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Changes in the business environment and their impacts on business strategies.

Extracts from this document...

Introduction

CHANGES IN THE BUSINESS ENVIRONMENT AND THEIR IMPACTS ON BUSINESS STRATEGIES. INTRODUCTION The external environment of a business involves all those issues which are currently important in the world in which the business operates. The external environment of a business affects all its decision. Changes in the business environment of businesses create both opportunities and constraints for the business. They stem from various sources including economic, social, technological, legal and political factors. Different firms will be affected by different factors, but all will be subject to economic changes. Markets and customers are volatile too. Markets are affected as much by fashion and fad as by economics. Customers are increasingly demanding, ever more fickle, and their loyalty to products and brands is harder to win, and then is more temporary than in the past. A host of external factor's act on markets can affect customers' willingness to buy. These include: economic factors and what customers can afford, political factors and how markets are allowed to operate, social factors affecting how people live and therefore what their needs are, technological factors such as the rise of information technology, and environmental factors that may affect choice and regulation. All these things are dynamic-witness to the pace of change in the area of computers and technology alone. Other changes may progress more slowly. POLITICAL CHANGES AFFECTING BUSINESS Government seek to control the business environment in order to meet a range of objectives. These include stability and predictability, health and safety, equity and fairness, the promotion of international trade and the efficient use of resources. Government policies affecting business have undergone substantial changes as attitudes have changed overtime. Government vary considerably in their approach to policies which affect business. There are other areas of policy which involve constant responses to change. Macro-economic policy must be continuously reviewed and adapted in the light of circumstances. In addition, policy may vary depending on which political party is on power. ...read more.

Middle

Domestically, as ever, problem areas remain atmospheric to pollution from nitrous oxide and noise from traffic which are generally improving. A tightening of exiting traffic pollution policies is required to overcome these problems. 2) SPACE RESTRICTION Transport facilities require large amount of space and transport capacity is limited to the space available. Space is becoming more difficult to attain. The price of land in the centre of large metropolitan centres has skyrocketed raising procurement costs. As transport demand grows, the crowding of facilities further intensifies. Demand for space is expected to increase further on all sectors as the scale of the economy grows in the future. 3) CHANGES IN ENERGY CONDITIONS Worldwide consumption of energy will continue to increase through maintaining expansion in developed economies and furthering industrialization in developing countries. Destabilization and a tightening in demand for oil can be expected due to the increased dependence on Middle East oil producing nations. In addition to this, new restrictions may develop due to global warming resulting from the use of fossil fuel energy sources. On the other hand, the consumption of energy in the transport sector which is a major consumer will continue to expand at a high rate. In all transport sectors, policies need to be implemented for energy efficiency and alternatives to fossil fuels. It is necessary to restructure the transport system into an energy-efficient system. 4) LABOUR SHORTAGE IN THE TRANSPORT INDUSTRY. The majority of sectors in the transport industry are characterised by irregular working hours and severe working conditions making it hard to attract labour. It is to establish an efficient transport system in order to achieve stable transport capacity as the expansion rate of workforce decreases. 5) RECYCLING The extraction of natural resources is expensive and often damaging environmentically. Higher levels of recycling can reduce the need to extract more raw materials. It also reduces the amount of waste material that needs to be dumped or incinerated. ...read more.

Conclusion

REFFERENCE: Leicester Mercury Business Issues Monday March 10 2003 March 2003 Page 21. Page 25. The times Thursday January 9 2003 Page 38. SUMMARY. Political policies affecting business have undergone substantial changes as attitudes have changed over the time. Public ownership of key sectors of the economy has given way to privatisation. Some industries are regulated because they have the potential to exploit the customer. Other industries are deregulated because it is thought they would work more efficiently with less interference. On the whole, governments now are less directly involved in the day-to-day decisions within the economy, but more involved in creating regulations which constrain business decision. The focus of policy change has now shifted towards measures which can reduce unemployment and measures that make international trade freer. Economic forces are potentially highly significant to marketing firms, particularly those engaged in international marketing. However, an understanding of economic changes and forces in the domestic economy is also of vital importance as such forces have the most immediate impact. By understanding and carefully monitoring the economic environment, firms should be in a position to guard against potential threats and to capitalize on opportunities. Environmental legislation is imperfect in the U.K and throughout the EU. Relatively few firms seem to take their responsibility to the environment very seriously. Successful businesses need to consider the effects of their activities on the environment, whether positive or negative. Technology is a persuasive force in industrial societies with widespread influence over many of man's activities. A substantial portion of new technology can be attributed to great increases in expenditures for research and development. Technology can create major economic changes which impacts lives and institutions. Social constraints are laws requiring social security, workman's compensation, minimum wages, overtime pay, safe working conditions, retirement programs as well as tariffs and taxes. These are laws put on organisations to meet its needs or protect it. Organisations can be seriously affected by changes in policies such as wage and price controls, tax policies, investment credits, foreign exchange rates, consumer protection policies and so on. 1 ...read more.

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