The main issues facing business over the medium to long term

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In Western Europe and many other parts of the world, changing demographics are considered the greatest long-term issue facing society and business. There are many issues that influence business nowadays. They include crisis, recession, technological progress, fashion, current trends, image, globalization, export and import, etc.

Business is an independent, carried out at a person's own risk activity, aimed at a receiving certain profit from the use of property, sale of goods, providing services to persons registered as such in the manner prescribed by law.  Business efficiency can be measured not only by the size of the profits, but also by the change in value of the business (market value of the enterprise, goodwill).  Enterprise, business is an important attribute of a market economy, cutting all its institutions.

It may be a legal entity or individual directly.  In many countries for entrepreneurial activity to an individual it is required to register as an individual entrepreneur. Entrepreneurship can be practiced in various fields.  In addition to general business, there is allocated social and technological entrepreneurship. Basic concepts in answering this question are: external environment organizations, including direct and indirect actions, characteristics of the environment.

Understanding the importance of assessing the external environment for the management of the company was finally formed in the late 50's., since the external environment of the organization became increasingly and is still the source of many problems of managers.  Organization as an open system depends on the supply of resources, energy, personnel, and consumers. In general, the external environment of the organization can be described as the totality of the factors influencing the organization's activities, namely: customers, competitors, government agencies, suppliers, financial institutions, sources of manpower, as well as science, culture, society and the state of natural phenomena. Since environmental factors have different effect impact on the organization, they are divided into direct and indirect factors, and the entire external medium on the medium of direct and indirect actions.

Consumers are those individuals who are interested or might be interested in the organization produced goods or services.  Well-known specialist in the management of P. Drucker believed that the only real purpose of any business - is the creation of the consumer.  Need to meet the needs of consumers affects the processes within the organization, as the number of consumers determine ultimately the necessary production resources, and characteristics of consumers (which they are) - the necessary range of goods and services and their quality.  Essentially all consumers can be divided into four groups: end-users or the public; industrial consumers, representatives of various sectors of the economy; middlemen or traders, who buy goods for resale and state as an entity.

An important component of the external environment is a competitor.  Each leader must realize that if he did not meet their customers as well (with certain quality and price), like its competitors, the company for a long time in market conditions cannot exist.  Under competitive means are not only those companies that offer similar products, but with a different brand, but also the companies that produce substitutes.  Thus, in any organization, there are two types of competitors: direct competitors - manufacturers of similar products (for example, Coca-Cola and Pepsi-Cola); indirect competitors - manufacturers of replacements (for example, Coca-Cola).

For economic activities of each company needs external supply: raw materials, labor, capital.  In this case there is a direct relationship between the organization and network of suppliers to ensure delivery of these resources, as described in The top nine issues facing business in 2008.  Procurement organization in the market is most interested in the conditions for obtaining resources, namely: price, quality and delivery conditions (timing, volumes, payment terms, etc.).  It is these trends in the market purchases affect the overall turnover of the enterprise.

Some NGOs also have a direct impact on businesses.  Especially this effect has increased in recent years. It is well known influence of trade unions that are fighting for the rights of workers, thereby setting the balance between owners and hired workers.  They are expanding the influence of organizations fighting for the rights of consumers and for environmental purity.  For example, in some countries were adopted laws on consumer protection, which strengthened the position of non-governmental organizations to protect the rights of consumers to purchase quality goods and to receive accurate information, as described in Ethical Issues in Business.

The state has an impact on the organization primarily through legislative regulation of activities.  The number and complexity of laws that deal directly with business have risen sharply.  They undergo changes in various forms of reporting by enterprises and organizations, change the tax and customs regulation.  State legislation is characterized by complexity and mobility, and often even uncertainty.  The uncertainty of today's impact on government business stems from the fact that the requirements of some organizations are in conflict with others, and at the same time for many organizations government agencies enforce such requirements.

Under the medium indirect impact refers to factors that may not have a direct and immediate impact on the activity, but, nonetheless, could potentially affect it.  Here we are talking about the economy as a whole, scientific and technological development, socio-cultural and political changes, as stated in Business Issues.

Economic factors. Factors in the economic environment must be constantly evaluated, since the state of the economy affects the goals and objectives and ways of achieving them.  This rate of inflation, the international balance of payments, levels of employment, business and lending rates, etc. Each of these may represent either a threat or new opportunity for the company.  Thus, the fluctuations of the dollar against foreign currencies may cause gain or loss of large sums of money, as stated in Economic Issues Facing Business.

