The success of the business depends upon identifying the needs, wants, likes and dislikes of the customers and meeting with their satisfaction. Example of this includes reputation, credit worthiness, and image. With constant reviews of new products between friends, consumers speak their mind on Facebook and Twitter, dealing both praise and deadly criticism with record speed. We all live in some kind of an environment. In other words, the theory refers to the differences between behavior. Benefit from global sourcing by foreign firms.
Technically, shareholders elect directors who make up the board of directors. Weaknesses Weaknesses are the areas which have scope for improvement. Let's say you've decided to add a large kitchen to your gas station and offer fresh foods to your customers. Macro Environment: The macro environment consists of the economic and non- economic variables that provide opportunities and threats to firms. The environment surrounding the organism from the outside, that involve physical, social, chemical and biological conditions encompassing the living organism. On the other hand, if a factor prevents the development of the company, it is a weakness.
In a competitive business environment technology is the key to development. Factor 5 Quality of Human Resources: Quality of employees i. This helps in creating a corporate image and strengthens the standard of the firm in the market. On the one hand, the clients can affect the way you run your company or advertise your products with their behavior. Managers must be careful about the technological dimension. If you do not overcome these, your customers might see you as unreliable. To enjoy the economies of scale, firms establish the business in large cities but the Government promotes them to establish their units in backward areas by providing various tax incentives.
What technological developments or trends are affecting or could affect our industry? It will have favourable effect on the business. In this post, we will look at the elements of organizations environment. Import duties have been greatly reduced due to which domestic industries face competition from the imported products. The expectation of the society from the business is increasing. Future: What are significant trends and future events? Business environment j is a set of external factors that affects the business decisions.
On the contrary, in an open and participatory culture, business decisions are taken at lower levels of management, and top management has a high degree of trust and confidence in the subordinates. For efficient and transparent working of the board of directors in India it has been suggested that the number of independent directors be increased. This emphasis on lower taxes is why municipalities often offer substantial tax breaks to a business for several years, in exchange for business relocation into the area. They are the law making bodies that frame rules and regulations. Companies that remain passive in their relationships with other firms and the rest of the world risk losing their position and ending up in the last place. If they have a well-structured and modern infrastructure, but the road to access the company is not well created will be deterrence for the business. Here there are some internal factors which are generally controllable because the company has control over these factors.
Now you have all the necessary information about the two types of business environment. The political-legal environment provides a host of laws and regulations that affect the business affairs. Retrieved on March 27th, 2013, from Birn, R. Technological environment affects the success of firms and the need for technological advancement cannot be ignored. Promoters vision : The promoter should have far sight vision to forecast opportunities and threats in the business so that the opportunities are properly grabbed and threats are diffused off in time. But mission is different from this narrow objective of profit maximization.
Learning more about the factors at work will better equip you. Therefore, to reduce risk and uncertainty business firms prefer to keep multiple suppliers of inputs. Their buying habits, buying capacities, tastes, preferences and education affect business enterprises. These are controlled to offer a constant inside environment and that is called homeostasis. The value system of the promoters of a business firm has an important bearing on the choice of business and the adoption of business policies and practices. It is therefore highly desirable to increase the extent of professional management of private corporate companies. The macro environment consists of general factors that a business typically has no control over.
The informed consumer forces companies to evolve into transparent marketing machines. Therefore, each company also needs to innovate themselves firstly to keep up with the development of the whole world and secondly to make themselves outstanding among competitors. Legislative machinery promotes economic growth, efficiency and equity. More generally, market forms of monopolistic competition and differentiated oligopolies exist in the real world. Internal factors are generally regarded as controllable factors. Demographic factors like size of the population, age composition, density of population, rural-urban distribution, family size, income level, status etc. The structure of the organization also influences the business decisions.
These forces are customer, creditors, competitors, government, socio-cultural organisations, political parties national and international organisations etc. The extent to which you can control them differs. These factors after being figured out are grouped into strengths and weaknesses of the company. Profitability: For each major market consider the following: Is this a business in which the average firm will make money? The factors of production are privately owned and production activities are initiated by the private entrepreneurs. Business environment consist of all those factors that have a bearing on the business. The micro environment consists of the factors that directly impact the operation of a company.
As a consequence of liberalisation and globalisation of the Indian economy since the adoption of economic reforms there has been a significant increase in competitive environment of business firms. McDonald's has implemented the latest plants and machineries at its production units and the most advanced enterprise management systems in its offices like inventory management, customer relations management, , etc. As a supplier: It supplies resources to business concerns. Brought to you by External: The Economy No external factor affects a business more than economic conditions. Various laws are made to regulate the functions of business enterprises. List the strengths all companies need to compete successfully in this market. Legislative measures are also enforced by the Government Pollution Control Board to protect the natural environment.