FACTORS AFFECTING BUSINESS DIRECTLY AND INDIRECTLY

1: POLITICAL FACTORS :

THE POLITICAL ENVIRONMENT CAN AFFECT A BUSINESS EITHER POSITIVELY, OR NEGATIVELY, DEPENDING ON THE PREVAILING SITUATION IN A COUNTRY. IT MAINLY FORMS THE EXTERNAL FACTORS - WHICH ARE PART OF THE MACRO-ENVIRONMENT, CONTROL OF WHICH IS BEYOND THE ABILITY OF HUMAN BEINGS. 

THESE FACTORS TOUCH ON THE WAY POLITICS ARE CONDUCTED IN A COUNTRY, WHICH DIRECTLY REFLECTS ON WHAT IS HAPPENING WITHIN THE GOVERNMENT ITSELF.

BUSINESS DEALS TOTALLY DEPEND ON THE POLITICAL ENVIRONMENT. LET ME TELL YOU HOW:

1) THE POLITICIANS ARE THE ONLY PEOPLE WHO DECIDE WITH WHICH OTHER COUNTRIES TRADE TAKES PLACE, AND UNDER WHAT CONDITIONS.

2) THE RULES AND REGULATIONS FOR TRADE ARE PASSED BY POLITICIANS. 

3) IF POLITICAL RELATIONS ARE NOT GOOD WITH A NEIGHBORING COUNTRY, OR WITH ANY COUNTRY WITH WHOM YOU WANT TO TRADE, YOU WILL NOT BE ALLOWED TO DO SO - DUE TO THE RULES & REGULATIONS WHICH HAVE BEEN MADE BY THE POLITICIANS.

 

Geographical factors affecting business

Economic and geographic environmental factors impact businesses that are beginning, expanding or currently competing. Businesses often take into consideration the overall economic conditions in a country, such as whether a recession or boom is underway. Businesses also consider geographic and climactic factors. For example, a company that relies on vegetable or fruit crops must consider seasonal temperatures, rainfall and other conditions.2) Natural resources available in the region also play a big role in how much a region or country develops. While not a permanent factor, as most natural resources eventually become depleted, it does offer an advantage or a boost to a country in a resource-rich region.

3) Environmental stability plays an unpredictable role as well. If a nation is located within a radius of known environmental danger, such as tornadoes, earthquakes, tsunamis, etc. it must work to protect itself against them, thus lowering its chances of progress.

Demographical factors affecting business Demographical(जनसां��ख्यि��की सां�बं�धी� )

The demography of a region includes population size and composition, as well as key socio-economic attributes such as literacy levels and wide or narrow disparities in a society's distribution of income. Theoretically, the larger the total population in a region, the larger the potential market that will exist. In addition, the composition of a population in terms of age and sex will also influence the potential demand for specific products. For example, if a company wishes to market disposable nappies abroad, the number of women in a particular target market who are of child-bearing age is an important influence on the potential demand for that product.In effect, demographic factors such as literacy levels serve to stratify the total population into two different segments - those people who are likely to be potential consumers and those who are not.

An overall increase in population size is therefore relevant to potential demand. Stratification of the overall market by demographic characteristics also helps to identify significant changes in potential marketing opportunities. For example, the ageing of the post-War 'baby-boomers' is creating a growing worldwide market for products and services geared to affluent and middle-income families.

Physcological factors affecting business

Successful businesses understand how to leverage the different factors that influence consumer buying behavior to effectively market their products and maximize sales. Studies show that there are generally four main factors that play a role in the consumer's buying behavior. These factors include cultural factors, social factors, personal factors and psychological factors. The psychological factors that influence an individual's decision to make a purchase are further categorized into the individual's motivations, perceptions, learning and his beliefs and attitudes.

Best example of physcological factors can be understood by the example of Mc.donalds burger restaurents where u found that there are separate counters for veg and non veg burgers because ofPhyscology of peoples that they don’t eat burger where non veg is also made . So they have separated Their counters .

Another example of physcology can be understood by the example of branding of clothes . We have the physcology that this brand is good and this is bad . Even it is possible that both are same things .

Another exaples is the case of restaurents where drinking(hard drink) and food are available . But due to our physcology that we will not eat here because here drink is also done at this restaurant.

Social and cultural factors affecting business

consider while creating and implementing a marketing strategy of a company. These often-linked but somewhat different factors have diverse effects on the decisions of consumers and buyers. Basically, sociocultural factors are customs, lifestyles and values that characterize a society. More specifically, cultural aspects include aesthetics, education, language, law and politics, religion, social organizations, technology and material culture, values and attitudes. Social factors include reference groups, family, role and status in the society. Small-business owners should be aware of and understand these factors' connection with buying habits.

1) There is a negative demand for beef products because cow signifies as a holy one.2) Chicken Shops don't open on Tuesday due to religious reasons.3) They have different official languages so be careful to use a certain word because it may have unethical meaning to them.4) India is one of the homes of Muslim populations so avoid pork products.5) The have a "caste system" that clearly indicates your status in the society so their manual or exhausting works are meant to the lowest level of status only.

