Meaning of Business Environment
A business environment encompasses all the internal and external factors that affect the functioning of a company… including employees, customers, management, supply and demand and business regulations. For a business to survive in the long run, it must effectively satisfy and influence all stakeholders.
External Factors That Affect A Business
- Political factor: These are factors relating to type of government. The policies of the political parties in power would affect the operation of businesses.
- Technological factor: This is the factor relating to degree of technology development e.g. the degree of mechanization and automation in agriculture and industry or the degree of development in transportation and communication.
- Demographic factor: This factor is relating to the size, structure, and geographical distribution of population of the society. Demographic factor determines what to produce, the quantity and the level of demand.
- Economic factor: This factor is relating to the economic environment of a business. These include the type of economic system that is being practised, it may be a capitalist, socialist or mixed economy system, the income distribution or the nature of the natural resources available are great factors.
- Socio-cultural factor: These are factors relating to people’s attitude to work, their norms and values, their religion and religious beliefs. A business organization must take into consideration the beliefs, attitude and lifestyles of the people in the community where it operate.
- Climatic or ecological changes in a particular environment. Ecological changes might involve erosion, pollution, drought; all of these have great effects on business.
- Legal Environment: This has to do with government laws, decrees or legislation. Example is company’s act; Employment act etc.
Social responsibility is an ethical framework and suggests that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large. Social responsibility is a duty every individual has to perform so as to maintain a balance between the economy and the ecosystems.
Corporate Social Responsibility (CSR)
Corporate social responsibility (CSR) refers to business practices involving initiatives that benefit the society. A business’s CSR can encompass a wide variety of tactics, from giving away a portion of a company’s proceeds to charity, to implementing “greener” business operations.
Responsibility of a business to the Government
- Business organisations offer employment opportunities to citizens
- Payment of taxes to the government so as to contribute to the development of the country
- Business organisations must comply with rules and regulation guiding their operation.
- Business organizations must accept government role in business affairs.
Responsibilities of a business to the Consumers
- They educate the consumers
- They provide quality services to the consumers.
- Prevention of product defects
- Provision of pre-sales services to consumer
- They attend to customers’ complaints
- Must be truth in advertising.
Responsibilities of a business to the Shareholders
- They ensure business profit.
- They distribute dividends to shareholders.
- They organize annual general meeting
- They prepare statement of account
Responsibilities of a business to the Community
- A business has the responsibility of controlling environmental pollution in the community.
- They should provide social amenities to the community.
- Employment of community member
- Provide support for sports and games
- Award scholarships to students from the community
- Provision of quality goods and services to the community member.
Responsibilities of a business to the Employees
- Must ensure payment of wages and salaries.
- Provision of conducive working environment for the workers.
- Provision of Welfare Package.
- Recruitment and promotion of staffs.
- They provide training facilities to the staffs.