The Importance Of External Business Environment Commerce Essay

The Importance Of External Business Environment Commerce essayMost firms operate in a very uncertain , volatile and dynamic environs. To remain competitive they need to anticipate changes in their external merchandise environment and be prep bed to adapt business activities accordingly. Industries need to be prepargond and have some outline plans for dealing with different eventualities so that they ar less likely to be exposed to loosing business. The external environment of different organizations differ in many ways, but the theme of every organization is to intent their current resources and the information or data the have to their advantage and transform it into the required out puts, and this change happens against a background of external influences which are outside the industry and can effect the organization and its activities. The external environment is very complex, dynamic and volatile and unpredictable. But these factors have to be considered for any meaningful abstract of an industry.key determinants - Political , Economical , Social , Technology , Environment , Legalas few determinants overlap for example the political, well-disposed, and economical can be utter to socio-economic determinants.swot analysis strengths weaknesses opportunities and threatsThe actual strategies being pursued at any time reflect the organizations system content, and the important productions are. The ability of the organization to add harbor in meaningful ways which exploit organizational resources to achieve synergy, also at the same time. Satisfy the needs of the organizations major stake holders. Particularly its portion holders and clients.Strategic management involves devising a complete roadmap for capturing and maintaining competitive advantage by determining the broader concepts of mission, goals, and long and short-term objectives and by defining and managing the more special details of analysis, decision-making, actions, roles, responsibilit ies, and timelines needed to do so. A sustainable society is one that meets current environmental, economic, and community needs without compromising those needs in the future. There are third main categories of issues that affect a sustainable society1. Environmental issues2. Economic issues3. Community issuesToday, companies are expected to practice good business ethical motiveby fostering a sustainable society.Environmental issues may be caused by constitution or humans.Environmental issues include the fol broken iningChanges in the climate, such(prenominal) as global warming Natural disasters, such as hurricanesThe alteration of terrain or bodies of water due to natural disasters or developmentDeterioration of diffuse quality, both outside (such as fumes from locomote vehicles and airplanes) and inside (such as toxins released from paint and varnish)The release of groundless materials from activities such as oil spills and the dumping of hazardous waste. The depletion or de terioration of natural resources, such as farmland, water, trees, and minerals. The displacement of wildlife or depletion of their food sourcesA company can influence those environmental issues caused by nature through its response and management of the after-effects. For example, a companys financial or emergency response to a hurricane illustrates a companys contribution to an environmental issue in a sustainable society. This is also a good example of an environmental issue that crosses over into a community issue.but by choosing active practices for oil gas or other leading industries which use more fuel and other natural energy resources they can take the fol pitifuling steps to be more eco neighbourlyUse renewable resources, such as bamboo and treated pine timber whenever possible.Plant trees on company property and in the community. Reduce the number of motor vehicles and airplanes to lower emissions and noise pollution. Use recycled and biodegradable materials in product d evelopment. Operate facilities during non-peak utility and travel hours. Design products that are recyclable or biodegradable. Use option fuel vehicles whenever possible. Develop preference energies, fuels, and products. aim financial incentives to employees who travel to work by bicycle, public transportation, and hybrid or electric motor vehicles. Or Offer employees the opportunity to work from home part of the time. Purchase products from companies that employ sustainable packaging.Analysis on the external environment of UK diligent industry The ideology that defines the boundaries of companies and industries abide unaffected, even if they include diverse implications as technology, boundaries can mainly be focused on the basic service, quality and price. Analysis of the external environment of the UK mobile phone industry key determinants of success .EconomicDue to the affluence of various market segments and consumption patterns of different individuals and direction of t he economy in which a firm operates. Each firm must consider economic trends in the segments the effect the industry on both national and international level . governing plays a major role in the economy and its activities influence both demand and supply side. The social factors that affect the firm involve beliefs, values, and attitudes, opinions of the persons in the firms external environment as essential from the ecological religious and ethnic conditioning. As the attitudes change among people, so does the demand. Entry of women into the labor market has brought about a profound social change.Technologicaluses of technology in UK mobile industry is a big factor, and important. Same the technology represent the main technical issues. Same as GPRS, 3G, multimedia system and many more technical supports for to enjoy people mobile and its technology. In UK there are approx45 million phones in circulation with an estimated 77% of population having at least(prenominal) one mobile phones. UK users alone dispose 15 million mobile phones annually.POLITICALPolitical issues helps and improves the legal aspects of UK mobile phone industry is a broad running industry in world. Many companies are the hands of it. Interference of political factor in UK mobile phone industry by the government or judicial have helped the mobile industry to a large amount like the blocking the unwanted sites and making internet browsing safe. The decisions do by the government and political play a key factor in any mobile industry. Political factors define the legal and regulatory issue within the firm and the mangers who formulate the mobile companys strategy. This factors has an influence on two government functions.Supplier functionCustomer functionThere are the three factors to determine the external environment of the UK mobile phone industry in key determinants of success.SummaryThe development improvement and sustainability of an industry