Strategic Planning in the Small Business

Unit 2 HO 2-4 (continued)

THE VALUE OF ENVIRONMENTAL ANALYSIS

"Coping with the constantly changing environment is probably

the most important determinant of a company's success or fail­

ure in a free-enterprise system."' Although most businesses­

large and small-will agree with this statement,

small businesses

must be particularly sensitive to environmental influences. There

are two important reasons why this is so.

First, the small firm's responsiveness to environmental is­

sues may be a source of considerable competitive strength. The

small business can stay closer to the consumer, holding a mon­

itoring thumb on the pulse of its target consumers. By virtue

of its size, the small firm can move with speed, flexibility, and

sensitivity when shifts in customer desire and preference arise.

Larger, more structured, and hierarchically-bound organiza­

tions may be unable to alter quickly their direction or focus.

Consequentl, the small business may be able to etch out a

competitive edge against the large firms.

Second, size

also renders small businesses particularly vul­

nerable to environmental influences. They can ill-afford to mis­

read the environment. Although one mistake, one misreading

of a critical environmental trend may adversely affect a large

firm, such errors can be readily absorbed into the breadth of

its total operations. However, a mistake of similar magnitude

may destroy asmall business. Rare is the small business whose

resources are sufficient to withstand such mistakes. In short,

the small company may be significantly impacted by environ­

mental upheavals that larger firms can easily navigate and

weather.

I. Alan J. Rowe, Richard 0. Mason,

and Karl E. Dickel, Strategic

ManagementandBusinessPoliy:A MethodologicalApproach. (Reading, Mas­

sachusetts: Addison-Wesley Publishing Company, 1982), 57.

22 PartOne The Analysis Phase

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