The External Business Environment

Hey everyone. This is Matt from Alanis Business Academy. In this lesson, were going to talk aboutthe external business environment. And this topic I actually generated a castigate ona few days ago in my Intro to Business class, and supposed Id take the opportunity toupdate some of available resources we have related to this topic. We do got a few videos may be obtained on the externalbusiness environment. They were done a few years ago, and franklywith some older technology that we had at the time. So I felt Id take this time to updatethat and yield us a brand new video and that sort of thing.So hopefully you find the information valuableof course. So gives start by going into what is the externalbusiness environment. Frankly, the external business environmentis anything outside of the limit of a business of some kind, that has the potential to affectit in some way. So we operate under the assumption, as individualsbut also as individuals, we can control very little. Theres a lot that happens outside of ourcontrols, so the mindset then shifts to well if I cant undoubtedly control these thingsthe best that I can do is try to pay attention, and prophesy them. And if I are most likely foresee them, thenadapt to them clearly before they become an issue to where theyre negatively affectingmy business.And that really is the goal, to try to makesome varies so that were not inevitably caught flat statu and we can manufacture thoseadjustments. So whether it be a change in price or whetherits a competitive doing something that can potentially affect our business. If “were having” some type of idea that can potentiallyhappen, then we can take some actions undoubtedly to try to lessen the impact of it. Thats truly the goal now. Not trying to change or prevent these trendsfrom happening. But if we can at least anticipate them, tryingto adapt to them before them. And if theyre opportunities, then obviouslytrying to leverage those as well and well talk a little about that once we get alittle further along here.So the first thing that we need to do is talkabout the different environments, almost like sub-environments within the external businessenvironment. And plainly were talking about anythingoutside of the restraint of the business, but thats pretty vague and general. And so it becomes very difficult to try andanalyze everything that could potentially affect your business. So what weve done, is we separate theseinto six environments just for the purpose of doing investigate so we can make sure andconsider some really important things now. The first of those, and this is really inno apparent order. Ill go ahead and index them firstly and wellgo ahead and talk about them a little bit. Is the economic environment, “were having” the socialenvironment, the technological environment, the competitive environment, the political-legalenvironment, and lastly the global environment. So such is six environments wholly, each of which has the potential to impact the business in some way. So, makes go through and talk about each ofthese. Ill give you kind of a quick definition, at least in terms of that way that I would describe it.And Ill give you an example of a changeor a trend that could be important to some occupations. Maybe not all customs because rememberwere talking about a businesses unique external business environment. So although there might be some factors, likethe economy, that are harmful to all jobs in a jolly same path. It still doesnt affect them in an identicalfashion if that concludes smell. So causes first talk about the economic environment. When I say fiscal environment, what Imreferring to is the condition of the economy where the business primarily operates. So wherever the business principally derivesits revenues, were talking about the condition about that economy. So if we have a business that mainly operatesin the United District, and thats mode a amount of its revenues are be obtained from the the UnitedStates economy would be its economic environment.And so what were really concerned abouthere is the health and necessity of that economy. So truly the key question is how are consumersdoing in the economy? We want to know what are their habits, whatare their purchasing dress. But too what are things like unemployment? What is GDP? You know were looking at fiscal metricsto do smell for the health for the consumer. Because as you know, a majority of the growthin the economy is derived from consumer spending. So if buyers arent spending money thenthat will affect the health of the economy.If purchasers payments have been decliningor inflation is continuing to rise. That could potentially affect consumer purchasingpower. It affects that amount of money that consumershave in their owned. Which will mean that their less likely topurchase sure-fire goods and services. Right? Kind of stick to inevitabilities. And we saw this happen in the latest recessionin 2008 -2 009, where people genuinely did start to buckle down on saving. Try to eliminate debt, because they were justconcerned and dread for what the future was going to hold. And so those are things that as a businessyou would want to pay attention to, especially if your customer is suffering very vastly. Even in recedings, even in difficult economictimes not everybody suffers that same direction. So you need to understand what your consumersis and how theyre doing financially. But regrettably if youre not paying attentionto what is going on in the economic environment, then you might be creating concoctions that consumersdont have a need for at that point in time.Maybe theyre outside of the expenditure rangethat consumers can open at that point in time. So those are important things to considerin that particular field. Now the next environment is the social environment. The social environment includes changes indemographics, in customer wishes, interests, and even lives within a particular society. And so, like all things, from a business perspectivewere looking forward to possible converts or tends that might lead to some sort of advantageif I are most likely leverage. So a couple of things to consider here inthis area. The first thing is there has been a significanttrend towards trying to having a healthier lifestyle. Overall this is a good direction. From a societal perspective we generally wantpeople who are healthier because that affects ultimately healthcare costs and those typesof things. Its better to have a healthier societyversus the exact opposite. So thats certainly a good thing. And weve looked opportunities as a resultof that. So as parties desire to eat healthier weveseen organizations adjust to that to try to leverage that particular opportunity.So this includes everything from segment assure, where weve seen a lot of businesses that