Information technology has a very big impact on the development and location of industries all over the world. The new innovations in the Information field like the advent of internet have taken the whole process of industrialisation to a new level. It was thought that with the introduction of internet, geographical location of industries was going to be affected. (Brickley, 2004) This has had a small effect but not so great as it was initially thought since there are so many factors that are considered when selecting the location of a particular kind of business. The factors which affect the geographical location of businesses can be grouped as either physical or human and economic factors. The development of IT does not play a very important aspect as far as the physical location of industries is concerned. (Bannock et al, 2003)
Competition is a very important factor in a business environment. Competition should not be avoided as it gives a very healthy environment for business operations. In places where competition is prevalent, consumers are the ones who benefit the most. In return, quality of services and goods manufactured is greatly increased. When a person tries to avoid competition, then he/she will also be avoiding customers. (Brickley, 2004) When there is a competitor in place, then there will be a large pool of customers in the vicinity. This is the main reason why many industries tend to put up in places where there is competition.
Other factors which affect the physical location of industries include:
a. Raw materials – Most factories which deal with raw materials which are heavy and bulky to transport need to be located close to these raw materials
b. Energy supply – Different machines in the industries need some source of energy so as to work. Most factories in the past were situated near the source of energy which was the coal fields. However, in the recent past this trend has changed as electricity is easy to transmit thus not affecting the physical location of industries.
2. Human and Economic
a. Labour – Many industries are located where a large amount of cheap labour can be found.
b. Market – There is need to locate an industry which produce bulky goods in areas close to their market targets. Industries that provide services to people also need to be located close to the people receiving the services. However this is not a major factor especially to industries that produce light goods which are easy to transport.
c. Transport – There is need to locate an industry in areas that have a good transportation system so as to reduce the costs incurred when moving both the raw materials and the already manufactured products.
However most of the factors mentioned above affected the location of industries pin the past. With the new developments in Information technology, this has greatly changed. The internet enables sharing of information and the movements of people reduced. Transactions can be done remotely. This reduces the costs incurred during transactions. Carrying out market analysis has also been made easier with the introduction of the internet. (Davies & Lam, 2001)
Corporate structure is the layout of the various departments, divisions and job positions which interact to perform the business of the company. A corporate structure is very essential as it ensures that all the important tasks of a company are conducted according to the stipulated guidelines. A corporate structure also helps everyone in an organisation to know where a given issue should be addressed. (Davies & Lam, 2001)
Corporate strategy is the overall scope and direction of a corporation and ways in which its business operations interrelate and work together to achieve some particular goals. (Johnson, 2008)
There are many environmental factors which affect the operation of businesses in different ways. The factors can be categorised as either external or internal environmental factors. The internal factors are factors which are within the company and can be controlled by the company’s management. (Davies & Lam, 2001)These factors include: Organizational culture, leadership and manufacturing factors. The external factors are not under the control of the company. They include social environment, political conditions, competitors of the company government regulations, demographics of people, resources in an economy and accounting agencies. (Nellis, 2006)
External environmental factors:
The external environmental factors that affect a business establishment include:
Competition provides choice to customers. In order for a business to gain increased share, there must be a proper analysis of the competitor strengths and weaknesses so as to know how to counter any challenge that may result from these competitors. (Johnson, 2008)
They are the back bone of the success of any business establishment. A company needs to keep changing customer views, attitudes and change in demand for products and services. (Johnson, 2008)
There is need for a company to play a proper analysis on the types of suppliers that are to provide them with goods. If this is not properly done, they may end up being exploited by these suppliers thus reducing the amounts of profits they are to get. (Johnson, 2008)
d. Economics and Geography
These types of environmental factors impacts businesses that are beginning or trying to expand. There is need for a business establishment to take note of the kind of economic situation in the country so as to predict the performance of their goods in the market. A good analysis of weather and climatic conditions also needs to be conducted so as to know whether establishing a business at any given location is viable. (Johnson, 2008)
Influence of environmental factors on corporate structure and strategy
Environmental factors, both external and internal have a very big impact on the corporate structure and strategy of an organisation. There is need to carry out a research on the environmental factors mentioned above. After a comprehensive research has been carried out, the senior management of the company will therefore embark on ways of restructuring and strategising on the company’s operation. The company’s corporate strategy and structure will have to be changed so as to accommodate all the environmental factors which may be prevailing. If a proper restructuring is not done, then there is a likelihood of the company failing to meet its objectives. There is need for the right managerial decision to be made so as to ensure the success of the business. The managerial decisions usually affect the corporate strategy and structure of a business.
Process of Business planning
Business planning is a very important aspect in the operation of a business. In order to have a successful business, there is need to carryout proper planning for the business. The process of business planning should be detailed and systematic. There are five steps which are very essential when writing a business plan. They include:
This involves conducting a detailed research into the industry. The research will involve the types of customers expected, competitors and the cost of business. When conducting the research one can consider researching on databases, direct interviews with potential customers or other entrepreneurs who may or may not be operating the same kind of business. The research findings should then be documented and carefully organised for future reference.
This is the second stage when planning for a business. Based on the information gathered from research, it is easy to formulate options of strategising. Strategy usually pulls from the best practices of the industry.
This is the third process to be taken. It involves performing some calculations on the amount of revenue that can be used to implement this strategy and the amount of money that is expected to be generated from the implementation of the business establishment. During this stage you need to sketch out the financial situation which involves looking at whether revenues can be compensated from the amount of money expected to be collected from the project. At this point you need to insert your financial assumptions and start up costs into a financial model.
