Some of the benefits of good business environment are as follows:
Benefits of a Good Business Environment Every businessman must have a clear understanding of the business environment in which they operate.
Ignorance about the business environment can lead to disastrous consequences, including being forced out of the market. Having a clear understanding of the business environment brings many benefits, including:
1. Enables the Firm to Identify Opportunities and Getting First Mover Advantage:
The businessmen who are able to understand and scan the opportunities of business environment at early stage they get maximum benefit or they can capture a big share in the market.
They can go much ahead of their competitors. However, this does not come without challenges. One of the challenges that these businessmen face is that they have to be able to continuously learn and adapt to their ever-changing surroundings. Another challenge is that of resources, in making sure that they have what they need in order to maintain their advantageous position.
When Maruti Company was preparing to sign a contract with Suzuki Company of Japan, Goodlass Nerolac Company was the first to investigate the market and find that there would be a high demand for car painting in India. At the time, no paint company in our country had car paint technology.
With the chance to do so, Nerolac Company decided to sign a contract with Kansai Paint Company in order to import car painting technology. When Maruti eventually started car production in India, Nerolac got all the corresponding contracts for car painting work. In fact, even today, ninety percent of all Maruti cars are painted by Nerolac Goodlass Company.
2. Helps the Firm to Identify the Threats and Early Warning Signal:
Businessmen who can scan and understand the business environment quickly are able to adapt to changes and negative policies more easily. This allows them to continue running their business smoothly without too many disruptions.
Businessmen need to stay up-to-date with what’s going on in the business world around them, and take any new information they receive as a sign to change things up in their own company.
For example, when Maruti Udyog Company scanned the business environment, they found out that more foreign car manufacturing companies were planning to set up shop in India.
The company saw the writing on the wall and took action to increase their production capacity. This meant that, for example, the number of Esteem cars produced per day went from 65 to 80. As a result, sales increased from 25,400 cars per year to 42,000.
3. Helpful in Tapping and Assembling Resources:
Businessmen need to supply goods to the market according to demand. To do this, they need raw materials, resources, and other input. They acquire these things while keeping in mind the output that is demanded in the market. This helps them to know how much of each product to produce.
They select resources based on what is available and what is needed. For example, if there is a demand for flat screen color TVs, manufacturers will collect the resources necessary to make them instead of collecting resources for black and white TVs.
Product managers always have their finger on the pulse of what’s trending. By constantly scanning reports, they are able to make changes to their products which suit the taste of present day customers. This attention to detail and willingness to change ensures that their products are always in demand.
4. Help to Adjust and Adapt with the Rapid Changes:
Today, the business world is changing at a very rapid pace. These changes can have a big impact on businesses. So, it is essential to understand these changes as early as possible. Business environment scanning helps companies to scan and understand these changes in their environment.
Businessmen make changes to both their internal and external environments to stay ahead of the competition.
So, by regularly scanning their business environment, they are able to identify and adapt to changes more quickly. For example, the Ambani brothers recognised that the business environment today demands quick decision-making, so they shifted from centralisation to decentralisation.
5. Assisting in Planning and Policy Making:
The major strategies and plans in the organisation are formed keeping in mind the business environment because the policies and strategies have to be implemented in the presence of environmental factors.
So, these must be made keeping in mind the environmental factors. Scanning the environment helps in finding out opportunities for business and strategies can be made to take advantage of these opportunities.
We find that there is a lot of potential for the tourism industry in India. This has caused businessmen to start making plans to take advantage of these opportunities. Different hotels, both in the private and public sector, are coming up with new strategies to attract tourists. There is now a separate travel segment that is specifically designed to get the most out of the upcoming tourist boom.
6. Improvement in Performance:
Scanning the business environment is key for any company that wants to improve its performance. Making changes to the internal environment to match the external environment can help organizations prosper and increase their market share. For example, a company might need to make changes to its production process if there are new environmental regulations that come into effect.
Weston Company was unable to adapt to the changing environment and started to lose market share. BPL and Onida, on the other hand, did a better job of scanning the environment and were able to compete successfully against multinational companies.
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