The activity of providing goods and services involving financial and commercial. Look around you and ignore living things. Can you see anything that has not been produced by business? Business is life, everything we have been produces by a business: the food we eat, the shoe you wear, the house you live, the car you drive, the college you study, the phone you call, the iPod we listen to our music on, the book you read and others. We live in a world dominated by business. Businesses provide people with the opportunity to become wealthy in a world.
2.0 Introduction to Business Environment
Business environment consist of all those factors and can affect in business. The term business environment implies those external factors, forces and institutions that are beyond the control of individual business organizations and affect the business enterprise. Macro environment is also known as General environment. Macro environment is the major external it can influence an organization decision making and affects its strategies and performance. These factors are the economic and legal environment, global environment, social environment, the competitive environment and the technological environment. As a business owners or organization are not aware of the environment around them. If they aware the business environment they have less success in business.
2.1 Types of Business Environment
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Business environment consists of five types of environment. The business environment is social environment, global environment, technological environment, economic and legal environment, and competitive environment.
2.1.1 The Social Environment
Social environment means is the environment developed by humans as contrasted with the natural environment and society especially in its relation to the individual. The social environment impact on an organization in terms of the various types of products and services it offers, what markets it serves, where and how it produces, and how it sells its products and services to the social environment.
In social environment we will be looking at key factors in the social environment and how they impact on organizations. Based on the analysis of the social environment allows organizations to spot trend and determine whether they are a threat or an opportunity. What is an opportunity for one organization might be a threat for another.
2.1.2 How Demography Affects Business?
Demography is study about the human population. It regard to its density, size, age, gender, race, income and employment. Demographic trends affect businesses and career choices. For example our country Malaysia population is going through major changes are dramatically. This trends changed are affecting how people live, what the buy, where they live and how they spend their time. Finally, huge population shifts are leading to provide new opportunities for some firms and to decline opportunities for others.
2.1.3 Dual Incomes
Dual-income families are playing a role in the society changes. Companies have do some research and implemented in response to the demands of bust two-income families. Dual income families increasing in the workforce, employers should provide welfare s to the employees like child care benefits. Employees felt not always worries about children daily. Employees will more concentrate and focused on working increasing performance levels or productivity. For example, some companies offer services that provide counseling to parent in search of child care or elder care. Such trends are creating many new opportunities for graduates in human resource management.
Workplaces changes due to the rise of two income-income families create many job opportunities in day care, counseling, and other related fields.
2.1.4 Single parents
Nowadays, rates of single-parent increasing and has had a major effect in business. It is a tremendous task to work full-time and raise a family. Single parents can enjoy the welfare like flextime and family leave.
2.2 The Technological Environment
In 21 century, humans have felt the need to create tools that make jobs easier. Technology is about various tools, technique, machines and method to improve production and processes in business fields. Business environment will be changed tremendously by the technological. A few technological products like cellular phones, modems, computers and more. It can changes more comprehensive and lasting impact on business. Undeniably, internet is a major force in business today.
2.2.1 How technology affect in business ?
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Some company provides the technology and tools to make the business processes more efficient, effective and productive. In here means all things from phones, PDA, computer, IPAD, and the various type software programs that make business processes more efficient, effective and productive to increase more profits.
2.2.2 The growth of E-Commerce
Definition E-commerce is they are buys or sells products through an Internet medium without paper document. There are two major types of e-commerce transaction Business-to-consumer (B2C) and business to business (B2B). As important in the B2B market, which consist of selling goods and services from one business to another, such as Intel company selling micro processors to Dell Company. Example of B2C is Dell selling me a laptop.
In this modern era of globalised world, everyone seems to compete with time to enable them to solve more tasks in short time. With using high advances of technology, we can communicate with customers or workers from anywhere to any anywhere. It is very convenient for us and can save big amount of money. The money can upgrade of the company equipment. Email allows for quick communication, all across the world. That means time differences not a problem as emails are asynchronous. Faxes can be sent and received instantly, and can be used as legally binding documents, speeding up many organizational processes. There are some popular software are using by people now in video conferencing allows people in different geographic locations to meet up and see each other on screen to conduct meeting. Social networking like Facebook can do some research for sales marketing.
