Environmental Factors and the Effect on Business

Environmental Factors

External factors are always making an impact on a company's performance. One would think that by looking within the company for answers it would be a simple enough solution to understand the what is causing the business impacts. However, this is not the case. Looking outside is good too. Environmental factors have just as much influence on a company's decisions. These include social, legal and political, economical, technological, and competitive factors.

Social
Society can have a large impact on a company. The social aspects that a company should pay attention to are how society acts, what they value, what do they think about certain issues, what are their views on people, places, things, and issues? Society is essentially your market. Know them!

Legal/Political
Like in any aspect of life, there are rules. Laws, regulations, standards, and those running things essentially set the stage for all businesses and their performance. Those who lead a group are faced with the decisions that make or break a business. Companies must ensure  they follow the rules when conducting business. If they don't, there will be negative consequences that can hurt the company.

Economic
The state of the economy will affect a business no matter what, whether negaitve or positive. The things within the economy a company must pay attention to are the income of those in its market, the ways in which the state of the economy can play into their consumers' decisions (bad economy = less buying, good economy = more buying), supply and demand ALWAYS show how much the consumer will be buying the product or service based on what the need of it is.

Technological
With the continuos development of technology, there are always new ways it can play in to a company's means of business. Technology has created a means of fast and easy communication; global at that. Storage of information is still in its imfancy, and yet it has become an enormous aspect of top companies worldwide. It can store all sorts of data; on customers, company records, files, plans, documents, and so on. It is up to the company to take advantage of this to make business processes more efficient and cost effective.

Competitive
They say keep your friends close, but your enemies closer. This makes perfect sense in the world of business. Knowing who your competition is, what their products are, and how they can affect your product or service. Knowing how they do business (how they set prices, who they do business with, what they produce, the threat they cause) is essential. Not only does this include knowing current competition, but it also deals with knowing the threat of new competition that can come into the market as well. There's always opportunity for others to enter. It is the company's responsibility to keep themselves up to date and prepared.

Real World Analysis

These environmental factors can be used to look at any field of business. I would like to take my job as a Residence Manager for an example, Western New England University being the business up for analysis. As a private educational institution, the people we provide a service for are mainly students. Knowing who they are, what they value, and how they view the service we provide them is implicit. Knowing things about them also help us to differentiate from competition. Being able to provide for our students better will help to model our institution in a more appealing, more beneficial way.  In order to ensure we are providing them the service of an education to the fullest while abiding by the law, we follow educational guidelines and standards, laws that ensure all people are afforded the opportunity to gain an education, federal regulations in terms of financial aid to students, incident action plans and training, and several other aspects related to legal factors that keep the institution in -check. As times change, so does the knowledge an institution must give its students. Technology is an important factor in this. Everything from having computers and databases for students to learn and research from, having security components like ID scanning access and cameras to ensure safety, as well as a central student information server that gives officials access to the students' information. Finally, knowing the economic aspects help the institution to market to our students better because we can take a look inside to the factors that will help them see our product as beneficial. With the rising cost of a college education, we see it can be harder for a student to pay for an education. However, by understanding their difficulties and needs, we can look into what we will need ot do in order to grab their attention and convince them to essentially "buy" our service, or in these terms enroll in our University.

No matter what business one works for, these external factors are important to look at. A company can greatly benefit from understanding how each of these factors play into its daily decisions. Why not try it yourself?