Studying the business environment requires financial acumen.
In a modern economic environment replete with multinational companies competing for new market segments, understanding the business context in which firms operate becomes important. Organizations study the business environment to gain market share and improve the quality of their products.
Identification
Studying the business environment incorporates all methodologies and steps organizations use to evaluate the competition, assess the effectiveness of internal processes and monitor external developments such as regulatory initiatives.
Significance
Organizations study the business environment to pinpoint factors driving profit indicators and to better manage their operating activities. Without adequate business intelligence, a firm may lose market share. To gather business information effectively, companies often use computer tools, such as customer relationship management software and enterprise resource planning software, according to the "Economist Intelligent Unit."
Types
A study of the business environment helps corporate leadership understand internal and external factors impacting operating activities. Internal factors include operating controls and manufacturing processes. External factors include regulatory initiatives and competitors' actions.
