Business Environment: Factors Impacting Business Functioning

Introduction
Business environment are those factors which impacts upon business
functioning whether directly or indirectly. Business environment
consist of two elements first is external factors and another is internal
factors. External factors are those factors which occur outside a
business and impacted upon business activities like political factors,
technological factors, social factors and many more.
External environmental factors
PESTEL is applied for external analysis of business. PESTEL analysis
of Morrison are explained below-
Political factor- This factor states that how much Government
intervention is there is an economy.
Economical factor- This factor includes economical condition of an
economy like growth rate, inflation rate, interest rates, exchange rates
and many others.
Social factor- This factor includes attitude and shared beliefs of
population of a particular area or location.
Technological factor- This factor includes how a country uses its technology in producing new goods and services and
are they have advanced and modern technology or not.
Environmental factor- This factor includes availability of raw material climate, whether, pollution control, tourism
arrival rate and etc.
Legal factor- This factor considers all legal laws and rules and regulations which is made by the legislation of a country.
Internal environmental factors
For internal analysis companies use SWOT model and the SWOT of Morrison are explained below-
Strengths: Morrison is known for their effective distribution channel and their supply chain. This company never faces
the issue of lack of inventory just because of their good work at supply chain management.
Weaknesses: Morrison is unable to expand their business in other countries well because they do not have proper growth
strategy. Their main issue is that they are unable to make strategies which are beneficial of their company on time.
Opportunities: Morrison sell food products, hence it is an opportunity for them to sell organic products because today
more customers believe to have organic food products because UK population are more health conscious.
Threats: Increase in number of competitors is the biggest threat for any company. In context of Morrison, they also have
tough competition in UK market. Their competitors like Asda, Sainsbury and etc. impacted upon their business.
BUSINESS ENVIRONMENT