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Proper environmental assessment helps to make optimum utilisation of scare human, natural and capital resources.Systematic analyses of business environment helps the firm to reduce wastage and make optimum use of available resources, without understanding the internal and external environment resources cannot be used in an effective manner.
The purpose of an environmental analysis is to help to develop a plan by keeping decision-makers within an organization.
The changes can be include exchanging of executive parties, increasing guidelines to decrease pollution, technological developments, and fluctuating demographics.
A business organisation has short term and long-term objectives.
Proper analyses of environmental factors help the business firm to frame plans and policies that could help in easy accomplishment of those organisational objectives.
Without undertaking environmental scanning, the firm cannot develop a strategy for business success.
Decision-making is a process of selecting the best alternative from among various available alternatives.The following is the need and importance of environmental scanning: Strength of the business firm means capacity of the firm to gain advantage over its competitors.Analysis of internal business environment helps to identify strength of the firm.The firm should make every possible effort to grab the opportunities as and when they come.Business is subject to threat from competitors and various factors.Environmental analysis will help the firm to understand what is happening both inside and outside the organization and to increase the probability that the organisational strategies developed will appropriately reflect the organizational environment.Environmental scanning is necessary because there are rapid changes taking place in the environment that has a great impact on the working of the business firm.An environmental analysis is an extremely important tool in understanding and decision making in all situation of the business.Success of the firm depends upon the precise decision making ability.Monitoring internal environment helps to identify not only the strength but also the weakness of the firm.A firm may be strong in certain areas but may be weak in some other areas.