Question

What are the 5 elements of the business environment? How has the technological environment changed how...

What are the 5 elements of the business environment?
How has the technological environment changed how new businesses enter the market?
How do changes in demographics impact new business opportunities?

Homework Answers

Answer #1

Answer- Business environment consists of things that surround the business and affect in it’s working. They may affect directly or iindirectly or even withing or outside the organisation. The elements of business organisation are a part of Micro and Marcro environment.

Micro Environment- This type of environment gets in contact with business on a day to day basis and affects its working directly. Elements of Micro environment are-

•Customers or consumers- These are the people who consume the product of the company and play a major role for the business organisation. The organisation should continiously keep a check on customer needs and their taste and preferences

• Suppliers- These play a part in supplying the raw materials on time so that prpduction can take place. Good relationship with suppliers should be maintained so that goods can be delivered on time and production process will not be delayed.

• Competitors- These are the rival firms that help the business in growing as they pose a competition by conpeting for the same target market. There should be a check on competitors strategy.

•Organisation - In an organisation many people work together to realise the business objective and thus influence the business hy their actions. People include employees,Board of directors and owners and stake holders.

• Market- It the place where goods are exchanged for some consideration and thus this provides the organisation with tremendous opportunities and threats.

MARCO Environment -This type of environment does not affect the organisation on a day to day basis rather it affects in the long term process. Following are its elements-

•Economic Environment- This type of environment tells about the economic condition of a nation and tells about the capital and money market and about buyers, suppliers buying and selling decisions as well. For eg- GDP rate, Tax rates, unemployment rate etc.

•Technological environment- Here the technology used by business comes into affect and thus it must keep an eye on latest technology. Also the technology may be inhouse or from an external source.Since technology requires huge investment thus caregul planning is needed.

• Population or demographic environment- It tells about the population characteristics in a particular area by their age, sex, caste, education level, income earned etc. This helps the business in knowing the nuying capacity of people and their taste and preferences.

•Legal environment- Since every country has their own set of legal structure thus, every company must adhire to such norms and carefully follow the legal and political environment so that any interference from the respective govermment for non compliance can be avoided.

• Social Environment- It consists of the values of people living near the area where the organisation is situated. Every organisation must take care that such sentiments are not affected and business is in harmony with the people living there.

Technology is changing very rapidly and this requires the business to keep pace and implement the latest technology because latest technology helps performing business with more efficienty. It also results in faster communication and faster transportation of goods or products thus serving the customers in a much better way than all the existing companies.

New business must have the latest technology so that they can compete with all the existing busines organisations. Since providing customers withbthe right goods on right time is very crucial for the business to survive as the ultimate profits comes from the customers and how they consider the product.

In todays time every business wants to excel and create value for customers, which can be done only if customers are served on time. Thus implemeting the right and latest technology is essential. It provides the business with a competitive edge and provides it with many opportunities.

Demographic environment as defined above is the characteristics of the people living in that particular area. They may be categorised on the basis of sex, education level, ethinicity, social status, income level etc. This type of business environment element helps to find out about the taste and preferences of the target market.

These factors help to understand the business plans to fulfill the needs to the people. It also tells which strategy to follow to create demand and persuade people to buy products and service them better. It helps to find out how they are living and what their wants and needs are.

This analysis helps the new business is going ahead from all the existing business thatbhave not been following such trend of the population. New business can create product according to the needs and thus ensuring the business growth as theybwill be serving the customers in a better way.

A change in demographic environment sat in the income level will affect they product they will buy. If the income level rises then they will ho for premium brands and lucuries but if the income level falls then generic brands would be preferred.

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