Features Of A Business Environment, Regulating The Scope Of Businesses

Business Environment and Management
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Business Environment and Management
1.0 Introduction
The term business environment is used to describe the internal and external forces and institutions that can exceed the control of the business. These factors can also affect the normal functioning of the company. Some of the factors that can affect the normal function of a business include the government, suppliers, competitors, customers, competitors, technology, and the political and social factors. Such factors are in two classifications as either external or internal factors; the internal elements are also known as manageable factors. Effective management of business requires that the administrators of a company to be aware of where the business stands and the possible factors that can influence the company. It is important to note that some of the elements may have a direct impact on the operation of business while other factors may indirectly affect the company (Lee et al., 2015, p.31). For this reason, the business environment is the total surroundings that may present a direct or indirect influence on the normal operations of a business.
For proper management of a business, it is essential to understand the features and importance of a business environment. Due to the growing complexities of operating company, there is close and interaction between individual businesses and their environment. Effective management of a business requires the understanding of the business environment as a dynamic, complex, and multifaceted issue that has a substantial influence on the growth and survival of the company (Harrison, 2014, p287). If a business attains the proper management strategies for the industry, it will be possible to give the direction of growth, determine opportunities and threats, allow continuous learning and improve the image of the business. Also, a proper understanding of the business environment enables the management to gauge the various strengths and weaknesses that may allow or hampering the growth of the business and meets the competition. This paper will explore the features of a business environment, various internal and external factors that may influence the normal function of a business and determine how the elements are controlled.
2.0 Features of A Business Environment
The business environment has dynamic characteristics, which means that it is continuously evolving. Constant evolving makes the business environment to be unpredictable (Elearn, 2009, p.16). Hence, it becomes challenging to predict the exact nature of the possible future events and the changes in the social and economic environment. That is why it important to understand the various features of a business environment to gain insight on how the business environment can be used by managers to ensure smooth operations in organizations. The main features of a business environment are as follows.
2.1 Environment and organizations are inseparable
Business Environment is a crucial part of regular functions of a business. It is impossible for a company to function without being aware of the environment. Marketing requires a working system of economic, cultural, social, political, and legal factors to work correctly. The setting and business have an impact on each other (Kolk, 2016, p.23). They share a close relationship and attaining success in an organization requires the understanding of various environmental challenges and the willingness to adapt to the business policies accordingly. Therefore, a business cannot afford to ignore the interdependence between the company and the environment. Organizations interact with the business environment when it requires the acquisition of inputs such as energy, labor, capital, and raw materials and efficiently transform the inputs to valuable goods and services, and release them back to the environment.
2.2 Uncertainty
The business environment is so diverse, and correct predictions are challenging for businesses leaders to resolve, than the business itself. The challenge is due to the frequent changes that take place in the business environment. Some factors may remain constant for a long time while other factors, such as political factors, may change quickly leaving very little room for business to respond quickly enough (Hamilton and Webster, 2015, p.170). Factors that keep on changing rapidly may be a challenge to the success of a business and may result in reduced profit margins. As Hamilton and Webster (2015, p.366) note, limiting the effects of uncertainties, it is essential for businesses to continuously monitor their environment and come up with strategies that will improve their current performance levels. Also, adoption of suitable business strategies ensures that an organization has what it takes to succeed in the market for an extended period.
2.2 Long lasting impact
The environment can have a positive and negative effects on the long-term success of a business. Changes in the environment can create either favorable or unfavorable effect on the firm. Case in point, change in emission laws may generate a convenient opportunity for some business and adverse impact in some industries. One company will have the chance to sell the needed equipment to companies that need to conform to the new laws while other companies may face closure due to lack of capital to purchase new equipment (Raziq and Maulabakhsh, 2015, p.721). Careful diagnoses and systematic analysis provides the organization with the much-needed information to come up with stratagems to anticipate both threats and opportunities. Developing a knowledge-based approach will help an organisation to anticipate changes in the industry and plan ahead. Such an approach will develop the necessary preventive measures to deal with the potential dangers efficiently.
2.3 Regulating the scope of businesses
The business environment specifies the kind of structure a company must adapt to achieve smooth operations. All business operations should be conducted within the necessary legal, economic, political, and social structures. Business should monitor any changes in the arrangements to ensure that the company maintains growth. Without proper monitoring, the market might find itself struggling with the changes in the structures and suffer losses in the process (Crane and Matten, 2016, p.326). Business must always be ready to adjust their internal processes to match with the changing structures to ensure the survival of the company. Therefore, companies must find ways to normalize the evolving business environment.
