the business environment

Topics: Force, Business, Management Pages: 7 (1595 words) Published: March 28, 2014
The Business Environment
SIX FORCES OF INFLUENCE
by Ryan L. Sievers, MBA
Definition—The six forces of the Business Environment are defined and described in detail. These are the forces beyond the control of any company. Understanding and monitoring them is crucial in order to anticipate, prepare for and successfully adjust to the change that is both inevitable and constant.

Revised June 2008. Copyright © 2006-2008 Ryan Sievers. All rights are reserved.

DEFINITIONS

/ The Business Environment

September 2006

The Business Environment
SIX FORCES OF INFLUENCE
by Ryan L. Sievers, MBA
THE BUSINESS ENVIRONMENT IS

the complex realm of factors and conditions that influence all participants

(principally composed of consumers, businesses, and governments) that are engaged in various market exchanges. It is the amalgam of all the forces of influence that are external to—and outside the control of— any one person or company. The business environment is dynamic; engaging and connecting myriad business concepts in a complex and multifaceted interplay of issues, causes, and effects that can manifest in foreseeable, as well as unpredictable and unprecedented, risks and outcomes. As a means to better understanding and analyzing its complexities, the business environment has been organized under six major forces of influence: Sociocultural, Competitive, Technological, Economic, Political & Regulatory, and Natural. These six forces are interrelated, constantly in action, and constantly changing. Each of these forces exerts some degree of influence or effect on any given business at any given time. Depending on the scenario and situation, some forces of influence are more important than others, and some at different times than others. To be successful a company must thoroughly understand the business environment and its effects.

SYSTEMATIC AND TIMELY OBSERVATION

of the business environment is necessary to help a company

develop and maintain an edge over its competition, and to anticipate important changes among issues that are beyond its control. This is done for the purpose of preparing for and successfully adjusting to the changes that are induced by the business environment.

To accomplish the mission of understanding the business environment, two critical functions must be undertaken in a systematic and timely way. The first is to observe and analyze1 the business environment. The purpose of this effort is to identify and comprehend as best as possible the nature of the situation in which the company is operating. The second function builds on the first by synthesizing2 the information gained from observation and analysis. This knowledge should then be used to make competent decisions on the issues of when and how to utilize the company’s limited resources in its ongoing effort to adapt itself to the forces of the business environment, as well as to support the achievement of the company’s mission and strategic objectives.

Analysis and synthesis of the business environment can provide the critical information necessary to recognize and take advantage of current trends, as well as help to predict coming market shifts. It also enables a company to identify potential threats, as well as opportunities that may be linked to changes in the business environment.

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2

Analyze – To examine something in great detail in order to understand it better or discover more about it; to find out what something is made up of by identifying its constituent parts.
Synthesize – To combine different ideas, influences, or concepts into a new whole. The process of gaining contextual understanding.

Revised June 2008. © 2006-2008 Ryan Sievers. All rights are reserved.

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RYANSIEVERS.COM

DEFINITIONS

/ The Business Environment

September 2006

The six forces of influence are defined according to their general sphere of effect. A single issue or factor in the business environment can frequently be categorized...
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