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Unit II Assignment
This assignment allows you to demonstrate the following outcomes:
2. Examine the different environments in which businesses operate, to include social, technological, economic, legal, and market environments.
2.1 Describe how different environments impact a business.
2.2 List the characteristics of different environments as they relate to a business.
Instructions: The purpose of this assignment is to examine the different environments in which businesses operate. Read each set of instructions before completing the three exercises. Then, save all of your work to this template and submit it in Blackboard for grading.
Exercise 1: The table below contains cells where you can insert the elements for each type of environment: (a) the characteristics of the environment as it relates to the business and (b) a description about how the environment impacts the business. For Exercise 1, your answers should focus on the following type of business: a retail business with clothing and other apparel.
In your own words, complete the table below by inserting the appropriate elements.
| Environment | List the characteristics of the environment as it relates to the business (at least three each) | Briefly describe how the environment impacts the business (at least four sentences each) |
|---|---|---|
| Social | 1. Religion / Culture2. Age of targeted market3. Location | The social environment has a great impact on how businesses operate. Social environment can shape what types of products; offered by the same business, are offered based on the location in which it is serving. Religion or culture for example could impact what type of clothing this particular company would offer for sale in different parts of the world. Where certain types of clothing are acceptable in most western cultures, some eastern cultures may not find the same clothing acceptable. Therefore, the type of products offered would need to be tailored to fit that specific area, culture, or population. |
| Technological | 1. New material development2. Infrastructure and manufacturing technology3. Online shopping | The technological culture can impact the types of goods or services a business offers in many different ways. Not only could the technological environment impact goods or services offered, it can also greatly impact how businesses operate. For this particular business, advances in new types of material could impact what types of clothes are offered. It may also impact the durability and quality of the products. Another technological environment impact that could influence this business would be advancements in online shopping capability. Impacts could be both good and bad. If this store only offers products through a physical location, then advancements in online shopping may hurt sales. But, if this business also offered online shopping capability, and took advantage of the technology, the store could then cater to that specific shopping market and capitalize on the opportunity. |
| Economic | 1. Labor / material costs2. Supply / demand of items offered3. Product cost | The economic environment could be the easiest to understand how it may impact businesses. If the economy is doing well, it would generally positively impact business as customers are more likely to shop. If the economic environment is poor, customers are less likely to feel comfortable with certain expenditures and are less inclined to absorb some unnecessary costs. A poor economic environment could also lead to a lower demand for items offered by this business. |
| Legal | 1. Taxes2. Copyright regulations3. Pricing laws / regulations | The legal environment could be seen as the environment that generally costs, but does not generate revenue in return. Many aspects of the legal environment incur required expenses for operation, but are not so much an investment. However, they are a necessity. The legal environment can impact the location businesses choose to operate. Areas with higher taxes or operating permit costs may drive businesses away in favor of less expensive locations. This not only affects the business, it affects employees and customers as well. If a business is unable or unwilling to absorb high legal environment costs and fees, they may choose to raise products costs, forcing customers to pay more, or driving them away all together. Or, they may even choose to move the business completely, possibly costing employees their jobs. |
| Market | 1. Competitor pricing and products2. Target market influence3. Target customers | The market environment determines is what products or services to make available based upon its customers. This is centered on multiple different aspects including target market buying influences, market studies, and competitor products and pricing. For a clothing store, knowing what types of clothing their target market desires is key. Businesses must research and know what products customers are looking for, what competitors are offering, as well as pricing points. Businesses should know what price point customers are comfortable with and adjust based upon this. |
Exercise 2: This exercise is similar to Exercise 1, however, your answers will now focus on a different type of business: an electronics manufacturing business.
