Environment in business means various elements of surroundings which have direct or indirect impact on a business. These elements influence the functioning of a business.
There are different types of environmental elements, which are discussed below:-
Customers:-
The final goal of a business is to gain profit by satisfying its customers. A business unit must evaluate the likes and preferences of customers. A business unit must need loyalty of customers towards their products and services. The duty of a business unit is to monitor customers attitude, behaviour, preferences etc.
Suppliers:-
A business unit, especially a manufacturing unit needs raw material for production purposes. Suppliers are those, who provide various kinds of needed raw materials. A business unit must ensure high quality as well as uninterrupted supply of raw materials.
Competitors:-
In today’s world, monopoly markets are very rare. Every business unit is facing competition in their business activities. So, to grow as well as sustain in the market, a business unit must closely monitor their competitors activities. A business organisation should also evaluate competitors activities and business policies should be made on the basis of that.
Workers:-
Workers are those part of human resources which are actively involved in day to day workings of a business unit. On the root level, workings of workers are very much important. Proper wages, remuneration and better working conditions should be given to workers. So that business organisation can get maximum outcome from them.
Employees:-
Employees are a permanent workforce of a business organisation. Employees are involved in every aspect of a business unit such as in manufacturing, policy making, decision making, promotion, advertisement etc. So, a justified salary, promotion, better working conditions, training etc should be given to them.
Political and legal aspects:-
A business organisation must follow the rules and regulations of the country in which it is operating it’s business. Government plays an active role in regulating economic activities of that country. A business unit must pay tax time to time and do their business by following rules of that country.
Socio-cultural elements:-
Business activities are greatly influenced by social structure and culture of a society. Every society has its own language, habits, beliefs, customs etc. A business organisation need to be careful about socio-cultural elements of a society before entering into that market for business purposes. Every society has their own significance. So to sustain and grow business, a business unit has to study carefully about that particular society.
Economic elements:-
Various aspects in an economic environment such as GDP, per capita income, income distribution, balance of trade, poverty etc have created a great influence on the operation of a business organisation. A business firm has to be very careful while evaluating these economic aspects. Proper study and research has to be done before making any business policies.
Technology and innovation:-
A business organisation should be flexible in nature, which means it has the strategy to adopt new technology. A firm cannot survive in a competitive world with the outdated technology. In the era of globalisation, adoption of new technology will significantly benefit a business organisation.
Nature:-
In the race of growth and profit making, a business unit must not forget its duty towards nature. Nowadays it is seen that companies and industries are not conscious about pollution and degradation of nature. It’s the ethical duty of business to protect our environment. Apart from that, it is also kept in mind that natural resources are not unlimited. So, companies must be aware of using natural resources and promote the recycling process. It is very much needed for future generations also.
Apart from all these internal factors, there are some other internal factors which have indirect effect on environment of a business unit.some of these factors are discussed below.
Price determination :-
Price determination is a vital aspect of the business unit because it involves determining the value or cost that consumers must pay to get product on service. The process of determining the proper price of a product is complex and must consider various factors before determining it. These are:-
In pricing based on the value system, the price is determined based on the perceived value of the product to the customer. This value can be influenced by various factors such uniqueness, brand value etc.
In cost based pricing system, nowadays the most common approaches of pricing is based on its cost of production. Cost can be calculated on various factors such as cost of production, labour, distribution cost, raw material cost, transportation etc. This system helps a business unit to cover all its expenses and generate profit.
Again in a competition based system, It involves determining the price of a product based on what competitors charged for similar product on services. It also helps a business unit to sustain in a modern competitive market.
Understanding price elasticity helps in setting optional prices that maximise profit. It is also an important factor in the price determination process. Dynamic pricing plays a vital role in the process of price determination. Adjusting price in real time based various factors such as season, demand, supply ete is also needed for dynamic pricing systems.
Thus, we can conclude that effective determination is essential for profitability and competitiveness of a business unit to sustain in the modern era.
Personal selling process :-
Apart from having a broad approach, sometimes a business organisation must have a strategic approach to engage with potential customers on an individual basis, build good relationships and persuade them to purchase products and services. It involves a series of steps to guide representatives of a business organisation through the interaction of potential customers. Some of these steps are:-
Proper presentation of product is the first step in this regard. Representatives provide information about the product and service. This includes focusing or highlighting features and benefits, addressing the customers needs and demonstrating their product’s concerns.
In the beginning, the representatives identify and research potential customers who might have interest in their product and services. Some Sources such as online databases and social networks will help in this process.
In direct approach, the representative of a business organisation makes initial contact with the potential customers through various ways, such as over a phone call on via email etc. The goal is to create a positive impression about the product and services.
After describing all the features of a product, the final sale deal is done. Sometimes some discounts and incentives may help in this process. To establish good relations with customers, providing them good after sale service is needed for customer retention and loyalty. We can conclude that selling process is a vital element of marketing.
In conclusion, it is seen that all these elements of environment are the part and parcel of decision making, policy making and strategy making of and business organisation.
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