Understanding Business Environment

Posted by Imam Larh on Friday, 23 March 2018

Understanding Business Environment
The business environment cannot be ignored simply. The business environment can be a driver or obstacle for the company. The environment that can affect the business/company is the environment of the micro and macro environment.

a. Micro Environment

A micro-environment is an environment associated with the company's operations, such as suppliers, employees, shareholders, employers, managers, directors, distributors, customers/customers and others.

If this is in line with a shift in marketing strategy, ie from a corporate profit (shareholder) to benefits for stakeholders, then the internal environment of both individuals and groups who have interests in the company will be very influential. Which includes individuals, individual groups, interest groups of companies and expect satisfaction from the company (stakeholder satisfaction) among them:

a. Supplier

Suppliers have an interest in providing raw materials to the company. In order for the company to satisfy the buyer/customer, then the company must produce goods and services of high quality. This can be achieved if the raw materials of the supplier are qualified, timely, and sufficient.

b. Buyer or Customer

The buyer or customer is a very influential environment because it can provide information for the company. Consumers who are disappointed not to benefit from the company, for example, due to inadequate quality, price, and time will tend to move and subscribe to other companies.

c. Employees

Employees are the first people involved in the company. Employees will try to work well if they benefit from the company. High morale, good service, and high productivity will occur if they get a reasonable salary, a guaranteed future and an upgraded level of regular rank. If not, employees will work less motivated, less productive, less creative, and will harm the company.

d. Distributor

The distributor is a very important environment for the company because it can expedite the sale. Distributors who do not benefit from the company will hamper delivery of goods so that goods will be late to the consumer or market.

b. Macro Environment

What is meant by the macro environment is the environment outside the company that can affect the life of the company as a whole, which includes:

A. Economic Environment
The existence of local, regional, national, and global economic power will affect business opportunity. The company's sales and costs are heavily influenced by the economic environment. Economic variables, such as inflation rate, interest rate, and foreign currency fluctuations either directly or indirectly affect the company.

Inflation or rising prices will make it difficult for entrepreneurs to protect their business. Likewise, an increase in interest rates and fluctuations in foreign currency will make it difficult for companies to calculate their finances

A. Technology Environment

The technological strength and trends of change have a profound effect on the company. The technological changes that have drastically in the last century have expanded the scale of the industry as a whole. 

New technology has created new products and other product modifications. Likewise, the service business field has much influenced by technological advances. Technological advances in creating goods and services have been able to meet the needs and demands of the market quickly. Therefore, the competitor's ability to create added value rapidly through technological change must be noted by the company.

C. Sociopolitical Environment

The magnitude of social and political forces, as well as their tendencies, need to be taken into consideration to determine how far these changes affect society's behavior. The change in political power affects the changes of government and indirectly affects economic change. For example, for example, Political turmoil and riots that occur always bring market sentiment. 

Changes in government investment in technology are also very influential on economic conditions. However, this environment will be very useful if smart entrepreneurs take advantage of opportunities from the environment.

D. Demographic and lifestyle environments
The number of products and services generated by entrepreneurs is often influenced by demographic and lifestyle changes. Community groups, lifestyles, habits, income, and community structure can be an opportunity. In principle, all of the above environments can create opportunities for entrepreneurs.

Summary

1. The steps that can be taken to select the business idea is
  • Creating New and Different Products
  • Observing the Opportunity Door
  • Analyze product and production process in depth
  • Estimate startup costs
  • Takes into account possible risks.
2. The ability to obtain opportunities is highly dependent on the entrepreneurial ability to analyze markets that include aspects of:

  • Ability to analyze market demographics
  • Ability to analyze the nature and behavior of competitors
  • Ability to analyze competitive advantage of competitors and the vacuum of competitors who are considered to create opportunities
3. Some possible business risks, such as technical risk, financial risk, and competitor risk. 

The technical risk associated with the product development process matches the expected or involves a determinant object whether the idea can actually be transformed into a product that is ready to be marketed with capabilities and characteristics. The competitor's risk is the competitor's ability and willingness to maintain his position in the market. Competitor risk includes the following questions:
  • Possible similarities and advantages of what products are developed by competitors?
  • What level of success has the competitor achieved in product development?
  • How much competitor's financial support for the development of new products and products it introduces?
  • Is the new company strong enough to overcome competitors attacks?
4. Financial risks are risks that arise as a result of financial insufficiency/funds either in the stage of developing new products or in creating and maintaining the company to support the cost of new products.

Most of our entrepreneurs do not want to acknowledge the weaknesses and failures of their business. The reason for their lack of business is
  • Lack of venture capital.
  • Lack of guidance from the government.
  • Business is dominated by Chinese people.
  • The effort is dominated by people who have strong capital.
  • Business is dominated by foreigners who have capital.
5. The Government has encouraged the growth of the business world by increasing their business needs through the following ways:
  • Make it easy to set up a company.
  • Make it easy to get credit.
  • Establish trade facilities in the form of cheap kiosks/business places, shophouses and other business support facilities.
  • Opens trade attaches or promotional / exhibition venues in world trade centers.
  • Issuance and grant a privileged license to certain products.
  • Encourage national economic growth.
  • Establish open vocational schools and business courses or business schools, business incubators, business training, and entrepreneurs etc.
6. The business environment can be a driver or hindrance to the company. 
The environment that can affect the course of a business or company is a micro and macro environment.

7. The micro-environment is an environment that is related to the company's operational, 

such as suppliers, employees, shareholders, employers, managers, directors, distributors, customers/customers, and others.

8. What is meant by the macro environment is the environment outside the company that can affect the life of the company as a whole, which includes:
  • Economic Environment
  • Technology Environment
  • Sociopolitical Environment
  • Demographic and lifestyle environments

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