Question

What did you notice about the different environments and how they impact a particular type of business? What could you, as a business manager or entrepreneur, take away and apply to a job?

Answer 1

Business refers to any activity involving production or sale/purchase of goods and services for the motive of satisfying the needs of end customers.

Analyzing business environment helps organizations in identifying their strength, weakness, opportunities & threats. This helps for survival and growth of the business enterprise. The following are the advantages of analyzing the business environment:

(1) Identification of Strength, Weakness, Opportunities, Threats

(2) Keeping Business unit Alert

There are various factors which affect the business. The organizations must carefully study these factors and handle them according to the need of the hour to get the maximum revenues. These factors are:

Macro Environment: It includes factors that are outside the scope of owners of the business entities.

• Economic
• Non-Economic

Economic environment influences the businesses in a very vast manner. It includes macro level patterns of distribution of wealth that impacts the business. Factors including economic environment of business:

• Economic system
• Economic planning
• Industry
• Agriculture
• Human resource

Non-Economic:

• Political & Legal Environment: Influence exerted by The constitution of a country, Political Organization, Political Stability, and Image of the country and its leaders, Foreign Policy etc.
• Socio- Cultural Environment such as Educational system & literacy rates, Customs, beliefs & life styles as well as Taste & preference of people.
• Technological & Physical Environment
• Natural Environment
• Demographic Environment
• Global Environment

Environment conditions covers a major part of the factor and demand conditions.

In it the things which effect or which can effect the business are studied. For example, a political stable environment eases the process of doing business. Another instance is of demand of the product. For example, an apparel (a fashionable jeans) may get out of demand because of the new apparels being introduced in the market. Thus, organization should keep an eye on the market to avoid losses because of overproduction.

In analysing the environment, you will need to study every factor purporting to the environment, that may effect the business outcomes.

So you will need to study the following factors:

1. Political factors prevailing in the market in which a business operates.
2. Market demands of the products/services which a company offers.
3. Strategies and strengths of the Competitor firms which operates in same market. It also comes under the other categories but then all these factors are interrelated.

All these three factors will constitute the environmental study.

Thus, it can be said that a business is highly effected by the environment in which it operates.

As a business manager, a person can try to analyse the role of different factors on the business. For example, some businesses are affected by political while other depends on religious environment. For example, beef cannot be sold in India because of religious sentiments. A manager could analyse the environment and accordingly implement the changes in the strategies so as to get effective results.

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