Near environment

Near environment
See also
Business environment Industry environment Factors affecting business Mobility barriers Domestic market Promotional plan Macro environment analysis Competitive risk Strategic position

Near environment otherwise known as a competitive business environment, micro-environment consist of entities (organizations, businesses, banks, government bodies) that affect the functioning of a company and which the company can influence. It is also called marketing environment and consist set of all the factors that affect or potentially affect the activity of the enterprise (e.g., its objectives, strategy, structure). The external environment of the company is divided into macroeconomic and microeconomic (near) environment.

Distinctive feature of the near environment is that there is direct feedback between above mentioned entities and the company. Subset of the near environment is Competitive environment which consist of entities directly affecting (competing with) the company and influencing its actions.

The management of a company should only to examine relationship with entities of near environment, but also shape this relationships by direct activity. Possible effects of this activities on the competitive environment on the company is different and is determined primarily by its competitive position. Near environment consists of all entities with which the company interacts (competitors, customers, stakeholders).

Fig.1. Near and far environment elements

Elements of near environment

Micro environment of business consist of:

• competitors (local, regional and national),
• producers of substitute and complementary goods,
• customers (actual and potential) for the goods,
• suppliers and subcontractors,
• financial institutions (banks, insurers, etc.),
• trade unions (their strength and social support),
• service companies.

In some cases, i.e. agriculture, tourism, important component of near environment is biosphere.

Analysis of near environment

Analysis of the competitive environment helps to define the conditions of operation and business development in the sector and on a given geographic market. It also provides information on opportunities and risks associated with the dynamics of the sector, the behaviour of suppliers and customers, and above all competitors. Results of analysis allows the company to customize their resources to the requirements of implemented market strategy.

The structure of marketing environment of business

Near environment of business include general marketing environment and marketing support system. Marketing support system are created by near environment entities (e.g. agents, subcontractors, suppliers). The company uses the services of these entities to achieve the goals of marketing.

Companies and their marketing support system form the overall business marketing environment. This environment consist of following factors:

• Socio-cultural - influences the demand for company products or services,
• General economic - influences the price level, etc.,
• Political - regulates the formal relations between the entities of environment,
• Technology - affects the quality and production capacity,
• Competition - influence every market decision,
• Legal - legal factors affecting business.

This factors causes various reactions. These reactions, carried out within the framework of marketing activities, determine the success in achieving the fundamental objectives of the company.

References

• Kotabe, M., & Helsen, K. (1998). Global marketing management. New York.
• Oster, S. M. (1999). Modern competitive analysis. OUP Catalogue.
• Porter, M. E. (2008). Competitive strategy: Techniques for analyzing industries and competitors. Simon and Schuster.
• Porter, M. E. (2008). On competition. Harvard Business Press.