Impact of External Environment on Businesses

Topics: Natural environment, Environment, Economic system Pages: 5 (1366 words) Published: April 10, 2013
* Impact of external environment on Business*
For success in the present world, one need to consider not only the internal environment of the company consisting of its resources and employees, but also needs to consider the external factors. These aspects cannot be stopped but one can adjust accordingly as per the changes in the economical, social or political pressures. These are the external factors which consist of: • Opponents or competitors • The changing economic structure • Impact of the society • Financial arrangement • Legal or political system • The impact of the environment Opponent's procedures influence the capability of work in earning profits, as the basic aim of the opponent is to get advantage over the other which is obtained by either diversifying the existing products and services or by finding means to offer better options for the same worth of money. There are three stages of opposition existing in the present world organizations which can be either having a straight competition when the associations are challenging for the similar customers with the analogous products for example grocery or bakery items. Or when there is a rivalry existing between goods that can be replaced with one another for example butter for margarine. Similarly when consumer's purchasing power is the main attraction for the producers it results in competition between organizations for example the entertainment sector. The allocation of the scarce resources is handled by the organization comprising the economic system. Economy is part of a nation which is expected to under go phases of progress by leaps and bounds. When the economy is in a flourishing stage lifting the standards of living resulting in the growth of the business. On the other hand the society is a foundation of inspirations, outlook and activities which are a part of the human affairs. However the business is subjective to change by the actions of customer because of their approach and activities which alter depending on various factors such as maturity level, populace, type of vocation, and spare time activities. Alternatively fiscal classification smoothes the progress of trade alternates. Activities dealing with money basically move around producing, having a loan, expenses and banking. For the lubrication of the wheels of commerce, capital is considered to be the main oil. Monetary doings engross production in a network of contacts linking fiscal bodies which consists of banks, people or companies who grant loans or to whom money is given as advance, clients and contractors. A main factor affecting the business is the interest rate because it is directly proportional with the cost of the company. The elevated the rate, more will be the expenditure to act as a stop on payments in the economy. The rules and regulations created by the legal system provide the framework on which the organization runs. Administration policy of any nation shores up by promoting activities like ventures while puts off others which result in polluting the natural environment. In contrast the environment is made up of all the nature's gifts bestowed upon us ranging from land to water and to air which has any sort of life in it. Progressively more productions have turned out to be alert of the affiliation between their cost-effective movements that is composing produces and providing assistance for earnings making sure the environment is not at stake at any cost.

If there is anything that is stead fast and unchanging, it is change itself. Change is inevitable, and those organizations who do not keep up with change will become unstable, with long-term survivability in question. 

There are things, events, or situations that occur that affect the way a business operates, either in a positive or negative way. These things, situations, or events that occur that affect a business in either a positive or negative way are called "driving forces or environmental factors." 

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