Challenges Faced by Businesses

This report discusses the different types of challenges that businesses face when converting innovative ideas into reality. It highlights the importance of considering external environmental factors, such as competition, customer loyalty, integrity, political, social, and economic factors. The document also provides references to books, journals, and online resources for further study.

CONTEMPORARY
BUSINESS ISSUES

Table of Contents
INTRODUCTION...........................................................................................................................3
Main body........................................................................................................................................3
Ease of developing enterprising and innovative ideas................................................................3
Challenges faced by the businesses at national level..................................................................4
Challenges faced by businesses at global level...........................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business organisations are formed based on an innovative idea through which they
provides their products and services to the customers. These businesses faces various challenges
such as lack of funding, low brand awareness, customer dissatisfaction etc. which impacts their
performance in negative manner. The management of these businesses needs to develop their
strategies by considering the challenges so that their impact can be reduced. This essay will take
the examples of different companies who had faced the discussed challenges in both local and
global level. This report will cover the challenges in context of sustainability, ethics and
technology which businesses face in performing the operations at national and global level.
Main body
Ease of developing enterprising and innovative ideas
Innovative idea is the backbone of a business on the basis of which the business is
formed. These innovative ideas are generated by the business or entrepreneurs for providing
something new and fresh to the customers in order to satisfy their needs and demands. However,
business owners or management faces several issues in implementing these innovative ideas into
the business which acts as barriers in achieving the desired growth and performance at the
marketplace. The management of the business firms or entrepreneurs needs to determine these
issues or challenges which can impact the implementation of the ideas and forming the business
which are discussed further with the recommendation for overcoming the challenges.
According to the Ali Ayyash, (2018) the major challenge faced by the entrepreneurs in
implementing the idea into business is of improper planning. Planning of different aspects such
as strategies, resource allocation etc. is essential for businesses in order to determine the required
resources and strategies which are essential for running the business or for providing the
products to the customers. Without proper planning, ideas could not be implemented by the
business owners which can lead to failure of business (Biggest challenges in converting ideas
into reality, 2018). For overcoming this challenge, the companies needs to hire skilled candidates
having proper planning and problem solving skills through which they can develop the strategies
in proper manner. For example: Elizabeth Gooch is owner of EG solution PLC who started the
firm as consultancy provide but due to improper planning the start-up failed. Later she planned
properly and started the company by providing software services. Second challenge is associated

with the lack of funds due to which the business could not purchase the required machinery and
resources which are essential for converting the idea into reality. Without the funds, business
could not execute its work for implementing the ideas. The management or owner of business
can overcome this challenge by gathering the required funds from various sources such as bank
loan, mortgage loan provider, angel investors etc. For example: Elizabeth Gooch faced this
challenge in starting her company EG solutions plc. She took some money from her family and
friends and remaining from the bank for performing the operations. Third challenge is associated
with the skilled workers. Talented and skilled workers are the essential requirements of the
business when converting the ideas into reality (Weiss, 2014). These workers performs their
roles in an effective manner if they are having the right set of skills and capabilities. For
overcoming this challenge, management or owners of the business needs to provide the training
to employees for improving their skills so that the ideas can implemented easily without facing
any problem. This challenge is faced by almost every organisation which is impacting the
productivity.
Challenges faced by the businesses at national level
New businesses are formed by a unique idea who needs time to get the desired success in
the market. These businesses requires various resources such as human resource, equipments,
funds etc. in order to perform the business operations in an effective manner. When businesses
fails in acquiring these resources, then various issues or challenges can arise which can impact
the sustainability and productivity of the company (Dunning, 2014). These issues or challenges
can negatively impact the business operations at both national and global level. The present
business environment is full of competition and in order to stay ahead of the competition, these
new business firms needs to overcome these challenges which can impact their profitability. The
national level challenges arises when business lacks resources which are essential for performing
the operations or the strategies get wrongly implemented without considering the consequences.
According to Cheryl Conner, (2013) the first challenge which is faced by companies at
national level is associated with Integrity. In this present world economy, businesses are facing
moral challenges which hasn't been experienced before. Individuals are struggling for becoming
successful and desires to make the next quarterly earnings estimate, keeping their job etc. by
competing with other co-workers. These individuals try to cut corners, omit information, and do
whatever it takes to get ahead of everyone (Challenges Every Business Faces, 2013). People