Best examples of social and cultural factors affecting business:

Technological factors affecting business

Changes in the technological environment have had some of the most dramatic effects on business. A company may be thoroughly committed to a particular type of technology, and may have made major investments in equipment and training only to see a new, more innovative and cost-effective technology emerge .

Technological factors affect supply chain and social chain also in a big amount.

We can take the example of dvd players where in older time VCR were present .also dvd comes at a cheaper rate than cassetes of VCR so the companies engaged in the manufacture of VCR are all finished or we can say that their business is destroyed .

Global factors affecting business

Global factors influencing business are legal, political, social, technological and economic. Understanding of these factors is important while developing a business strategy.a. Social factors - These factors are related to changes in social structures. These factors provide insights into behaviour, tastes, and lifestyles patterns of a population. Buying patterns are greatly influenced by the changes in the structure of the population, and in consumer lifestyles. Age, gender, etc all determine the buying patterns and understanding of such changes is critical for developing strategies which are in line with the market situations.

BIMARU

BIMARU was an acronym coined by taking the first letter of four northern Indian states : Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh. Later Orissa was included resulting in BIMAROU. It was coined by Ashish Bose in the mid-1980s. BIMARU has a resemblance to a Hindi word "Bimar" which means sick. This was used to describe the bad state of economy in backward states Bihar, Madhya Pradesh, Rajasthan and Uttarpradesh. Later Orissa was included in the list. Several studies, including those by the UN, showed that the performance of the BIMARU states affected the GDP growth rate of India.[5][6] Some of these states are also a part of Red Corridor. Since some of these states have now started to advance faster than some of the developed states, the concept of BIMARU is starting to become outdated.

SOURCE (IIIT-A)

AIDAAIDA is an acronym used in marketing and advertising that describes a common list of events that may occur when a consumer engages with an advertisement.A - Attention (Awareness): attract the attention of the customer.I - Interest: raise customer interest by focusing on and demonstrating advantages and benefits (instead of focusing on features, as in traditional advertising).D - Desire: convince customers that they want and desire the product or service and that it will satisfy their needs.A - Action: lead customers towards taking action and/or purchasing.Using a system like this gives one a general understanding of how to target a market effectively. Moving from step to step, one loses some percent of prospects.

Economies of scaleWhen more units of a good or a service can be produced on a larger scale, yet with (on average) less input costs, economies of scale (ES) are said to be achieved. Alternatively, this means that as a company grows and production units increase, a company will have a better chance to decrease its costs. According to theory, economic growth may be achieved when economies of scale are realized.

Internal and External Economies of ScaleAlfred Marshall made a distinction between internal and external economies of scale. When a company reduces costs and increases production, internal economies of scale have been achieved. External economies of scale occur outside of a firm, within an industry. Thus, when an industry's scope of operations expands due to, for example, the creation of a better transportation network, resulting in a subsequent decrease in cost for a company working within that industry, external economies of scale are said to have been achieved. With external ES, all firms within the industry will benefit.

What Is the Difference Between an Environmental Analysis & a SWOT Analysis?

Environmental Analysis

An environmental analysis surveys the business landscape to determine how external variables will affect its decision-making. Robert Grant, author of the book, “Contemporary Strategy Analysis,” categorizes environmental influences as either source or proximity. Grant explains that sources include political, economic, social and technological factors; these factors form what’s known as a PEST analysis. The business is not always in a position to control these variables; it can only plan for them and make decisions accordingly. Companies use an environmental analysis to prepare for a variety of potential scenarios. For instance, an organization may prepare for a downturn in the economy by drafting several production schedules that are contingent on different levels of consumer demand.

SWOT Analysis

A SWOT analysis reviews the business’s strengths, weaknesses, opportunities and threats. As is the case with an environmental analysis, a SWOT analysis also surveys external circumstances. However, this type of analysis also takes into consideration internal components. Within the strengths and weaknesses section of the SWOT analysis, the company assesses factors unique to the organization. Examples of these components may include the business’s leadership abilities, patents and intellectual property, technology available within the company and the strength of its brand name. The company can control these factors, so it attempts to strengthen its best assets and improve its apparent weaknesses.

Benefits with environmental analysis and swot analysis

Benefits of Environmental Analysis

A PEST analysis prepares the business for handling external factors. Robert Chapman, author of the book, “Simple Tools and Techniques of Enterprise Risk Management,” explains a PEST analysis helps the business be proactive with market trends. Instead of reacting to market forces, Chapman explains a PEST analysis gives the business the tools to prepare for potential risks. For instance, this type of analysis may disclose that government legislation will increase the cost of raw materials by 20 percent. If the business can preempt this as a possibility, it can switch vendors, stock up on raw materials or find cheaper alternatives. Such preparation ultimately saves the company money and in turn gives it a competitive advantage.

Benefits of a SWOT Analysis

A SWOT analysis offers a well-rounded, holistic picture by revealing both internal and external issues. Though the "opportunities" and "threats" sections of the analysis do not differ much from a PEST report, the "strengths" and "weaknesses" components highlight the internal issues of the organization. Carlos Moore advises in his book, “Small Business Management,” to ask additional questions about how these strengths, weaknesses, opportunities and threats can help the business prepare for future events. This turns the SWOT analysis into an insightful tool that allows the company to capitalize on future possibilities and avoid potential pitfalls.