Factors affecting business
| Factors affecting business |
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| See also |
There are many factors affecting business described in literature and examined during strategic management process. These are phenomena, processes, and institutions shaping interchangeable relations. Main factors could be divided to main groups:
- external factors affecting business or so called external factors of business environment
- internal factors of business environment
Managers use internal analysis or external analysis to determine those factors and its influence on organization.
External factors
External factor is everything that outside the organization can influence it. The boundary dividing the organization from its external environment is not always clear and clearly defined. For example, shareholders are in a sense part of the enterprise, but in a different perspective they are rather an element of its environment.
We can distinguish following factors:
- Technological factors affecting business
- Legal factors affecting business
- Ethical factors affecting business
- Political factors affecting business
- Economic factors affecting business
- Social and cultural factors affecting business
- Ecological factors affecting business
- Environmental factors affecting business
- Factors affecting demand
- Factors affecting supply
- Factors influencing consumer behaviour
Internal factors
Internals factors consists of conditions and forces inside the organization. \
We can distinguish following factors:
- Success factors of company
- Key success factors
- Factors affecting pricing
- Objectives of the organization
- Source of financing
Method of analysis of the external factors
A tool used to analysis (evaluate) external factors:
- Analysis PEST
- Delphi method
Analysis PEST
Is a method used to study macro-environment - the macroeconomic environment of an enterprise. In other words, it is called general segmentation of the environment. Defines the basic spheres of the environment, i.e. areas that have a key impact on the functioning of the organization. It also sets out the future strategy of the organization through in-depth analysis.
The starting point is the combination of the basic external factors of the organization (hence its name):
- Political
- Economic
- Social-cultural,
- Technological -
In some types of analysis, there is also an independent environmental factor - Environment (we call PEEST then). Sometimes we meet with the legal environment distinction (the name of the analysis - PESTEL).
Delphi method
Belongs to the group of heuristic methods in which the knowledge, experience and opinions of experts in a given field are used to make decisions. It is used to determine the probability or timing of future events. The forecast is obtained by conducting a series of surveys among experts.
The name of the Delphi method comes from the name of the ancient Greek city of Delphi, where in the temple of Apollo, with the help of a priestess called Pytia, the future was foretold.
Method of analysis of the internal factors
- Porter's five forces analysis- methods of strategic analysis of the company. It supports the verification of the attractiveness of the sector, the study of its structure. It is used to better understand the environment closer to the enterprise, and more specifically to assess the strength of competitors in the analyzed sector. The main task of the model is to estimate the profitability of the sector. The greater the intensity of competition, the lower the profitability and the sector's potential.
- "Five Forces:
- Threat of new entrants
- Threat of substitutes
- Bargaining power of customers
- Bargaining power of suppliers
- Industry rivalry [1]".
References
- Chittithaworn C., Islam\ M. A., Keawchana, T. & Yusuf D. H. M. (2011). Factors affecting business success of small & medium enterprises (SMEs) in Thailand. Asian Social Science, 7(5), 180.
- Dalkey N., Helmer O. (1963). An Experimental Application of the Delphi Method to the use of experts
- Koumparoulis, D. N. (2013). PEST Analysis: The case of E-shop. International Journal of Economy, Management and Social Sciences, 2(2), 31-36.
- Porter M. (1980) What is Five Forces Analysis?
Footnotes
- ↑ Porter M.
Author: Natalia Borowiec
