Impact of Environmental Factors on Modern Business - Report

This report delves into the dynamic landscape of the modern business environment, examining the profound impacts of both micro and macro environmental factors. It begins by identifying and discussing key external forces, such as social, technological, economic, and political factors, using the PESTLE analysis framework to illustrate their influence on business operations. The report emphasizes the critical importance of corporate social responsibility (CSR) and ethical behavior for businesses to maintain sustainability and build strong relationships with stakeholders. It highlights the need for organizations to adapt to changing customer preferences, technological advancements, and economic fluctuations, while also adhering to legal and ethical standards. The report concludes that understanding and effectively managing these environmental factors is essential for business success in today's globalized and rapidly evolving marketplace. The report also emphasizes on the need for businesses to fulfill their CSR obligations and conduct their operations ethically to ensure long-term sustainability and stakeholder trust.

Context of Business

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Identifying as well as discussing micro as well as macro environmental factors which has
changed the nature of modern business......................................................................................3
Analyzing the need for individual and organization for managing responsibility and behaving
ethically in context of cultural social, economic and environmental issue.................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
In present digital world, advancement in the technology has bought drastic changes in
business environment. Both digitalisation as well as globalisation has provided companies an
ease in expanding and managing their business at global level.
The assignment will have focus on identifying the micro as well as macro environment
factors which has changed the nature of business environment. Study will emphasize on
analysing the significance of fulfilling the corporate social responsibility and to behave in ethical
manner.
MAIN BODY
Identifying as well as discussing micro as well as macro environmental factors which has
changed the nature of modern business
Macro environment are those external forces which directly as well as significantly effect
the business .
Pestle analysis is a technique which can be applied in order to identifying the factors
affecting the business environment, The several external variables such as social, legal,
environmental, political and especially economic as well as technological changes has bought
drastic change in nature of business.
Social cultural factors: The changes in social as well as cultural factors in macro business
environment has played crucial role in the functioning of business. Changes in social
environment has significant influence on the modern business. Social variables in macro
business environment includes change in trends, taste and preference of customers. Changes in
customer demands encourages modern business to develop innovative products or services. The
negative effect of this factor is that due to the continuous change in the trend, modern companies
have to face difficulty in maintaining demand and supply (Kopnina and Blewitt, 2018.).
Technological factors: Emergence in digital technology has brought positive as well as drastic
change in way of communication done by modern companies with customers. Growth in digital
technology has provided modern business an ease in promoting their products or services at
international level. It has provided modern business a chance to bring improvement in the
marketing activities. At the same time, emergence of technology has given rise to intense
competition in industries due to which many modern companies are facing difficulty in
concentrating on the core business functions. In addition to this, technology used by the

companies becomes obsolete due to such developments, then it can also be a threat to the firm. It
is very much important for companies to keep update themselves with changes in technology and
keep pace with it, as this strategy will help enterprises in providing an appropriate response to
changes.
Economic factors: This type of components in macro environments includes the inflation,
changes in tax rates, fluctuation in interest rate etc. Changes in the economic factor has direct as
well as significant effect on the financial performance of companies (Dima, 2018.). Decrease in
the exchange rate might provides modern business like Tesco, marks and Spencer etc. an
opportunity to gain financial business. But due to the continuous inflation modern business
might face difficulty in determining the prices for their goods or services.
Physical environment : Natural environment influences modern business in diverse way.
Companies in modern times are highly dedicated in nature. It involves changes in weather
conditions, competition etc. Changes in the environmental factors have direct as well as
significant effect on the services provided by companies. As modern business believes in direct
selling, due to lack of proper distribution network and bad weather conditions they might have to
face difficulty in delivering products or services (Fowowe, 2019).
Political and legal factors : It includes changes in law as well as regulations. Amendments in
norms have great effect on the functioning of modern business. If modern companies fails to
follow the legislation that it can be threat to its sustainability. By complying with the laws
modern organization can solve their business issues.
MICRO level factors effecting business
Customers: changes in demands and needs of these people have direct effect on modern
business. Modern companies can not sustain as well as earn profit by without attracting the
customer. Changes in the taste of the customer have significant effect on the demand of product
offered by enterprise.
Employees : change in attitude or performance standards of employees might influence
company to bring changes in nature of business. Highly skilled employees can assist companies
in accomplishing desired business objectives (Spremic, Turulja and Bajgoric,2018). Low
motivation and low skilled employees, business would suffer as the employees would be least
motivated towards sales.

Suppliers: Behavior of suppliers might influence modern firms to bring change in the nature of
business. These are the stakeholders who can highly influence business strategy. For example,if
their services will not reasonable and timely that will affect the production time and the sales due
to delayed procedure of production (Hamilton and Webster, 2018.).
Level of competition: In modern business world, organization encounters various forms of
competition. The most common competition which a company’s product now faces is from
differentiated products of other companies.
Analyzing the need for individual and organization for managing responsibility and behaving
ethically in context of cultural social, economic and environmental issue
Corporate social responsibility can be referred to as an open and transparent business
practices which are supported by ethical values. It is very much important for firms to fulfill its
corporate social responsibility and to execute business in ethical manner, as this will them in
maintaining business sustainability in global environment. Fulfilling social responsibility by
companies is important in context of engaging with customers and also gaining their loyalty that
is further crucial for growth of companies (Dima, Cantaragiu and Istudor, 2018). In addition to
this, business ethics are needed for protecting the interest of workers, shareholders and other
stakeholders. Business ethics is required for attracting the employees, investors and customers.
Organizations are required to fulfill corporate social responsibility, as it will help them in gaining
the support of people in society.
CONCLUSION
It has been concluded from the report that changes in the macro environmental factors
have great in influence on modern business. The other fact which has been found during the
study is that mainly economic and technology factors have significantly effected the modern
business. It has been concluded from the project that business ethics is needed in order to protect
the interest of both internal and external stakeholders.

REFERENCES
Books and references
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Fowowe, M.A., 2019. Glocalisation and Sustainable Business Solutions: Business and
Environmental Sustainability. In Neoliberalism in the Tourism and Hospitality Sector (pp.
53-82). IGI Global.
Kopnina, H. and Blewitt, J., 2018. Sustainable business: Key issues. Routledge.
Dima, A.M. ed., 2018. Doing Business in Europe: Economic Integration Processes, Policies,
and the Business Environment. Springer.
Spremic, M., Turulja, L. and Bajgoric, N., 2018. Two Approaches in Assessing Business
Continuity Management Attitudes in the Organizational Context. In Always-On Enterprise
Information Systems for Modern Organizations (pp. 159-183). IGI Global.
Dima, A.M., Cantaragiu, R. and Istudor, L.G., 2018. The Relationship Between Competition
Policy and Innovation in the European Business Environment. In Doing Business in
Europe (pp. 105-124). Springer, Cham.