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Business Environment and SWOT analysis – Business guide for be your own Boss

Business Environment and SWOT analysis – Business guide for be your own Boss

Today we discuss about Business Environment for Guide how to start your own business, Be your own boss.

From the previous article about Business Concept we explain about What is a business and Its functions and aims. So I think now you have a better understand about What is a Business? Today we bring another guide for business guide for understand Business Environment. This article will help you to make a clear idea about what is a business environment & its factors? What are the effects and how to influences your business from Business environment? Business is a part of environment. Also it is in the business environment. So businesses cannot work along, they need to work with other parties in environment. So businesses need to depend on external factors. You can easily establish a business but for successfully sustain of your business you need to depend on resources which it has depend on external organizations in business environment. From buying materials to selling in the market you need to depend and connect with other external resources which in the business environment.  So every business organization are influenced by divergent and inter-related forces in a particular environment in the society. So you should understand this, Business environment is a complex network with changing forces that affect for your business performances. In the present, the environment is dynamic and rapidly changing. Also it became one of the leading contingencies for which business organizations should plan and which business organizations must adapt. 
Business Environment and SWOT analysis – Business guide for be your own Boss

Business Environment consists of diverse stakeholders. Every business organization has a relationship with its environment. However, the nature of that business organizations environment relationship is determined by several key factors, Business Environment factors are very dynamic and ever-changing.

Features of Business Environment
  • Dynamic – Its Continuously changing
  • Complex – There are Many forces, events and conditions
  • Uncertain – No anyone can predict what is going to happen in future
  • Multi-faceted – A single change in the business environment, can be viewed differently by different observers because factors perceptions vary
  • Relative – the notion of business environment is relative from one location to another

Importance of Business Environment for business

Let take a simple example If you are going to swimming in the river, before swimming it’s better to know about the Nature of river and widen of river and other factors, if you have a better idea about those factors you can easily swim as you expect but if you haven’t better idea about those factors you will fail. That river similar to environment and you similar to your business. So if you want to successfully achieve your business targets then You should have a better understand about your business Environment, otherwise you will fail. So it’s very important to know about your business Environment. Below is some importance about knowing Business Environment of your business.
  • Its help to understand the nature and Important of business Environment and its components
  • For successfully achieve your business achievements
  • It helps for SWOT analysis
  • To identify business Environment’s trends
  • For identify business opportunities
  • Helps in tapping useful resources
  • Helps to improve performance

What is business Environment?

For define business Environment we haven’t a global definition.

“Organizational Environment is a set of forces surrounding an organization that have the potential to affect the way it operates and its access to scare resources.”
                                                                                                                                                                                                      -jones

“Organizational Environment is the sum totality of all the internal and external factors and forces affecting the organizational performance.”
                                                                       
But we can make a simple definition for Business Environment “The sum total of all individuals (collection of all individuals), entities and other factors, which may or may not be under the control of the business, but business still depends upon them and affect for business’s performances, profitability and overall performances and stability of business.” 

The forces which included in the Business Environment are its customers, suppliers, investors, competitors, consumer groups, technologies, trends, governments and other factors which including in the Business Environment but externally from the business organization. These factors affect and influence the business organization even though they are outside the business boundaries.
For example, lay a new tax or increase the tax rate by the government can make increase the product price and customers buy can be less. Also customers will move to other competitor’s low prices goods or for other similar products. So business have to re-establish their prices of products to survive the change. That can be cause to reduce opportunity for make business profit and performances. Factors such as Government, competitors, market, consumers influence the business even though they are outside the business boundaries.

Classification of organizational environment

Internal Environment
External Environment
                Macro/General environment
                Micro/Task Environment

Internal Environment

The conditions and forces within an organization, Imparting strength or causing weakness to the organization, comes under internal environment. Internal factors help to indicate strong and weakness of your business.  That include,

1. Owner
Number of owners, their knowledge and experiences, Financial ability, their popularity.

2. Managers
Their knowledge and skills, training and experiences

3. Employees
Their training and experiences, their attitude

4. Organizational culture
Values, Principles, Traditions, Way of doing things of organization

5. Organizational Structure
Hierarchy of resource and power allocating and hierarchy of departments

6.Resouces
Physical and nonphysical resources which company have

7. Vision and Mission of your business

External Environment

External environment is All elements existing outside the boundary of the organization that have the potential to affect the organization. External factors provide opportunities and pose threads to the business.
There are two classified on External environment

Micro/Task environment
Environment that closer to the organization and includes individuals, groups and institutions directly influencing organization’s basic operation and performances. This is the immediate periphery of the business that has a continuous and direct impact. That include,

1.Customers
Persons who consume business products. Business work for satisfy these customers. Customer preferences can be different, So you need to get details about your customers from different methods and work to satisfy them.

2.Competitors
You and your managers should have a better idea about your competitors. Your competitors can be complete by Price, innovative or developed products or services. They can influence your business so You should be able to identify competitor’s activities and make quick response for them.

3. Suppliers
Persons who supply the materials, resources and power for organization. You should try to get quality supply materials continuously for low prices.

4. Finance institutes

5. dealers and distributors
Person or company who channelizes manufacturing product from producer to market. Their active role is delivering the products to the end-user and ensuring that commodities or products are well and availability in stores or retails. 

6. Investors
Persons who looking for invest money on your business or like to do more invest on your business.
 
Macro/General environment
Environment that influences the functioning and performance of business organization in general. Macro environment is the outer layer that is widely dispersed and affects organizations indirectly. Every business organization work in that macro environment, so you have to face those environment changes.

1.Political-legal Environment
Regulations from government and law, Interaction between government and Business, political stability of Country

2.Economic Environment
Overall health of the economic system- Interest rate, per capita income, employment, Unemployment, variations of share markets, inflation rate

3.Social and cultural Environment
When doing business, you have to comply with your society such as Social Values, Customs and Tastes. Your business operations want to adjust with changes of your society changes or if you are doing business in another county you need to do business according to that country’s Social and cultural Environment.  

4.Technological Environment
That is the most Uncertain and changeable environment. You should update with that Technological Environment changes daily if isn’t you cannot compete with other business

5.Global Environment
Simply this is a Globalization. Products are moving across countries without any barriers.  

6.Demographic Environment
Market is build up with peoples. So this is a most important environment. It includes factors such as, Age, Sex, Ethnic, Education, Geography, Lifestyle 

7. Natural Environment
This is about our natural environment. It includes factors such as Depreciation of natural resources, increments of fuel price, Environment pollution.

SWOT analysis for Business Environment

A careful analysis of business organizational environment is necessary to diagnose SWOT (Strengths, Weaknesses, Opportunities, Threats). With that analysis you can identify advantages and disadvantages of Your internal and external environment.
With analyzing internal environment, you can identify the Strengths and weakness, with analyzing external environment you can identify opportunities and threads to build competitive advantages to high performance of a business organization. If internal and external environment factors are favorable 


Internal
External
Favorable
Strengths
Opportunities
Unfavorable
Weakness
Threats

If you like to start your own business for work like a boss, you need a better understand about your Business Environment. Because all business must be doing business within a business organization environment. Your business organization is only a part of environment. Any changes in that business environment will be effect and influence for your business. So you need to be aware about your business environment and your business should be respond and adapt accordingly. If you have an understand about the business environment, you can easily recognize, analyze, react and adapt according to the changes/affect. So with this article about Business Environment will be help you to make better understand about Business Environment, its factors, their effects and SWOT analysis.

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