Management Information Systems (MIS) can be used to track stock on a hourly basic, so management are aware of which products are selling and which are not. This can assist management in deciding stock levels. It can make sure that revenue is not lost because of over-stocking or under-stocking of an item.
2.2.5 Storage and Distribution of information
The data storage electronic such as g-mail and reduce the paper using. Information sent electronically (email) and information given/retrieved on the internet.
Computer Aided Design (CAD) allows for speedy and accurate design and redesigning of products.
2.2.7 Storage and Distribution of physical goods
Electronic point of sale (EPOS) links to stock control. This system is computerised stock control and just in time methods.
2.3 The Economic and Legal environment
People are willing to start new business if they believe that the risk of losing their money isn't too great. Part of that risk involves the economic system and how government work with or against business. Government can more efforts or initiative to lessen the risk of starting business. Thus, it can attract more people to start new business and increase wealth.
2.3.1 Allow private ownership of business
In some countries, government owns most businesses and provide little incentive for people to create profit and work hard. In the world, governments are selling those businesses to private individuals to create more wealth in business. One of the best ways the governments of developing countries can do is to minimize interference with the free exchange of services and goods.
2.3.2 Lessen the risks of entrepreneurship
The government lessen the risks of entrepreneurship by passing laws that enable business people to write contract that are enforceable in court like contracts and warranties. There are some examples laws in business. Competition law ensure that large companies cannot abuse their market power, thereby protecting the free market and competition.
Deregulation of an industry occurs when the industry becomes free from government power or controls. The rationale behind this concept is that the market should regulate is a mechanism to create more competition in the market place.
2.3.3 Establish a currency in world
Government can also establish a currency in world market to make a deal like US Dollar. So, it can buy or sell goods and services anywhere you wish in the world using that currency.
2.4 Global environment
The global environment may affect all firms directly or indirectly. Some firms rely on foreign countries for some of their supplies or sell their products in various countries. They may even establish subsidiaries in foreign countries where they can produce products and sell them. Even if a firm is not planning to sell its products in foreign countries, it must be aware of the global environment because it may face foreign competition when it sells its products locally.
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Furthermore, global economic conditions can affect local economic conditions. If economies conditions weaken in foreign countries such as the foreign demand for U.S. products will decrease. So the sales of U.S. firms will decrease and cause the layoffs. The general income level in the United States will decline, and U.S. consumers will have no more money to buy the goods and services.
2.5 Competitive environment
Competition among businesses has always existed, but it has never been greater than it is today. Some companies have found a competitive edge by focusing on quality. The goal for many companies is no mistakes in making the product. Companies now have to offer both high-quality products and outstanding service at competitive prices this is what we mean by offering customers value. The concept of value supports the idea the businesspeople must not only know what their competitors are doing, but also try to constantly improve their products and processes to meet customer expectations.
2.5.1 Customer Driven Organizations
Customers required both high quality and high value, and for companies to stay competitive they must offer both. Big businesses and small businesses depend on their returning customers, and as a result, should go out of their way to make customers feel as if they are number one. Successful organizations must now listen more closely to customers to determine their wants and needs, then adjust the firm's products, policies, and practices to meet those demands.
2.5.2 Employee Empowerment
To meet the needs of customers, firms must give their frontline workers the authority, training, freedom , reasonability, and equipment they need to respond quickly to customer requests and to make other decisions essential to producing quality goods and providing good service, which is called empowerment is a concept that will be revisited throughout this book.
A key point to understand is that many businesses must reorganize to help their employees become more effective than they are now. Many firms have done so by forming cross-functional teams. The teams made up of people from various departments and to work on a special project. One aspect of empowerment has been the elimination of managers and redistribution of workload. Empowered employees need to be treated as partners in the firm. It sometimes takes years to restructure an organization so that managers are willing to give up some of their authority and employees are willing to assume more responsibility.
3.0 Conclusion to business environment
Business environment consist of five parts of environments. These five parts environments are the economic and legal environment, technological environment, social environment, global environment and competitive environment. These five parts of environment haves a key and influence in the business environment. Through this we can analyze the effect of current and future key influences on organizations. We can start the business smoothly and successfully with understanding the five parts of environment.
