Business Environments and Resources: A Comprehensive Guide
Business Environments
Definition of Environment
The external forces or institutions that can potentially affect a firm’s performance are known as its environment.
The Company
A company is a system that interacts with and depends on its specific environment (customers, competitors, suppliers) and its general environment (social, economic, political, religious).
A company’s success depends on appropriate and successful interactions with each element of its environment. Therefore, it’s crucial to understand the opportunities and threats that may exist.
Specific Environment
The specific environment is directly relevant to achieving an organization’s goals. It comprises competitors, customers, and suppliers.
This part of the environment deals with the realization of an enterprise’s goals. It consists of critical components that can positively or negatively influence a company’s efficiency and effectiveness.
Competition
Competition is comprised of producers or suppliers of the same good or service. All organizations have competitors, and managers should be informed about their strategies.
Suppliers
Suppliers provide raw materials, equipment, labor, machinery, money, etc. Every company strives to ensure a continuous flow of supplies at the lowest possible cost to guarantee its operation.
Clients
Clients are the purchasers of goods or services. They are the reason for a firm’s existence, as companies are created to meet their needs.
General Environment
The general environment includes everything external to the enterprise, such as the economic, political, socio-cultural, technological, and legal environments. It encompasses conditions that may affect the organization, but their immediate effect is not always clear.
Definition of Factors
1. Economic Environment
Some economic factors include interest rates, inflation, disposable income, fiscal and tax policies, and the unemployment rate.
2. Social Environment
The social environment consists of the attitudes, beliefs, conflicts, desires, expectations, and customs of a society.
3. Environmental Ethics
Environmental ethics encompasses social responsibility in the company and includes the ethical standards of personal conduct generally accepted in society.
Ethics relates to the principles or rules that define good or bad behavior, along with duty and moral obligation.
4. Political Environment
The government affects all organizations. Regulations or tax breaks may encourage or limit certain businesses.
5. Legal Environment
The legal environment consists of all existing legislation that may influence the organization.
6. Technological Environment
The most rapid changes occur in the technological environment. Progress in this area manifests in new machines, tools, materials, products, and services.
Soc Anonima (Corporation)
A corporation is a legal entity formed by the meeting of a mutual fund provided for shares liable only for their respective contributions and administered by a board composed of essentially revocable members.
The administration is exercised by a board elected by the shareholders. The board of a close corporation cannot have fewer than three directors, and a public company cannot have fewer than five.
Types of Corporations
- Under common: open stock companies and closed corporations.
- Under special arrangements: insurance companies, mutual fund managers, stock exchanges, etc.
- Banking: pension funds, in addition to the above, must be preceded in their formation by a prospectus that contains the essential features of the company and what it intends to develop.
Soc Cooperativa (Cooperative Society)
A cooperative society is created to supply goods and services to its members at cost price.
- Members pay dues or buy shares in the company.
- The total number of shares is limited by statute.
- Each member has one vote regardless of investment.
- It is run by a board of directors.
Resources for Business
1. Material Resources
Material resources are tangible assets that a company uses to offer its services, such as:
- Facilities: buildings, machinery, equipment, offices, land, tools, etc. (Business use)
- Raw materials: auxiliary materials that are part of the product in process, finished goods, etc. (Company product sold)
2. Technical Resources
Technical resources are ancillary tools and instruments used in coordinating other resources. They can be:
- Systems of production, sales, finance, administration, etc.
- Formulas, patents, trademarks, etc.
3. Human Resources
Human resources are essential for any social group, and they account for the management and operation of other resources.
Human resources have the following characteristics (apart from other resources):
- Possibility of development
- Ideas, imagination, creativity, skills
- Feelings
4. Financial Resources
Financial resources are the company’s own and other monetary resources essential for proper functioning and development. They may be:
- Financial resources themselves are in: cash, members’ shares (shares), utilities, etc.
- Financial resources of others are represented by: loans from creditors and suppliers, private bank loans, or the issuance of securities (bonds).