are now lessening the amount of food thatthey include. Whether thats pre-packaged, whether thatson a restaurant menu. Weve seen those kind of light alternatives ifyou will. And those are as a direct result of tryingto cater to consumers that crave healthier alternatives. Weve seen business like McDonalds whohave historically been known for kind of being the opposite of a healthier lifestyle, evenstart to adapt their gives in an attempt to cater towards a different consumer.Now regardless if thats effectiveness ornot from McDonalds standpoint, you certainly can argue that theyre trying to cater towardsthis healthier life. So those are things that you would look for. In changing demographics, one that is particularlykind of substantial now, at least in the U.S ., is patently the baby boomers who are continuingto age and getting close to retirement. That is a significant opportunity as well, and as weve talked about before that creates opportunities for different services relatedto retirement homes and other things that are a necessity as people get older.Especially as you have a large number of peoplethat are getting older and in a same time frame as well. Now the next thing is the technological environment. And the technological environment involveschanges in technology that can potentially add value to buyers. So from a business perspective, what Imlooking at here, is for a change in technology that will allow me the provide a commodity orservice that can help people basically. I mean thats certainly, at its core, a functionof a business is to provide value and if theyre not rendering ethic then eventually thatsgoing to affect the success of the business. So let me give you a couple of specimen totalk about some modifications with regards to technology and how thats altered the environment andhow weve seen.And so, one of those changes firstly that Illmention is with regards to digital works. This is now so much of a recent trend so much, as the mid-2 000 s, but some firms were able to leverage this reform instead successfully. While others werent definitely. So the companies that Ill name are onebeing Amazon and other being Borders. Amazon as well know started off selling physicalbooks alone and has all along been branched out into every possible item that you are buying. But was originally a big pioneer behind thisdigital records technology. They came out with the Kindle in the mid-2 000 s, and “re extremely” one of the early adopters even when a lot of businesses didnt thinkthat digital bibles is actually be that large-hearted of a lot. I symbolize why would you want a physical bookin your hold? Or why would you want a digital work instead? Why wouldnt you demand a physical volume thatyou could open, it has a physical anatomy, you own it and those sorts of things. And that really affected the extent to whichthey endorse that particular technology.It was rather late until they developed theirown dedicated e-reader and by that time Amazon already had a dominant foothold. So those are some alterations that Amazon sawand that could potentially be an opportunity as a course of adding material to people ina mode thats preferably handy. You dont have to lug volumes around, youcan carry quite a few in a e-reader or an iPad or some other tablet. So it furnishes a great deal of value. The interesting thing that Ill mention is withregards to travel and to gondola services. Uber is a relatively newer company, I thinkthey were established in 2010 or 2011 if Im not mistaken. Personally I truly enjoy the services offered, Iveused it a couple of times.Well more than a few. When a walk I often use it and its veryconvenient. If youre not familiar genuinely how it cultivates, and just so you know kind of disclaimer I dont work for them or anything like that. I merely a extremely, very happy customer. How the services offered runs just so you know, isyou basically sign online and create account. Store you credit card information within anapp. And you actually use an app to call a carto your current location.If youre concerned that reverberates a littlebit creepy, a photo of the driver shown in. Information on the car theyre driving showsup. So, you know exactly who to expect to comepick you up. Its not just some random personal plainly. So that person shows up, they ask for yourdestination and they take you there. And, the fee is all handled behind thescenes. So if you really dont like fumbling withyou know attaining sure you have the right legislations to be done in order to a taxi. Trying to herald a taxi cab, which can be difficultdefending upon where you are and then standing outside forever. It really is a instead accessible solutionthat one, leveragings technology in the form of mobile technology. So were clearly coming in that area. But really promotes and supports importance becauseits just so much more convenient now and the experience of coming a gondola and travelingfrom stage A to part B is relatively easy.Especially considering if youve had a lotof experience in taxi cabs and fumbling with pays and figuring all that stuff out. So those would be some examples of changesin terms of technology and how ventures have exerted them to provide value to clients. Which is really important. Once again, going back to well from a businessperspective what do we do? Our goal is to try to anticipate these changesand try to leverage them to provide value. Another environment here within the externalbusiness environment is the competitive environment. Now the competitive environment floods actionsor competitor activities that constitute a potential threat to another busines. So one of the big things undoubtedly for manycompanies is to be aware of what its competition is doing. Because a number of different things. One of which is if they create a product orservice that could potentially have an affect on your marketings or anything is attributable to that, than that could be very difficult to sustain long-term.So weve examined a great deal of competitor withinthat last several years. Weve seen Apple and Samsung lead front tohead in matters relating to patens in pretty much every geographic area. Weve seen a number of different companies, special Uber and Lyft, which is another car service as well. Not as large-hearted in terms of revenues and financialsupport, but supplies a very similar service. Also in this particular environment whereyou have them offering almost identical services and having them come out with those servicesat very similar meters. In massive persona thats because of this competitiveenvironment. Because they know that if one of them is goingto offer that service, it is actually threw them at a disadvantage if they werent. Peculiarly considering its a relativelynew busines, so theres no telling which is going to be successful. And that