Business Environment: Factors, Challenges, and Solutions Report

This report provides a comprehensive analysis of the business environment, exploring both internal and external factors that influence business operations. It delves into the challenges faced by organizations, such as changing customer needs, competition, and social environment shifts, and proposes innovative solutions to ensure organizational survival and efficiency. The report highlights the impact of micro and macro environmental factors, including economic, technological, socio-cultural, political, and legal aspects. It uses Woolworth as a case study, examining its strategies to overcome challenges, such as improving stock turnovers, product development, and customer relations. The report also discusses relevant responses to various environmental factors, including economic, technological, socio-cultural, political, legal, demographic, and natural environments, and how Woolworth adapts to them. It concludes that effective strategic formulation and implementation, along with a focus on sustainability and CSR, are crucial for achieving higher profitability and overall success in the dynamic business landscape.

Business environment 0
Business Environment
Factors Influencing the Environment & Solutions to the Environmental Challenges
Student Name
11/4/2018

Business Environment 1
Contents
Introduction....................................................................................................................2
Environmental Challenges:............................................................................................2
Solutions to Environmental challenges:.........................................................................3
Relevant Responses to the type of factors, which Influences the Environment:...........4
Conclusion......................................................................................................................6
References......................................................................................................................8

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Introduction
Business environment refers to the environment, which includes the internal and
external factors in which it operates. These factors affect the company functions including
employees, management, customers demand and supply and the business regulations. The
factors that happen outside the business are termed as external factors. Such factors critically
influence the internal functioning of the organization and leads to the various harmful
challenges for the organization. Other than this, impact of recession was high on company’s
profit. Due to stiff competition, this created a major gap between mission of the company and
decrement in results .In addition to this many challenges also affected the profitability which
ultimately leads to the shutdown of stores. The major challenges faced by the organization
are the changing needs of the customers, extensive competition and the changes in the social
environment. Such challenges entail the need to hypothetically face the challenges and thus
innovating the organization structures and methods to achieve the overall efficiency and
ensures the survival of the organization (Edmunds, 2018).
Environmental Challenges
In today’s era, external business environment critically affects the organisation. It
highlights the micro environmental factors such as customers, suppliers, competitors, market
intermediaries, public and the macro environmental factors, which includes economic,
technological, socio-culture, political and legal, which is very complex in nature and thus,
presents both challenges and opportunities. Certain strategies and framework are formed to
overcome these obstacles, which hamper the growth of the business (Sherman, 2018). Other
than this certain environmental challenges, which are faced by every business organisation,
are Uncertainty of future, financial management, monitoring performances internally and
externally, also considering market and technologies shift and restricted rules and regulations,
maintain customer services, getting on to innovations, Product development are some of the
challenges faced by the business organisations (Gleeson, 2018). There are certain technical
encounters faced by human resource managers, due to some technological advances, which
generates challenges for building up the organisation. Along with this, managing the
competitive prices within the organisation is considered as a toughest task. In order to
compete in the market the organisation biggest challenge is to maintain the quality of the

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product, which totally links with the customer’s satisfaction (Krapez, Sherlavaj & Groznik,
2012).
Solutions to Environmental challenges
Solutions to overcome the challenges faced by them are examined critically like
Woolworth core business aim is to improve the stock turnovers and optimized network
efficiency in the market, for this they have certain strategies planned for successful
accomplishment of their long-term business objectives. To surmount the challenges they are
extending their leadership in food and liquor. Woolworth is striving for building it
competitive market position by product development in retail sector (Pierre, 2015). They are
also taking strategic move towards profitability through effective supply chain and focusing
on overall development of the organisation. They are now more dedicated towards the
customer’s perception, through this they are attracting new customers and delighting the
existing customers to generate profit along with the building good relations. Through positive
business efforts they want to establish leading value proposition. For this purpose, they are
more emphasising on hiring the highly skilled local and international talents. Reduction in
cost motto highlights the minimal wastage along with the fulfilment of company’s objective
(Jimenez, 2015).
High quality of product and the competitive price structure attract more and more
customers. Being flexible in nature, is the apt change made to the company as this fulfils the
demand of the customers by delivering the fine quality of product and services with an
objective of high cash flow and income generation. Focusing on product development is the
solution for innovation, which improves the existing product by putting on to new ideas,
abilities, and new technologies in an old product (Mitchell, 2014).
Woolworth, to gain competitive advantage, they are adopting the strategy in context
of uniqueness by products the diversifying its product line under one roof. As launching its
leadership in food sector as well as liquor. Differentiation in product, which no one can copy,
generates profit. Certain strategies are to be performed in such a way that it helps in facing
competition with the other suppliers (competitors) in the market. Debating about the
Woolworths relation with suppliers and investors, Woolworths has found to be committed
into partnerships and trusts in establishing long-term relationships with them. As for their
business or supermarkets their dealings with suppliers is important, thus the company ensures

