Impact of Global Environmental Factors on Business Performance

This essay provides a comprehensive analysis of the global business environment, exploring the dynamic nature of businesses and the factors influencing their performance. It delves into both micro and macro environmental factors, including political, economic, technological, legal, and social aspects. The essay also examines the impact of customers, competitors, suppliers, and employees on business operations within a global context. Furthermore, it emphasizes the importance of ethical and sustainable practices, addressing environmental, economic, social, and cultural issues that organizations and individuals must navigate. The conclusion highlights the significance of managing these factors responsibly to ensure long-term success in the global market. The essay references various books and journals to support its arguments, providing a well-rounded perspective on the subject.

CONTEXT OF
BUSINESSES

Table of Contents
INTRODUCTION...........................................................................................................................1
L1. Micro and macro environmental factors that have changed the nature of business in the
global environment......................................................................................................................1
L.2 why it is important for organisations and individuals to manage responsibly, sustainably
and behave ethically in relation to social, cultural, economic and environmental issues. .........2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Global business environment is defined as a historical process, which is the result of
human innovation and technological progress. It refers to increasing integrity among different
economies around the world. This essay will analyse dynamic nature of businesses. It will also
identify why individual and organisational need to manage and behave ethically in relation to
different environmental issues such as social, cultural and economic.
MAIN BODY
The international environment is going through a historical transformation. Due to the
availability and advancement of technology, it has become easier for business to perform in the
global market (All business is global, 2019). As the environment is changing certain factors have
impacted it which includes both micro and macro environment factors. Macro factors such are
POLITICAL ENVIRONMENT: Every business have to operate within some specific rules of
the government. And every country has different set of rule which may affect the
performance of business in the global market. While some countries political system is more
suitable for flourishing and advancement of organisation some countries strict laws may
make it difficult for business to operate in their market (Hanson and et. al., 2016).
ECONOMIC ENVIRONMENT: Different countries have different economic structure and
systems. In order to successfully launch a product in the global market organisations needs to
study their economic structure. Free market system is the best suitable place to launch
product by companies as it has high success rate in these markets.
TECHNOLOGICAL ENVIRONMENT: These have changed the way in which businesses
functions. Due to advancement in information technology it has taken over every department
of the organisation. As organisation is bound to update itself every now and then in order to
survive in the dynamic environment.
LEGAL ENVIRONMENT: It includes rules of law. Every countries rules are different from
one another and they keep on changing from time to time. Due to to change in certain laws
such as laws related to trade, import and export etc (Krugman, 2017). It might effect the
business of the organisation as they have to obey to these norm to further operate in the
Market segment.
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SOCIAL ENVIRONMENT: It means operating in a cross cultural environment. It adds more
complexity to the business because they have to appreciate how different the foreign culture
is and how this difference is to be reflected in their business strategies. In order to perform in
global environment.
There are some micro factors that have also impacted.
CUSTOMERS: As the organisations main purpose is to satisfy the needs of customers. The
preference of the customers tent to be different in different market segments. In order to
please customers and increase profits companies needs to analyse global customers and
design products accordingly.
COMPETITORS: Global marketing and advertisement has enabled the development of global
brands across different nations. Which have increased the level of competition in the market
and reduced the market share of the business in the market segment.
SUPPLIERS: They are responsible to provide the firm with raw material and factors of
production which is required to run the businesses. Certain factors have effected the supplies
of material in the global market for example increasing focus on sustainability and the
environment have led to the use of environment friendly practices (Potrafke, 2015). One of
the global initiatives is going green which have forced organisations to have a stamp of
approval proclaiming that their processes are environmental friendly.
EMPLOYEES: is one of the most important factors required in the production process of the
company. Organisation can use different global markets labour force for increasing their
level of performance as different individual possess different set of skills and their
combination can help the organisation to perform better in the market.
For organisations and individuals, it is very essential to manage responsibly, sustainably and
behave ethically in relation to social, cultural, economic and environmental issues. Such as:
ENVIRONMENTAL ISSUES: It consists of certain issues such as growing pollution,
scarcity of resources and global warming (Robinson, 2014). As these are effecting environment
at a larger extent organisation as well as individual needs to address these ethically as they are a
part of the environment and they are responsible for using its resources. Thus, it is their duty to
use them in such a manner that the future generation may not face a difficult time using them.
ECONOMIC ISSUES: These continuously challenge businesses to adopt and change in order
to meet the current market conditions. As a business primary role is to satisfy customer needs
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in order to do so it have to analyse market on a regular basis. Where as Individual life also
gets effected by such issues for example rate of inflation have a direct impact on the day-to-
day living expenses of consumer if individuals have already managed their live in such a way
that could reduce the impact of inflation it is going to be beneficial for them.
SOCIAL ISSUES: These includes issues related to worker's health and safety and other
environmental concern. Social responsibility has led many firms to adopt corporate social
responsibilities policies some organisation focusses on issues such as climate change while
others on embracing a comprehensive approach that seeks minimize undesirable societal
impacts (Rupert and Smith, 2016). By adopting corporate social responsibility companies
tent to full fill their responsibility towards environment and it also helps in influencing
individuals.
CULTURAL ISSUES: Businesses have diversified workforce in their organisational structure.
Issues can be raised due to the difference between the religion, language and region among
the employees. Organisation needs to address these issues in order to resolve them so that the
workforce and work together and achieve overall organisational goals. It is also important for
individuals to resolve cultural issue between them in order to coordinate their work with their
teams work
CONCLUSION
By explaining the factors which impacts on business, it has been concluded that there are
several micro and macro environment factor which influence the performance of organisation in
global market. This essay also highlights different issues which an organisation and individuals
needs to face and resolve in order to behave ethically and substantially in the market.
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REFERENCES
Books and Journals
Hanson and et. al., 2016. Strategic management: Competitiveness and globalisation. Cengage
AU.
Krugman, P., 2017. Crises: The price of globalisation?. In Economics of Globalisation (pp. 31-
50). Routledge.
Potrafke, N., 2015. The evidence on globalisation. The World Economy.38(3).pp.509-552.
Robinson, G., 2014. Geographies of agriculture: globalisation, restructuring and sustainability.
Routledge.
Rupert, M. and Smith, H. eds., 2016. Historical materialism and globalisation: Essays on
continuity and change. Routledge.
All business is global. 2019.[Online] Available Through:
<https://www.bizjournals.com/bizjournals/how-to/growth-strategies/2015/02/why-all-politics-
local-but-all-business-is-global.html>
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