Business environment analysis studies internal and external factors that affect a business, including corporate culture, structure, location, competition, and government regulations. A strong corporate culture leads to better employee morale and productivity, while external factors like competition and government policies can be threats or opportunities.
Business environment analysis is the study of internal and external environmental factors relating to a business, with the goal of discovering how these factors affect the business. The effect of these environmental factors can be positive or negative. This includes internal factors such as the type of corporate culture in place in the organization and corporate structure. External environmental factors include factors such as competition, consumers, location and government regulations.
Studying corporate culture as part of an analysis of the corporate environment involves an assessment of what type of corporate culture the company has in place. A corporate culture encompasses the guiding principles that a company has established, such as the level of formality in the organization, the dress code of various employees, and how employees and leadership interact. The purpose of studying corporate culture during an analysis of the corporate environment is due to the fact that corporate culture has a major effect on the success of a company. An organization with a strong corporate culture is more likely to do well than one with a poor corporate structure. Employees of companies with a good corporate culture have good morale, are more motivated and consequently more productive.
Internal business structure in relation to analyzing a business environment includes a study of the immediate premises of a business, including office buildings and other related structures. External business structures include an analysis of the external environment, including the company’s location, facilities, and the location of related factors such as suppliers and distributors. The structure of a company, as well as the location and facilities of suppliers and distributors are important, as they influence the effectiveness of the movement of goods and raw materials from one section to another. The size of a distributor’s warehouse is important because it determines the number of goods that can be stored for distribution to outlets.
Other relevant external environmental factors include the number of competitors in the business environment and their effect on the business. A business with too many competitors producing the same or similar products can negatively affect a business. Government policies that are in place at the site are also taken into consideration, because favorable government policies can be considered opportunities while unfavorable government policies can be part of the threats to the success and survival of the business.
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