The Strategic Environment of a Business
Introduction
The strategic environment of a business is the external factors that shape and affect the performance of the company and its success. The company’s strategy, resources and goals will be changed based on the external environment, and the internal activities of the company. The strategic environment does not remain stable and can be affected by changes in the economic, political and social forces.
Economic Forces
The economic environment is one of the most influential forces in the strategic environment of a business. Changes in the economy can drastically alter the cost of production, market trends and investment opportunities. Businesses must adapt their strategies to stay competitive in the changing environment. For example, companies are responding to the current economic recession by decreasing operational costs and increasing efficiency. Companies will also look to markets with better returns or implement strategies to produce competitive advantages over their rivals.
Political Forces
Political forces also affect the strategic environment of a business. The government policy can affect the taxes, regulations, and subsidies allotted to companies. In some countries, the government can own and operate large businesses. These businesses then become a direct competitor to private sector companies. Multinational companies must be particularly aware of government policies when entering foreign markets.
Social Forces
Social forces are also important components of the strategic environment of a business. Consumers have more access to information through the internet and social media, resulting in more discerning customers. Companies must adapt their product and service strategies to respond to changing consumer requirements. Consumption levels represent a large part of the economy and businesses need to be in touch with evolving trends and tastes.
Conclusion
The strategic environment of a business consists of several different forces, including economic, political, and social components. Companies must constantly adapt their strategies to the changing environment in order to remain competitive. The external environment of a business can drastically affect the performance and success of the company.