2.4 Opportunities and obstacles
The business environment is flexible; it keeps on changing and is regularly under the influence of various factors. At one time, it may provide opportunities for the business while other time it may create new obstacles and challenges in the organization. Chances favor the growth of a company while the challenges present new threats that are unfavorable to the organizational and may affect its profitability and growth (Savrul et al., 2014, p.37). Companies realize the opportunity for growth when the environment proves to be favorable; contrariwise, it is the primary source of obstacles and problems when it is unfavorable.
2.5 The business environment is complex
A chain of positive and negative responses follows changes in the business environment. A variation may be favorable to one individual and unfavorable to other individuals. Case in point, increasing employees’ salaries might be advantageous to the employees, but customers might have to pay more for goods and services, which is unfavorable to consumers. Also, different entrepreneurs might perceive a change in the business environment differently (Moroni et al., 2015, p.2201). Due to the complexity of the business environment, change in the business environment can bring opportunities to specific people and obstacles to others.
3.0 Internal business environmental factors (microenvironment)
Internal environmental factors that may have a negative influence on business are composed of the elements that are within the organization (Baranenko et al., 2014, p.190). For efficient management of the factors that affect people on the management level, it is crucial to exploit the various leadership and philosophical styles to handle issues that directly affect employees.
3.1 Employees
It is essential for managers and all personnel involved in the management operations of a business to note that employees differ in their personalities. Such differences may result in various ways employees react to different internal and external pressures that affect the organization. Interestingly, most employees spend more than half of their waking hours in their workplaces, and the business environment has an immense effect on their mental framework and performance (Wheelen, 2017, p.15). Recent studies have revealed that an employees’ mental framework directly affects the performance levels, which ultimately affects the whole organization. An effective business management skill involves the anticipation of various factors that affect employee’s performance and makes the necessary corrections.
Understanding why employees are an internal factor that affects businesses requires the knowledge of the various factors that affect their performance. Most of the factors that influence employee’s performance are considered as the force behind employees becoming an internal business environment factor that may have adverse effects on the business (Wheelen, 2017, p.16). One of the factors that affect employee performance is the possibility of existing personality or ego clashes. Employees may develop the habit of trusting their workmates due to the difference in personalities. Stress is another factor that emphasize employees being an internal factor. Considering that, most modern workplaces are replete with deadlines and demands; some employees find ways to maneuver the stressful conditions while others might succumb to the pressure. Poor leadership from the top management may execrate the employee’s issues. Case in point, employees may lack the much-needed motivation for them to perform if there is a supervisor that engages in punitive and aggressive behaviors that results in harassment in the workplace. Thus, it is the responsibility of the management to ensure that employees receive dignified treatment concerning their work.
3.2 Owners And The Board
Owners and the board might present some challenges and hamper the normal functioning of a business. Albeit their significance in corporate governance, a company may be affected due to owner’s conflict over money. Also, the succession of power from one owner to the next may present challenges to the normal functioning of a business. The board may affect the normal operation of the business when they act “within the best interests of the company or shareholders” (Piekkari, 2015, p.29). Serving in the best interests of the company or shareholders may lead to decision making that may not augur well with the managers or employees. The board or owners to make radical decisions, such as adding benefits to the owner or the board, leading to misuse of power, by misuse of the term. Such abuse of power may be in contradiction with ethical decision-making. Case in point, Bank of America board of directors have implemnted some of the worststrategic decisions in corporate history (Tobak, 2012). Some of the bad decision includes outrageous executive bonuses and taxpayer handouts. It is also important to note that owners and the board must act in good faith for the benefit of the company as a whole. Thus, the owners and the board can influence the normal functioning of the business.
Owners and the board should maintain an upright cycle of trust, respect, and sincerity with employees so that the business can operate normally. Successful business leaders encourage teamwork and chemistry between workers that is not easy to quantify (Piekkari, 2015, p34). The cycle is broken when the CEO does not trust the owners or the board with sensitive information and chooses not to share with the board and the owners. Efficient management business, the owners and the board have a responsibility to insist on receiving adequate information.
