The Process of a business establishment is a tough challenge and to make it favorable, creating a proper business environment is essential.
A successful business can’t possibly function in a vacuum because a brand that remains passive and never applies the changes of the business environment is bound to fail.
Constantly changing and monitoring the environmental process is vital for any business to survive and prosper.
Moreover, the business environment is directly connected to your staff’s productivity.
Definition of Business Environment
A company’s operating system is affected by the combination of internal and external factors, that include: economic and social trends, technology improvements, suppliers and clients, government activities, management, employees and business regulations.
Given the fact that there are only two environmental factors, internal and external, every company must try to maximize their control over these components because leaving them without attention will literally destroy your business.
So, to learn how to effectively manage our business environment, firstly, we need to acquire knowledge on internal and external factors.
Internal Business Environment
The internal business environment emphasizes on factors happening within a company that impacts the success of an operation.
Apart from external factors, you have the power to control the internal and managing to dominate it, your business’s success is inevitable.
One of the vital parts of your internal operation is company leadership. Choosing the right way to lead, will increase the chance of success.
Employee Attitude – Your employees are your way to success. Always check, whether your staff is motivated or not, because it dramatically affects your business’s productivity.
In a high-performing workplace, employees not only work hard, they cooperate, that results into breeding unique ideas.
Implementing wise team building activities can help to achieve such attitude.
One head is good, but two are better.
Maintaining good relationships between and within departments can also boost the productivity and effectiveness of your workplace.
Internal factors include the inner strengths and weaknesses and it can influence how a business faces its goals. These are examples that are commonly addressed as typical internal factors:
- Finance. For example, investing and funding.
- Physical Resources. For instance, location and facilities.
- Human Resources. Like volunteers and staff.
- Natural Resources. For example, copyrighting, trademarks and patents.
Now, let’s discuss several internal factors that can affect your business.
Operational and Administrative Procedures – Having an outdated information technology (IT) and keeping inaccurate records are the number one priorities to be rebuilt.
Because it directly affects your public image and customers will see as an unreliable identity.
Innovation – In order to withstand the competition of the 21st century, innovation is essential to be ahead of others. The forms of innovation may differ from marketing to PR strategies.
Training your staff and improving their welfare can also be considered as an innovation. Frankly speaking, using your creativity is the best way to keep up with the technological advancement.
Financial Risks – Your company’s financial structure and business transactions are on what your risks depend on.
Moreover, dramatic changes in interests and heavily relying on certain consumers may negatively impact your brand.
External Business Environment
The external environment refers to factors that happen outside the company and affects its functionality. Some external elements might need marketing adjustments or organization, to stabilize the situation.
Though, unlike internal factors, monitoring and adjusting external elements is hard, because it’s solely depended on the business environment.
Here are the five most commonly discussed external factors:
Government – Government regulations play a vital role in your business by introducing new regulations that might prevent you from scaling your company.
For instance, if your company is oriented on import/export and the government implements regulations like changing the packages or adding quotas, will increase your unit costs or will limit the amount of product you can import/export.
Economy – Your company must be effective in monitoring the economy. Economical factors determine how much money to spend on growth, how your product markets and which market you’ll be able to pursue.
Competition – You competition significantly affects the way you do business. You have the choice to find a field where competition equals to zero or enter a market where rivalry is fierce.
Withstanding the competition is partly depended on your competitors mistakes, when you must fully take the advantage of the situation.
Public Image – Any scandal information leaked, negatively affects your company’s public image and it severely damage your sales.
On the other hand, positive news can boost your product sales and strengthen your authority among the society. Public opinion can be influenced through effective PR campaigns by spreading useful and informative news.
Customers – Influencing your consumers through marketing strategies is an essential part of the external business environment.
Maintaining good relationships with your clients can increase your sales and engagements.
So, market research is widely used to determine, whether certain changes will increase the number of sales or not.