What do we mean by business environment?
Business Organisations simply mean a group of people working together as a team in a particular organisation by delivering products, goods and services to customer in exchange of profit. But, these organisation are influenced by many factors within the environment in which they operate and said to be the very dominant force in the shaping and moulding of the organisation. What do we mean by business environment? Business environment is a set of influence, which shapes and moulds an organisation. There are number of factor which shapes and moulds an organisation.
In other word, the development and strength of an organisation lies on these seven main influence such as ways of doing thing, rules and regulation, principle and procedures, attitude and behaviour, product and service, framework of an authority and finally the channel of communication. As everyone knows, different people have they own of ways of doing thing because they are not necessary to have the same thought with others and maybe it all depends on some sort of style or tradition, which need to be followed. For an example, a football team has many strategic such as 4-4-2, 4-4-3, 3-5-2 and so on.
But, they use different strategic when facing different opponent or maybe changes their strategic when it comes to a certain circumstance e. g. player got sent off or injured, difficulty in defending, urgency to score, etc. No one can declare a particular method or way of doing thing of organisation is the best. This is because each given set of circumstances requires different solution. Rules and regulation is must for an organisation. Without it, everyone will not be bothered to do what he or she supposes in a proper manner within the dateline.
Let us take a look at this example, which is sound familiar for some of us. Being an APIIT student, everyone strictly prohibit the wearing of T-shirt, jeans, sneakers or slippers, as well as provocative and immodest attire. Principle and procedure are essential for an organisation. Every job or task given must be done according to a particular principle and procedure to ensure a good output or result in return. For instance, let’s take a look at a football team again. In order to score a goal, the ball must be played to one another until someone has the golden opportunity to score a goal.
Attitude and behaviour play an important role for an organisation. Basically, there is two type of business environment, which is external and internal. What do we mean by external environment? External environment is non-controllable environment, which is outside an organisation. This environment can be divided into a number of areas such as politic, economy, social, technology -P-E-S-T- and last not the least globalisation. Political environment refers to the set of law, regulation and government policies existing within a particular country.
Some people argued that this is the most powerful influence at work e. g. if a businessman wants to start up a business in a particular country, first he or she must ensure the political stability of that country. For instance, an unstable political climate in a country will not instill confidence in people and this will in turn affect the business climate adversely. If given an option to run a business in Kabul, Afghanistan or Tokyo, Japan, I am pretty sure that everyone will choose the second option.
Moreover, the tax treaties, which are agreements between governments to avoid, double taxation of profits by the foreign and the domestic government would serve to accelerate the foreign investment in a country. Two main policies are privatisation (where government sells off some of its existing public corporation to the private sector e. g. MAS, Telekom) and deregulation (removal of government redtape and bureaucracy from the operation of the market or better known as duty tax e. g. same rate).
Next, economic environment, which is mainly, emphasizes on customers’ demand for good and services and the resulting supply situation. How an organisation will fare depends on the level of demands for its goods and services. Factors such as buying behaviour, purchasing power, price levels, interest rates, etc. are important determinants of demands. Since, World Cup is this month, let us take another example on football. The football fever starts, as you walk around in the city you can see many football freaks wearing their favourite teams’ jersey.
This clearly indicates the demands for jersey increases as the interest rates increases. Beside that, the state of economy in terms of changes in levels of income, employment, inflation and foreign exchange rates affect the level of consumption and the standard of living. Business organisation themselves can boost demand by extending employment and investment, and conversely they can adversely influence the economy when they cut back on investment or retrench workers. For instance, the current state of economy of Argentina will decrease the foreign investment and.
As a result, many of their countrymen were unemployed and creating havoc everywhere causing a major setback for the government. Social environment is made up of the attitudes, beliefs, customs and values of people in society. Entrepreneurs must realise that these social factors vary with the different classes of people within a country – the rich and the poor, the educated and the uneducated, the liberal and the conservative, etc. For an example, in India the Indians belief and consider the cow as their mother for providing milk. Therefore, they do not eat beef.
