The first area in which an organization needs understanding in is itself. Accounting, essentially, provides financial self-understanding. Accurate knowledge of assets, cash flow, and liabilities allows a company to make safe financial decisions. Financial information can also be used to assess the relative profitability of different activities and allow the organization to focus on the areas that are most profitable rather than just chasing revenue or growth. Knowledge of its own human resources allows them to be deployed and motivated more effectively.
An organization needs to understand its customers and potential customers in order to anticipate their future needs and create products and services that will address those needs. In retail, loyalty programs can be especially important in accumulating data about valuable customers. An increasingly important area of understanding is customer technological preferences so that one can use appropriate channels and interfaces for communication and payment.
Understanding suppliers is important because a business relies on its supply chain. In recent years, discoveries that suppliers have engaged in unethical and even illegal practices have caused major problems for globalized businesses. Monitoring supply chains is also crucial to ensure quality and reliability of inputs.
Finally, environment is important. Many companies now have staff assessing risks due to global climate change in addition to political risks that might affect their businesses. Tariffs, trade wars, and actual wars can disrupt businesses.
In addition to using a SWOT analysis to critically examine a company, a business organization also needs to analyze the specific details of the environment, supplier, and customer base in the area the business is operating. A business needs to understand consumer patterns, best selling products, if competitors have local customer loyalty, etc.
It is helpful to know if the customer base tends to be long-timers (such as farmers who consistently return to the local farm co-op) or if the customer base is more comprised of larger pools of not strictly-loyal customers—who may go choose to purchase products from multiple competitors. The company should consider the products sold and what effects the natural, social, and political climate may experience when these products tend to be purchased.
Information is a vital aspect of business operation. Communication is the flow of information from one party to another. Without information moving between groups efficiently, a business cannot make proper decisions and be successful.
For example, if you are manufacturing shoes for a customer, you will need to know their demands. If they want a sneaker, they will be dissatisfied if you give them dress shoes, so you need to be aware of their needs.
On the other side of things, if you want to make a leather shoe, you need to understand your vendor's price for leather. If it is not financially viable, you need to know before you start purchasing or promising a product to customers. Information and communication are therefore paramount in business decisions.
Information plays an important role in an organization because it guides every decision an organization makes or expects to...
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make. Thus, information is important in the decision-making and problem-solving processes, and without the right information, organizations are bound to make mistakes in these key processes.
An organization needs to have information about its Strengths, Weaknesses, Opportunities, and Threats in what is known as a SWOT Analysis. The main idea of a SWOT Analysis is to ensure the organization knows its internal and external position in order to secure and grow its business. The information is also important because it helps the organization devise better strategies for dealing with their competitors.
A customer analysis helps the organization understand the people it serves by getting to know their needs, perceptions, and preferences among other key customer variables. This information then ensures that the organization offers the right products or services that would adequately address the needs of their customers.
The organization also needs to understand their suppliers and their ability to provide the required products or services required for the existence of the organization. This information helps organizations deal accordingly with situations of surplus and shortage.
Information is vitally important to the successful functioning of any organization. The absence of organization can be taken to mean many things that is not intended. For example, if a vendor does not hear from a supplier, it could be interpreted as rudeness as something not intended. The absence of organization could also be interpreted as a sense of disorder and a lack of precision in the way business is conducted. In contrast, the constant and steady stream of communication and information helps to build credibility, reflect a sense of transparency in business interactions, and can probably do more good than not. It is important that what is communicated is of vital importance and relevance, but with this in mind, the presence of information and its continuous stream can go very far in the process of instilling confidence within a business and for its external perception.