becomes highly infectious and soon start to lying,stealing, deceiving others, etc. Such type of
practices are leading to the erode the trust between the employers, employees and other
stakeholders. Without trust among employees, company can loose its effectiveness which will
also creates barriers in achieving sustainability. For example:
Another challenge is of lack of funds. Huge amount of money is required by new
businesses for purchasing the required technological equipments, human resources and
infrastructure for performing the business operations. Without performing the operations,
company could not achieve the desired performance which will also creates barriers in attracting
the investors for collecting the required money. Cash management is essential for the new
businesses in order to overcome the financial challenges. For example: Elizabeth Gooch is the
CEO of EG solutions PLC. While establishing the company, she lacks the money required for
hiring the employees and for purchasing the machinery as her father did not supported her in
establishing the business. However, she collected the funds from family, friends and bank for
purchasing the required resources for running her business. Third challenge is of Competition
which is increasing at a rapid pace in the market due to less time taken in opening a new
business. The competition is high in this modern 21st world which can impact the sustainability
of a company if not handled properly (Welford, 2016). The businesses needs to have strong
innovative products and services in order to stay ahead of the competition. Without the
innovative and unique products, other companies can lower the profitability of a business. For
example: Sainsbury is a retail firm of UK who was coming on 3rd number in the supermarket
chains of UK. Before 2014, ASDA a company in same sector of UK was on 2nd number but
Sainsbury took the 2nd position in 2014 by providing innovative products. Sainsbury was able to
cut the throat of competition using their innovative products which also assisted the company in
staying ahead of the competition. Another challenge is of Customer loyalty which can impact
the sustainability of the new business as if the customers are not satisfied with the products and
services provided by the company, then they can switch their brand to other firms. Customer
loyalty is essential for the sustainability of the business as when customers stay loyal to an
organisation then they will purchase the products of that firm which will also enhance the sales
and profitability of the company (Dunning, 2013). For example: Volkswagen is a German car
manufacturer who was involved in an unethical scandal. Due to the scandal, the brand image of
the company get reduced which also impacted the customers. The customers does not stay loyal

to firm as they thought that their rights are exploited. This leads to a huge loss to the company
which was overcome by the company by regaining the trust of their customers which also leads
to increase in loss.
Challenges faced by businesses at global level
Global business environment is full of competition due to the availability of a large
number of big companies who are having operations in several countries. Businesses faces
various challenges in operating their business operations at global level. These issues should be
determined by the businesses for performing their operations in an effective manner. These
challenges can be determined by using the PESTLE analysis (Cavusgil and et. al., 2014). This
analysis tool is used by the organisations for determining various factors of external environment
which can impact the business operations at global level. These factors are Social,
environmental, economical, technological etc. which should be considered by the management of
business organisation for developing the strategies accordingly.
According to the Kiesha Frue, (2018) Pestle analysis can be used by the business
organisations for determining the various types of challenges which can impact the business
activities of companies at global level (Solve problems with PESTLE analysis, 2018). Political
challenges of a country can be identified by analysing the political factors such as policy
changes, regulations, taxes, and political stability which can negatively impact the company. The
management needs to determine the changes in such factors for developing the strategies for
overcoming these challenges. These challenges are also associated with the political conditions
and environment of a country in which the company is operating their operations. For example:
The management of the Tesco sees the opportunity in Indian market by analysing the political
factors. The company also developed the strategies considering the challenges due to which the
company was able to enter in India. Also due to the understanding of the political challenges and
factors, company gained the success in Indian market in a short span of time (Tesco plans
cautious entry in India, 2013).
Economical challenges are associated with the economical factors such as economic
growth, exchange rates, inflation rates, interest rates etc. which should be considered by the
management of the business in strategy development and decision making. These challenges can
arise due to the economic condition of the people and country to whom the products and services
are provided by the company. For example: During the recession in UK, Tesco which is a UK

based retail firm face the economic challenges in which the customers are not capable of
affording the groceries from company due to weak economic conditions. Tesco determined the
challenge and lowered the prices of their grocery products so that the customers can afford the
products of company. This initiative of company improved the brand image as well as the sales
of the company as customer can purchase the products at less prices (Tesco - understanding the
economy and its effect, 2017).
Social challenges are associated with population growth rate, age distribution, income
distribution, career attitudes, safety emphasis, health consciousness, lifestyle attitudes etc. which
can impact the sales of the products and services as well as profitability of the company. These
factors should be considered by the management in marketing and promoting the products so that
the products can reach to potential customers. For example: M&S is also a British retail firm
who also faced the social challenges due to not providing the products based on expectations of
customers. As a result, customers becomes dissatisfied from the quality and price of the products
provided by the company to the customers (M&S’ woes: from loyalty to innovation, 2018). These
challenges mainly arise due to the improper design and prices of the clothes provided by the
company.
Technological challenges are associated with the advancement in the technology such as
technology incentives, the level of innovation, automation, research and development (R&D)
activity, technological change etc. which can impact the performance and efficiency of the
businesses. These factors must be considered by management and updated technological
equipments should be implemented at the workplace so that the performance can be enhanced.
For example: Sainsbury is also an UK based retail firm who was facing the technological
challenges as latest technology is not installed in business due to which the marketing
department get negatively impacted. This also impacted the sales and profit of the company. For
reducing the impact of this challenge, Sainsbury implemented the latest and updated technology
in the business operations or store such as Brand Match, Nectar loyalty programme, Mobile Scan
& Go etc. for improving the sales and customer satisfaction based on market research by
marketing department (Marketing challenges faced by Sainsbury, 2016).
Environmental factors are associated with scarcity of raw materials, pollution targets and
carbon footprint targets set by governments. These factors should be considered by the
management in order to conserve the national resources as well as to overcome the

