Abstract
Purpose: Environmental analysis is a useful tool in strategic planning. It is a method for identifying all external and internal factors that can influence an organization’s performance. The analysis comprises determining the amount of threat or opportunity presented by the factors. These assessments are then used in the decision-making process. The analysis aids in the alignment of strategies with the firm’s environment. The purpose of this study is to establish influence of environmental analysis and financial sustainability of NGOs in Kenya.
Methodology: A desktop literature review was used for this purpose. Relevant seminal references and journal articles for the study were identified using Google Scholar. The inclusion criteria entailed papers that were not over 10 years old.
Findings: The study concluded that environmental analysis is a useful tool in strategic planning. This is because it is useful in identifying all external and internal factors that can influence an organization’s performance. The analysis comprises determining the amount of threat or opportunity presented by the factors. These assessments are then used in the decision-making process. The analysis aids in the alignment of strategies with the firm’s environment. The study also concluded that, external factors had significant positive and negative effects on performance.
Unique Contribution to Theory, Practice and Policy: The study recommended that the government should embrace environmental analysis as it is a useful tool in strategic planning. The government should also establish a favorable business environment for rural SMEs by providing entrepreneurship training and company incubation programs. The findings help define the future of small business reengineering in rural areas by providing information on environmental analysis strategy and innovation management theory. The study recommends that the strategic leaders should do environmental analysis as it will bring an upper hand to the NGO hence be able to assess the threats and opportunity present. The organization can then act on the opportunity at hand and prepare to mitigate the threats present, resulting to financial sustainability of the NGO.