last thing that you want is to avoidadopting something, and find out that was really what buyers demanding and thatsnow the flagship product or service for that corporation. So theres a lot of things that are happeninghere. You go into e-commerce and you start talkingabout Amazon and Walmart.Obviously Amazon is the dominant player ine-commerce. There should be no surprise when I read that. But then looking at some of the things thatWalmart is trying to do to better compete. You have some of the brick-and-mortar locationsthat are trying to leverage their physical stores for distribution. And so those are some things that are happeningin their competitive environment. The key is to be aware of what youre competitionis doing, which can be difficult because we try to maintain some confidential patterns clearly. You dont want to disclose everything. But being aware of what youre competitionis doing so that you can make a decision if eventually it matters. If you need to do anything about it. Maybe not. But if you do, what does that look like? Is it offering a similar product or serviceor purely re-positioning something that you already have.Unfortunately, you really cant impel thatchange unless youre familiar with whats actually had taken place in the competitive environment. The next environment is the political andlegal environment, and this includes any converts or trends with regards to legislation, regulations, and even court decisions that have the potential to affect the business in some way. We know that the government does a whole lot. Some of that is maybe good for business, alot of it is not undoubtedly. So we have to be aware of some of things thatare potentially happening that pose a risk to us so that we can adapt accordingly.Obviously its really difficult to affectgovernment policy unless youre a well-established company with a good deal of fund to throw at publicists. But most business dont have that sameability to do so. So although we can take issues immediately toconsumers and hope that they kind of address grievances and those types of things and swayinglegislation that way. Its not ever such guarantees. So many times we have to adapt to what isalready happening. And so one change, or possible alter, thatseemed to have some steam earlier today, and seemed to kind of lose some of its momentum is thenational minimum wage rate.A few years ago this was a very big issue. President Obama kind of led on this platformwhen he was up for re-election on collecting the national minimum wage. Regardless of your opinion of whether or notit would really accommodate any benefit long-term, there are two tents of course. But regardless of that, you cant arguethat it wouldnt have some type of impact on ventures that particularly hire low-wageworkers. You deal with the increase immediately inyour direct proletariat penalties, which of course you know potentially you pass along to consumersand everything like that. But that can be a potential reform that couldpose a risk to your business that you would have to be aware of so that you can adaptaccordingly.And the last environment is the global environment. Now here were focusing on a few differentthings, but primarily apparently international. Dealing the international economic conditions, natural disasters, and even political unrest in a society that sheds over and affectsyour business. We live in a global economy, so its notenough to simply consider whats happening domestically, but likewise whats happeningaround the world. Everything from you know how a crisis in theMiddle East alters that oil prices, has the potential to impact customs in someway, determine, or form.One of the things thats happened recentlywithin that last few days of this record is the conflict within Ukraine and Russia. And potentially, allegedly Russia was sendingin rig and units into the Ukraine. The Ukraine apparently fired upon them andcaused some impairment and those sorts of things. So if youre were watching the stock marketor the financial markets those were very much affected by that special crisis. So something thats happening all the wayaround the world for some people, has the potential to affect whats happening backin the U.S. One large-hearted even that happened two years ago wasthe earthquake and precede tsunami over in Japan that caused damage to that nuclearreactor hope. I think its the Fukishima Daiichi powerplant if Im saying that properly hopefully. That justification some really significant issueswith suppliers. I know for example in certain parts of theU.S. it was really difficult to get components for Japanese made automobile because theirwere certain parts that were manufactured in Japan in that area that was affected.That had a big impact on dealerships and bodyshops being able to get segments to actually repair vehicles here in the U.S. Once again, something that happens all acrossthe world, but has the potential to impact people in the U.S. and in other areas in theworld as well. So from a business standpoint, what you needto consider is the probability of something like that happening, but likewise attempting toinsulate yourself against those threats. So, you know, perhaps you cant predict whenan earthquake is going to happen, but based upon precedent know that it is a possibility. So what can you do to lessen the impact ofsuch an phenomenon happening? So maybe thats diversifying suppliers whereyou have things spread out between numerou suppliers in different localities. So that if one is negatively affected youstill have operations and can pluck equips from another one.It could be a number of different things, but obviously you have to start looking at that issue to go ahead an adapt accordingly. So altogether, these six environments representwhat we call the external business environment. So each of them has some potential impacton customs, and its up to us to analyze them so that maybe we can identify some opportunitiesfor brand-new products and services that we hadnt ordinarily was just thinking about. Or potentially identify threats that we haveto respond to if were going to maintain market share and those other sorts of things. Alright that does it for this video on theexternal business environment. Hopefully you found that information to behelpful. If you crave more information feel free togo to alanisbusinessacademy.com. Also be sure to sign up for our email listwhere we send out periodic revises is attributable to brand-new instructions, podcasts, courses, and otherreally important information that you might find useful.You can do that by going to alanisbusinessacademy.list. And feel free to check out some of our otherpodcasts and assignments that we have on the webiste as well. Thanks for watching, and well talk to yousoon ..

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