Business environment
Business environment refers to factors and forces affecting organizations’ functioning and their ability to build and maintain successful operations. Understanding the nature of the business environment and its changes is an essential part of business analysis. It create competitive strategies that ensure the company has the right success strategy in the future.
Business environment refers to factors internal and external factors, elements, and forces that affect a business’s development, performance, and outcome. Business environment is simply the surroundings where a business firm grows up. Business environment specifically operates in dynamic environments. Environmental adaptation is the most critical part of business survival and growth. The business environment is the aggregate name of factors and forces that affects business and business-related activities.
Diageo PLC is an alcoholic beverage company, formed in London in 1997, which sells its products in one hundred and eighty countries worldwide. It has more than 200 brands, which include Johnnie Walker, Smirnoff, Baileys, and Guinness. Diageo’s most significant revenue producers are scotch at 25% and beer at 16%. The business environment has helped Diageo in the following ways:
It has helped in identifying strengths which helps to improve employee job satisfaction hence improving the overall performance.
Identification week areas that help the organization to mitigate them and move forward
Identification of threats due to Severe competitive markets
Identification of opportunities that helps the company existing options.
There are two main types of business environments: internal and external environments whereby the internal environment comprises factors in the organization that affects the organization’s achievements and approach, where the company has control over these factors; these factors include financial and marketing resources, management structures, technology, and physical assets.
The external environment comprises institutions, organizations, and forces that impact the organization’s operation outside the company. The organization must act or respond to keep up its regular flow of operations. The external environment are classified into two types: the microenvironment and the macro environment.
Diageo’s critical internal environments are carefully considered, including profitable communication channels within the organization, proper organization structures, and effective production procedures. Diageo PLC regularly conducts assessments on its operations and effectively responds to any aspect.
The external business environments can affect an entire company since they are more powerful than the internal business environments. Putting these into consideration, Diageo PLC closely monitors the microenvironment such as workers unions, suppliers, and customers attitudes and the macro environment such as the prevailing business cycles, demographic patterns, and instabilities in the economy.
Porter’s Five Forces Framework is the most common method for analyzing a company’s competitive environment. The five forces, customer, company’s competitive rivals, supplier, potential new market, and substitute products, affect its profitability. Diageo is applying the Porter five points to understand and identify its strengths and work on its weaknesses to avoid future mistakes. It also helps to learn and understand the factors affecting profitability, thus enabling the management in the decision-making process.
A PESTLE analysis is a method used to analyze the critical macroenvironmental that mat has a strong effect on its performance. These factors include Political, Economic, Sociological, Technological, Legal, and Environmental factors. I t is essential to note that these factors affect an organization from the outside.
Political Factors: these are factors on how the government influences the businesses
Economic Factors: economic performances determines these factors. Economic factors include exchange rate, inflation rates, economic growth, and unemployment rates.
Social Factors: This represents the demographic characteristics, cultural norms, customs of the population in which the business operates. The social factors include population growth rate, lifestyle, cultural barriers, age distribution, and career attitudes.
Technological Factors: These factors are innovation and technology factors that favorably or unfavorably affect the industry.
Environmental Factors: These factors include environmental aspects such as weather, climate changes, and environmental offsets.
Legal Factors include laws such as discrimination laws, employment laws, antitrust laws, consumer protection laws, health and safety laws, and copyright and patent laws.
Diageo, therefore, finds it essential to use these factors to analyze each department at a time hence focusing on specific factors that affect that department.
Therefore, it is essential for organizations to carefully monitor internal and external environments to detect any early signs of threat or opportunity that may influence their current and future operations through a process known as environmental scanning. They should also gather information and study the cause and effect of various factors to analyze and predict the future.
Business environment refers to factors and forces affecting organizations’ functioning and their ability to build and maintain successful operations. Understanding the nature of the business environment and its changes is an essential part of business analysis. It create competitive strategies that ensure the company has the right success strategy in the future.
Business environment refers to factors internal and external factors, elements, and forces that affect a business’s development, performance, and outcome. Business environment is simply the surroundings where a business firm grows up. Business environment specifically operates in dynamic environments. Environmental adaptation is the most critical part of business survival and growth. The business environment is the aggregate name of factors and forces that affects business and business-related activities.
Diageo PLC is an alcoholic beverage company, formed in London in 1997, which sells its products in one hundred and eighty countries worldwide. It has more than 200 brands, which include Johnnie Walker, Smirnoff, Baileys, and Guinness. Diageo’s most significant revenue producers are scotch at 25% and beer at 16%. The business environment has helped Diageo in the following ways:
It has helped in identifying strengths which helps to improve employee job satisfaction hence improving the overall performance.
Identification week areas that help the organization to mitigate them and move forward
Identification of threats due to Severe competitive markets
Identification of opportunities that helps the company existing options.
There are two main types of business environments: internal and external environments whereby the internal environment comprises factors in the organization that affects the organization’s achievements and approach, where the company has control over these factors; these factors include financial and marketing resources, management structures, technology, and physical assets.
The external environment comprises institutions, organizations, and forces that impact the organization’s operation outside the company. The organization must act or respond to keep up its regular flow of operations. The external environment are classified into two types: the microenvironment and the macro environment.
Diageo’s critical internal environments are carefully considered, including profitable communication channels within the organization, proper organization structures, and effective production procedures. Diageo PLC regularly conducts assessments on its operations and effectively responds to any aspect.
The external business environments can affect an entire company since they are more powerful than the internal business environments. Putting these into consideration, Diageo PLC closely monitors the microenvironment such as workers unions, suppliers, and customers attitudes and the macro environment such as the prevailing business cycles, demographic patterns, and instabilities in the economy.
Porter’s Five Forces Framework is the most common method for analyzing a company’s competitive environment. The five forces, customer, company’s competitive rivals, supplier, potential new market, and substitute products, affect its profitability. Diageo is applying the Porter five points to understand and identify its strengths and work on its weaknesses to avoid future mistakes. It also helps to learn and understand the factors affecting profitability, thus enabling the management in the decision-making process.
A PESTLE analysis is a method used to analyze the critical macroenvironmental that mat has a strong effect on its performance. These factors include Political, Economic, Sociological, Technological, Legal, and Environmental factors. I t is essential to note that these factors affect an organization from the outside.
Political Factors: these are factors on how the government influences the businesses
Economic Factors: economic performances determines these factors. Economic factors include exchange rate, inflation rates, economic growth, and unemployment rates.
Social Factors: This represents the demographic characteristics, cultural norms, customs of the population in which the business operates. The social factors include population growth rate, lifestyle, cultural barriers, age distribution, and career attitudes.
Technological Factors: These factors are innovation and technology factors that favorably or unfavorably affect the industry.
Environmental Factors: These factors include environmental aspects such as weather, climate changes, and environmental offsets.
Legal Factors include laws such as discrimination laws, employment laws, antitrust laws, consumer protection laws, health and safety laws, and copyright and patent laws.
Diageo, therefore, finds it essential to use these factors to analyze each department at a time hence focusing on specific factors that affect that department.
Therefore, it is essential for organizations to carefully monitor internal and external environments to detect any early signs of threat or opportunity that may influence their current and future operations through a process known as environmental scanning. They should also gather information and study the cause and effect of various factors to analyze and predict the future.