Business Environment for External Environment- myassignmenthelp

Question: Discuss about theBusiness Environment for Internal and External Environment. Answer: Introduction Organisational environment include both internal and external factors; it is necessary that corporations scan such markets before formulating any development strategies. The analysing of markets assists companies to identify possible risks or opportunities that they have due to their weaknesses or strengths. Environmental scanning focus on evaluating, monitoring and dissemination the information from both internal and external environment, it is conducted by the top management of a firm. In order to develop and sustain future growth, corporations are requiring analysing the external factors which influence their business. The report will focus on evaluating the external factors which influence the business of a corporation. Further, the report will provide suggestions to reduce the impact of external factors and attain success in adverse market conditions. Background According to Hamilton Webster (2015), business environment includes various types of internal and external factors that impact an organisational business; it is divided into two parts, micro, and macro environments. The micro business environment defines the internal factors which affect the productivity and performance of an organisation. The macro environment factors are external forces which influence the operations of business along with its internal environment (Wetherly Otter, 2014). For example, health and safety regulations created by government affect the internal operations of business. The external environment includes various factors such as political, social, consumer behaviour and competitor strategy. Influence of External Factors on Business Following are few external factors that affect a companys business and operations. Government Regulations and Economic Policies As per Percival, Schroeder, Miller Leape (2015), the political factors refer to the political conditions and governmental activities which affect the operations of a business. The political environment add various risks factors to a business which leads to major loss of capital and investments, political factors have the power to change the result of business transections completely. For example, increase and decrease in taxation is an element of political factors. The government might enhance the tax of few companies and reduce it for others; these policies directly influence the financial position of a firm. Other significant political decisions also influence organisations operations; a recent example is Brexit. The UKs government decided to terminate its membership from the European Union. This decision influences the Cross-Border mergers conducted between British and European companies since many mergers were revoked. The international corporate transactions also impacted because of change in sterling exchange rates (Dhingra, Ottaviano, Sampson Van Reenen, 2016). The dynamic economic environment influences the operations of a business; economic factors include demand and supply, inflation, interest rates, recession and many others (Lim Tsutsui, 2012). For example, change in interest rates of banks might influence a corporations decision if they were relying on large loans. An economic recession changes the purchasing behaviour of customers which might force companies to clear small volumes or reduce their prices. In case of employees, jobs tend to be plentiful during economic boom, and in the slow economy, many corporations adopt harsh options such as retrenchment or layoffs to reduce their operations costs. Consumer Behaviour To successfully sell services or products, a corporation is requiring assessing its customers attitude and their demands. The examinations provide necessary information to a company such as what products are liked by consumers and what factors influence their purchasing decisions (Solomon, 2014). Organisations analyse its customers attitude while formulating product development, marketing, and customer service strategies. The attitude of consumers towards a product defines their goodwill and reputation in the market, therefore, companies use effective advertisement strategies to make their brand a household name. For example, Nike started their marketing campaign called Just do it which makes them an international brand because customers reacted positively to the slogan of such campaign. There are several factors which negatively affect customers attitude towards a brand such as hidden prices, use of environment polluting material and false advertising. The corporations are requiring to continuously monitoring customer behaviour because it changes rapidly, for example, awareness regarding organic and environment-friendly products are quickly increasing because people are getting health conscious (Paul Rana, 2012). Competitor Strategy The strategies adopted by competitor significantly affect business decisions as well, an enterprise formulate its organisational policies after assessing competitors policies. One of the primary objectives of organisations is to gain a competitive advantage over other companies which allow them to capture the market and increase their sales (Grant, 2016). Usually, the customers compare price and quality of a new product with already existing products to decide whether purchasing such product is a good deal or not. Therefore, corporations must analyse prices and features of its competitors