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What Are The Environmental Factors That Affect Business?

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Question added by Rehan Qureshi , Financial Consultant , Self Employeed
Date Posted: 2014/01/21
Rehan Qureshi
by Rehan Qureshi , Financial Consultant , Self Employeed

The different environmental factors that affect the business can be broadly categorized as internal ands has its own  external factors.

INTERNAL FACTORS : Internal factors are those factors which exist within the premises of an organization and directly affects the different operations carried out in a business. These internal factors are :

A. VALUE SYSTEM : It implies the culture and norms of the business. In other words, it means the regulatory framework of a business and every member of the organization has to act within the limits of this framework.

B. MISSIONS AND OBJECTIVES : Different priorities, policies and philosophies of a business is guided by the mission and objectives of a business.

C. FINANCIAL FACTORS : Financial factors like financial policies, financial position and capital structure also affects a business performance and its strategies.

D. INTERNAL RELATIONSHIP : Factors like the amount of support the top management enjoys from its shareholders, employees and the board of directors also affects the smooth functioning of a business.

The EXTERNAL FACTORS include all those factors which exists outside the firm and are often regarded as uncontrollable.. These external forces can further be categorized as MICRO ENVIRONMENT and MACRO ENVIRONMENT.

MICRO ENVIRONMENT includes the following factors.

1.SUPPLIERS : Suppliers are those people who are responsible for supplying necessary inputs to the organization and ensure the smooth flow of production.

2.COMPETITORS : Competitors can be called the close rivals and in order to survive the competition one has to keep a close look in the market and formulate its policies and strategies as such to face the competition.3.MARKETING INTERMEDIARIES : Marketing intermediaries aid the company in promoting, selling and distribution of the goods and services to its final users. Therefore, marketing intermediaries are vital link between the business and the consumers. 

MACRO ENVIRONMENT includes the following factors.

1.ECONOMIC FACTORS : Economic factors includes economic conditions and economic policies that together constitutes the economic environment. These includes growth rate, infation, restrictive trade practices etc. Which have a considerable immpact on the business.

2.SOCIAL FACTORS : Social factors includes the society as a whole alongside its preferences and priorities like the buying and consumption pattern, beliefs of people their purchasing power, educational background etc.

3.POLITICAL FACTORS : The political factors are related to the management of public affairsAnd their impact on the business. It is important to  have a political stability to maintain stability in the trade.

4.TECHNOLOGICAL FACTORS : Latest technologies helps in improving the marketablity of the product plus makes it more consumer friendly. Therefore, it is important for a business to keep a pace withv the changing technologies in order to survive in the long run.

mohamed sabeen
by mohamed sabeen , QHSE Manager , Novus catering service

There are various environmental factors which can impact the businesses in an economy. These environmental factors can be categorized into external and internal environment of the businesses. The internal environment of the company includes the factors which are within the company and under the control of company like product Organizational culture, Leadership, and Manufacturing(quality). On the other hand, the external factors are not under the control of the company and include Social environment, political conditions, suppliers, competitors of the company, Government regulations and policies, accounting agencies like Accounting standard board, Resources in an economy and demographics of people.1.) Social 2.) Political 3.) Financial 4.) QoS 5.) Product Quality 6.) Distribution Channels 7.) Promotional Channels 8.) Manufacturing 9.) Employee 10.) Leadership

khaled Ibrahim Sayed Abd El Salam Ibrahim
by khaled Ibrahim Sayed Abd El Salam Ibrahim , Chief Accountant , -ElMehy engineering company

I think we know for sure they are a lot of internal and external as well , but form my point of veiw i think one is the first factor is the economy status of the country which the company run its operations in.

Mohammad Tohamy Hussein Hussein
by Mohammad Tohamy Hussein Hussein , Chief Executive Officer & ERP Architect , Egyptian Software Group

All business are affected by economic and political factors and access to power sources. Some businesses are also affected by other environmental factors such as whether and access to raw material and technical expertise.

Ahmed Gendy
by Ahmed Gendy , English Senior Inspector , Ministry of Education (MoE)

natural disasters,crises depression or recession price of petrol and price of gold

Divyesh Patel
by Divyesh Patel , Assistant Professional Officer- Treasury , City Of Cape Town

Companies in the industrial or manufacturing industry often work with different kinds of equipment, machinery and chemical-producing agents. In effect, a business' day-to-day operations can pose an ongoing threat to the natural environment. To reduce the likelihood of damage to the environment, federal and state regulations require businesses consider certain natural environmental factors in their overall operations plans.

 

  1. Environmental Regulations

  2. Permit Requirements

  3. Compliance Requirements

  4. Environmental Contaminants

  5. Availability of Raw Materials

  6. Labour Supply

  7. Proximity to the Market

  8. Transport Facilities

  9. Power and Fuel

  10. Climatic Considerations

  11. Supply of Capital

  12. External Economics

  13. Personal Factor

  14. Strategic Considerations

  15. Government Policy

  16. Miscellaneous Factors

Bayern Msafi
by Bayern Msafi , Business to Business Sales Representative , Self employed

  1. proper management ,adequate finance, adequate resource

As we know there are two kinds of business environment. External and Internal environment. From the external factors such as political, economic, social, technological, legal and environmental, the business can affect various way. for example; if the government changes the employment law or rules that can affect in business from the business perspective how the operate an organisation. 

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