‘Business’ and Its ‘Environment’
Introduction
Every business organization has to interact and transact with its „environment‟. The effectiveness of interaction of an enterprise with its environment primarily determines the success or failure of a business.
The environment imposes several „constraints‟ on an enterprise and has a considerable impact and influence on the scope and direction of its activities. The enterprise, on the other hand, has very little control over its environment. The business environment presents two challenges to the enterprise, viz., the challenge to combat the environmental threats (such as intensification of competition, declining market etc.) and to exploit the business opportunities. The basic job
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Within the private sector businesses vary in
Objectives (profit and CSR) Legal structure (sole trader; partnership; limited company) Industry; Size (measured in terms of number of employees; sales revenue) Market power (degree of competitive pressure) Geographical reach (within, between, and among countries)
The diversity also means that, although there are common elements in the business environment, each business operates in an environment that is, to some extent, unique.
Thinking about the business environment – Eight key themes
Internal/external – the environment is both inside and outside organisations. Internal: „controllable‟ | External: „uncontrollable‟
Business organisations is not really a single, unified entity but is internally differentiated. Managers within business, to be effective, have to deal with both the internal and external environment. The ability of an organization to operate successfully within its external environment depends, in large part, on the effectiveness of internal systems and procedures. The internal environment has to be managed and adapted to the demands and opportunities of the external environment.
Important internal factors: organizational resources; R & D and technological capabilities; financial capability; marketing capability;
These factors create certain expectations and requirements for organizations, which in turns determine the organization's direction and strategy. Whereas internal environment is made-up of several internal subsystems. Internal subsystems work together systematically and drive the organization in the direction which is in conformity to external environment demands; thereby making the organization effective and a good fit with external environment. (McShane & Steen, 2012, p.6)
When manipulating a business’s strategy, it is important to focus on the external factors in the environment. An external analysis is where a business conducts environmental scanning that present a company with the key external forces influencing the organization. The facets of external forces examined are the business environment, remote environment, or the competitive environment. A business environment is all of the external factors in the general environment that a firm cannot control, but can affect their strategy. The remote environment is the forces that affect most firms. Lastly, a competitive environment is the firm’s specific industry and its entirety. The external analysis is pertinent to a company called Dick’s Drive- In; without it, Dick’s would not be a thriving popular business today.
Environment is defined as “all factors affecting and affected by the system” and is “all internal and external factors or influences surrounding the identified client or client system”. Neuman has identified three relevant environments. The internal environment “ consists of all forces or interactive influences internal to or contained solely within the boundaries of the defined client/client system”. The external environment “ consists of all forces or interactive influences external to or existing outside the defined client/client system” and is interpersonal and extrapersonal in nature(Neuman, 2002).
External environment consists of forces that directly or indirectly influence organization’s business activities. The actors and forces outside marketing that affect management’s ability to build and maintain successful relationship with target customers.
A business organization cannot survive in its industry if it does not keep an eye on what is happening in its internal and external business environment. The analysis of business sector or environment acquaints an organization with the issues, challenges, and external factors that have a direct or indirect impact on its business operations and profitability. On the basis of this analysis, the organization can formulate its future strategies and compete in the industry in a more effective and vigilant manner (Cadle, Paul & Turner 2010).
The internal factors are inclusive of the marketing mix of the organization and the organizational goals. The product itself is a huge
Internal environment are SW which stands for strength and weakness, actually analysis of internal organization and external environment OT stands f opportunities and threats
It is defined as all the forces or conditions that are available within an environment that affects an organization and business. It is also known as controllable factors because business can control them. The internal environment deals with the management of resources like human resources, physical resources, technology, monetary resources and others that constitute the organization in order to implement or execute a strategy. Internal environment also includes culture and other intangible aspects like teamwork, coordination, efficiency level of employees, employee’s salaries and monitoring costs. The strategy for competition should also be in sync with the internal resources especially the internal environment.
A businesses environment creates many opportunities as well as problems for prospering businesses. The environment determines what a business can do by shaping and channeling its development. Businesses function within an environment by allowing entrepreneurs to raise capital and create profits freely. The supply of money available within a business as well as the economic stability through times of growth and recession have strong effects on businesses. Not only is the physical environment, including natural resources, pollution and energy as discussed previously, important, but many other
In this term of our discussion we’re talking about business environment. It’s like an overview of the whole business environment. Simply environment of a business means the external forces including the business decisions. They can be forces of economic, social, political and technological factors.
In today's world, no business operates in isolation without interacting with the environment where it operates. Irrespective of the nature of business whether public or private organization; manufacturing; service industry; local or international firm, its operations are inhibited by the environment in which it operates.
An organization is an open system; therefore it interacts with its environment. To manage the relationship with the environment, a large part of strategic planning is concerned. The environmental factors can be divided to 2 main categories, which is MACRO and MICRO .Macro environmental factors seriously affect an organization business practice, profitability and future progress. It can
Organizations are open systems and must relate to their environments. They must acquire the resources and information needed to function; they must deliver products or services that are valued by customers. An organization 's strategy--how it acquires resources and delivers outputs--is shaped by particular aspects, and features of the environment. Thus, organizations can devise a number of responses for managing environmental interfaces, from internal administrative responses, such as creating special units to scan the environment, to external ,collective responses, such as forming strategic alliances with other organizations.
As the name suggests, “internal” business environment refers to internal factors and resources that affect the running of the business. This primarily includes the workforce where the employees play a vital role in affecting company’s performance. If a company has well trained or motivated employees, that company is likely to get good output from them. However, if the same company recruits unmotivated employees who do not perform well or dig in their heels when a new plan arrived, this will affect that company’s production levels and ultimately hinder its profitability. Another factor to consider is all the capabilities that a company possesses. The tool used to monitor them is the resource based