Exploring Environmental and Ethical Factors in Business Success

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University of Suffolk
BA in Business Studies
(Foundation Year)
Context of Business
Essay on
ENVIRONMENTAL FACTORS AND
ETHICAL ISSUES IN BUSINESS
Word Count: 1042
I declare that this assignment is all my own work and that I have acknowledged all materials
used from the published or unpublished works of other people. All references have been duly
cited.
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ENVIRONMENTAL FACTORS AND ETHICAL ISSUES IN BUSINESS
Introduction
The modern business environment for an organisation is complex, as it contains the various
internal and external environmental factors, while these external factors are categorized into less
affecting micros and more affecting macro factors (Wirtz and Daiser, 2017). On the other hand,
the ethical factors in business environment comprises of the issues that arise due to unfair and
illegal business culture of the organisation. This essay highlights the arguments on the changes in
business organisations due to various micro and macro environmental factors, and the impacts of
ethical factors on the business success of an organisation.
Main Body
LO1: Understand the dynamic and changing nature of business and the consideration of
the future of organisations within the global business environment
Environmental Factors
For any business organisation, the environmental factors play a very important role while
determining its capability to create and foster long-term business relationship with its customers.
These factors can broadly be classifies into internal and external environmental factors. For a
global business organization, its internal business environment mainly comprises of its different
business functions such as research and development, finance, sales and marketing,
administrative management, since the activities of these departments greatly affects the business
success of that organization. However, Indris and Primiana (2015) argued that the external
environment is much wider, and is usually categorized as micro and macro environmental
factors.
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ENVIRONMENTAL FACTORS AND ETHICAL ISSUES IN BUSINESS
Micro Environment
These factors usually have lesser impact on the business success of an organization than its
macro environments. Some of them are:
 The suppliers: As the businesses depend on its suppliers’ products, if suppliers are lesser
in number, they may gain advantage in business negotiations, and affect the success of
the business.
 The business partners: Intermediaries like resellers, distributors, financial institutions
like banks and advertising agencies aid the business organisations to sell their products to
the final customers, while the investors helps the organization to gather business capital.
As opined by Aschemann-Witzel et al. (2017), their reputation reflects on the brand
reputation of the business organization.
 The customers: The demand of customers plays a vital role in determining the success of
a product or service offered by the business organization.
 The competitors: The business methods of the rival organisations, which provide similar
services or products, greatly affect the business success or an organization.
Macro Environment
These factors usually have greater impact on the success of a business, and are usually analysed
with a PESTLE analysis.
Factors Effects
Political Success of a business always depends on its
compliance with political activities in its area
of business.
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ENVIRONMENTAL FACTORS AND ETHICAL ISSUES IN BUSINESS
Economical The economic environment of a market largely
affects the success of a business running in that
market.
Social The culture, etiquettes and preferences of a
society greatly affects the success of a business
running in that society.
Technological Utilising the latest technologies and skills in a
business greatly affects its success in a
competitive environment (Cabrera and Mauricio,
2017).
Legal Not complying with the applicable and
enforced laws and regulations significantly
hampers success of a business.
Environmental The success of a business is heavily dependent
on its sustainable use of various natural
resources while minimizing environmental
pollution.
Table 1: PESTLE Analysis
(Source: Created by Learner)
Impacts of environmental factors on business environment
These factors affect the business environment of an organization in various ways. For instance, if
the supply quality decreases, it also damages the product or service quality of the organization,
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ENVIRONMENTAL FACTORS AND ETHICAL ISSUES IN BUSINESS
as it happened in case of HSBC Holdings and their software technology supplier FIS Global in
2016. However, cleverly analyzing customer preferences and demands, and utilizing the latest
technologies to deliver customer-oriented service allows rapid increase of business for an
organization, as it was seen for Marks and Spencer in 2014, which implies that these factors
direct the growth of a business organization in a global market.
LO2: Identify the need for individuals and organisations to manage responsibly and
sustainably and behave ethically in relation to social, cultural, economic and environmental
issues
Ethical Issues in Business
While operating, any business faces various issues that require it to judge its own ethical
standpoint and act accordingly. Some of them are:
 Trust and integrity: This issue refers to the way an organization treats its customers and
stakeholders. Treating every customer equally and conducting the business with honesty
and fairness strengthen the relationship of trust between customers and organization.
 Respecting diversity in workplace: Treating all employees with respect, and providing
them equal opportunity for success enhances employee relationship with organizational
management.
 Issues in decision-making: To maintain business ethics, Chell et al. (2016) argued that
the decision-making process of an organization have to be fair, ensuring the rights of
customers and employees are protected, and the cultural values and beliefs of the
stakeholders are respected.
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ENVIRONMENTAL FACTORS AND ETHICAL ISSUES IN BUSINESS
 Legal Compliance: Organisations have to maintain their ethical standpoint by
maintaining their compliance with applicable laws and regulations, ensuring no illegal
activities are conducted during their business.
Responsibility of individuals and organisations to maintain business ethics
To maintain ethics in the business activities, the organizational management have the
responsibility to treat their customers, employees and other stakeholders with respect and
fairness. The individuals and organizational management also have to ensure that their business
operations do not violate any law or governmental regulations (Wallace and Sheldon, 2015).
These promote a positive ethical business culture within the organisations, which boosts the
morale of the employees, increasing the productivity of the organisations. This is why the
modern global companies like Tesco or HSBC Holdings strictly maintain a positive ethical
culture within their organizational environment. It also enhances the trust between them and the
customers, potentially enhancing the brand reputations of the organisations.
Conclusion
In this essay, the various macro and micro environmental factors, as well as the various ethical
issues has been discussed in the context of a business environment. It has been seen that even
though the organizational success mainly depends on its performance efficiency, various external
factors also affects its business operations largely, while maintaining a positive ethical standpoint
is also important for employee efficiency. Hence, it can be said that if the organisations align
their business policies with the external factors, and maintain fairness and honesty in their
business operations, they will be able to enhance their brand reputations and business success.
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ENVIRONMENTAL FACTORS AND ETHICAL ISSUES IN BUSINESS
References
Aschemann-Witzel, J., De Hooge, I.E., Rohm, H., Normann, A., Bossle, M.B., Grønhøj, A. and
Oostindjer, M., 2017. Key characteristics and success factors of supply chain initiatives tackling
consumer-related food waste–A multiple case study. Journal of cleaner production, 155, pp.33-
45.
Cabrera, E.M. and Mauricio, D., 2017. Factors affecting the success of women’s
entrepreneurship: a review of literature. International Journal of Gender and Entrepreneurship,
9(1), pp.31-65.
Chell, E., Spence, L.J., Perrini, F. and Harris, J.D., 2016. Social entrepreneurship and business
ethics: Does social equal ethical?. Journal of business ethics, 133(4), pp.619-625.
Indris, S. and Primiana, I., 2015. Internal and external environment analysis on the performance
of small and medium industries (SMEs) in Indonesia. International journal of scientific &
technology research, 4(4), pp.188-198.
Wallace, M. and Sheldon, N., 2015. Business research ethics: Participant observer perspectives.
Journal of Business Ethics, 128(2), pp.267-277.
Wirtz, B. and Daiser, P., 2017. Business model innovation: An integrative conceptual
framework. Journal of Business Models, 5(1).
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