environmental challenges. Conserving the environment can improve the brand image of the
organisations as well as customer base. For example: Volkswagen is a German car producer who
was involved in pollution emission scandal in which the company produced cars whose pollution
emission is 40 % more than the standards set by the industry. This scandal has impacted the
brand image of the firm as well as on the profitability (Environmental impact of Volkswagen
scandal, 2016). For overcoming this challenge, company has to withdraw these cars from the
market in order to eliminate the emission issue and improving the brand image of the company.
Legal challenges can also occur for the business which are associated with
discrimination laws, antitrust laws, employment laws, consumer protection laws, copyright and
patent laws, and health and safety laws etc. These factors should be considered by the
management in order to eliminate the legal challenges. Following the laws and regulation can
enhance the business productivity as employees can feel satisfied if they are provided with their
basic right. For example: The emission scandal of the Volkswagen results in arising of legal
challenges for the company (Volkswagen facing 'tsunami' of legal trouble in emissions scandal,
2015). The company was found guilty of neglecting the Clean Air Act, conspiracy, fraud and
false statements due to which company has to pay a huge amount of money as fine for the
scandal. This challenges results in reduced brand image of the company as well as dissatisfaction
among the customers.
These above discussed challenges should be eliminated or overcome by the businesses in
order to ensure the smooth flow of business operations. By overcoming these challenges,
businesses can achieve the desired growth and sustainability in the market as the challenges are
eliminated or their impact has been reduced by the firms.
CONCLUSION
It has been concluded from the above discussed report that there are various types of
challenges such as lack of funds, improper planning etc. are faced by the businesses for
converting the innovative ideas into reality. The challenges associated with Competition,
Customer loyalty, integrity also exists when business firms are operating at national level. The
businesses also faces challenges such as political, social, economical etc. which should be
considered by the management and business owners when operating the business in global
environment. Companies can use the PESTLE analysis for determining these challenges of
external environment or global environment.

REFERENCES
Books and journals
Cavusgil and et. al., 2014. International business. Pearson Australia.
Dunning, J.H., 2013. International production and the multinational Enterprise (RLE
international business). Routledge.
Dunning, J.H., 2014. The Globalization of Business (Routledge Revivals): The Challenge of the
1990s. Routledge.
Weiss, J.W., 2014. Business ethics: A stakeholder and issues management approach. Berrett-
Koehler Publishers.
Welford, R., 2016. Corporate environmental management 3: Towards sustainable development.
Routledge.
Online
Challenges Every Business Faces. 2013. [Online]. Available through:
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every-business-faces-and-how-to-master-them-all/#5aa6cf7f3891>.
Solve problems with PESTLE analysis. 2018. [Online]. Available through:
<https://pestleanalysis.com/how-to-solve-problems-with-pestle-analysis/>.
Biggest challenges in converting ideas into reality. 2018. [Online]. Available through:
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business-ca2feaef5be0>.
Tesco plans cautious entry in India. 2013. [Online]. Available through:
<https://www.businesstoday.in/current/economy-politics/tesco-plans-india-entry-after-
arm-twisting-by-politicians/story/201650.html>.
Tesco - understanding the economy and its effect. 2017. [Online]. Available through:
<https://paperap.com/paper-on-tesco-understanding-economy-effects-business/>.
M&S’ woes: from loyalty to innovation. 2018. [Online]. Available through:
<https://econsultancy.com/five-reasons-for-m-s-woes-from-loyalty-to-innovation/>.
Marketing challenges faced by Sainsbury. 2016. [Online]. Available through:
<https://www.thedrum.com/news/2016/11/09/the-marketing-challenges-facing-
sainsbury-s-wieden-kennedy-takes-the-reins>.
Environmental impact of Volkswagen scandal. 2016. [Online]. Available through:
<https://earthtalk.org/volkswagen-emissions-scandal-impact/>.

Volkswagen facing 'tsunami' of legal trouble in emissions scandal. 2015. [Online]. Available
through: <https://www.chicagotribune.com/business/ct-volkswagen-scandal-20150927-
story.html>.