are dependent upon the pertinent stra tegic options becoming available and used to the organizations best advantage within that industry. The methods of analysis used in this report are internationally recognized and impart a sound foundation for market and competitor analysis. The following report looks at and assesses the macro and micro environment of the mobile network industry on a domestic and global outstrip.PESTILE ANALYSISOne variation of PESTLE ANALYSIS has three main elements. The first two are often developed simultaneously with the third done as part of a following review process.1. EXTERNAL FACTORS- LIST2. intimationS OF EXTERNAL FACTORS- IDENTIFY3. RELATIVE IMPORTANCE OF IMPLICATION OF EXTERNAL FACTORS-DECIDE1 LIST EXTERNAL FACTORSA DESCRIPTIVE LIST OF FACTORS,Influences or pressure that have identifiedImplications and impacts, now or in theFuture, for the organization is compiled forEach of the PESTLE componentsPOLITICAL Global, national, regional, local and communitytrends, changes, events etc.ECONOM IC world, national and local trends, changes,events etcSOCIAL Developments in society- culture, behavior,Expectations, composition etc.TECHNOLOGICAL Developments calculator hardware, software,other equipment, material, products andProcesses etc.LEGAL Word/ EU/ National legislation changes,Prospects etc.ENVIRONMENTAL Global/ EU/ national/ local issues, pressure,Movements etc.Porters 5 ForcesThe exemplar of the cardinal Competitive Forces was developed by Michael E. Porter in his book Competitive Strategy Techniques for Analyzing Industries and Competitors in 1980.Since that time it has become an important rotating shaft for analyzing an organizations industry structure in strategic processes .Porters model is based on the insight that corporate strategy should meet the opportunities and threats in the organizations external environment. Especially, competitive strategy should base on and understanding of industry structures and the way they change. Porter has identified five comp etitive forces that shape every industry and every market. These forces determine the durability of competition and hence the profitability and attractiveness of an industry. The objective corporate strategy should be to modify these competitive forces in a way that improves the position of the organization. Porters model supports analysis of the driving forces in an industry. Based on the information derived from the Five Forces Analysis, management can decide how to influence or to exploit particular characteristics of their industry.The Five Competitive Forces are as followsBargaining Power of Suppliers The suppliers comprises all sources for inputs that are needed in order to provide goods or services. Supplier bargaining role is likely to be mellow whenThe market is dominated by a few large suppliers rather than a fragmented sourceof supply,There are no substitutes for the particular input,The suppliers customers are fragmented, so their bargaining power is low,The switchin g costs from one supplier to another are high,There is the possibility of the supplier integrating forwards in order to obtain higher prices and margins. This threat is especially high whenThe buying industry has a higher profitability than the render industry,Forward integration provides economies of scale for the supplier,The buying industry hinders the supplying industry in their development (e.g. reluctance to accept new releases of products),The buying industry has low barriers to entry. In such situations, the buying industry oftenfaces a high pressure on margins from their suppliers. The relationship to powerful suppliers can potentially reduce strategic options for the organization.The product is undifferentiated and can be replaces by substitutes,Switching to an alternative product is relatively simple and is not related to highcosts,Customers have low margins and are prices sensitive,Customers could produce the product themselves,The product is not of strategically import ance for the customer,The customer knows about the production costs of the productThere is the possibility for the customer integrating backwards.Bargaining Power of Customers The bargaining power of customers determines how very much customers can impose pressure on margins and volumes. Customers bargaining power is likely to be high whenThey buy large volumes, there is a concentration of buyers,The supplying industry comprises a large number of small operatorsThe supplying industry operates with high determined costs,High switching costs for customersLegislation and government actionThreat of New Entrants The competition in an industry will be the higher, the easier it is for other companies to take down this industry. In such a situation, new entrants could change major determinants of the market environment (e.g. market shares, prices, customer inscription) at any time. There is always a latent pressure for reaction and adjustment for existing players in this industry. The t hreat of new entries will depend on the extent to which there are barriers to entry.Economies of scale (minimum size requirements for profitable operations),High initial investments and fixed costs,Cost advantages of existing players due to experience curve effects of operation with fully depreciated assets,Brand loyalty of customersProtected intellectual property like patents, licenses etc,Scarcity of important resources, e.g. qualified expert staffAccess to raw materials is controlled by existing players,Distribution impart are controlled by existing players,Existing players have close customer relations, e.g. from long-term servicecontracts,Threat of Substitutes A threat from substitutes exists if there are alternative products with lower prices of better performance parameters for the same purpose. They could potentially attract asignificant proportion of market volume and hence reduce the potential sales volume forexisting players. This category also relates to complementary p roducts. Similarly to the threat of new entrants, the treat of substitutes is determined by factors likeBrand loyalty of customers, airless customer relationships,Switching costs for customers,The relative price for performance of substitutes,Current trends.Competitive Rivalry in the midst of Existing companys This force describes the intensity of competition between existing companies in an industry. High competitive pressure results in pressure on prices, margins, and hence, on profitability for every single company in the industry. competition between existing players is likely to be high whenThere are many players of about the same size,Players have similar strategiesThere is not much differentiation between players and their products, hence, there ismuch price competitionLow market growth rates (growth of a particular company is possible plainly at the expense of a competitor),Barriers for exit are high (e.g. expensive and highly specialized equipment).