The Modern Business Environment - Term Paper Example

?Running Head: FORCES IN INTERNATIONAL BUSINESS inserts His/her inserts inserts Grade (Date)  Table of Contents EXECUTIVE SUMMARY …………………………………….3 INTRODUCTION……………………………………………….4 Economic Environment………………………………… ..4 Socio-cultural Environment……………………………… .5 Political Environment…………………………………… ..6 Technological Environment………………………………. 7 Legal Environment…………………………………… ….8 Competitive Environment…………….…………………....8 COCA-COLA……………………………………………………..9 CONCLUSION……………………..…………………………….10 REFERENCES…………………………………………………..11 Executive Summary In an increasingly competitive modern age, where competition drives the entire business world, a myriad factors influence the operations in the business fraternity. The business environment is indeed inundated with waves of issues that totally define the nature of operations. This mix translates to what is referred to as the business environment. The forces that define the business environment normally range in various aspects as can be realized in the modern age. Some of these factors can be controlled by the business whereas others are beyond the manipulation of the business. These factors are the core subject matter in this essay. It seeks to address how the external environmental forces influence operations. FORCES IN INTERNATIONAL BUSINESS Introduction The modern business environment is defined by myriad factors that vitally influence the operations of all players in market. In an increasingly global and competitive business environment, it is impossible for any business to evade the influence of these factors as a function of its operations. These factors that define the operations of businesses are usually collectively referred to as the business environment. As such, business environment is the aggregate of all the external factors that influence the organizations and the operations of businesses. It is imperative that the business managers in the modern age be aware and inundated with all the factors that can impact on the business operations. In most cases, some of these factors affect the organizations directly while others impact indirectly on the organizations. In that manner, the modern business environment is classified into; internal environment, operational environment and external environment. The first two classifications are normally a function of the organization’s own operations and can therefore be influenced whereas the external environmental factors are broad in scope and cannot easily be manipulated by the operations. Economic environment The economic business environment usually refers to the combination of the nature of economic system prevailing in the country of operations, the anatomical structure of the economy in terms of economic policies, the government’s regulation of the capital markets and such other factors as the socio-economic infrastructure. Such market situations are normally great determinants of the success or failure of entirely all organizations (Becker, 2001). In any case, a supportive economic environment is the best condition an organization may imagine. Most multinationals today operate in entirely different economic systems from their home countries and are as such usually compelled to adapt to the conditionality in existence. In many countries, governments in place have tried to promote investment activities though the creation of favorable economic environments that support the operations of investors. The economic systems in many countries differ in many respects and this has a great influence on investment viability. The economic systems in the Eastern countries are totally different from the systems in the Western economies. An American multinational corporation aspiring to operate in Africa should therefore be well acquitnted with the economic environment evidenced in Africa. Socio-cultural Environment The organization’s social dimension is a great determinant of the value system which also influences the operations of the business. Many sociological factors like cultural heritage, costs structure, customs and conventions and perception towards the ownership of wealth will usually impact greatly on the viability of a business. Many organizations today are confronted will a wave of many sociological factors which will usually determine such factors as the mobility of labor and the work culture in the country. An organization has to adapt to the demands and requirements in a given social environment by customizing its products or services to suite the peculiar demands of such environments. Different countries in the world are unique in terms of cultural attitudes, people’s mannerisms, customs and values. These social orientations create the differences in demand for goods and services between one region and another (Certo, 2008). In the same way the code of conduct that businesses are expected to follow is usually a product of the socio-cultural environment that exists in the particular business environment. The national culture of a country becomes very cardinal in the success equation of any multinational firm operating in a country. In any case, the economic freedom a firm enjoys in the global business environment is usually influenced by the national culture of a people. The ability of a firm to acknowledge the various ways of thinking and attitudes in different social environments is a very critical step toward the success of the organization (Ellis, 2008). Therefore the socio-cultural dimension of a business is not only an important consideration in the marketing of products but in the whole organizational phases. Political environment The global business environment is usually shaped by, among other factors, the political environment existing in different countries across the world. The political environment is usually determined by political units such as political parties, philosophy and government ideology, the extent of bureaucracy, foreign policy and political stability. To a great extent, these factors influence the operations of businesses either directly or indirectly. Some governments are always on a constant watch against the operations of multinationals under the banner of promoting the local infant industries. For instance, most African governments do not easily permit Western multinationals to infiltrate all the sectors of their economies (Dobbins, 2009). The local industries are given the immunity against the stiff competition posed by such large corporations. Similarly, the recent adoption of trade liberalization tendencies across several countries in the world has opened up new markets for most multinationals which were previously not accessible. In many countries, political instability has made business operations become very expensive and risky. As such, organizations tend to avoid such countries unless the need is clearly justified. In such a case, the cost of insurance will usually become very high as a result of such political instabilities. Government red tape and bureaucracy is a great threat to business