Influence Of External Environment On Business

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Introduction This research is based on the ways that the external environment can influence the operation of a business, and the aim of this research is how to protect a business operation from the influence of external forces. An external environment is composed of all the outside factors or influences that impact the operation of business. The business must act or react to keep up its flow of operations. The importance of the external environment analysis especially for managers is to fully understand the aspect of the business environment because it can affect and have an impact on their firm and how it operates. External environment plays a critical role in shaping the future of individual businesses as well as to keep the business ahead…show more content…
For example: an increase in the inflation rate of any economy would affect the way companies’ price their products and services. Adding to that, it would affect the purchasing power of a consumer and change the demand-supply patterns for that economy. Economic factors include inflation rate, interest rates, foreign exchange rates, economic growth patterns etc. Moving on with the social factors : they represent the culture of the society and civilization that a business operates within .These impact on the consumer’s need and the potential market size of an organization’s goods and services. An example for that can be buying trends for Western countries just like Greece where there is high demand during the holiday season. Social factors may include, age distribution, population growth rates, level of education, distribution of wealth and social classes, living conditions and…show more content…
References  Paul Mckinney. (). Internal and External Environments of Business. Available: http://study.com/academy/lesson/internal-and-external-environments-of-business-lesson-quiz.html. Last accessed 20/12/2015.  Jim Downey. (). Strategic Analysis Tools. Available: http://www.cimaglobal.com/Documents/ImportedDocuments/cid_tg_strategic_analysis_tools_nov07.pdf.pdf. Last accessed 20/12/2015.  S.Markwell. (2009). Assessing the impact of political, economic, socio-cultural, environmental and other external influences. Available: http://www.healthknowledge.org.uk/public-health-textbook/organisation-management/5b-understanding-ofs/assessing-impact-external-influences. Last accessed 20/12/2015.  Tan Chee Teik. (2013). PESTLImportance of the External EnvironmentE - Macro Environmental Analysis. Available: http:/http://m360.sim.edu.sg/article/pages/Importance-of-the-External-Environment.aspx/www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31. Last accessed

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