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Business environment: characteristics and elements

The business environment is made up of all the external factors that influence the business. The company is not an entity that works in isolation, but interacts with its surroundings, that is, with customers, suppliers, other companies, the Government, technology, among others.

The business environment is divided into two parts; the general environment and the specific environment. The general environment is one that affects all companies, while the specific one affects a particular company.

Then, suppliers, customers, other companies that represent a competition and the community in which the company operates, would be part of the specific environment, therefore, they would directly affect the company.

While technology, government, legal aspects, environmental and socio-cultural aspects would be part of the general environment.

Characteristics of the business environment
The business environment is constantly changing, it is necessary to update the information of both the general environment and the specific environment.

The business environment is ambiguous, there is nothing clear about what could happen.

For example: a community may be happy with the creation of a company, but suddenly it begins to feel that it is threatening the life of the community. For which they begin to carry out campaigns against the company.

There it is evident that you are never sure about what can happen to the business environment.

The business environment is characterized by being unstable and is closely related to ambiguity, because there is no clear idea about how things will be for the company and for the economy.

Elements of the business environment
The business environment is made up of the specific environment and the general environment.

- The specific environment and its components
It is made up of all the external elements that directly influence the company. It contains the following components:

Customers are those who receive a good, a service or a product for which they are paying.

Customers can be other companies or they can be end consumers. The growth of the company will depend on the clients, since this is the one that brings the profits to it.

Suppliers and suppliers
Companies need certain merchandise and certain services to be able to carry out their daily activities, for that they hire other companies or people (suppliers) to supply them with the necessary merchandise to carry out their production process.

They also contract the services of electricity, water, gas, telephone, internet, among others, and these companies are usually called suppliers.

This component refers to all those companies that compete with the company, that is, those that offer the same or a similar product.

Companies need to know who their competitors are, as this will allow them to improve their products and offer them at a better price than other companies.

Public administrations
Public administrations refer to the State, the autonomous communities, the governorships and the mayors, among others.

Public administrations are an important component, since a company has to request certain permits in order to operate. You also need to keep up with your tax payments, otherwise you could be penalized or closed.

Financial entities
Financial entities are an indispensable component for the financing of a company, since money loans are requested through them.

Every company is located within a specific community, which has its customs, traditions, a social structure and a greater or lesser concern for the care of the environment.

In this sense, it can be said that you have to know the community where the company is located in order to avoid taking actions that threaten it.

Working market
According to the place where the company is located, it will have more or less expenses and will also have more or less qualified workers.

For this reason, it is necessary that before deciding the final location of the company the following aspects are taken into account.

- Salary costs : salary costs vary from one place to another and companies are usually located in the places where they must pay less to workers, since this way they would have a greater profit.

- Qualification : if a company needs highly qualified personnel, it must be located in a territory where it is more feasible to find them.

- The general environment and its components
It is made up of all those factors that are not directly linked to the company, but that influence the operation of a company.

The general environment has the following components:

Economic component
The economic component is made up of the following factors: inflation, unemployment, salary costs, loan costs, among others.

Technological component
The technology component consists of all the advances in the field of machinery and new technologies.

New technologies make the work of a company easier, but only if they are used correctly.

For example: today most companies have a website and social networks that allow them to be in direct contact with customers and reach a much larger population. Companies that do not use this type of technology are at a total disadvantage.

Environmental component
It refers to the damage that humans have caused to the environment. As a consequence, companies must adapt their production systems so that it is contaminated as little as possible.

Legal component
This component refers to the set of laws that regulate the actions of a company.

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