4.0 Introduction of ownership
One key to success in starting a new business ids understanding how to get the resources you need. You may have to take on partner or find other ways to obtaining money. To stay in business, you may help from someone expertise than you have in certain areas, or you may need to raise money to expand, how you for your business in one of several ways. The three major forms of business ownership are sole proprietorship, partnership and corporations.
4.1 Definition of sole proprietorship
The simplest and most popular form of ownership remains the sole proprietorship. The sole proprietorship, as its name implies, is a business owned and managed by one individual. Sole proprietorship makes up nearly 72 percent of all business in the United States.
4.2 Definition of partnership
A partnership is an association of two or more people who co-own a business for the purpose of making a profit. In a partnership the co-owner (partners) share the businesses assets, liabilities, and profits according to the terms of a previously established partnership agreement (if one exists).
5.0 What would I prefer sole proprietorship
I prefer sole proprietorship because profit incentive. One major advantage of proprietorship is that once owners pay all of their companies' expenses, they can keep the remaining profits. The profit incentive is a powerful one, and profits represent an excellent way of "keeping score" in the game of the business. Another reason is total decision-making authority because the sole proprietor is in total control of operations, he or she can respond quickly to changes, which is an asset in a rapidly shifting market. The freedom to set the company's course of action is a major motivational force.
5.1 Reasons I don't choose partnership
I don't choose partnership because capital accumulation. Although the partnership form of ownership is superior to the proprietorship in its ability to attract capital, it is generally not as effective as the corporate form of ownership, which can raise capital but selling shares of ownership to outside investors. Another reason is unlimited liability of at least one partner. At least one member of every partnership must be a general partner.
5.2 Advantages of a sole proprietorship
5.2.1 No special Legal Restrictions
The proprietorship is the least regulated form of business ownership. In a time when government requests for information seem never ending, this feature has much merit.
5.2.2 Easy to Discontinue
If an entrepreneur decides to discontinue operations, he or she can terminate the business quickly even though he or she will still be personally liable for any outstanding debts and obligations that the business cannot pay. Entrepreneurs considering the sole proprietorship as a form of ownership also must be aware of its disadvantages.
5.2.3 Simple to Create
One of the most attractive features of a proprietorship is how fast and simple it is to begin. If any entrepreneur wants to operate a business under his own name (e.g., Uncle Lee's Bakery), he simply obtains the necessary licenses from state, country, or local governments and begins operational.
5.2.4 Least costly form of ownership to begin
The proprietorship is generally the least expensive form of ownership to establish. There is no need to create and file legal documents that are recommended for partnerships and require for corporations. An entrepreneur simply goes to the city or country government, states the nature of the business he or she will start, and pays the appropriate fees and license costs.
5.3 Advantages of the Partnership
5.3.1 Easy to establish
Like a proprietorship, a partnership easy and inexpensive to establish. The owner must obtain the necessary business licenses and submit a minimal number of forms. In most states, partners must file a Certificate for conducting Business as Partner if the business is run under a trade name.
5.3.2 Complementary Skills
On a sole proprietorship, the owner must wear many different hats, and not all of them will fit well. In successful partnership, the parties' skills and abilities usually complement one another, strengthening the company's managerial foundation.
5.3.3 Larger Pool of Capital
The partnership form of ownership can significantly broaden the pool of capital available to a business, each partner's asset base enhances the business's pool of capital and improves its ability to borrow need funds, together, partners' personal assets support greater borrowing capacity.
Although not as flexible as sole ownership, a partnership can generally react quickly to changing market conditions because the partners can respond quickly and creatively to new opportunities. In large partnerships, however, getting partners' approval can slow a company's strategic actions.
The partnership itself is not subject to federal taxation, it serves as a conduit for the profits or losses it earns or incurs; its net income or losses are passed along to the partners as personal income, and the partners pay income tax on their distributive shares based on their personal tax rates.
The three major forms of business ownership are sole proprietorship, partnership and corporations. Through this we can understand disadvantages or advantages of three major forms of business ownership. So, we can analyse the characteristic of three major ownership are playing in the business.