External Factors Affecting Business Operations

Introduction

According to Abay, Tessema & Gebregziabher (2014), External factors are the things that exist outside a business that can impact the performance or success of the business either directly or indirectly. It’s the role of the business to keep track of the external factors to realize and settle the issues caused by those factors and make adequate changes. By monitoring these external factors, the businesses can protect themselves from foreseeable events and lessen the effects of unexpected changes (Chittithaworn et al., 2011).

This paper aims to discuss the external factors that affect business operations in a country.

External Factors Affecting Business Operations

Here are the various external factors that affect business operations in a country.

The first one is Economic Factor. According to Dragnic (2014), economic status in a country plays a key role in the well-being of an organization to thrive. Dragnic (2014) furthermore states that when the economy is down, there is a high level of unemployment, and businesses will be required to work extra hard to retain their employees. Businesses can achieve this by changing their processes to continue earning more revenue.

The second factor is Political and Legal Factors. When current political officers leave their offices and are replaced by new ones, the new political leaders tend to implement a new regulation that often affects existing businesses. Therefore, Businesses should monitor the legislative policies closely to be prepared for any potential change caused by the inconsistent political arena (Zinovieva et al., 2016). The various policies that affect businesses include taxation, regulations on importing goods, employment laws, tariffs and competition regulations.

The third external effects on business operations are Technological factors. According to Jankovic, Mihailovic & Cuetkovic (2016), technology is advancing daily, and this advancement can affect businesses positively or negatively. Businesses can choose to compete with the improved technology by embracing it. Businesses can also implement modernized methods on their premises; for example, health care facilities can decide to use modernized methods to collect information from their patients and implement an advanced way of keeping patients’ records (Dragnic, 2014).

Another external factor affecting business operations in a country is competition. There are so many entrepreneurs emerging, thus creating more competitive businesses. The business’s role in their market share is improved and always remains royalty to people depending on their products by keeping track of what the others in the marketplace are doing (Kartiwi et al., 2018). They can evaluate the challenges they face and come up with measures to cope with them. They can also identify their areas of success and try to modify them to become more successful, thus producing more revenue. Dragnic (2014) suggests that businesses can also carry out statistics to gather information about their products and services, thus developing new ideas on how to change their products or develop new products that are much more competitive.

The fifth external factor affecting business operations in a country is social factors. According to Chittithaworn et al. (2011), most businesses consider social factors while developing and marketing their products. They consider how these people live, what are their cultural beliefs and what is their value and take on the products. For example, the pork business can do well in a Christian populated area compared to an Islamic populated area.

Lastly, another external factor affecting businesses in a country includes demographic factors. Most businesses evaluate the demographic of the market they are targeting to ensure that the needs of those who are benefiting from their products are met and that their satisfaction is fully met (Abay, Tessema& Gebreegziabher, 2014). They carry out measures to test how well their customers are served. Through this, they can identify changes in their marketplace. They can also identify those customers who have been devoted to them and earn themselves new customers. Abay, Tessema& Gebreegziabher ( 2014) illustrate some of the businesses’ demographics are age, gender, marital status, income, nationality, occupation, race, level of education, and belief system.

Conclusion

In conclusion, the various factors that affect business operations in a country are economic factors, political and legal factors, technological factors, competitive factors, social factors and demographic factors. These factors are important because they can have a direct or indirect effect on businesses. If these factors are well monitored, the businesses can determine if any predictable event happens. They can also mitigate any change that unexpectedly occurs in the business. These factors have enabled businesses to comply with the regulations required by the government and thus been able to be operational.

References

Abay, H. H., Tessema, F. G., & Gebreegziabher, A. H. (2014). External factors affect the growth of micro and small enterprises (MSEs) in Ethiopia: a case study in Shire Indasselassie Town, Tigray. European Journal of Business and Management, 6(34), 134-145.

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), 180-190.

Dragnić, D. (2014). Impact of internal and external factors on the performance of fast-growing small and medium businesses. Management-Journal of Contemporary Management Issues, 19(1), 119-159.

Janković, M., Mihajlović, M., & Cvetković, T. (2016). Influence of external factors on business of companies in Serbia. Ekonomika, 62(4), 31-38.

Kartiwi, M., Hussin, H., Suhaimi, M. A., Mohamed Jalaldeen, M. R., & Amin, M. R. (2018). Impact of external factors on determining E-commerce benefits among SMEs in Malaysia. Journal of Global Entrepreneurship Research, 8(1), 1-12.

Zinovieva, C. G., Kuznetsova, M. V., Dorfman, T. V., Limarev, P. V., & Limareva, J. A. (2016). Study of external and internal factors affecting enterprise’s stability. Advances in Systems Science and Applications, 16(1), 62-71.