Foundations of Business

There are other forces besides competition you should be concerned with before developing a strategy and implementing it. After you read, you will be able to name the other external considerations when creating your business strategy.

Apple and other businesses don't operate in a vacuum: they're influenced by a number of external factors. These include the economy, government, consumer trends, technological developments, public pressure to act as good corporate citizens, and other factors. Collectively, these forces constitute what is known as the "macro environment" – essentially the big picture world outside over which the business exerts very little if any control.

Environmental Forces

The company surrounded by its environmental forces: demographic, natural, economic, political, cultural, and technological.

"Business and Its Environment" sums up the relationship between a business and the external forces that influence its activities. One industry that's clearly affected by all these factors is the fast-food industry. Companies such as Taco Bell, McDonald's, Tim Hortons and others all compete in this industry. Here are a few statements to show the way external factors impact business. For instance, a strong economy means people have more money to eat out. Food standards are monitored by a government agency, the Canadian Food and Drug Inspection Agency at the federal level with entities at both the provincial and municipal levels following through with adherence. Preferences for certain types of foods are influenced by consumer trends (fast food companies are being pressured to make their menus healthier).

This example shows the large scale impact of external forces. The Ministry of Health and Long Term Care's Newsroom on December 30, 2016:

Starting January 1, 2017 Ontario will be the first province in Canada to require food service providers with 20 or more locations in the province - such as restaurants, coffee shops, convenience stores, grocery stores and movie theatres - to include the number of calories for each food and beverage item on their menus, labels or tags.

Finally, a number of decisions made by the industry result from its desire to be a good corporate citizen. For example, several fast-food chains have responded to environmental concerns by eliminating Styrofoam containers.


Of course, all industries are impacted by external factors, not just the food industry. As people have become more conscious of the environment, they have begun to choose new technologies, like all-electric cars to replace those that burn fossil fuels. Both established companies, like Nissan with its Nissan Leaf, and brand new companies like Tesla have entered the market for all-electric vehicles. While the market is still small, it is expected to grow at a compound annual growth rate of 19.2% between 2013 and 2019.

As you move through this text, you'll learn more about these external influences on business.

 

Key Takeaways

Important terms and concepts
  1. The main participants in a business are its owners, employees, and customers.
  2. Every business must consider its stakeholders, and their sometimes conflicting interests, when making decisions.
  3. The activities needed to run a business can be divided into functional areas. The business functions correspond fairly closely to many majors found within a typical college of business.
  4. Businesses are influenced by such external factors as the economy, government, and other forces external to the business.

Source: Pamplin College of Business and Virgina Tech Libraries, https://ecampusontario.pressbooks.pub/businessfuncdn/chapter/foundations-of-business/#chapter-33-section-6
Creative Commons License This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 License.

Last modified: Wednesday, June 22, 2022, 9:42 AM