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Dynamics

The business environment is dynamic, constantly changing due to factors like government policies, consumer preferences, and technology, which can impact business growth and survival. Key micro and macro environment factors include suppliers, customers, competition, economic conditions, and political/legal influences, all of which affect marketing strategies and organizational success. Internal factors, such as company policies and resources, contrast with external factors that are beyond the company's control, necessitating adaptability in business planning.

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Karan Arora
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15 views13 pages

Dynamics

The business environment is dynamic, constantly changing due to factors like government policies, consumer preferences, and technology, which can impact business growth and survival. Key micro and macro environment factors include suppliers, customers, competition, economic conditions, and political/legal influences, all of which affect marketing strategies and organizational success. Internal factors, such as company policies and resources, contrast with external factors that are beyond the company's control, necessitating adaptability in business planning.

Uploaded by

Karan Arora
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Business Environment

Why Dynamic
• B
​ usiness environment is dynamic in nature because it keeps on
changing (uncertainty). For example, change in government
policies, change in taste and choice of the consumer, change in
technology, etc. Such changes could be triggered by internal or
external factors and it can affect the growth, even the survival of
business. That is why business environment is called dynamic in
nature.

• It is right to say that business environment is dynamic as every


day new changes are taking place in that business environment.
These changes are so fast and effective that the companies,
which are able to scan them or recognize them on time, only
survive in the market.
Micro Environment Factors

Suppliers: Suppliers can control the success of the business when they hold
power. The supplier holds the power when they are the only or the largest
supplier of their goods; the buyer is not vital to the supplier’s business; the
supplier’s product is a core part of the buyer’s finished product and/or
business.

Resellers: If the product the organization produces is taken to market by


3rd party resellers or market intermediaries such as retailers, wholesalers, etc.
then the marketing success is impacted by those 3rd party resellers. For
example, if a retail seller is a reputable name then this reputation can be
leveraged in the marketing of the product.
Customers: Who the customers are (B2B or B2C, local or
international, etc.) and their reasons for buying the product will
play a large role in how you approach the marketing of your
products and services to them.

The competition: Those who sell the same or similar products


and services as your organization is your market competition,
and the way they sell needs to be taken into account. How do
their prices and product differentiation impact you? How can
you leverage this to reap better results and get ahead of them?

The general public: Your organization has a duty to satisfy the


public. Any actions of your company must be considered from
the angle of the general public and how they are affected. The
public has the power to help you reach your goals; just as they
can also prevent you from achieving them.
Macro Environment Factors

Demographic forces: Different market segments are typically


impacted by common demographic forces, including
country/region; age; ethnicity; education level; household
lifestyle; cultural characteristics and movements.

Economic factors: The economic environment can impact


both the organization's production and the consumer’s
decision-making process.

Natural/physical forces: The Earth’s renewal of its natural


resources such as forests, agricultural products, marine
products, etc must be taken into account. There are also
natural non-renewable resources such as oil, coal, minerals,
etc that may also impact the organization's production.
Technological factors: The skills and knowledge applied to the production,
and the technology and materials needed for the production of products
and services can also impact the smooth running of the business and must
be considered.

Political and legal forces: Sound marketing decisions should always take
into account political and/or legal developments relating to the
organization and its markets.

Social and cultural forces: The impact the products and services your
organizations brings to market have on society must be considered. Any
elements of the production process or any products/services that are
harmful to society should be eliminated to show your organization is taking
social responsibility. A recent example of this is the environment and how
many sectors are being forced to review their products and services in
order to become more environmentally friendly.
Internal Environment Factors

Definition

The internal factors refer to anything within the company


and under the control of the company no matter whether
they are tangible or intangible.

These factors after being figured out are grouped into the
strengths and weaknesses of the company. If one element
brings positive effects to the company, it is considered as
strength.
There are 14 types of internal environment factors:

1.Plans & Policies


2.Value Proposition
3.Human Resource
4.Financial and Marketing Resources
5.Corporate Image and brand equity
6.Plant/Machinery/Equipment's (or you can say Physical
assets)
7.Labor Management
8.Inter-personal Relationship with employees
9.Internal Technology Resources & Dependencies
10.Organizational structure or in some cases Code of Conduct
11.Quality and size of Infrastructure
12.Task Executions or Operations
13.Financial Forecast
14.The founders relationship and their decision making
power.
External Environmental Factors

Definition
On the contrary to internal factors, external elements are
affecting factors outside and under no control of the
company. Considering the outside environment allows
businessmen to take suitable adjustments to their marketing
plan to make it more adaptable to the external environment.

Sometimes this involves developing a new


Amazon product photography strategy if you advertise your
products on this platform, finding trustworthy partners
willing to make an investment, or pruning the original
business plan.

There are numerous criteria considered as external elements.


Among them, some of the most outstanding and important
External Environment Factors Macro factors:

Micro factors:
Economic
Customers
Input or Suppliers
Competitors Political/legal
Public
Marketing & Media
Technology
Talent

Social and
Natural
There are 7 factors that have
direct impacts on business firm
• Tax rate
• Exchange rate
• Inflation
• Labor
• Demand/supply
• Wages
• Recession
Political and Legal Environment
• Governance
• Political system
• Pressure Groups
• Political Stability
• Political relations with other countries
• Policy formulation and implementation
• Policy Reform and Political Agenda
Legal Environment
• Law of Contract
• Low of Torts
• Common Laws: based on S.C. Judgements
• Theocratic Laws: Laws based on religious codes.
• Company Laws
• Civil Laws: Civil laws are codified laws and not as
flexible as common Laws.
• Miscellaneous Laws

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