Political factors. For business political stability in society is very important.  It depends on the level of investment and other types of resources in certain regions.  The ratio of administrative authorities to the business are expressed in the establishment of various privileges or duties that are either developing business in the region, or creating unequal conditions for different organizations. It also uses the techniques of lobbying the interests of certain industry groups in government agencies, which also affects the entire business as a whole.

Social and cultural factors. In organizing, the activity cannot be ignored than the cultural environment in which it occurs.  It is, above all, about the prevailing social values of life and traditions.  On this basis the standard of conduct is based.  There is known fundamental difference between American and Japanese standards.  In the first case, the standard is expressed in "individualistic" approach to the organization, while the second - in "family" approach, as described in How Social and Demographic Change Influence Business. Hence the norm of conduct in one case, a desire for career growth with a regular change of jobs (in the U.S. it is believed that people should change jobs every few years).

Scientific and technical progress. This factor determines whether to increase production efficiency and, consequently, the effectiveness of ways to satisfy consumers.  To enable the organization to be competitive, you need to collect, store and distribute large amounts of information about innovations occurring in the environment of business.  In recent years, have appeared completely new processing technology resources and information: the computer and laser technology, robotics, satellite communications, biotechnology, etc. The researchers say there is the high rate of technological change, and this trend continues.

International factors. If previously it was thought that the international environment is the object of interest only to those organizations that work for export, now changes in the international community and affect virtually all businesses.  In today's world there is a tendency of market globalization.  This means the blurring the boundaries between businesses in different countries, developing transnational corporations have an increasing impact of international economic and political organization.  The factors responsible for the development of international business include: lower costs of doing business abroad, the desire to get away from trade restrictions within the country, as well as investment and production opportunities in other countries.

In general, all of the external environment can be characterized as follows: there is a relationship of environmental factors or the force of impact, of the change of one factor that will act on the others. The environment has brought a lot of different factors affecting the organization, which demonstrates its complexity. Environment is characterized by a high degree of volatility or mobility. A large number of factors and their variability lead to the fact that the accuracy of the information is lost about the processes occurring in an environment that increases the uncertainty and complexity of environmental decision-making process.

Initially, the concept of "crisis" is perceived as a negative phenomenon, the mere thought of which begins in the minds of people and they panic, the fear is then generated by uncertainty.  But, despite the entire inherent negative aspects, a crisis has some positive points. Its positive impact on the economy is reflected in the fact that most businesses are beginning to wonder about the effectiveness of its operations, analyze costs in order to reduce costs, seek new and more profitable decisions.  At this stage, the IT department can play an important role by offering the best solutions to maintain the effective functioning of the business.

More recently, enterprises experienced rapid growth to extend their presence, both on domestic and foreign markets.  The main task in this situation was not to miss a moment and take its place in the market.  With the advent of the crisis in the country, many companies are seriously thinking about their business.  As a fact, started a wholesale reduction in costs, review of the cost structures, minimizing the unprofitable activities.   But, unfortunately, not always optimization is a deliberate action that results from the preliminary analysis.  It happens that the leaders are beginning to cut costs and staff without considering the consequences of such measures and their impact on the business system.

The main advice we can give the owners and top managers - starting with the optimization of the analysis of the performance of individual structures, business systems, analyzing both lines of business, and the range of products or services. Today, the market is represented by the mass of instruments that could facilitate this task.  For example, many enterprises have long been used by ERP-systems, CRM-system and many others.  Their list was supplemented with systems of class BI (Business Intelligence), which can not only analyze the current state of business, but also to build predictive models to predict the results of the adoption of various management decisions, as described in 10 critical perpetuation issues facing business.  With the application of modern systems for enterprise performance, management executives and managers have the opportunity to receive reports on receivables though every day; moreover, these reports are available in real time.

According to analysts, the second place in popularity among owners and executives will own decisions on managing costs and expenses, providing the possibility of analyzing its cost structure as for whole lines of business, and for selected categories of goods and services.  To take this analysis full, it is necessary that IT departments have picked up a complete solution, containing technological and methodological tools for analysis.

In general, it should be noted that, subject to a competent and balanced approach, a wave of optimizations that shook companies will only benefit the business; making it "healthier" to that in the future it will reflect positively on the economy as a whole. One of the key elements of strategic management is to analyze the external environment and market monitoring.  And the threats that await the company and the opportunities that are available to us - all this there is in the business environment, part of which is business.  In the external environment company threatens competition, unscrupulous suppliers, rapidly changing tax laws, social upheavals and many other "surprises".  At the same time the company is waiting for buyers, the resources necessary for our business.

