Factors of Business Environment Flashcards
Business Environment
- factors that affect a business, internal (employees & resources) or external (customers & markets)
Environmental Scanning
- monitoring of the surrounding situation in the external & internal level of the business
- Adhoc Scanning: done during crises
- Regular Scanning: done in regular intervals
- Continuous Scanning: done constantly to collect macro daya
Task Environment
- Customers: persons purchasing the goods/products of the company
- Members: employees
- Owners: person owning the business, making major business decisions
- Other organizations: other organizations that are linked (supplier, competitor, etc.)
Macroenvironment
- part of the external environment
- Sociocultural Factors: norms & customs of a general population
- Legal-Political Factors: regulations, laws, objectives of the government
- Natural Factors: living & non-living things not created by humans
- Natural Sensitivity:
- Obstructionist: profit-oriented company with no concern to environment
- Defensive/Legal: profit-oriented company using the environment to the extent allowed by law
- Market: companies that profit while being environmentally friendly
- Accommodation: companies with products that do not harm the environment
- Proactive/Activist: companies avoiding actions harmful to environment
Internal Environment
- factors with direct impact on business operations
- Shareholders/Owners: investors or those with shares in the business
- Management: top, middle, and frontline managers
- Organizational Structure: hierarchy of the organization
- Corporate Culture: shared values and beliefs of the organization
- Employee: individuals who work for the company
External Environment
- factors with indirect business impact
- consists of Microenvironment (Operating Environment) and Macro-environment (General Environment)
Microenvironment
- part of External Environment
- Suppliers
- Lobby/Special Interest Groups
- Regulatory Bodies
- Customers
- Competitors
- Trade Unions
- Financial Institutions
SWOT
- Strengths: company attributes that give a competitive edge
- Weaknesses: company attributes that need to be changed
- Opportunities: factors/events that can give positive impact to the company
- Threats: factors that could negatively impact the company
PEST
- Political: laws, regulations or restrictions that could affect the company
- Economic: economic growth, exchange and inflation rates
- Social: societal and cultural influences on an organization
- Technological: impact of technology and technological advancements on an organization
Local vs International Business Environment
- Local: considers local business conditions, rules and regulations, relationships/connections, weather, natural disasters and culture
- International: PEST analysis, normally operation area of Multinational Corporations
- Multinational Corporations: receive more than 25% of its total sales outside its home country
Ways of Internationalization
Exporting: manufacturing of products in home country and transporting internationally for sale
Importing: bringing in a foreign product to be resold domestically
Global Outsourcing: importing of an organization’s products or services from another country
Counter-Trade: barter trade/ exchange of products for other products rather than currency
Licensing: an organization sells its products to another organization for resale in foreign countries
Franchising: franchisor sells a complete package to a franchisee in
order to set up an organization
Strategic Alliance: two organizations combine resources and knowledge to develop a new market or product
Joint Venture: two organizations agree to create a separate jointly owned organization
Foreign Subsidiary: distinct business entities established in a foreign country by a parent country