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in maintaining good terms with these people. Woolworths established strong collaboration
with farmers of Australia to ensure delivery fresh and high quality food to the people (Janda,
2016).
The past trends of the Woolworth states that the mainly focuses on customers,
suppliers, and competitors value but in future concern they are more oriented towards CSR
and sustainability context, which makes Woolworth more successful and will earn higher
level of accomplishments (Sotiropoulos, 2017). Likewise, Farming for future programmes
were initiated by the company, which manages, monitor and will help the company in
transforming the environmental performances. Woolworth is also focusing on climate
resilience by proactively responding and adapting opportunities. Along with this, Woolworth
initiates with certain motives like reducing food wastage, and ensures by helping to manage
waste of farms, in stores and at homes of customers by expanding farmer donation
programmes, which allows stores to donate surplus produce to farmers to feeding animals.
Other sustainable efforts were reducing plastic packaging, Animal welfare and energy
efficiency, which in total made positive change (Brook, 2018).
The above challenges and below, their related solutions concluded that Woolworth is
now; more focused in reducing risk, protecting their reputation, looking after customers need,
taking care of their shareholders on which their business depends on. Their aim is to have
more responsible and sustainable business, which generates more and more profits over a
period (Jones, 2015).
Relevant Responses to the type of factors, which Influences the
Environment
In relation to the above context, historically relevant responses made to the factors,
which can influence the environment and the business critically and affects the working of
the organization. It includes the social, political, economic, legal and technological factors,
socio-cultural and the natural environment, which brings the challenges and the opportunities
for the business. These factors affect the long run functioning of the organization.
Economic factors:
The economic conditions of the country majorly influences the business in
which it operates .It consist of changes in the government policy, distribution of
income , inflation rate, development stage of the country as well as the restricted

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import and export policies has majorly affected the working of the Woolworth. The
organization gets affected through such changes in the form of decrease in the
demand and restriction on export leads to reduction in the profit of the organization.
Increase in the inflation rate leads to reduction in the demand for the goods .To
overcome such challenges the organization adopts the strategy that favours the
government policies and does not hamper the growth of the organization (Anastasia,
2017).
Technological factors:
The technological advancements hinder the growth of organization as the
workforce at Woolworth was not able to cope up with the changes and thus leads to
the fall in the demand of the goods. There are also certain technical encounters faced
by human resource managers, which generates challenges for building up the
organisation. To overcome such challenges the Woolworth focuses on providing the
efficient training to the employees, which helps them to use the technological
advancements and thus increase the productivity of the firm.
Socio-Cultural environment:
Fluctuations in such factors majorly affects the demand of the business. It
includes the changes in buying pattern of the customers, alterations in their taste and
preferences, customs and traditions. These factors lead to fall in demand and thus
decreasing the profitability of the organization. To overcome such challenges the
Woolworth focuses on the changing needs to the customers and producing according
to the taste and preferences. Its focus was to delight the customers and maintain its
competitive edge over the other. The business focuses to deliver the product
according to the customs and traditions of the country so that the customer achieves
the overall satisfaction.
Political and the legal environment:
The political and legal environment of the country influences the political
stability, changes in the organizational structures and the changing attitude of the
government and government intervention. Such changes create the fear for the firm to
bring innovation and to abide by the laws made by the government. To overcome
such challenges Woolworth abides by the law made by the government and restricts
the use of plastic. The innovations made by the business were in accordance to the
laws set by the government.
Demographic environment:

Business Environment 6
It includes the changes in size of the family structure, age, sex composition of
population, education levels. The demographic environment majorly affects because
demographic constituents the people. It affects the demand of the products, as there is
a shift in the composition of population and changes in the family structure. To
overcome such challenges the business adopts the strategy of catering the needs of all
the age group under one roof. The organization opens one store fostering to the needs
of all the age group, also opens the grocery store under that roof to fulfil all the needs,
and thus earns profit (Bennie, 2015).
Natural Environment:
It includes the seasonal variations, changes in the climatic conditions, the
natural terrain and soil conditions. Such alterations affect the differences in the nature
of the product bought by the consumers due to the variations in the climate and
season. The quality of the product does not remains same especially the food products
gets majorly affected. In the hilly areas, the product becomes expensive for the
consumer. The increase in the distribution channels also increases the price of the
product. To overcome such challenges Woolworth adopts the strategy of maintaining
and supervising the warehouses, which assures for the quality of the product. The
business also focuses on reducing the distribution channels so that the stability in the
price can be, maintained and thus does not hamper the growth of the firm
(Mitchelson, 2018).
Such Industry specific factors highly influence the decision making of the firms. The
Woolworth has adopted various strategies which further helps in improvising the decision
making process. Such strategies have led to fruitful conclusions, which include alternation of
the challenges, and achieving higher rates of return and proper allocation of the resources.
These strategies have helped the form in attaining higher profitability and ensuring overall
success of the organisation (Fobes, 2018).
For a successful strategy implementation, an appropriate strategic formulation is
necessary. It consists of certain guidelines and policies, pre- defined rules and responsibilities
to each member, effective communication among the various levels of hierarchy and proper
budgeting. This will help the organisation in smooth functioning and thereby achieving
higher profits (Jones, 2015).
Conclusion

Business Environment 7
From the above discussion, it is analysed that the business gets majorly influence
from the changes in the external as well as internal environment. Externally it affects micro
and macro factors, which comprises of individuals and environment. In addition, these factors
critically influence the internal functioning of the organization and leads to the various
harmful challenges for the organization. In Woolworth, Australian based company concern, it
is concluded that the company has adopts various strategies to maintain its competitive edge
over the others and thus ensuring the survival of the organization. Along with this it further
helps in improvising the decision making process. Such strategies have led to fruitful
conclusions, which include alternation of the challenges, and achieving higher rates of return
and proper allocation of the resources. These strategies have helped the form in attaining
higher profitability and ensuring overall success of the organisation. Successively, they not
only thought for their own benefits their also worked over improving sustainability. Now,
they are focusing on 2020 targets, which are majorly on the corporate responsibility goals.
The above adaption made to the environmental changes ensures success in current targets
because they are adaptive in nature to changes made in the society.

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