Analysis of external factors helps to develop strategic solutions that provide algorithms of interaction with the environment in the short and long term, which will maintain its capacity to the level necessary to achieve the goals, will help uncover threats and opportunities. External environment can be divided into two parts: macro-and microenvironment, as stated in Business Expansion and Handling Problems.  If the macro is difficult for us to exercise significant influence or control processes, the dynamics of the microenvironment may directly depend on the choice of our strategy.

When analyzing the external environment within which we operate, we can distinguish a number of factors affecting the possibility of its development.  For this purpose, use the technique called TEMPLES (Technology, Economics, Market, Politics, Laws, Ecology, Society).  It allows the group to consider issues associated with the external environment, dividing them into several sub-groups for the relevant definitions and classifications.  Each of these factors is subjected to appropriate analysis to find out what difficulties may arise when working in this field and which open positive opportunities.  It is convenient to analyze the above reasons, the light of various (mostly long-term and medium-term) outlook, when it is necessary to predict what changes the company expects in the future and find strategies, appropriate to the situation, as stated in 6 small business issues too important to ignore.

Scientific and technological achievements seriously alter the functioning of the firm's environment.  There are new technologies, new products, which certainly enhances competition.  Many companies regularly monitor trends in scientific and technological progress, which has a positive impact on their activities.  Scientific and technological developments, by changing consumer lifestyles, improve the quality of customer satisfaction. Scientific and technological innovations appear in the design, engineering models, distribution and sales, marketing, thereby influencing the overall strategy of the organization.

As the global economy significantly affects the lives and activities of the company, there should be considered carefully, economy-wide processes (for example, rising unemployment and inflation, increase in the number of companies working on the import or export). Political factors seriously affect the different types of businesses.  Typically, the political factors are: political situation in the country; stability; loyalty to the authorities; protectionism in the sector; the availability of administrative barriers; system for the protection of property.

This should take into account such important driving force, as a change in the socio-political system, the outbreak of religious intolerance and the revival of nationalism. One cannot discount threat of armed conflict, a sharp reduction in import or export embargo and various trade sanctions targeted at the economic repression.

Changes in legislation directly affect many kinds of business activities, as stated in The Challenges Facing Small Businesses.  These changes occur at a high level, and in specific issues in the sectors (for example, range of issues associated with the introduction of any sanctions and regulations, changes in labor legislation and work in progress).

Currently, an increasing number of companies are paying attention to environmental conditions.  Therefore, the range of issues related to its defense, play an important role in strategic planning in many developing industries and companies.

The strategy of development (particularly in the case of long-term strategy), many companies often consider as demographic factors.  If the company provides a population of such services and goods that are differentiated by age or category of buyers falling into different groups, or gender, then such an analysis can be an extremely valuable contribution to the development of strategy.  Thus, at present time, there has increased the birth rate in many countries, resulting in the increased demand for related goods and services, as described in What Influences the Success of a Small Business.  Hence, this factor stimulates the development of precisely those sectors that are associated with the production of goods and services to meet diverse demands and needs of young families.

The demographic situation has considerable on influence specific characteristics of the regions that host the data of the company or enterprise.  For example, there may be a constant flow or, conversely, the outflow of population from the region, the ethnic composition often plays a decisive role in the structure of demand. The company's activity is often a significant degree, and depends on various social factors.  They may include social needs and demands of determining the vital activity of employees of the business, issues relating to the social life of the region where the enterprise is located.

Here are a number of social factors affecting the company's activity: demographic situation in the region; age and sex structure of population; average level of income and subsistence; cultural environment and moral values, religion; level of education. The social factors that play a significant role in the functioning of the enterprise also include a way to attract staff to the profession and as a part of the business, namely: how important and / or prestigious for them it is to work in state enterprises or are they completely satisfied with the work under the contract. In addition to social factors that include life style of employees, the degree of their involvement in solving internal managerial problems, a qualitative change in relations between staff members are at different levels of hierarchy inside people's expectations from the work of your organization; various risks, fears, etc, which also influence business this days.

All in all, the influence of different factors can be perceived by the companies all over the world, and the consequences can be felt for a long time after some event, considerable change or crisis. Nowadays each company is under influence of some factors, such as demographical, economical, social, cultural and political, and each company faces challenges and the competition at the international market.