Environmental factors affecting business
|Environmental factors affecting business|
The companies want to get to know what are their macroeconomics possibilities and what are their reasons in order to receive higher income and adapt to customers’ needs. They can use many different kind of analysis, one of them is called PESTLE (or PESTEL). These four letters stand for the factors:
- P- political,
- E- economic,
- S- social,
- T- technological,
- L- legal,
- E- environmental.
This analysis checks each aspect which can affect on the organisations’ activities. Most of organisations determines ‘environmental factors’ as each indicator which is outside the company and has the influence on them. When the PESTLE analysis is taken into consideration, this phrase is connected with the real environment, such as weather, climate or access to resources.
The way of affecting on business
The reader could think that this aspect does not affect on the companies. However, there is clear connection between them. There are some examples below:
- water and air pollution (influencing production processes in high-tech companies and food production),
- quality of water used for consumption or production,
- health problems (employee attrition) in polluted places, healthy environments improve mental and physical health and reduce absenteeism,
- quantity of renewable and non-renewable resources available,
- biodiveristy of ecosystems and its protection,
- minerals, oil, gas and other natural resources deposits,
- degradation, deforestation and depletion of fisheries and other natural resources,
- flooding, storms, and other natural disasters caused by human influences on ecosystems (global warming, etc.),
- climate change, drought and food scarcity could lead to social unrest and international conflicts,
- ecosystem services used in business processes,
- growing importance of technology for prevention and reduction of consequences of environmental pollution.
Corporate Social Responsibility policy
The organisations should take into consideration that the cooperation between the businesses and the environment is strong and visible. The way how the environment behaves is the results of what the human and its activity has done the environment. The entrepreneurs should release that nature supports people's lives and what it is done today, it affects on future generations and their possibility to live on the Earth. The way how they can prevent the bad affect of its activity is Corporate Social Responsibility. It should be analysed what are the opportunities for the company to improve the local or global surroundings, for example last campaign about stopping using the disposable plastic straws. It was announced because there is the issue of using each day 500 million straws only in United States which end up on landfills and in the ocean. The one of most known companies which took part in this campaign was Starbucks. It admitted that there would be added straws from reneuwable materials to its beverages in order to act awarely and sustainable. There are also different ways of facing environmental issues like: car pooling, using reusable bags, not wasting resources like paper, fruit, vegetables but also time. That kind of activities pay attention of the customer and, moreover, increase the good public relations of the company.
Sustainable Development Goals
In 2015 The United Nations also noticed that problem and set a list of goals which can prevent the results of humankind's activities and strive to improve the life of people on each continent and end all ways of poverty, inequalities and face climate changes. They are called Sustainable Development Goals which consists of three goals established with the environment, such as Climate action and Life below water and on the land. It is really important due to the fact that according to the researches of United Nations 1.6 billion people depend their livelihood on the forests. What is more, it is strongly connected with the food economy and pharmaceutical industry.
The companies affects on the environment but it also have impact on the organisations. They need to be open to the changing situations in surroundings and try to adapt to it in order to cooperate with the nature and climate and create the beneficial opportunities for stakeholders and customers.
- Abebe J. O. (2018), Environmental Factors Affecting Business
- Caron C. (2018), Starbucks to Stop Using Disposable Plastic Straws by 2020, The New York Times
- Carrington D., Watts J. (2018), Humanity has wiped out 60% of mammals birds, fish and reptiles since 1970, "The Guardian Weekly", No. 45, p. 10-12
- Grayson D., Hodges A. (2017), Corporate Social Opportunity! Seven Steps to Make Corporate Social Responsibility Work for Your Business, Routledge, London
- Koberg, C. S., Detienne, D. R., & Heppard, K. A. (2003). An empirical test of environmental, organizational, and process factors affecting incremental and radical innovation. The Journal of High Technology Management Research, 14(1), 21-45.
- Life on land: Why it matters?, United Nations
- Zalengera C. (2014),Overview of the Malawi energy situation and A PESTLE analysis for sustainable development of renewable energy, Renewable and Sustainable Energy Reviews, Volume 38, Pages 335-347
Author: Beata Mertyn