In your own words, complete the table below by inserting the appropriate elements.
| Environment | List the characteristics of the environment as it relates to the business (at least three each) | Briefly describe how the environment impacts the business (at least four sentences each) |
|---|---|---|
| Social | 1. Environmental Awareness2. Product popularity3. Social trends | The social environment surrounding an electronics manufacturing business could be shaped by many different things. One factor influencing this environment could include current social trends. It can be seen time and time again, how new items are released, take hold and create social trends. These trends can impact what products or services a business may offer, manufacturing numbers, new product development, and even how long a particular products stays around. As a manufacturing company, the growing social awareness surrounding being “green” could also have a large impact. Social pressure to be clean and more environmentally friendly and energy conscious would have a certain influence on this business. |
| Technological | 1. Automation2. Technological advances 3. Availability of new technology | It is quite obvious that the technological environment would have a very large impact on an electronics manufacturing business. Advances in the specific electronics that the company produces would affect the infrastructure of the company itself. Requirements for certain tools, machines, robotics, and software could change in an instant. Automation could play a key role in shaping the technological environment of this type of business. In general, automation has proven to be quite efficient in manufacturing. Robots are better suited to produce quality products; with far less chance of having quality issues, at a much faster pace than humans are. |
| Economic | 1. Production costs2. Resource availability and costs3. Available capital | For an electronics manufacturing business, a strong economy, or economic environment is key. Manufacturing is about producing products to be sold. If an economy is poor, sells could be down, thus less product would be produced. This obviously impacts revenue and would trickle down from there. If the economic environment is strong and products are selling, a company such as this would be better suited to afford production costs. These costs include not only employees, but materials as well. Supply and demand would play a large role in this as well. If the economic environment is strong, customers are more likely to buy, therefore creating a higher demand for products. |
| Legal | 1. Wage or pay regulations2. Compliance regulations3. Import taxes | Just as it would with any other business, the legal environment does a great deal in shaping many different aspects of a business. A manufacturing business would have many regulations in regards to environmental compliance, labor and wage laws, and import/export laws. Electronics is a very widespread industry and many products are produced in certain countries and shipped all over the world with all types of regulations governing these practices. Ensuring all regulations and laws are followed can be costly in both time and money, but could be even more costly if they are not followed. |
| Market | 1. Competitor pricing2. Post-purchase services offered3. Customer wants and needs | The market environment for a manufacturing company such as this one could be impacted both directly and indirectly. This means that this business could be impacted by the customers of another business, which in this case would be the company that it produces products for. If the other business has done its duty in judging the correct market for desired products and costs, then manufacturing will be steady. If said company misjudges the market or prices themselves out to a competitor, then manufacturing numbers may drop. |
Exercise 3: The purpose of this exercise is for you to reflect upon your observations after completing the first two exercises. What did you notice about the different environments and how they impact a particular type of business? After completing this assignment, what could you, as a business manager or entrepreneur, take away and apply to a job? Your response must be at least 200 words in length.
After completing the first two assignments, I have learned how each different environment can have similar effects on different types of businesses. An example of this could be how the economic environment plays a key role in determining whether or not customers are willing or able to purchase certain products and services. In a strong economic environment, customers would more likely be in a position to have disposable income and be more willing to buy certain products or services. However in a poor economic environment, customers may be hesitant to depart with any extra income to buy products or services that they may not particularly need. The legal environment can also have similar effects on different businesses. One simple fact of life is that taxes will be paid. Different businesses will be similarly effected by local, state, federal, and import taxes. In addition to this, every business must ensure that it is in compliance with any specific regulations that pertain to its business practices. All of these things will impact a number of decisions made within any business.
I feel that after completing this assignment; if I were to be in a position as a business manager or entrepreneur, one major item that I would take away and apply to a job would be a much better understanding of the importance of understanding your market. So many factors can come into play in determining what products to sell, who to sell to, when to sell them, and what the pricing should be. This aspect has many variables to it including location, population demographics, social trends, influences, and competitor products and pricing. A great deal of research and understanding is needed in order to ensure that target markets are being met, customers are happy, and getting what they want.
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