But, lately a McDonald outlet in India offers some sort of burger or meal with beef. These turn out to be a disaster for McDonald as many of the citizens got angry and begin to create havoc in the country. McDonalds’ outlet in India finally found a solution. They modified and make slight changes in their recipes, beef burger is replaced by fish burger. An excellent moves which paid off when they got an immediate response from the citizen. This show how important is to know the beliefs and customs of a particular country. It is fool to underestimate the beliefs and customs of a country.
Hence, it has become necessary for businesses to analyse and study carefully these factors and issues if their goods and services are to be accepted. Another important and not a new factor in the overall environment is the technology environment. Its increasing importance and influence is now being felt clearly and powerfully than at any other time. The changes in technology are virtually revolutionising how work is perfomed in factories and offices, and indeed the whole market. For instance, massive advancement in technology and rapid changes in information technology helps to increase the productivity of an organisation.
The usage of hi-tech machines and equipments will greatly influence the success of organization. It simply save a lot of time, energy and helps to cut down number of employees. Organisations that are not able to keep pace with such changes are left behind, and consequently edged out of competition. One area that has emerged as being vital to business organization is information technology. Assume that an organization dealing with thousands perhaps millions customers data, somehow need to use the the technology employed to collect, process, produced, maintain and update the customers information.
Microprocessors have allowed the introduction of small low-cost micro-computers that have household application for monitoring weather conditions. Many industries such as motorcar manufacturers are using microprocessors to control the operation of the car engine. Globalisation environment is an essential factor in organization. With the rapid advancement of telecommunication infrastructure and information technology has forced organization to proceed beyond their national or geographic boundaries in search of ways and means to exploit existing new technology so as to ahead of their competitors.
Speed and quality in addressing the needs of world-wide customers and continuously learning of organisations will greatly influenced the success of organizations. As everyone knows, the current business environment is one where the whole world is seen as one market place, borderless world. In short, the ability to think globally while acting locally. One example is the usage of internet and mobile phone which connects you to people all around the globe no matter where they are.
Market environment is very much similar to the economic environment, but there are a number of distinguish features. Essentially this is the environment of competitors, buyers and sellers. It is important to monitor these three groups of people. For instance, competitors must also be analysed closely with regards to their strengths and weakness. Customers must also be researched thoroughly in order to establishe needs and trends. Businesses should also be constanly on the look out for new products and materials from existing or new supplier.
It actually refers to an organization behavioural system whish is constantly changing as it adapts to the evolving requirement of society. As you can see customers itself influence the demand level because they have the buying or purchasing power. If you look out for mobile phone industries, there are number of companies competing each other to outplay, outwit and outlast one another to become the number 1 leading mobile phone. That is why you can see many mobile phones with different size and outlook out for sales like mushroom to satisfy the customers need.
Finally, lets take a look at internal environment. There are number of area which covers internal environment such as the rules and regulation, employee management, produst and service and facilities. Rules and regulation is must for an organisation. Without it, everyone will not be bothered to carry out his or her duties and responsibilities in proper way. There are many rules and regulations in an organisation such as attire (e. g. wear modest attire), punctuality (e. g. always meet the dateline), behaviour (e. g. must be polite and coorperate with other colleagues).
As an organization, employee management is important to run business systematically. The management is the backbone of an organization thus it needs to be strong to overcome any difficulty. A good management always productive and try their level best to meet their target or objective. Product and service is the most important factors without it business cannot be run. Customers is fussy and choosy, they always want the best product or service. Therefore, organisation must always upgrade their product and service to meet the need of so called customers.
The best quality products with reasonable price always attract the customers. Last not the least, facilities and infrastructures which play an important role too in an organisation. Basically, a high class facilities and latest infrastructures simply help both the organisations and the customers to connect each other. Thus, a country with an excellent network of highways and railroads will definitely be attractive to foreign investment to start business there. It is vital to note that business orgnisation interact with the above environmental factors. This means that the influence and impact is not one-sided.
