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Why should the company know the environment around itself?

Why should the company know the environment around itself?

The environment of the company is a sum of the factors (processes, trends, and states). It is constantly changing and ruthlessly determining actions within the organization. But…why else should a company know the environment in which it operates?

The environment of the company – everything and nothing?

By clarifying the definition, we can divide it into micro and macro-environment. The first category includes factors that directly affect the organization, so the environment is not the same for everyone. It depends on the market position, as well as the competitive entity, whether it influences their formation. Among the most important groups belonging to the micro-environment are: suppliers, intermediaries, competitors, customers, local governments, and residents. The environment continues to have a similar effect on all economic entities operating in a given market. Usually, they are independent of specific companies, so they have to adapt to it. The macro-environment includes demographic, economic, political, and legal, socio-cultural, technical, and natural factors.

Changes, changes, and once again…

In an ever-changing world, in which information is one of the most desirable and advantageous tools, awareness of the environment in which a company operates becomes almost crucial. A new competitor on the market, a different market segment, changing consumer behavior, a cheaper product than suppliers, and perhaps further legal regulations, tax reliefs, subsidies – these are only examples of changes that appear in the micro and macro environment of a company. Ignorance of these changes, lack of awareness of their occurrence may be associated, respectively, with a loss of competitive advantage, a decrease in demand for the company’s products or services, incurring higher operating costs than is possible, exposure to non-compliance with the law and wasting the opportunity to obtain additional financial resources.

…changes and with them new opportunities,

The perception of changes in the company’s environment can be transformed into opportunities waiting to be seized. Reducing production costs and improving the company’s profitability are some of the long-term benefits that can result from conscious observation and reaction to stimuli from the environment. Sometimes the conclusions from the conducted analyses may indicate new possibilities of optimizing activities within the company. Then it is important to check whether the company operates in symbiosis with its environment, using the potential it receives, or maybe there is a possibility of mapping the processes that require improvement? However, to take rational steps, it is necessary to get to know the specificity, way the environment works, and follow the processes taking place in it.

but also challenges and threats.

Sometimes regular observation of what is happening around the company can draw attention to negative changes that have come or are likely to come. Rapid identification of such factors will enable the organization, albeit partially, to prepare a strategy for action in the new circumstances. The efficient use of resources, implementation of a new solution, and improvement of those used so far will help to overcome challenges and avoid threats. Storing more product X, in the event of a difficult market situation among suppliers, a new advertising campaign for the Y service, when customers start looking for other solutions or maybe introducing new technologies to follow the technological revolution in subsequent sectors of the economy? You can prepare an answer to any stimulus coming from the environment. Time, the effectiveness of predictions, and the efficiency of actions remain important elements here.

A study of the environment? Or is it just enough to work?

The appearance of spontaneous success of suddenly taken actions is something that makes every entrepreneur happy. But can you still rely on luck and intuition? Yes, you can, but only with the support of their awareness of what is happening around the company. Noticing changes in the micro and macro environment of an organization gives the basis for making conscious business decisions and setting its goals, long-term strategies, and cost optimization. There is no doubt that they influence its financial results, the scope of operation, its target group, and development perspectives. It is up to you how much information and knowledge you will draw from your company’s environment.

Although many people collect information on their account, it is often too time-consuming and the multitude of (sometimes unnecessary) information scares the hell out of you – we will be happy to help you with that. If you are interested in free business consultation, just write to us.

Natalia Szczucka

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