The following simple breakdown of basic business analytic tools is vital for all business managers and decision makers. Looking at, evaluating and making decisions decisions based on external and internal factors to the firm is vitally important to ensure adequate and efficient production.
These are factors that are not in control of the company, but they must be observed nonetheless so that the best course of action can be chosen. In this instance, to analyse the external environmental factors that will affect a firm a simple PEST Analysis should be done.
- Political (legal)
Looking into each of these in turn will give the business managers a good insight into what is going on outside of their control, and how they should prepare/adapt.
There are obviously internal factors that are crucial to the firm, and are more manageable for the firm’s managers. In this, a combined internal and external examination is required of the firm’s performance through a SWOT Analysis.
This form of analysis can be useful for many reasons, as it enable the company to:
- identify where it is doing well and where it will likely do well in the future.
- helps identify problems.
- helps focus management on strategic problems.
- provides an opportunity to identify organisational strengths and weaknesses.