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The Business Environment
The business environment of an entity consists of any factors that may affect the operations of the business (Fernando). These factors can either be external factors or internal factors. For instance, while elements such as management and employees are internal, other factors such as government policies and technological factors are external factors. Due to the dynamic nature of the business environment, it is of vital importance that every business entity understands how every element impacts its operations.
Every business must understand the internal factors that directly affect the operations of the company as this can entail the failure or success of the business (Craig and Campbell). Although some of these factors vary from one business to another, there are some factors such as customers and employees that are universal to all businesses.
The existence of any business entity is heavily dependent on the ability of the business to satisfy the needs of its customers (Patterson, Johnson, and Spreng). Customers are therefore instrumental to the survival of any business. Therefore, every entity should ensure that its prime goal is to satisfy its customers by offering quality products and services. One way of ensuring and improving customer satisfaction is through invaluable customer feedback from surveys.
Every business must ensure it has a competitive advantage over its competitors to ensure its survival (Kew and Stredwick). Regardless of the scale of operation of any business, competitors will always be a part of the internal factors of a business. As such, every business should always ensure that it has a competitive advantage over its competitors if it is to stay in business.
Employees are an essential factor in the micro-environment of any business entity as they make it possible for production (Malheiro, Ribeiro, and Jamil). Therefore, as part of the business strategy to ensure the provision of quality products and services, businesses should ensure that they employ the best labor. This ensures that a company operates optimally and produces quality products and services that meet customer’s demands.
Every business should ensure that they meet the demands of its shareholders as they are the owners of the business. Although customer satisfaction comes first, the company should also ensure that it generates profit. These proceeds are then used to compensate in form of dividends, shareholders who have invested in the industry (Havard). Part of the profits is also used in the growth of the market.
Suppliers are vital to any business as they provide the necessary raw materials that allow for production. Since suppliers are an essential factor in the micro-business environment, it is in the best interests of a business to foster good relations with its suppliers as the survival of a business depends on the availability of raw materials (Corrigan).
Whereas a business has some level control when it comes to its internal environment, it has no control over factors that affect its external environment. Since an organization lacks the autonomy of its macro-environment, they have to adapt to these factors to ensure its survival proactively. To make the necessary adaptations, it is important that for an organization to gain an insight on these external factors.
Technology is a very dynamic factor that is vital to the operations of every organization. Utilizing technology can be considered as a competitive advantage if an organization can keep up with the rapid pace of the technology industry (Marcus). Measures to adapt to technology can vary widely from ensuring the use of the latest systems to utilizing the latest production practices. Although it may not be feasible to keep up with technology, organizations should make an effort where possible to keep up with trends in technology. Conversely, obsolete technology can also be an organization Achilles heel.
A favorable political environment is also another external factor that can affect the success of an organization. Different countries have different political settings that are determined by their government. Government policies such as taxation policies and the political stability of the government are just some of the critical factors that determine the success of the organization (Sakh).
The physical environment affects a business’s operations. For instance, fluctuations in weather patterns can have a considerable impact on an organization in the industry of crop production. This creates a domino effect as manufacturing companies that rely on crops as their raw material for production are also affected by the weather fluctuations.
Works Cited
Corrigan, Karyn. What Is a Supplier in a Business? 2018 October 2018. Website. 23 June 2020.
Craig, Tom, and David Campbell. Organizations and the Business Environment. Oxford: Routledge Copyright, 2012. Print.
Fernando, A.C. Business Environment. New Delhi: Pearson Education India, 2011. Print.
Havard. Principles of Corporate Governance. 18 September 2016. Website. 23 June 2020.
Kew, John, and John Stredwick. Business Environment: Managing a Strategic Context. The Broadway: CIPS Publishing, 2005. Print.
Malheiro, Armando, et al. Handbook on Research on Knowledge Management for Contemporary Business. Hershey: IGI Global, 2014. Print.
Marcus, Alfred. The Future of Technology Management and Business Environment. Chicago: Pearson Education, 2015. Print.
Patterson, Paul, Lester Johnson, and Richard Spreng. “Modelling the Determinants of Customer Satisfaction for Business-to-Business Professional Services.” Academy of Marketing Science Journal (1997): 4-17. Print.
Sakh. Business Environment. Chicago: Pearson Education, 2009. Print.