Answer to Question #204657 in Management for Brighton Mkhwanazi

Question

Explain the nature /characteristics of business environment and provide examples to help substantiate your answer.

Answer 1

The nature of business environment entails:

i)Specific and general forces: Specific forces are those aspects which affect a particular firm of industry. They have a direct influence on the functioning of a particular firm. They include: employees, customers, investors and competitors among many others.

General forces impact the whole industry in which a business operates. General forces have an indirect influence on the several firms in an industry and are often shared by all firms under that industry. They include: Economic, political, legal, social and technological forces.

ii)Totality of external forces: An environment is a large and comprehensive force that comprises of several external factors. External factors are beyond the business' control and have a huge impact on its performance. The include factors such as: competitors, customers, investors, the government, cultural and socio-economic factors. These occasional changes come with opportunities and threats for businesses, compelling them to monitor their environments from time to time to take appropriate measures over the changes. Changes may include: a shift in customer taste or preference, technological modifications and entry of new competitors in the business' market.

iii)Dynamic nature: the business environment is never constant; it's an ever-changing concept. It may remain constant for a certain period but changes from time to time.

iv)Inter-relatedness: A business cannot be separated from its environment and is required to continuously monitor it to establish better business policies. A business is dependent on its environment for various inputs such as raw materials, capital and labor for producing goods and services.

v)Uncertainty: due to its dynamic nature, nothing can be said with full certainty about the aspects of the business environment because they change from time to time. Business strategies should take into consideration any likely changes, e.g. the upgrading of technology in case there are new inventions in the market. It's sometimes impossible to anticipate changes though since anything can happen, any time. For example, no business could have predicted the disruption from Covid-19 since 2020.

vi)Relativity: the business environment is a relative concept that ranges from one place, region or country to another depending on the local conditions of that area e.g. the economic conditions of the United States are different from those of Mexico. Also, demand for hijabs may be higher in Iran than in Canada.

vii)Complexity: owing to the interrelation of the various factors that build up the business environment, their individual effect on the business cannot be recognized. This, therefore, makes it complex for the business to face them.