Reflective paper on Business and Economic Environment

Document Type:Essay

Subject Area:Business

Document 1

In addition, the consumer decisions or behaviors determine the demand for particular products or goods and the effects. The factors in the economic environment include unemployment rates, inflation, interest rates that influence the purchasing decisions among organizations and consumers. As a businessman, it is essential to understand the environment that a business operates. The environmental factors also determine the location, supply chain strategy, human resource policies, and pricing. I believe that every entrepreneur needs to understand these factors before setting up a business. On the other hand, the economic environment entails the external factors as well as the broader economy that affect the operations of a company. Usually, these factors are categorized into microeconomic and macroeconomic factors. The microeconomic factors influence the decision making of firms and individuals and are usually at a smaller scale.

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Contrary, the macroeconomic environment influences the entire economy and all parties involved. From investigations, I have observed that the economic factors impose obstacles to business operations. This includes keeping at par with current happenings in politics, trade policies, regulations, consumer preferences, among others. With the rapid changes in technology, the business environment is constantly fluctuating as a result of the developments. Also, the environment is dynamic because it continually evolves depending on the developments in technology as well as the shifts in consumer preferences. Moreover, I have established that the business differs from nation to nation. This is because the demographic trends in one country are different from those in another nation. These economic factors include employment rates, inflation rates, interest rates, clients’ income level, and company profits.

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All these factors determine the pricing levels, production, marketing strategy, and budget allocation (“The Impacts of the Economic Environment on Business”). Another essential component of the business environment is the social environment that includes factors such as culture, beliefs, lifestyle, demographic trends, and movement of the population. In this regard, the managers or entrepreneurs must understand the social trends and develop products that fulfill these needs. I personally acknowledge that people purchase what is acceptable within their culture or jurisdiction. The political environment is closely linked with legal factors. These legislations include taxation laws, environmental regulation, and trade regulations (Bush). The government is also responsible for imposing trade restrictions, including the amount of particular goods to be outsourced from another nation (Pearson Higher Education, n.

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d. Over the years, technology has played a significant role in the evolution of businesses as well as the emergence of new product and service lines. While the micro-environment is smaller in scale, the effects thereby can be devastating to a business if they are ignored. The environment comprises the essential relationships between companies and the forces that sustain such relationships. Notably, this is the localized influence of the factors within the business environment and must be addressed for efficient operation. As a business student and future stakeholder in the business world, I understand that the value delivery system includes all stakeholders involved in the supply chain. All parties offer resources that are required by the firm to deliver its mandate.

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The basis is to ensure that the business has a competitive advantage when compared to companies with the similar product offering. Consumers purchase product or service based on diverse needs. Therefore, the products must align with the social needs of consumers. I understand that effective business management requires understanding the preferences and consumer behaviors for proper product alignment. Conclusion The decision making within an organization requires consideration of the micro-level and macro-level factors that influence the operation of the business. Similarly, it is important that the managers control the supply chain manager and maintain constant communication to ensure that there is an efficient and prompt movement of goods. The objective of aligning strategies with environmental factors is to ensure that a company has an advantage over its competitors.

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