success in most developing economies in the world today. In several countries, establishing a business is usually a nightmare for any investor. Such restricted environments are never conducive for the success of business. Technological environment The modern age is characterized by great technological advances that crop in day by day. These advances in technology influence all sectors of life including business operations. Technological advances in business are normally meant to bring efficiency and simplicity in business operations. The level of technology an organization adopts today will determine to a great extent, the quality of goods or services it presents to the consumers for consumption. It also determines the quantity of goods produced and the extent of marketing activities of the business. Advances in information technology and automation of business activities have greatly transformed the mode of business conduct in the world. Nevertheless, it must be remembered that technological advances will usually come at great costs to the organizations. Most organizations cannot effectively match up to the technological demands of the new age due to the high financial requirements of acquiring such technology. In several countries in the world, most technological simplicities evidenced in the Western countries have not gained root. A multinational operating in such environments will therefore be forced to spent millions in acquiring the technology otherwise it can’t compete against its competitors in technologically advanced countries (Zuboff & Maxmin, 2010). Technology has radically transformed the internal workings of most businesses by replacing workers through the application of computerized systems. In the same way, many organizations can today access faraway markets through the application of online trading which has drawn all markets together. Technology is therefore a necessary component in the operations of any business today. As such, technology becomes a tool for breaking new ground and accessing new markets through the use of more advance mechanisms. In that case, the benefits accrued from the acquisition of technology clearly justify the costs involved. Legal environment The business legal environment involves the laws, rules and other legal aspects that influence the operations of the business. The efficiency of the judicial system in the determination of court rulings in a country coupled with environmental laws are great success factors in business operations. Several countries have established very strict laws relating to environmental pollution in a country. Adhering to such laws becomes very expensive for most businesses. Any investor aspiring to venture into a foreign market needs to thoroughly understand the legal environment of the particular country. Rules and regulations are normally enforced through the government organs which can always prove a challenge to most new businesses. Competitive environment Competition is totally inevitable in the modern business environment. The world today is defined by thousands of multinationals always on the constant move toward making more profits through the use of strategies meant to outdo the competitors. Indeed, competition has forced many firms to quit markets when the costs and conditions in the markets become unbearable. Every firm must develop strategies and means of survival in the modern market. Such survival mechanisms are always the greatest headache for most managers. Competition is nevertheless good as it gives the consumers a variety to choose from apart from creating the opportunity for a firm to establish a niche in the market (Horn, 2002). Coca-Cola Coca-cola is a household name in many countries across the world as a consequence of the wide availability of its soft drinks in these countries. The organization is indeed a big multinational that operates in several countries across the world and has to grapple with the external and internal environmental challenges evidenced in these foreign markets. In most African countries, the firm faces very restrictive laws governing the operations of business. Such measures range from restricted production to harsh environmental rules. It faces great competition from local brands of soft drinks as well as other multinationals like Pepsi-cola. In some cultures, the consumption of soft drinks like coca-cola is highly prohibited and the firm has to come up with alternatives and convince the masses on the quality and effectiveness of such drinks. The firm has to adapt to the technological advances in the business world so as to stay competitive in the market. Coca-cola is a classic example of a firm that has effectively managed to operate effectively within the environmental challenges realized in the modern business environment. Through the use of modern forms of production, it has indeed managed to become the market leader in the world’s soft drink industry. In several countries, the firm faces completely no competition at all whereas in other markets, it is always under a constant threat from competitors and has to develop better strategies to survive in the market. Nevertheless, it has managed to stay focused and competitive despite the challenges. On ethical grounds however, Coca-Cola has had challenges in India where it was accused of water pollution and water scarcity from its bottling plant in Kerala in 2003. That was indeed a wrong move for the firm and the plant was henceforth closed after the locals raised the issue with the government. It was however sad to realize that the company was certainly dumping this wastes into the river yet much aware of the dangers it was posing to the local populations. This is certainly contrary to the Christian values of responsibility and empathy. Indeed, the damage that the company did on the health of the local population was much great and considering that it was basically as a result to make more profit, it becomes wrong. The company should therefore be driven not only by ethical values in its business activities but by Christian values as well. As such, it becomes acceptable. Conclusion In conclusion, it can be stated that the business environment is indeed a combination of several environmental forces which usually impact on the operations of organizations across the world. A business must be prepared to tackle the challenges and conditions that present themselves in the course of operation. In such a case, the success of a business becomes a reality. References Becker, B. H. (2001). Linking People Strategy and Performance. Boston: Havard business School Press. Certo, S. (2008). Modern Management. Upper Saddle River,NJ: Prentice Hall. Dobbins, C. (2009). Strategic Planning: External environmental scanning. Boston: McGraw-Hill. Ellis, J. (2008). Strategic Management: Comparing business and military strategy. Stanford: Stanford University Press. Horn, S. (2002). The Strategy Reader. Malden, MA: Blackwell Publishers. Zuboff, & Maxmin. (2010). Size is not a strategy. 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