This interaction helps to strengthen the firm and use its resources effectively. For example, suppliers, an important element of micro level environment, are often … ADVERTISEMENTS: Business Environment Types (External Micro and External Macro)! However, all micro forces may not have the same effect on all firms in the industry. The business might then pull random samples from the order and perform statistical analysis to decide whether to accept or reject the microchips. To address these challenges, business leaders often conduct an environmental analysis and develop policies and processes that adapt company operations and products to this environment. Thus, one of the importance of the business environment is ease in … I don’t think people understand what environmental analysis really means. A business may buy hundreds of thousands of microchips, for example, so many that it would take years to inspect each one. It will reduce the profit margin and will make the opportunities for expansion to slip. Type 1# External Micro Environment: Micro external forces have an important effect on business operations of a firm. The purpose of the Business Environment Analysis is to identify the potential influence of particular aspects of the general (economic, political, cultural, technological, natural, demographic, international environments) and operating environments (company’s suppliers, customers, competitors, and public) on business operation. Scanning and searching is an important technique of business environment analysis. However, the greatest challenges to business success may be a consequence of the external environment over which company leaders have little, if any, control. The purpose of an environmental analysis is to help to develop a plan by keeping decision-makers within an organization. Statistics can be used for marketing and market analysis. They might think it has to do with how “green” or environmentally safe an organization is. If an environment is to be analyzed, written as well as the verbal information from various sources with regard to the elements of environment for that particular business is to be collected first. Relativity: Business environment is a relative concept since it differs from country to country and even region to region. Hence business environment analysis helps to forecast the future prospects of the business concern. Therefore environmental analysis helps to identify threats from the environment identification of threats at an earlier date is always beneficial to the firm as it helps to defuse the same. Business environment is dynamic concept or a phenomenon w hat with emerging trends i n business ethics, corporate social … Analysis of internal business environment helps to identify strength of the firm. ... Business environment is the sum totals of all those factors/forces which are available outside the business and over which the business has no control. Solutions often include a software-systems development component, but may also consist of process improvement, organizational change or strategic planning and policy development. Environmental analysis helps you make significant decisions for every aspect of your business. Image: Importance of the Study of Business Environment Failure to understand the environmental factors for business shall create number of problems, which in fact are difficult to solve. This analysis should identify such trends and events and estimate their likelihood and impact. @Mammmood - Good point. 2. An environmental analysis in plays an essential role in business management by providing possible opportunities or threats outside the company in its external environment.