Environmental analysis is scrutinizing of the external forces which have the bearing on the functioning of the Business. The environment of an organization consists of it surrounding anything that affects its operation favorably or unfavorably. Organizations environment includes those factors (internal and external) that affect the operations of the business directly or indirectly. The internal components indicate the strengths and weakness of the business entity whereas the external components represent the opportunities and threats outside the organization.
There are some steps in the environmental analysis. These steps are as follows:
Defining: The first step in the environmental analysis is determining the relevant environmental forces and the geographical scope of operations.
Scanning and forecasting: The second step in the environmental analysis is ensuring that information is available about the defined environment.
Interpreting: This final step in the analysis is packaging the information into forms that are useful for strategic planning. So, these are the major imps involved in the environmental analysis.