Global Factors Affecting Business

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Global factors affecting business
The way of running the business differs from country to country. The marketing, sales and technical skills are required to increase the productivity of business. Business in general is enhanced when people from different cultures find new approaches to old problems, creating solutions by combining cultural perspectives and learning to see issues from the viewpoint of others. Business Environment consists of factors influential to the business operations. These factors are classified into two broad categories. These are:

a) External or Uncontrollable factors of Business environment. b) Internal or Controllable factors of Business environment.

External Factors: The factors those are not controllable at any cost but have to adopt for success of business are external or uncontrollable factors. For example Demography, Political forces, Legal practices, Cultural influences, Technological advancement, competitiveness etc. Businesses are affected by an external environment as much as they are affected by the competitors. Internal Factors: The factors those are related to the internal operations of a business and can be controlled by proper management are controllable or internal factors of business environment. For instance Land, Labour, Capital, Business Location etc.

Global factors influencing business are legal, political, social, technological and economic. Understanding of these factors is important while developing a business strategy. a.Social factors - These factors are related to changes in social structures. These factors provide insights into behaviour, tastes, and lifestyles patterns of a population. Buying patterns are greatly influenced by the changes in the structure of the population, and in consumer lifestyles. Age, gender, etc all determine the buying patterns and understanding of such changes is critical for developing strategies which are in line with the market situations. In a global environment it is important that business strategies are designed keeping in mind the social and cultural differences that vary from country to country. Consumer religion, language, lifestyle patterns are all important information for successful business management. -Religious Considerations – appropriateness of some business ventures – e.g. selling condoms in staunchly Catholic countries -Impact on local communities of business development – availability of jobs, training, environmental impact for these communities -Impact on the environment – can impact on the businesses image -Ethical considerations

-Cultural issues Impact on the environment

b.Legal factors - These factors that influence business strategies are related to changes in government laws and regulations. For a successful business operation it is important that the businesses consider the legal issues involved in a particular situation and should have the capability to anticipate ways in which changes in laws will affect the way they must behave. Laws keep changing over a period of time. From the point of view of business it is important that they are aware of these changes in the areas of consumer protection legislation, environmental legislation, health & safety and employment law, etc.

c.Economic factors - These factors involve changes in the global economy. A rise in living standards would ultimately imply an increase in demand for products thereby, providing greater opportunities for businesses to make profits. An economy witnesses fluctuations in economic activities. This would imply that in case of a rise in economic activity the demand of the product will increase and hence the price will increase. In case of reduction in demand the prices will go down. Business strategies should be developed keeping in mind these fluctuations. Other economic changes that affect business include changes in the interest rate, wage rates, and the rate of inflation. Incase of low interest rates and increase in...
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