1.0 INTRODUCTION
A business plan that appears flawless on paper may seem incomplete in the real world. Internal factors such as corporate money, staff, or equipment can fail. It’s sometimes the atmosphere in which the company operates. A successful firm meets its goals while adhering to its obligations and responsibilities to its owners, staff, customers, intermediaries, and other businesses (Dvořáková, 2000). Corporations are likely not to survive in a terrible economy. Credit card interest charge that is too elevated can discourage clients from the expenditure. Though you can’t administer the financial system, knowing how it facilitates can aid you in spotting risks and opportunities. It necessitates a joint venture since there should be a bridge of knowledge and skills, increased capital investment, tax benefits, new perspectives, moral support, cost-effectiveness, and a decent life-work balance. Partner trust, dependency, and commitment are all qualities to look for in a partnership (Lee and Lim, 2003).
External and internal factors refer to anything tangible or intangible within a firm and under its control. After taking all of these aspects into account, the company’s strengths and weaknesses are determined. When anything has a beneficial impact on a corporation, it is referred to as a force. On the other hand, if a component obstructs business growth, it is flawed. There are several factors to consider in a business. “Internal factors” refers to everything inside the company and its organization, whether substance or insubstantial.
Capital should be considered first, which includes the start-up and ongoing costs of everyday operations for the company’s seamless process. Consider the inventory you’ll need to retain, the credit you’ll be able to extend to your clients, and the credit provider you’ll be able to find (Vaishnani, 2022). A good partner can bring money into the company. Communication can also be quite strategic. It can assist a company in attracting new investors and raising additional funds to help it grow. A solid business partner can also help you develop lending skills, which can help the company to flourish. It’s beneficial to keep these financial concerns in mind while considering a potential mate.
Employees have the power to build or break your company. No business can ever prosper without successful personnel. Hiring employees with experience in this field might be beneficial because they add to the agency’s expertise. There are, however, risks linked with them. Workers can go on strike, which can cause a slew of issues (How to Start a Tour Operator Business – Checkfront, 2022). Legal issues can force a company’s interior and exterior environments. The lawful and authoritarian setting can manipulate business policies, events, and services. Employment laws and purchaser security laws are examples of lawful factors. A business ought to have systematic responsiveness to the legal surroundings in which it operates, as these basics can control whether the business succeeds or fails.
2.0 POLITICAL FACTOR
Politics directly impacts business since the government, through legislation and policy, regulates how a company runs. Tariffs on commerce, taxes, and conflicts are all examples of this. Imported items are more expensive as a result of tariffs. Local businesses are not pressed to incise their prices owing to growing contests, and domestic consumers give elevated prices as an outcome. Consequently, Potter’s force of supplier power and threat to new entry is applied. Owing to how readily the agency’s services can be increased if foreign competition is eliminated.
As a result, domestic enterprises will have a better opportunity of competing in the worldwide market (Schwenk, 1989). Background policy and sell overseas subsidies are examples of tariff trade barriers that can impede our capability to carry out business. Alternatively, nontariff trade obstacles comprise setting up the least amount trade-in prices and sell abroad prohibitions and restrictions.
3.0 ECONOMIC FACTOR
Economic issues have a significant impact on the prices of the services provided. Interest rates, unemployment, disposable income, economic growth patterns, inflation, foreign exchange rates, and taxation are all considered.
3.1 Interest Rates & Taxes
The interest rate is a key determinant of currency liquidity in the financial system. The money surge in the nation reduces as venture increases, and as an outcome, the nation’s liquidity reduces. The decrease in investment cash flow in the government increases the country’s liquidity. A superior come back on venture entices investors to join the company, resulting in additional capital investment. However, as the rates on the interest of loans increases, the cash flow into the state and, as a result, the nation’s liquidity declines. Cash flows grow, and the nation’s liquidity elevates when the rates on interest fall. As a result, the interest rate has an impact on the economy. More investors may enter the same industrial area, affecting market competition by introducing competitive rivalry. It increases buyer power because they have a variety of businesses from which to purchase their services, allowing them to easily influence rates (Porter’s Five Forces of Competitive Position Analysis, 2022). The supplier’s authority to regulate the prices of the business’s services is eroded.
Taxes imposed may have an impact on the pricing of services provided; for example, taxes on local tourists are cheaper because no surcharges are levied, so promoting domestic tourism, whereas taxes on foreign tourists are high, resulting in high charges to visit destinations (Begley, Tan and Schoch, 2005).