3.3 Customers
For successful management of a business, it is important to consider customer satisfaction. Currently, there is a stiff competition in almost all industries and many competing brands. It is essential for a business to understand that it is their interest to keep the customers happy. Ensuring customer satisfaction is a crucial step that provides a company gains a competitive advantage (Korschun, 2014. p.24). A business achieves a competitive advantage by ensuring its internal process allow and promote customer satisfaction. That involves forecast of the future, and the conversion of the customer needs to sought-after solutions. Achieving such a resolution required the management team of a business to ensure interaction or integration of customers in the innovation process.
3.4 Contractors
The contractors assure most inputs in a business. The contractor may face competition from other contractors who offer better services to an organization, but may also happen vice-versa (Yeoh and Popovič, 2016, p.139). No matter the scenario, the business must strive to ensure that they have an efficient input supply system. Without a proper input supply system, a company may fail to meet the customers’ expectations and possible delay of services. Hence, it is crucial for the management team in the organization to ensure that a proper business relationship with contractors is maintainable.
3.5 Competition
Companies that intend to solidify and grow their [position in any industry must observe their competitors at all times. After careful observation of the competitors, it is possible for an organization to come up with ways that outsmart the competition (Korschun, 2014, p.31). Also, an organization can use the gathered information and find ways to buy party of their competition. It is essential for an organization to be aware of the evolving global competition and global economy. Competition has become more intense due to the availability of many options for selling, buying, and hiring. The normal operations of a business can be adversely affected if a company is outsmarted or bought by their rivals.
Again, competing with larger companies can be a nightmare to smaller businesses. Large companies can hire more workers even from other countries by using an online platform while the more modest company may struggle to keep their existing workforce satisfied. According to Korschun (2014, p.31) competition is regarded as an internal factor due to the struggle that businesses keep up with during harsh economic times. Because of too much competition, a company can choose to charge far less than their rivals and provide work, goods, or services that are potentially poor in quality. The business environment may be filed with a lot of competing companies that steal potential profits and reducing the generated revenue of a particular company.
3.6 Financial Organizations
The effect of economic organizations is one of the factors that have a visible impact on a business environment. Case in point, exchange rates between two individual banks can result in losses or profits. The most critical role of the financial institutions in business operations is ensuring functionality of day to day activities (Benn et al., 2014, p.186). There are different types of financing, and they affect business function differently. For instance, equity financing requires repayments at regular intervals and some management interest in exchange for upfront financing.
3.7 The Government
Governments have the potential to exact direct or direct effects on business functions. For instance, the government may decide to offer subsidies to companies. Conversely, the government may punish unlawful behavior or choose to give extra tax-refunds. An organization’s management team must manage their relationships with the government to save valuable company finance (Ulrich and Dulebohn, 2015, p.192). The government actions may affect a business’ operating income and have a great impact on a company’s internal process.
4.0 External Factors (Macro Environment)
Similar to a person’s life, some factors affect the lives of organizations, and the organizations cannot do anything to stop the effects. Albeit there are more than three factors in this category, the paper will only focus on the main ones. Below is a discussion of the three main elements.
4.1 Technology State
Technological advancements may rake in millions for one company and have the potential to take away millions from other companies. An organization that leads to technological innovations may make millions, other companies may learn and follow suit, and rivals might go bankrupt. A good management team must be able to identify the effects of various changes in specific industries and embrace technology (Chen, 2014, p.329). viedo rental industry is an example of an industry that has been changed dramatically due due technological advancements. Companies such as netflix are affected by pirating activities that seem to be a persisting problem (Danaher et al., 2015 p.14). Embracing technology innovations is essential for a company that seeks to gain an edge on the competition. Recent technology advancements have influenced significant changes in how businesses are operated.
4.2 Social-Cultural Environment
To manage an organization, a manager must be aware of the diversities involved in this category. For instance, a company in France may not have to produce as much as a company based in China due to the difference in population (Hamilton & Webster, 2015, p.47). Considering that there are social and cultural differences between the two countries, the community alone is a significant difference (Williams, 2017, p.97). Customers in different parts of the world may have different preferences due to the difference in customs, beliefs, and practices. The social-cultural environment may affect a company’s decision-making process and influence the way a company interacts with its customers and the markets.
4.3 Political-Legal Environment
The effects of this particular factor are evident due to the many political, legal forces i...