|The Business Environment | | | |Karron Lay | |February 2, 2013 |
BUSINESS IN THE ECONOMY
To understand how a business affects the economy we must first understand the meaning of what a business is by definition. A business is “an organization or enterprising entity engaged in commercial, industrial or professional activities”. (Investopedia, 2013) A business or firm produces the products or services that consumers need, want, or desire. Most businesses or firms operate for profits, which is “the financial reward that comes from starting and running a business”. (Kelly & McGowen, 2012) When a business is not making a profit they are operating at a loss. This could be due to the amount of funds that a business or firm must cover such as their expenses to produce products or services. If the business or firms' expenses are more than the profits, then business or firm is operating at a loss. If a business is running at a loss it could be due to key economical dimensions such as the economic environment, competitive environment, technology environment, social environment, or global environment.
How a business or firm deals with these key economical dimensions can make or break them. If the economy is in any way in a fiscal crisis, many consumers can be unemployed or saving their earnings for harder times to come. With the competitive environment, if more than one business or firm is offering the same product they must compete with each other to get the consumer to purchase their product. Most businesses or firms rely on advertising to promote their product and make it appealing to the consumer so they will be more motivated to purchase their product. They will also exploit their competitor’s weakness to show consumers that their product is not up to the standards that they require. This could be the way the company treats the environment, if they give to charity, or if they care about global issues.
With business technology which “includes the tools that the businesses can use to become more efficient and effective”. (Kelly & McGowen, 2012, p. 11) If the business or firm doesn’t keep their producing tools current it could affect their production of the products and could lead to slower production. This could lead to the company making less profit and losing to the comparators that are using current technology to produce their products.
The social environment is the “values, attitudes, customs, and beliefs shared by groups of people”. (Kelly & McGowen, 2012, p. 11) It also covers the demographics of a population. This is very important so that they reach each and every person that could be a potential customer. Knowing the diversity of the population in the areas that the product will be offered to can help in the way you advertise your product. A business can run as a for-profit or as a non-profit entity.
Lastly, we have the global environment. In this global environment will allow your product to be introduced into other countries and potentially increasing the business or firms economical funds. Thought having your product introduced into the global environment can be costly due to tariffs that will be imposed on the transportation of the product and the exchange rate from one country to another. With the free trade and the technology of the internet, many times the costs of shipping the product to other countries fall to the consumer. This could make the...
Cited: Businessdictionary.com. (2013, February 02). Retrieved from social Responsibility: http://www.businessdictionary.com/definition/social-responsibility.html
Fritz, J. (2013, February 02). about.com. Retrieved from How Is a Nonprofit Different from a For-profit Business?: How Is a Nonprofit Different from a For-profit Business?
Investopedia. (2013, February 02). Retrieved from http://www.investopedia.com/terms/b/business.asp#axzz2JmilHtdZ
Kelly, M., & McGowen, J. (2012). BUSN 4, 4th Edition. Mason: Cengage Learning.
P&G. (2013, February 02). Retrieved from Social Responsibility: http://www.pg.com/en_US/sustainability/social_responsibility/grant_application.shtml
United States Department of Labor. (2013, February 02). Retrieved from Bureau of Labor Statistics: http://www.bls.gov/
Dr. Matt Keogh
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