The business environment has various factors that impact the company at this time. The dynamic of business makes the business environment be affected, and a company needs to take decisions. This decisions can include; economic situation, demographic change, government regulation, change in taste, and change in technology. These environmental factors can help a company use a PESTLE analysis to counter the impacts. The factors call for the company to develop strategies for their positioning, segmentation, and target market. This can involve breaking the market into groups of customers that have similar tastes. The positioning and targeting of the market can help the company to focus on limited resources so as to develop the products, people and customers want. Targeting the market will help customers to buy services and products of the company as they are what they prefer in the market.
The legal and political factors like government regulations can affect the operation of a company. The laws are placed, by the government, to make the businesses practice fairly. Most governments enforce their presence to promote fair competition and trading practices (Thompson 23). This makes the company to trade carefully so that the profit margin is not affected. In addition, the company needs to discounter a strategy so as to find a way of maximizing the profit as a result of the laws that the government impose. This needs practices that keep the reputation if the company to the customers. The company has to look for alternative methods of stopping rivals from venturing into their market or surrounding location where they have stores. This needs to be done in time because the laws and regulations can affect the growth of the company.
The economic factors in the businesses environment can affect the company’s operations. The economy of a country can experience a worse situation where the economy declines such as credit crunch. The situation has an impact on customers and business as people do not have disposable incomes. This makes people focus on saving instead of consuming. The result is to have an impact to the company as performance is affected. This can cause heavy discounter so that customers can afford their products and this needs strategies to attract more customers.
The social cultural factors of the business environment can be unmanageable variable to predict. The effect of credit crunch has an impact of peoples spending. This can change the notion of people and hence change their lifestyles so as to be healthier while cost saving. The company can react by making their products cheaper by advertising strategy, and this can make the company gain reputation with their customers.
The technological factor in the business environment can influence the dynamics of the company. This can cause the creation of new services and products by the company for new business opportunities. In addition, the company can reshape their structure so as to keep their competition and productivity (Hill 54). The company has to embrace the advancements into a competitive edge and opportunities. This can be possible by the company being aware of the novel technologies and how they can be implemented to better their profits and advantage. The company can employ the use of the internet and encourage online shopping by their customers so as to create more business opportunities.
The environmental factors of the business environment involve the resources and nature system that the company requires. These factors are affected by the human activities. The company needs to save energy and related renewable resources. This can call for recycling of some of their activities in the environment that they operate. Moreover, the company can take advantage to appeal to their customers as environmental responsible firm. The company can do this by funding green initiatives.
The company can also position and target the market segment by looking at the micro business environment. This environment is the internal environment that impacts on the firm’s competitive advantage. This has a direct impact on the company’s strategy. The competitive environment requires profitability, growth, and survival. The company has to prepare a structure of opportunities and competition to keep in business. This requires strategies to manage factors that include; threat of substitution, buyer’s power, supplier’s power, rivalry, and threat of new entry.
Hill, Jones. Strategic Management An integrated Approach 5th ed. New York: Houghton
Mifflin, 2001. Print.
Thompson, Machin. AS Business Studies 1st ed. London: Harper Collins Publisher, 2003. Print.