Business Environment Interaction of the Business Environment

Business Environment

Interaction of the Business Environment

The environment of a company is much like the natural world in that there are many layers to any single organization (Marques, 2007). Political forces are present because there are factions and beliefs within a company which cause different politics to be formed. The economics of running an organization are a different facet of the environment which many consider the most important part of the business (after all the business of business is to make money), but it is actually a piece of the larger while which is neither more important or less than any other. Very business also has a social component. All of the different relationships that occur in the wider world can be found in any large organization. Another part of the environmental whole that affects every other part has to do with the technical functioning of the business. Technology can make operations easier, but it can also detract from other areas of the company which are just as important. These layers of environment must interact properly for a business to operate at peak efficiency and complete its mission. Evaluating business environment process has also given rise to theories which try to best explain and influence the workings of a business.

Despite the politics inside a business, political forces in the country where the business is located also deeply effect the environment (Porter, et al., 2010). Since many companies, even relatively small ones, are operating in a global environment, this can be further complicated by the political forces governing foreign investment and infrastructure. Some countries will allow a company to do business there, but foreign companies are not allowed to own property. Political forces can dictate how the business operates via legislation, or a change in political climate can make it very difficult to maintain a business within that nation.

The economic climate if a company is a slave to so many factors that it is difficult, many times, to control. Currently, many countries are experiencing an extended downturn (many believe full-blown recession) because of different political and cyclical forces which have cause them to lay off workers, and cut productivity considerably. A company, especially one financed by debt, that cannot borrow money is in serious trouble. Right now the ability of most companies to borrow is affected very negatively. With the decrease in people, the changes in job descriptions, and the uncertainty going forward, the current business environment is greatly affected.

The social aspects of a company are largely determined by the efforts of management and leaders within the company. Leadership determines whether people are free to work cooperatively with others, which can positively affect the environment, or whether people largely work alone, and never form more intimate relationships Laumer, Eckhardt, & Weitzel, 2010). Such positive modern practices are sexual harassment legislation have decreased the unwanted intimate contact that used to exist in many companies. However, a negative consequence of the legislation has been that people fear any contact, other than that of a strictly business nature. Some companies try to counter this by gathering workers together for retreats which help employees work better in teams (Loewe, Blume, & Speer, 2008). But, both fear of more intimate relationships, or team building exercises can dramatically affect the business environment.

Technology is a force that has greatly changed over the past two centuries (Ruff, 2006). During the industrial revolution, technology advanced what could be done in many different markets. Machinery made it possible to mass produce goods that previously could only be manufactured by hand. Farmers do not have the need for hands to help them work the land, and other types of business were able to streamline processes that caused previously tedious work to become easier and even more mundane. The innovation of the electric power grid allowed companies to work in shifts which increased productivity even further. The communications and electronic revolutions have allowed companies to leap forward in matters of production and service (Ruff, 2006). However, technology can greatly increase the cost of training, decrease social interaction, and cause political entities to believe that they need to intrude further into the business.

Business environment theorists have tried to determine how all of these different business factors interact to make the process of a company work more efficiently. Researchers have looked into which of the four external factors (and some include legal factors also) is most influential, but it has been difficult to determine what factors most affect the environment of a business. The internal workings of a business can be controlled to a great extent, but those external features are largely outside of the businesses purview. All the a business can actually do is manage what happens around the business, and in some instances it is far beyond a controlled reaction. When political forces outside the company enact legislation that impacts a business, it is sometimes impossible for the business to quickly change how it has been working. As stated earlier, it is also difficult to react properly to external economic factors which can devastate companies. Theorists look at specific factors and help advise companies as to how they can effectively meet the challenges that arise.

One help that has arisen from research is a SLEPT analysis. When a company is worried about the effects that external factors are creating within their business they will have an external consultant conduct and analysis of how much the business is impacted by social, legal, economic, political and technological factors. This analysis is done to improve both the profitability and the process of a business.