Outside Forces Affecting Businesses

Relevant Issue Affecting Business

The business environment is rapidly changing due to various factors including environmental factors. As a result of the frequent changes in the business environment, business owners and managers face the need to develop measures for planning and conducting their operations in relation to the changes. Over the past few months, the business environment has been affected by numerous environmental factors ranging from technological to social factors. For business managers and owners, the ability to remain competitive and successful is largely affected by their ability to respond to emerging changes in the business environment. One of the major factors that have affected the business environment in the recent past is the COVID-19 global pandemic.

McLaughlin (2022) wrote an article regarding the implications of COVID-19 for business. The article sought to provide the latest perspectives regarding the coronavirus outbreak and how its threats to lives and livelihoods affect business organizations. In the article, McLaughlin (2022) also examines the need for business managers and owners to develop targeted action due to fallout from the pandemic. The fallout from the global pandemic has included inflation, mental health challenges, and the need for improvement of customer service. These environmental factors have generated undeniable challenges for business managers to develop new ways of operations.

As part of new ways of operating, business owners and managers need to find creative ways to mitigate prices in response to inflation, which has been a major issue for businesses since the 1970s. To this extent, the author argues that supply-chain leaders can embark on a series of steps in order to determine the suitability of a price increase. This process begins by identifying the main costs of inputs with the highest level of change. This is followed by estimating the percentage of the total costs for these inputs. Once the percentage of the total costs is determined, an acceptable price-increase range is calculated. Insights obtained from the process can be used to determine whether to explore new suppliers or used as the basis for win-win negotiating.

COVID-19, which has affected lives and livelihoods across the globe, has disrupted businesses operating in nearly every sector of the economy. A recent consumer survey conducted by McKinsey showed that Generation Z is facing behavioral health challenges brought about by the pandemic. This generation is more likely to suffer from substance abuse or mental health issues and more likely to have not sought treatment. Additionally, Generation Z is thrice as likely as other generations to report suicide ideations or attempts since the beginning of the COVID-19 pandemic. These health issues brought about by the coronavirus outbreak have, in turn, affected consumer behavior and purchase decisions, which has significantly affected business operations.

In addition to these factors, McLaughlin (2022) reports that the pandemic has generated numerous discontinuities in the business environment. These disruptions have contributed to a decline in job growth and productivity. The uncertainties associated with the pandemic continue to pose risks to business growth and productivity. Therefore, it is important for business owners and managers to respond effectively. Business organizations, especially large companies need to reshape their long-term business strategies and define their new normal in relation to the effects of the COVID-19 pandemic.

The article by McLaughlin (2022) provides significant insights regarding the implications of environmental or external factors for businesses. As shown in this article, external factors are those in the organization’s external environment and have significant impacts on business operations and productivity. While these factors happen outside the organization, they are forces that can either help or present challenges to the business. In this case, the external factor is the COVID-19 pandemic, which is essentially a public health issue that affects business operations due to its effect on lives and livelihoods across the globe. Business owners and managers cannot simply ignore outside forces or the external environment when planning for and conducting their business operations.

Based on insights obtained from the course, the operations and profitability of a business are affected by both internal and external factors. Internal factors relate to internal forces within the organization whereas external factors are those outside the business. In most cases, internal factors are those within the control of the business whereas external factors are not essentially within its control. However, when formulating strategies, business owners and managers need to be aware of outside/external forces. The external environment changes constantly as it is affected by various factors. As a result, the external environment has direct and indirect impacts on business personnel, operations, and revenue.

Similar to internal factors, external factors have impacts on the financial and non-financial performance of a business organization. Financial performance is strongly linked to the profitability and success of a company while non-financial performance relates to the long-term sustainability of the business (Seo & Lee, 2019). With regards to financial performance, external forces affect consumer behavior and purchase decisions. In relation to non-financial performance, outside forces affect business strategies and planning. This implies that the external environment affects business organizations in terms of how they function and methods developed to overcome challenges.

External forces that affect business operations and profitability are commonly classified into technological, social, demographic, political and legal, environmental, and ethical factors (Indeed Editorial Team, 2021). However, these article demonstrates that outside factors go beyond the commonly identified forces. As evident in the article, some of the external factors that could affect businesses include natural disasters or emergencies. In this regard, the COVID-19 global pandemic is a public health emergency that has affected lives and livelihoods as well as businesses. Based on insights obtained from the course and from the article, natural disasters/emergencies end up affecting the business environment through disrupting the everyday lives of the affected communities. Natural disasters/emergencies like the coronavirus outbreak generate new demands, especially in the field of public health. In addition, such emergency events affect people’s normal lives and affect business operations.

Given the impact of natural disasters/emergencies on business operations, they should be considered as one of the major external forces affecting businesses. Therefore, businesses should develop measures and strategies to mitigate the impacts of such emergency events. An effective business plan or strategy not only includes measures to deal with common external factors but also incorporates responses to natural disasters/emergencies. The creation of an emergency management plan helps to enhance a business’ preparedness and response to potential disasters/emergencies in its environment. This implies that emergency preparedness and planning is a critical component for dealing with outside forces that are constantly changing in today’s business environment. The planning should incorporate strategies to address unprecedented disasters like a global public health emergency. Without a proper emergency management plan, business organizations are unable to effectively respond to emergencies and other outside forces affecting them.