Analysing the business environment - Business Environment

In a subject as all encompassing as the business environment it is possible to identify numerous approaches to the organisation of the material. One obvious solution would be to examine the various factors mentioned above, devoting separate chapters to each of the environmental influences and discussing their impact on business organisations. While this solution has much to recommend it not least of which is its simplicity the approach adopted below is based on the grouping of environmental influences into four main areas, in the belief that this helps to focus attention on key aspects of the business world, notably contexts, firms and their markets and issues of significance to entrepreneurs and to society as a whole.
In Part two consideration is given to the political, economic, social, cultural, demographic, legal and resource contexts within which businesses function. In addition to examining the influence of political and economic systems, institutions and processes on the conduct of business, this section focuses on the macro economic environment and on those broad social influences which effect both consumers and key organisational resources, particularly labour, technology and raw materials. The legal system and the influence of law in a number of critical areas of business activity is also a primary concern and one which has links with Part Three.

In Part Three, attention is focused on three central structural aspects: legal structure,size structure and industrial structure. The chapter on legal structure examines the impact of different legal definitions on a firm’s operations and considers possible variations in organizational goals based on legal and other influences. The focus then shifts to how differences in size can affect the organisation (e.g. access to capital,economies of scale) and to an examination of how changes in scale and/or direction can occur, including the role of government in assisting small-business development and growth. One of the consequences of changes in the component elements of the economy is its effect on the overall structure of industry and commerce a subject which helps to highlight the impact of international competition on the economic structure of many advanced industrial economies. Since government is a key actor in the economy, the section concludes with an analysis of government involvement in business and in particular its influence on the supply as well as the demand side of the economy at both national and local level.
In Part Four, the aim is to compare theory with practice by examining issues such as pricing, market structure and foreign trade. The analysis of price theory illustrates the degree to which the theoretical models of economists shed light on the operation of business in the ‘real’ world. Similarly, by analyzing basic models of market structure, it is possible to gain an understanding of the effects of competition on a firm’s behaviour and to appreciate the significance of both price and non-price decisions in the operation of markets.
The analysis continues with an examination of external markets and the role of government in influencing both the structure and operation of the market place.The section on international markets looks at the theoretical basis of trade and the development of overseas markets in practice, particularly in the context of recent institutional, economic and financial developments (e.g. the SingleMarket, globalisation, the Euro). The section concludes with an investigation of the rationale for government intervention in markets and a review of government action in three areas, namely, privatisation and deregulation, competition policy and the operation of the labour market.
Finally, in Part Five, consideration is given to three aspects of business which are highly topical. One of these corporate responsibility towards the natural environment raises fundamental questions about the moral dimension of business activity, a subject often overlooked by writers and commentators on the business scene. A second, on the subject of technology, looks in detail at the impact of new technology on organisations and on market development and examines the increasingly important issue of ‘e-business’.
The concluding chapter in this section and, appropriately, in the book as a whole emphasises the continuing need for organisations to monitor change in the business environment and examines a number of frame works through which such an analysis can take place. In seeking to make sense of their environment, businesses need access to a wide range of information, much of which is available from published material, including government sources. Some of the major types of information available to students of business and to business organisations including statistical and other forms of information are considered in the final part of this chapter


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