This section involves drafting through the narrative of the different sections of the plan. The process of drafting is usually not a hard process since at this stage most of the work has already been done at the initial stages.
e. Revise and Proofread
This is the last stage which involves revisiting the entire plan to look for any ideas that may not be clear in the process of planning. Proofreading involves looking at the plan for grammatical mistakes, formatting errors and any mistake that may arise.
Policy making process
Policy making is a course or principle of action which is adopted or proposed by a party or a business enterprise. A policy can take a different range of different forms. For the case of a business enterprise, they are usually developed by the top management. A thorough analysis has to be conducted before deciding on which policy is to guide the business establishment.
The process of business planning and policy making is very important as it helps to ensure that the business to be established is well aware of the challenges that may come its way. Business planning and policy making helps device means and ways of tackling such problems tat may occur during the operation of a business.
Reasons for changing a business plan and a business policy
Business plans and business policies should not be a hindrance towards the achievements of your goals. A change in environment and customer trends can prompt for a change in the business policy or business plan depending on the current situation of the business.
A business plan is an ongoing blue print or plan of what one may want to accomplish and how to accomplish it. Goals of the business and the business environment will always change. Whenever there is a change, the business plan will also have to be adjusted accordingly to ensure that is always up to date. Some of the reasons that can prompt for a change in business plan and policy may include but not limited to the following.
a. Taking a new path
Depending on the current situation of the business and opportunities there may be need for one to take a new path different from the one initially planned during the start of the business. During this time, a business plan can be changed so as to reflect the new change in business activity. Financial data also needs to be changed so as to accommodate the new changes. (Nellis & Parker, 2006)
b. Decision to include new marketing Strategies
New marketing strategies will affect the way a person’s business operates. A business plan needs to be changed to reflect the new changes in marketing strategies. The new marketing strategies could be initiated by new innovations in the Information Technology field which can prompt one to change so as to accommodate the changes. It is important to note that even if the new marketing strategy does not cost the business any additional amount of money, it should be included in the business plan as it is likely to influence the operation of the business in future.
c. Forming a partnership/ new management
There could be a change in terms of the business management. It doesn’t matter the person that you are teaming up with but the business plan should be changed so as to include the new entrants into the market. (Nellis & Parker, 2006)
d. More competitors
Depending on the number and the nature of the new competitors into the market, the operations of the business will be greatly affected. Whenever there is a new pool of competitors into the market, there is need to adjust the business plan so as to accommodate that fact. This may also involve adjusting your marketing strategies so as to counter the new competitors. These adjustments have to be reflected in the business plan.
e. New Business model
Business models always change with time. Whenever there is a change in business model, several changes have to be made to the business operations to accommodate the new change in the model of the business. Changes which are made to the business model usually affect the business finances, clients and customer relationships. These must all be reflected in the business plan.
f. Changing markets
Markets for a business will always change. There may be some new opportunities arising or some of the products you produce may perform poorly with time in terms of sales. Whenever such a problem occurs, there is need to change your business plan so as to accommodate the changing market trends. (Nellis & Parker, 2006)
g. New products
After carrying out a market survey, you may realize that introducing new products into the business can boost the overall performance of the business. Once you realize that, you may introduce a new product into the market. The business plan also needs to be changed to reflect the changes made to the types of goods and services you offer. (Nellis & Parker, 2006)
There is business plan software that can be used to make changes to the business plan whenever required.
h. Legal requirement
The process of updating a business plan to reflect the current status of your business is a legal requirement. Banks will ask for an updated version of a business plan whenever you want to borrow money from the banks. You should always ensure that your business plan is constantly updated to reflect on the new changes that may occur in the business. (Nellis & Parker, 2006)
The location of business enterprises depend on a number of facts. Several industries are located close to the market, raw materials and accessible places. Information technology has played a major role in ensuring the success of businesses as transactions are done faster with a corresponding increase in accuracy. (Lipczynski, 2004) However, the introduction of information technology into the business environment has not played a major role in geographical relocation of industries. This is because the industries rely on other factors which are not related to information technology. (Ormerod, 2006) Many industries are located near their competitors. This is in the attempt to get more customers and improve on the quality of goods and services which are supplied to the market. Whenever there is competition, there is always a corresponding increase in the quality of goods and services offered. . (Lipczynski, 2004)
1. Bannock G et al (2003) Dictionary of Economies (8th Edition) The Economist/Profile books
2. Brickley J et al (2004) Mangerial Economies and Organisational Architecture (4th Edition) McGraw Hill
3. Davies H & Lam PL (2001) Managerial Economies (3rd Edition) Prentice Hall FT
Johnson G & Scholes K (2008) Exploring Corporate Strategy (8th edition) Prentice Hall
4. Kay J (2003) The Truth about Markets. Penguin Allen Lane
5. Krugman P (2009) The Return of Depression Economies Penguin
6. Lipczynski J & Wilson J (2004) The Economies of Business Strategy Planning Prentice Hall FT
7. Nellis J & Parker D (2006) Principles of Business Economies (2nd Edition)
8. Ormerod P (2006) Why most things Fail, Foster & Faber
9. Wheelan T & Hangar JD (2008) Concepts in strategic Management Prentice Hall
10. Worthington I et al (2001) Economics for Business Prentice Hall FT