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Business Environment and Its Value Creation

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A business environment refers to the specific surroundings or area in which an organization is operating. The analysis of the business environment of the company is the basic criteria on the basis of which decisions of a business organization will be made. The regular analysis of the business environment will keep the business organization up to date and keep the competitiveness of the company high as compared to other competitors. The environment of an organization consists of the internal and external environment of the company. every organization formulates the strategies as per the business environment and it is reflected from the strategies formulated by the management. Because the strategies are based upon strengths and weaknesses of the company which can be evaluated by the environment analysis. Thus, the analysis of the business environment helps to align all the operations and strategies of the company in order to achieve desired goals and objectives. To conduct an environmental analysis, a number of activities have to be performed which are known as stages of environment analysis which are as follows:

  • Scanning the environment refers to the detection of warning signals of an environment. The management has to identify the factors which influence the activities of an organization. The potential changes or threats in a business environment can also be identified to prepare an organization to face it.
  • Monitoring of environment refers to environment trends in the market which requires in-depth analysis of all the factors of an organization and its continuous follow-up. The analysis provides sufficient information to an organization to be updated according to the requirements and get prepared to follow the trend.
  • Forecasting of environment refers to the direction of future environmental changes of the company through which a firm can identify the potential opportunities and threats imposed by the external environment of the company.
  • Assessment of the environment refers to the implementation of changes in an organization according to the outcome of environment analysis. The management will ascertain the implications of environment on the business operations and plan the activities accordingly.

Business innovation strategy refers to the new value created by a firm which is different from previous strategies of a firm. Innovation refers to the use of resources and strategies of an organization in a totally different manner and achieve the desired level of innovation in products, processes, and operations performed. The objective of business innovation is to create added value and achieve competitive advantage by delivering quality products and services in the market at economical prices. The innovation to be undertaken by a firm has to be evaluated through the environment analysis. Innovation implemented by the company sets the boundaries for improved performance. To formulate a business innovation strategy number or steps has to be followed which are as follows:

  • Determine the objectives of the organization and design the strategy to implement new innovations.
  • Evaluate the market scenario, the deep analysis of customer and competitors in the market.
  • Define the value proposition of the company.
  • The company has to evaluate the existing core capabilities of the company and develop for future purposes.
  • Determine the innovative techniques and systems followed by the company.

Business capabilities refer to the capacity of a business organization to perform key operations or functions. Every business organization has some set of strengths and weaknesses which are illustrated from the strategies of the company. The uniqueness of the company depends upon the strategies formulated. The management of the business organization determines the capability Maps to ascertain the significance of the capabilities in operations of the company which can be evaluated by analyzing processes followed by the company, people involved in the performance of various processes and the technology used. Through the mapping of these factors of an organization, the management can identify the operations and factors that provide the highest value to the business organization and support the overall strategy of the company.

Business value creation Every business got established with the purpose of creating some value, the creation in such a way that it will generate higher profits for the company. whether the business is successful or not so, it creates some sort of value. The concept of value creation is very subjective, every business organization has its own definition, future perspective and measuring technique for value creation. The business value can be created in three ways, which are as follows:

  • Create new value: The company has to build its value from scratch. The entirely new products or processes have to be supplied or a company can start selling its products and services in different market sectors to create higher value for its customers.
  • Create more value: More value can be created by providing something better with the existing supplies. The best example of more value is providing additional units of goods or services at the same price.
  • Create better value: In this way, a company has to improve the existing goods or services to create additional value for its customers. The internal processes have to be modified or updated to improve efficiency so that a company can supply its goods and services at fewer prices and higher quality.

While creating the value the business organization has to consider the following factors:

  • Create Intensity: By providing additional value to the customers, a company is going above and beyond its competitors. It increases the intensity level of value provided by the company.
  • Value application is the use of different factors or means to create and deliver more value to the customers. To provide extra value to the customer a company can apply different technologies or processes.

Tradition: many companies face problems to adopt a new set of technologies or processes because of traditions followed by them. The rigidness in the tradition creates hindrance to perform better and create additional value.

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