Elements Influencing the Business Environment

The business environment is a dynamic and complex realm. One must know the ins and outs of its components before one can navigate successfully.

This is where the six major forces of influence come in. Each force exerts a different degree of influence on a company’s performance. Some are more important than others.

As such, understanding the major elements influencing the business environment is key to gaining a competitive edge. While many businesses focus on marketing and sales, it is the internal and external aspects of the organization that make or break a successful enterprise.

Considering the various factors that affect a company’s performance is essential to determining how to best utilize these elements to boost profits. These factors include supply and demand, price, and interest rates.

To a large extent, it is the supply and demand factors that determine the rate of demand in a country. If a firm has access to a sufficient supply of its product, it will be able to fulfill customer demands. In turn, this will make it attractive to investors.

Another interesting concept is the market. A market is a human-made construct that brings together consumers, business, and government. It is a dynamic system that changes over time.

For example, during an economic upswing, the number of available employment opportunities increases. On the other hand, during a recession, the purchasing power of a nation’s citizens decreases. Therefore, it is no surprise that businesses are forced to cut their prices to stimulate demand.