The concept of the business environment consists of the surrounding factors that either help or hinder the development of business. There are five main elements in the business environment:
- The economic and legal environment
- The technological environment
- The competitive environment
- The social environment
- The global business environment
Today, Howtonc will analyze to you why both five elements are incredibly vital to any corporation. Please keep reading.
The economic and legal environment
It contains some main points such as freedom of ownership, contract laws; elimination of corruption; tradable currency; and minimum taxes and regulation.
How can the economic and legal environment affect businesses?
- Economic growth: It is an increase in the production of goods and services over a specific period. Besides, the measurement must remove the effects of inflation. Economic growth will result in low unemployment rates and high-income levels.
- Taxes and interest rate levels: It can affect the level of economic activity.
- The forces of supply and demand: They are price and quantities.
In which way, the government can foster entrepreneurship?
The government can allow private ownership of businesses, then pass legal laws that enable companies to write contracts that are enforceable in court, establish a currency that’s tradable in world markets, help to limit corruption in company and government and keep taxes and regulations to the minimum rate. From a business perspective, lower taxes mean lower risks, more growth, and thus more money for workers and the government.
Nowadays, many laws in the U.S. attempt to minimize corruption. Nevertheless, corrupt and illegal activities at some companies do negatively affect the business community and the economy as a whole. Also, ethics is so essential to the success of a business and the economy.
The technological environment
Now, humans are creating many tools that make work easier. Few technological changes have had a more far-reaching and lasting impact on business, however, than the emergence of information technology: computers (P.C.), laptops, cellphones, and especially the Internet.
It is undeniable that I.T. is such a significant force in business now.
Technology is everything from phones and copiers to P.C., personal digital assistants, medical imaging devices, and the software programs that tender business processes more productive, efficient, and effective.
What’s the difference between effectiveness, efficiency, and productivity?
- Effectiveness: producing good with the desired result.
- Efficiency: manufacturing goods or services using the least amount of resources such as time or workers.
- Productivity: the amount of output we make given the amount of input. For example, the number of hours you work is enough or not.
How does technology affect businesses and the way people work?
Technology is a tool to be more responsive to customers. Businesses use bar codes and scanner the checkout counter. For instance, you can collect customers’ information and their needs to provide them the products they’re looking for.
Technology is a tool to increase productivity. Businesses use more robots, automatical machines to save time and money for workers. For example, you can low the cost of production by using warehouse inventory technology to save resources.
Technology creates new ways of reaching customers and suppliers. The growth of E-commerce or online channels such as Shopee, Amazon, Tiki, etc. For example, you can contact them and keep them updated through online channels such as Gmail or E-commerce.
So, we see it E-commerce, is the buying and selling of goods over the Internet. There are two types of e-commerce transactions:
- B2C: Business to Customer, for example, in Sales, you sell your products directly for those people who want them.
- B2B: Business to Business; a great example is Amazon. We can see a lot of stakeholders of Amazon.com cooperated to increase their sales by taking advantage of E-commerce.
However, what is the main disadvantage of technology?
That is the problem with productivity today; many workers are so productive that fewer are needed. As a result, it is contributing to the high unemployment rate we are experiencing nowadays.
Another downside is identity theft. Identity theft is the getting of individuals’ personal information, such as Social Security and credit card numbers, for illegal purposes. Sadly for me to say that millions of U.S. customers are victims of identity theft each year. However, we also have some ideas to limit this issue. We need to set antivirus software on our computer as well as firewall and antispyware software. Besides, we can monitor ou credit report. For many experts, these ways are crucial for us to understand identity theft, security, stability, privacy, information, and other relevant I.T. problem.
The next one isThe competitive environment;keepreading here.