Influences on Business

6 Key excerpts on "Influences on Business"

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  eBook - ePub

  Strategic Marketing

  An Introduction

  • Tony Proctor(Author)
  • 2002(Publication Date)
  • Routledge

    (Publisher)

  Organizations need to respond and adapt to changing environmental conditions if they intend to survive. They can even instigate changes in the environment which are in their own interests. Both demand an understanding of those factors and forces which bring about change in the environment. Ideally, an organization should adapt to changes as they occur, even anticipate them in advance or systematically instigate changes to its own advantage. An inability to do so can put organizations in positions where their shor t- and long-term survival is jeopardized. The business environment is the setting within which a business operates, formulates policies and makes decisions. It is usual to distinguish between the inter nal and the exter nal environment. The for mer usually comprises the various assets and resources possessed by the organization. That is its workforce, plant and machiner y, know- how, financial resources, etc. The latter refer s to people, institutions and developments, etc. which exer t an external influence on how the organization performs. Of course, with the emergence of strategic alliances and networks such a definition of boundaries does tend to become more blurred.

  Firms need to know all about the business environment in which they operate. It is essential that they can anticipate the changes that are likely to take place in the marketing environment in the foreseeable future. However, as noted above, it is not simply a matter of adapting to change. Organizations can also exercise their own influence on the environment. Among the ways that this can be achieved is the development and commercialization of new technological ideas. These new technologies then become par t of the business environment and in their turn have an impact upon what other organizations can do.

  Considerable control can be exercised over its internal environment by a firm, but a firm cannot exert control in the same way or to the same extent over the external environment. It can only attempt to influence it. There are various ways of influencing events in the external environment. These may include activities such as lobbying among leg islative g roups. The latter is what organizations often do when tr ying to influence the for mulation of European Community directives which can have an impact on such things as product design safety standards, etc.

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  eBook - ePub

  Environment and Business

  • Alasdair Blair, David Hitchcock(Authors)
  • 2004(Publication Date)
  • Routledge

    (Publisher)

  The individual business is not a passive player in this relationship. Most can do little to influence the external environment—it is the province of only the largest of organizations that they can sway the market or influence government legislation. The individual company will impact on the environment in a variety of ways. In later chapters we will examine different strategies firms can adopt which will either increase or minimize any impact. We would expect that as the impact on the environment increased, so a firm would become more concerned with its relationship with the environment, although this may not be the case. We make the point that business has two effects on the environment and environmentalism. First, it changes the environment either directly or indirectly as a result of its commercial activities. Second, it influences environmental legislation and the attitudes of government, society at large and other organizations. Businesses are not only subject to influence from other organizations but also from the collective pressure exerted by individuals in society. The environment influencing business In Chapter 4 we consider more fully the ways in which the physical environment influences business operations. These are mainly concerned with either systematic changes in environmental conditions, e.g. global warming, or as a result of sudden and unexpected ‘natural’ events such as floods, storms or earthquakes. What is important to realize is that business behaviour is adjusted to expected variations in physical conditions. Just as companies successfully operate within an envelope of changing economic conditions—economic growth, inflation, unemployment, etc., so they operate within an envelope of varying physical conditions. Calamitous events present major problems and disruptions to their operations—be they physical or economic calamities

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  Organisations and the Business Environment

  • Tom Craig, David Campbell(Authors)
  • 2012(Publication Date)
  • Routledge

    (Publisher)

  A starting point in analysing political factors might be to examine the stability of the government and therefore its ability to implement its policies. In the UK, for example, the Labour party came to power in 1997 with a landslide majority and was re-elected for a second term in 2001 with another landslide majority. This followed 18 years of Conservative Government and in both instances the size of each party’s majorities in the House of Commons was sufficient to ensure a longevity that enabled the respective governments to implement their polices and introduce new legislation. Contrast this with the instability of Harold Wilson’s minority Labour Government of 1974 when compromises were needed to obtain support of the other parties. It follows that organisations require knowledge of the political agenda and how they will be affected by government actions. It should also be noted that while some elements of the political environment will act against a company others will work in its favour. For example, an increase in corporation tax will add to an organisation’s costs and may lead to a reduction of the workforce while tax incentives for research and development could boost future competitiveness and growth for some industries.

  Economic

  In the economic environment, changes in fiscal and monetary pressures can manifest themselves differentially across business sectors and bring about the need for varying degrees of organisational change. For example, reductions in interest rates can encourage house purchases and provide a stimulus to the building trade, but that same reduction can encourage greater debt levels via borrowing and may have a negative impact on savings and investments in the banking and finance sectors. Organisations concerned with imports or exports will be affected by exchange rates and trade tariffs while the amount of disposable income – influenced by employment levels, taxation, interest rates and inflation – will impact upon consumer spending, thereby affecting the demand patterns for an organisation’s products or services.

  Sociological

  Sociological influences, particularly changes in the country’s demographic profile such as the declining birth rate, an ageing population and the gender balance of people available for work, combined with changing social values and norms are key drivers for organisational change. For example, organisations may have to change working practices to allow flexible work schedules in order to attract and retain employees who have to combine work and domestic responsibilities. Reductions in the number of people available for work, together with their geographic concentration and density, can lead to skill shortages in certain occupations and locations. This can pressurise organisations into seeking technological solutions, such as automation or perhaps moving the operations to a new locality where labour is available. A new locality can of course mean a change to another country where there is less employment legislation and/or labour costs are lower.

