Limitations to environmental analysis - Business Environment

Limitations of Business Environment

The limitations of business environment are

The techniques described above represent some of the ways in which organizations can examine the changing business environment in an attempt to understand what changes are likely to occur, how these may affect the organisation and what responses would be appropriate in the circumstances. In short, the value of such analysis lies not only in the information provided but also in the process of gathering and evaluating it and in applying it to the task of strategic management.Despite its potential value as a tool of decision making, environmental analysisis not without its limitations and these need to be taken into account. For a start, analysing the business environment is not a precise science and does not eliminate uncertainty for an organisation, caused, for instance, by unanticipated events which do not follow the normal pattern. Nor should it be regarded by managers as a means of foretelling the future, allowing them to avoid their responsibilities as strategic planners and decision makers by blaming problems on a deficiency in the application of a particular technique or on inaccuracies in the data provided.

Added to this, environmental analysis of itself is by no means a guarantee of organisational effectiveness, and can sometimes complicate the decision-making process by providing information which calls into question the intuitive feeling of experienced managers. The danger is that the analysis may become an end in itself and may obscure information and data coming from other sources, rather than being used in conjunction with them. Accordingly, its value in strategic thinking and strategic decision making may not be exploited to its full potential and this may represent a lost opportunity to the organisation, as well as an inefficient and ineffective use of resources.


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