The Business Environment Influences
1. The Environment of an organization
Anything from outside which can affect org. business is business environment. Set of Economic, Political,
Social and Institutional conditions shape environment for Organization business.
P.E.S.T.
P. Political Factors
E. Economic Factors
S. Social, Culture and Demographic Factors
T. Technological Factors
While in last 20 years, there is addition of following two factors affecting business environment like above
mentioned four factors. This is called PESTEL
E. Environmental Factors
L. Legal Factors
2. Consequences of Environmental Change. Threats and Opportunities (Process)
Environmental scan
Threats
Opportunities
Scanning and Monitoring
Forecasting and Assessment
Political and Legal Factors
A- Political and Legal Influences on Business
1- Nationalizations of Industry and Privatization
2- Transport and Infrastructure
3- Education
4- Vocational and Technical Education
5- Environmental Policy
6- Taxation and Subsidies
B- Sources of Legal Authority
1- Supranational Bodies (Overseeing more than one Government EU, IAS, ICJ)
2- National Government
3- Local and Regional Government
C- Employment Law
1- Minimum Wage
2- Working Conditions
3- Unfair Dismissal
4- Redundancy
5- Discrimination
6- Gender Equality
D- Health and Safety Laws
E- Data Protection Law
Personal Data protection is very sensitive issue and many developed countries including developing
world pay a special heed to this issue. Personal data varies but typically it means living private data of
individual. Law basically discriminate between ordinary personal data and sensitive personal data.
Data protection must be followed in following way
1- Obtained and processed lawfully
2- Obtained only for specified reasons
3- Should be accurate, relevant and not excessive
4- Hold no longer than its required
5- Kept secure
6- Cross border transfer guidelines should be followed
F- Cyber Laws
G- Competition Laws
1- Monopolies
2- Anti-Collusion Regulations
3- Price Controls
H- Consumer Protection
1- Contract Law
2- Sales of Goods Law
3- Consumer Protection Ordinances
I- Responses to Political and Legal Developments
1-Lobby Groups
2-Pressure Groups
Economic Factors
1-Macro-Economic Factors
A- Economic Policy
B- Measuring Activity in the National Economy (NI, GNI, GNP)
C- Government Economic Policy Aims
D- Link between National Income Growth and Inflation
E- The Economic Cycle
F- Impact of Inflation
G- Implication of high inflation on country’s economy
H- Implication of high inflation on distribution of wealth
I- Impact of unemployment
1- High Unemployment
2- Low Unemployment
J- Impact of Economic stagnation ( Growth is not as expected and should be)
K- Protectionism (Worldwide Recession (2008 Financial Crises))
L- BOP Disequilibrium(US-China)
M- National Economic Policies
N- Fiscal Policies
O- Monetary Policy (Effects of managing interests rates)
P- Economic Policies to achieve some social and environmental goals)
Q- International Economic Policies
2-Micro-Economics Factors
A- Demand and Supply
B- Monopoly Pricing
C- Pricing in Competitive Market
D- Cost
E- Income of Customers
F- Others factors influencing prices
G- Price elasticity of demands
H- Elastic and inelastic demand
I- The significance of elasticity
J- Elasticity and Setting Price (Inelastic )
Social, Cultural and Demographic Factors
1- The nature of social, cultural and demographic factors in the environment
Social Factors
Cultural factors
Demographic factors
2- Ageing Population and Others Demographic and Social Changes
3- Government Policy for demographic change
4- Business Ethics
Technological Changes
1- The Impact of technological change on working methods
2- The impact of technological change on Products and Services
A- Downsizing
B- De-layering
C- Outsourcing
D- Restructuring
E- Virtual company
F- Social media
G- Big data
H- Artificial intelligence
Ecological Factors
1- Impact of Business on the Physical Environment
A- Use of Resources(Non-renewable and renewable)
B- Carbon Footprint
C- Pollution
2- Ways to counter ecological effects of Businesses
Improved energy efficiency
Investment in renewable energies
Local sourcing of goods to reduce costs
IT developments for effective and proficient business Processes
More efficient production technologies
Reducing packaging
3- Benefits of Economics Sustainability to a range of Stake Holders
Benefits to stake Holders(Success of Business, Supplier Long term Contract, Meeting
Government settled Environmental obligation, Employment and environmental improvements
for society)
Political factors
Economic factors
Social factors
Technological factors
Competitive Factors
1- SWOT Analysis
Strengths
Strengths are things that your organization does particularly well, or in a way that distinguishes
you from your competitors.
Extensive Research Knowledge
High Skilled Staff
Patents
Foreign Investments
High profit Margins
Weaknesses
Now it's time to consider your organization's weaknesses. Be honest! A SWOT Analysis will only
be valuable if you gather all the information you need.
Slow Progress
Research to Projects conversion low rate
Labor turnover
Opportunities
Opportunities are openings or chances for something positive to happen, but you'll need to
claim them for yourself!
Strong growth in Market
New direction in Research to be explored
Threats
Threats include anything that can negatively affect your business from the outside, such as
supply chain problems, shifts in market requirements, or a shortage of recruits. It's vital to
anticipate threats and to take action against them before you become a victim of them and
your growth stalls.
Recent Merger of Two Leaders of Industry
Strict Regulation on New Products
2- Competitive Strategy
Cost Leadership
Product Differentiation
Focus
3- Adding Value Chain
Reducing cost
Improving design
Improving quality
Improving quantity
Quick delivery
Less impact on environment
4- Primary Value Chain
Inbound Logistics
Operation
Outbound Logistics
Marketing and Sales
Services
5- Secondary Value Chain
Purchasing
Technology Development
HRM
6- Understanding Porter's Five Forces
Porter's Five Forces is a business analysis model that helps to explain why various industries
are able to sustain different levels of profitability. The model was published in Michael E.
Porter's book, "Competitive Strategy: Techniques for Analyzing Industries and Competitors" in
1980.1 The Five Forces model is widely used to analyze the industry structure of a company as
well as its corporate strategy. Porter identified five undeniable forces that play a part in
shaping every market and industry in the world, with some caveats. The five forces are
frequently used to measure competition intensity, attractiveness, and profitability of an
industry or market.
Porter's five forces are:
1. Competition in the industry
2. Potential of new entrants into the industry
3. Power of supplier
4. Power of customers
5. Threat of substitute products
