External Environment

3104 Words Apr 9th, 2008 13 Pages
Business environment is an element that will affect all the activities of an organization. Besides, it will bring firms both opportunities and threats because of its uncertainties. Business environment is uncertain, complex & dynamics; organization should apply more flexibility & discontinuity ways to manage them. A firm cannot control the environment because it is unpredictable in its direction and speed of change, such as interest rates, rate of inflation and exchange rate.
Business environment can classifies in two categories that are internal environment and external environment. Internal factors close to the company that have a direct impact on the organizations strategy, these factors include employee, customer,
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The enactment of any such duties, quotas or restrictions could result in increases in the cost of our products generally and might adversely affect the sales or profitability of NIKE and the imported footwear and apparel industry as a whole.

2.) Economic Environment :
Economic environment has its patterns and trends in overall economic activity and world trade; movements in exchange rates, interest rates and taxation both within particular countries and internationally; fluctuations in capital markets; broad changes in market demand; industrial trends like increasing industry concentration and increased mergers and acquisitions activity. All businesses are affected by economical factors nationally and globally. Whether an economy is in a boom, recession or recovery will also affect consumer confidence and behavior. A truly global player has to be aware of economic conditions across all borders and ensure they employ strategies and tactics that their protects their business
An example: In the early 1990’s when the UK economy was in a slump, and businesses were folding repeatedly, a security company called ‘Dreadlocks security?to combat falling sales embarked on strategy of cutting back on labour costs, and doubling advertising expenditure. The companies?theory was that not their entire target segment was affected by the recession and he had to fight for the
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