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  Simple Tools and Techniques for Enterprise Risk Management

  • Robert J. Chapman(Author)
  • 2011(Publication Date)
  • Wiley

    (Publisher)

  Part IV External Influences – Macro Factors

  Businesses clearly do not operate in a vacuum but in an ever-changing scenario where changes in the operating environment are beyond the control of any individual business. This part of the book examines the way in which external “macro” influences impact businesses. These macro factors are distinct from micro factors inasmuch as they are events that occur at both national and international level. Micro factors influence individual businesses or consumers in the domestic market. An understanding of how these external macro influences impact on a business is important as it provides an appreciation of how a business is subject to constraints and exposed to opportunities. Macro factors include the state of the economy, the environment, the legal framework, political structure, market conditions and social factors. These subjects are discussed in the following chapters and describe the sources of risk included in the risk taxonomy included in Chapter 9 (see Table 9.1 ). The sequence of the chapters follows the sequence in which the subjects appear in the taxonomy, as shown in Figure P4.1 . An extract of the taxonomy is given in Table P4.1 for ease of reference and assimilation.

  Figure P4.1 Structure of Part IV

  Table P4.1 Business operating environment

  Passage contains an image 21 Economic Risk Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted. (Albert Einstein)

  This chapter examines economic risk , the first of the six macro influences within the section of the risk taxonomy called “business operating environment” described in Chapter 11. Businesses do not operate in a vacuum. Hence, it would be difficult to comprehend an enterprise risk management process that did not address economic risk. The subject of economics relates to the allocation of resources. Economic business risk emanates from the performance of the national economy within which a business operates and the way its government elects to influence the economy and solve the basic economic problem of scarce resources and competing needs. Economics has such a large influence on business performance that managers must take steps to understand and predict economic phenomena and respond accordingly. While the subject is vast and it is only possible to examine some of the rudimentary elements of the body of economic theory here, any review of enterprise risk management that did not address those aspects of economics regularly encountered by businesses would clearly be incomplete. The structure of this chapter is illustrated in Figure 21.1

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  Unlocking the Business Environment

  • John Brinkman, Ilve Navarro, Donna Harper(Authors)
  • 2014(Publication Date)
  • Routledge

    (Publisher)

  After the key factors have been identified, the next step is to analyse how each one of them impacts on that organisation and decide whether it represents a threat that needs to be minimised, or an opportunity that can be taken advantage of. When analysing economic influences you will find that they have varying degrees of importance for different organisations. For some organisations it might be the level of lending of the banks that is most important, while for other organisations it might be the impact of oil prices, or the state of the national economy. The impact of potential economic developments may also need to be considered.

  It is important not only to describe factors, but also to think through what they mean and how they affect the organisation in the present and how their impact on the organisation might change in the future. Considering how and why the present is different from the past can be useful for your analysis.

  Activity   

  Choose an organisation and, using the template below, analyse how the economic environment impacts on your chosen organisation. Top tips:

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    Make sure you systematically consider each of the elements.

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    Then, carefully analyse how each in turn might affect the organisation now and in the future.

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    Assess the likely impact as high, medium or low.

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    In the light of your assessment, consider what action might be appropriate, for example, for any future impacts that seem likely, you might wish to monitor events and/or prepare action plans for the organisation so it is ready to be able to exploit opportunities or minimise any threats.

   

  Table 10.5  Template for analysing the effect of current and future key economic influences on organisations

  10.6   Summary

  The chapter began by outlining the importance of the economy to individual nations and the effect of the economy on individuals, organisations and governments. The term economy was explained and the three main types of economy were outlined. The focus of the chapter on the macroeconomic environmental factors was made clear. Key economic influences were introduced including international influences, national trade cycles and local economic effects. In addition to these, economic influences, key economic factors such as inflation, interest rates, exchange rates and levels of unemployment were examined in some detail. The chapter concluded by pointing out some emerging ethical and international issues around the macroeconomic environment.

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  Technological Capability and Learning in Firms

  Vietnamese Industries in Transition

  • Tran Ngoc Ca(Author)
  • 2019(Publication Date)
  • Routledge

    (Publisher)

  8 External factors and learning activities External factors are divided into four main groups: macro-economic policies of the government: financial and taxation policies; monetary, banking and investment policies; policy of labour and management; and trade policy. market factors : both domestic and international. supporting infrastructure : R&D, education and training; activities of other organisations which have a bearing on factors such as information, documentation, consultancy, standardisation, quality control, industrial property rights, etc. other social and cultural factors. These four groups of factors will be the main influential categories to exercise impact on the business and learning efforts of firms. At the same time, the transition from a planning to a market economy system is the most significant feature of Vietnam, which in turn, has decisive influences on all four groups of factors. Therefore, these influences will be examined more closely, in terms of both positive and to a larger extent, negative aspect. 8.1 Influences of external factors on firms' business activities The ranking of influences of external factors on firms' business activities is given in Table 8.1 : most of the firms indicated that macroeconomic policies and the supporting system were the most influential factors. In the interviews, firms’ managers tended to argue more about the problems they faced rather than overall influences, whether positive or negative

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