Question

Identify and explain the five factors of the business environment that could help or hinder the development of businesses.

Answer 1

Five factors of the business environment that could help or hinder the business development are as follows:

A) Business and it's environment are inseparable: Environment is an integral part of business. Business cannot work without it's environment. Business requires good network of social, cultural and economic factors. Both business and environment have influence over each other. They share a symbiotic relationship. Success of the business lies in the understanding of the environmental changes and adopting new business policies accordingly. This inseparation could either hinder or grow the business.

B) Environment is dynamic: Business environment is dynamic as it cannot remain static for a long period of time. There might be changes in consumer tastes and preferences, government policies. The surrounding of the business environment that is constantly changing carries both opportunities and threats with them. The success of the business depends upon alertness and adaptability with the changing environment.. The failure of this adaptability will cause hindrance to the business.

C) Opportunities and obstacles : Business environment is flexible, it keeps on changing. Sometimes, it may provide opportunities to the business whereas on the other hand may create new challenges and obstacles in the working of 5he organization. Opportunities may prove favourable to the firm and obstacles may create threat and unfavourable to the firm affecting it's growth and profitability. Opportunities for growth and expansion is created when the environment is favourable, on the other hand it creates problems and obstacles when it is unfavourable. Thus business environment helps or hinders the development of the business.

D) Long lasting effect : The environment can have both positive and negative impact on the business. Changes in the environmental factors have long lasting effects on the functioning of the business. These changes may create favourable and unfavourable impact on the firm.

E) Uncertainty: Business environment is largely uncertain, as it is very difficult to predict future happenings, especially when environmental changes take place very frequently. The enterprise must continuously monitor their environment and adopt suitable business practices not only improve their present performance but also continue to succeed in the market for the long run. Not doing the same will create a hindrance to the business.