products before setting standards for their own production process. To gain competitive advantage, a company is requiring using innovative approach in existing market. For example, Uber changed taxi industry by providing online services which allow them competitive advantage. To gain competative advantage over Uber, competitors either provides less expensive prices or high-quality services to their customers (The Economist, 2014). Public Opinion The public opinions have a significant impact on a business growth, and to sustain its development, a corporation cannot ignore public opinions regarding its products, services or reputation. Due to globalisation and popularity of social media sites, opinion of the public can be detrimental or beneficial for corporations (McCombs, 2014). Negative press or media scandal can reduce the corporations reputation which decreases its products sales. Modern customers are considerably vocal regarding their opinion and thoughts on different products and services, therefore, corporations have to ensure that they fulfill their target audience requirements. The popularity of Corporate Social Responsibility principles is one of the examples of public opinion. Modern corporations cannot just focus on maximising shareholders value; they have to ensure that they are fulfilling their social responsibilities as well, such as use of recyclable products, appropriate measures for pollution control, fulfilling stakeholders interest and others (Leiserowitz, Maibach, Roser-Renouf, Smith Dawson, 2013). For example, worlds most prominent corporations are also worlds profitable companies, such as Apple, Google, Starbucks, Microsoft, and others. All of these corporations implement CSR principles and fulfill their stakeholders interest to sustain their growth. Recommendations Following are some suggestions that can be implemented by modern corporations to address external challenges and reduce their impact on business operations. Assessment of various external factors which can influence the business and its operations and developing solid strategies to address them. The corporations can carefully assess the existing and future regulations implemented by national and international government and formulate policies according to them. The company can also establish a legal committee which recommends directors regarding laws which apply to firms operations. To protect themselves from dynamic economic conditions, organisations can make necessary reserves. For example, banking corporations can maintain a certain savings ratio to protect their assets from recession. Corporations can also use specific or general reserve in adverse economic conditions. Proper study of customers behaviour will provide necessary information to firms which they can utilise while manufacturing new products. Establishing a creative thinking environment and promoting innovative ideas will assist corporations in gaining competitive advantage. Proper implementation of CSR principles and involvement in charitable causes will positively influence a corporations public image. Conclusion and Summary To conclude, the external environment includes various factors which positively or negatively influence a companys operations and proper evaluation of external environment is required while formulating organisational policies. A company is requiring analysing national and international government regulations and economic trend before taking any significant business decision. The consumer behaviour and opinions increases or decreases the sales of an enterprise in the market, therefore, it is necessary that firms maintain a positive brand image in the market. Promoting innovative thinking and original ideas can assist corporations in gaining competitive advantage and sustaining their growth. To summarise, assessment and evaluation of external factors is significantly important for modern corporations without which corporations cannot sustain their growth. References Dhingra, S., Ottaviano, G., Sampson, T., Van Reenen, J. (2016). The impact of Brexit on foreign investment in the UK.BREXIT 2016, 24. Grant, R. M. (2016).Contemporary Strategy Analysis Text Only. John Wiley Sons. Hamilton, L., Webster, P. (2015).The international business environment. Oxford University Press, USA. Leiserowitz, A. A., Maibach, E. W., Roser-Renouf, C., Smith, N., Dawson, E. (2013). Climategate, public opinion, and the loss of trust.American behavioral scientist,57(6), 818-837. Lim, A., Tsutsui, K. (2012). Globalization and commitment in corporate social responsibility: Cross-national analyses of institutional and political-economy effects.American Sociological Review,77(1), 69-98. McCombs, M. (2014).Setting the agenda: Mass media and public opinion. John Wiley Sons. Paul, J., Rana, J. (2012). Consumer behavior and purchase intention for organic food.Journal of consumer Marketing,29(6), 412-422. Percival, R. V., Schroeder, C. H., Miller, A. S., Leape, J. P. (2015).Environmental regulation: Law, science, and policy. Wolters Kluwer Law Business. Solomon, M. R. (2014).Consumer behavior: Buying, having, and being(Vol. 10). Upper Saddle River, NJ: Prentice Hall. The Economist. (2014). Uber-competitive. [Online] The Economist. Available at: https://www.economist.com/news/business/21633833-uber-risks-consumer-backlash-over-its-tough-tactics-uber-competitive [Accessed on 14/11/2017] Wetherly, P., Otter, D. (Eds.). (2014).The business environment: themes and issues in a globalizing world. Oxford University Press.