“My partner used to say, all I want to know is where I would die so I would never go there”- Warren Buffet
What is the environment? This can simply be anything that has the power to influence or affect an entity directly or indirectly.
The business environment can however be seen as anything that can affect a business. This comprises of all stakeholders and some non-stakeholders like competitors.
All business like other beings in this world operate within a set of external forces over which it has little or sometimes no control. For any business to succeed it must KNOW its environment.
I heard Warren Buffet say something in an interview, he said “My partner used to say, all I want to know is where I would die so I would never go there”.
For a business the environment is as important as air to a human.
Below are some of the importance of the environment.
• It’s the source of input for the business, like employees, financing, raw material etc.
• It absorbs the firms output, e.g. you sell your final product to the people in the business environment
• The environment is a source of change. These change may be positive and negative changes, and if you want to survive and join in the continuous evolution you must learn to adapt and manage change or go to extinction like the dinosaurs.
• It’s a source of constrains, like the laws of a nation that affect your business. It can also be non-legal like the cultural norms of the society.
As from the above you can see that the environment is literally everything that affects a business one way or another, and with its importance it can’t be over looked, it needs to be properly analyzed for strategic planning.
I’ll stop here today and I hope this has given you a good introduction to environmental scanning. The next post on the Stategy series would be on the environmental scanning process. Where I would guide you on how to do proper environmental analysis like a pro and win big in your business.
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I am Ofomaja E. Joshua I talk Marketing, Business and Finance. Follow Me I promise I won’t waste your time.
