{"id":36,"date":"2023-11-01T20:25:36","date_gmt":"2023-11-01T20:25:36","guid":{"rendered":"https:\/\/openbook.ums.edu.my\/internationalmanagement\/chapter\/chapter-1-globalization-and-international-linkages\/"},"modified":"2024-09-18T01:42:23","modified_gmt":"2024-09-18T01:42:23","slug":"chapter-1-globalization-and-international-linkages","status":"publish","type":"chapter","link":"https:\/\/openbook.ums.edu.my\/internationalmanagement\/chapter\/chapter-1-globalization-and-international-linkages\/","title":{"raw":"Environmental Foundation","rendered":"Environmental Foundation"},"content":{"raw":"[embed]https:\/\/youtu.be\/DexE1hFye0Q[\/embed]\r\n\r\nAdapted from\u00a0\"political environment in business \"<\/a>\u00a0by\u00a0Indeed Team<\/a>\u00a0is licensed under\u00a0CC BY 3.0<\/a><\/strong>\r\n

Business environments change frequently and require consideration when planning and conducting operations.\u00a0Business managers\u00a0and executives have a responsibility to examine internal concerns for how they may influence company decisions. It's also important to monitor any external environmental factors that can affect how the business functions as well as develop methods for overcoming these challenges.<\/p>\r\n

In this section, we discuss what external environment factors are, their importance and nine of these factors that affect businesses.<\/p>\r\n\r\n

External environment<\/strong><\/h1>\r\n

External environment factors are elements that exist outside of a company's internal environment that can affect a company's operations. These outside forces can help the business or present challenges to its current processes. Managers often keep track of external environment factors so they can recognize and resolve the issues the factors cause and make appropriate changes.<\/p>\r\n

External environment factors are important because they can cause direct and indirect effects on business operations, personnel and revenue. The external environment of a company changes constantly in ways beyond the company's control, but executives and managers can track these changes and minimize their consequences. Choosing to monitor the dynamic nature of external environment factors allows businesses to protect themselves against predictable events and mitigate the effects of unexpected changes.<\/p>\r\n\r\n

Crucial external environment factors<\/h2>\r\n

Here are the nine types of external environment factors that affect businesses:<\/p>\r\n\r\n

Technological factors<\/h3>\r\n

As technology continues to advance, companies can benefit from these breakthroughs or face challenges in competing with them. For example, a company that manufactures GPS devices for personal cars may experience a decline in business because of the integration of GPS on mobile devices, but it can confront these challenges by developing new products. Other companies, such as health care providers, can use modernized methods to collect information from their patients, keep patient records and streamline patient care.<\/p>\r\n\r\n

Economic factors<\/h3>\r\n

The state of the economy plays an important role in every aspect of daily life from the well-being of personnel to the ability of a company to thrive. When the economy trends downward and unemployment rises, businesses may have to work harder to keep their staff and change their processes to continue earning revenue. If the company produces products for retail sale, for instance, it may consider lowering the price to increase sales and positively affect its revenue.<\/p>\r\n\r\n

Political and legal factors<\/h3>\r\n

As political officials leave office and new ones replace them, the policies they implement often affect businesses in relevant industries. Because of the inconsistent nature of politics, businesses monitor legislative bills closely to prepare for potential changes. Policies that can have long-term effects on companies include:<\/p>\r\n\r\n