The immediate or operational environment - Business Environment

Resources and resource markets

An organisation’s need for resources makes it dependent to a large degree on the suppliers of those resources, some of whom operate in markets which are structured to a considerable extent. Some aspects of the operation of resource markets or indeed the activities of an individual supplier can have a fundamental impact on an organisation’s success and upon the way in which it structures its internal procedures and processes.By the same token, the success of suppliers is often intimately connected with the decisions and/or fortunes of their customers.While some organisations may seek to gain an advantage in price, quality or delivery by purchasing resources from overseas, such a decision can engender a degree of uncertainty, particularly where exchange rates are free rather than fixed. Equally, organizations may face uncertainty and change in the domestic markets for resources as a result of factors as varied as technological change, government intervention or public opinion.

Customers

Customers are vital to all organisations and the ability both to identify and to meet consumer needs is seen as one of the keys to organisational survival and prosperity a point not overlooked by politicians, who are increasingly using business techniquesto attract the support of the electorate. This idea of consumer sovereignty where resources are allocated to produce output to satisfy customer demands is acentral tenet of the market economy and is part of an ideology whose influence has become all pervasive in recent years. Understanding the many factors affecting both individual and market demand, and the ways in which firms organize themselves to satisfy that demand is a vital component of a business environment that is increasingly market led.

Competitors

Competition both direct and indirect is an important part of the context in which many firms operate and is a factor equally applicable to the input as well as the output side of business.The effects of competition, whether from domestic organizations or from overseas firms, is significant at the macro as well as the micro level and its influence can be seen in the changing structures of many advanced industrial economies. How firms respond to these competitive challenges and the attitudes of governments to anti-competitive practices is a legitimate area of concern for students of business.


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Business Environment Topics