Business Environment: External Factors and Crisis Management

This report provides an analysis of the business environment, focusing on external factors that impact organizations. It details the significance of conducting a PESTLE analysis, a framework used to assess political, economic, social, technological, legal, and environmental factors. The report outlines a three-step crisis management procedure, emphasizing pre-crisis planning, acute crisis response, and post-crisis recovery. It further explores factors contributing to environmental damage, such as manufacturing waste and pollution, and suggests mitigation strategies like efficient resource utilization and waste reduction. The report also examines the impact of environmental negligence on business profitability and reputation, highlighting the growing importance of corporate social responsibility and adherence to environmental regulations. The content offers insights into how businesses can navigate external challenges, manage crises effectively, and adopt sustainable practices to enhance their performance and maintain a positive public image.

The Business
Environment
TASK 1: EXTERNAL FACTORS AND
ENVIRONMENTAL IMPACT

Table of contents
1. External factors impacting business organisations
2. Significance of conducting a PESTLE analysis
3. Three-step crisis management procedure
4. Factors contributing towards environmental damage and minimising them
5. Impact of lack of care for the environment on business profitability and reputation

External factors impacting business organisations
 Political factors: The current political climate of UK, the direction
in which government is taking decisions regarding the local
businesses, the issues of Brexit etc.
 Economic factors: Consumer confidence and purchasing
capacity, the income level of the people, the labour cost etc.
influences market and business decisions .
 Social factors: The purchase behaviour of the people such as
trends, customer preferences and taste, population, lifestyles,
buying habits, beliefs, education etc.

Continued..
 Technological factors: The state and advancement in the technology could mean enhanced
automation, use of AI and internet services, which could impact on how a business functions and
the way customer services and marketing is changed.
 Legal factors: The laws of a particular state or country impacts businesses such as consumer rights,
employee laws, anti-trust laws, health and safety laws, intellectual property laws etc.
 Environmental factors: The rise in the environment consciousness in people and the government
has made it important for businesses to adhere to environment regulation laws and standards such
as waste management, reducing carbon footprint and even going green for improving the goodwill.

Significance of conducting a PESTLE
analysis
Pestle analysis is a framework for the assessment of the various
external factors that directly and indirectly impact businesses.
Influences the major business decisions which also tend to have
an affect on the profitability, cost effectiveness, manufacture or
production, customer services, marketing, operations and other
business functions.
 It helps business in looking for opportunities and minimise the
estimated and existing threats in the business.
It encourages strategic thinking where the business owners can
evaluate all possibilities and make decisions that help in the
achievement of the business and functional goals.

Three-step crisis
management procedure
 Pre crisis: This stage can be described as the warning stage where the
problem of the crisis is discovered by the manager or superior. Functions
like risk assessment and emergency notifications system are implemented.
 Acute crisis: The team makes use of the crisis communication system for
notification of the masses regarding the issue. Necessary guidelines and
instructions are followed up and the crisis has to pushed towards
resolution, by conferencing the leadership and responder teams.
 Post crisis: After the containment or resolution of the issue, the business
recoups the losses to show community, shareholders, investors,
government, customers etc. the reassurance messages.

Factors contributing towards environmental
damage and minimising them
The major factors that lead to damaging the
environment:
Manufacturing and production waste,
emission of greenhouse gasses,
Pollution and improper waste disposal,
water wastage,
 improper and overutilisation of resources.
inefficient business practices,
 frequent utilisation of fossil fuels for
functions like transportation and sourcing,
 high carbon footprint etc.
The impact can be minimised through:
Efficient use of electricity
Conserving water: reduce the water wastage
through reusing water after treatment, reducing
usage, and processing waste water efficiently.
Considering near sourcing where all the business
functions can use nearby vendors
Travelling less, initiation of innovation techniques
that reduce overutilisation of resources and
increasing internet-based communication.

Impact of lack of care for the environment on business
profitability and reputation
The rising environmental consciousness and awareness of ethical
responsibility has led to a drastic change in the way stakeholders
think and behave.
 The reputation and goodwill of the company is majorly affected
by the customer behaviour who are constantly prefer green
companies which take csr initiatives.
There are various environment laws and regulations such as
waste disposal, efficient use of resources, reduction of carbon
footprint which have major influence on the costs of businesses.

Thank you!