3.2 Unemployment
Customers pay less on sports instruction, leisure, gifts, luxury goods, and vehicles if they lose their occupation or obtain positions that are insufficient to sustain them. Once joblessness is low down, suppliers will get additional orders since new consumers have disposable income to use up. Suppliers may accept fewer orders and lower prices when unemployment is high. The workforce could be troubled about their occupation security if joblessness is high, and they will have less bargaining power when it comes to payments and human resource rights. Staff will be extra safe in their jobs and earn higher compensation if unemployment is low.
3.3 Market
Identification of the target market is a very crucial matter. Consider the types of people interested in going on your vacation. Subsequently, the various decisions you make will be determined by who your consumer is. So, right now, spend some time getting to know this person. (Checkfront, 2022) How to Start a Tour Operator Business There are a lot of customers and clients that desire to travel overseas. While local agencies exist, the market is now in a state of flux. The types of clients an agency can serve are dependent on the present state of the market. The needs of our clients range from simple holidays to corporate retreats to medical tourism (Ideas and Agency, 2022). It also establishes relations linking how brands are produced nowadays and how client connections are built to foster trust (Duffy, 2003).
An intensive and exhaustive study on current agencies should be conducted to understand the business. Competitive analysis is all part of knowing your competitors, learning how they position themselves, recognizing their prices and marketing methods, and analyzing their strengths and shortcomings. Finding techniques to separate and emphasize all of the outcomes is required. When starting this firm, profitability should be a top priority.
Successful markets can be threatened by new entrants into the market, eroding the agency’s profitability. It is the fifth force in Porter’s Five Forces of Competitive Position Analysis (Porter’s Five Forces of Competitive Position Analysis, 2022). Your company must be innovative and technologically advanced to stay ahead of the competition. It is critical to make progress. Marketing can be a source of innovation. It could also be through marketing, staffing, and social media promotion campaigns. The greatest approach to keep up with technological advancements is to adopt new technologies. A lack of innovation can jeopardize a company’s ability to grow. Nothing fresh will save the company from becoming monotonous. Their expertise in the agency will be bland, stagnant, and ineffective. Working with someone in such a company might provide you with access to a wide selection of technology in various areas of your organization. A good partner and staff can provide you with information and knowledge that you may not have and related talents that will help you build your firm. External elements that impact a company’s operations are known as environmental factors. The number of clients and the business functions is affected by the location in which it is established. Is it a well-known tourist attraction? What are the different styles? Has anything been put to the test? While love is essential, having an opportunity is as crucial. Without the option, enthusiasm is merely a pastime. See whether your local tourism board has any market research publications highlighting the industry’s prospects and issues (How to Start a Tour Operator Business – Checkfront, 2022).
4.0 SOCIAL FACTOR
Social demographics and society can impact the business setting by influencing climax business periods, shopping manners, and everyday life choices. The social climate comprises society’s values, traditions, and acts. It is an imitated formation that stands in sharp distinction to the ordinary world we exist in. (Marketing Tutor, 2022 | How Social Factors Affect Business Environment). As formerly acknowledged, every development establishes its societal surroundings aspects that shape its enterprises. Certainly, various cultural values behaviors are common, whereas others are not.
5.0 CONCLUSION
This set of characteristics enables business executives to assess the ‘balance of power’ in a market between various businesses worldwide and the attractiveness and prospective profitability of a particular industry sector. Every company that wants to prosper needs to develop a thorough list of important business criteria, including internal and external factors. Keeping these factors in mind aids a company to determine the right course of action in the appropriate time.
6.0 REFERENCES
Begley, T., Tan, W. and Schoch, H., 2005. Politico-Economic Factors Associated with Interest in Starting a Business: A Multi-Country Study. Entrepreneurship Theory and Practice, 29(1), pp.35-55.
Duffy, D., 2003. Internal and external factors affect customer loyalty. Journal of Consumer Marketing, 20(5), pp.480-485.
Marketing Tutor. 2022. How Social Factors Affect Business Environment | Marketing Tutor. [online] Available at: <https://www.marketingtutor.net/how-social-factors-affect-business-environment/> [Accessed 21 February 2022].
Checkfront. 2022. How to Start a Tour Operator Business – Checkfront. [online] Available at: <https://www.checkfront.com/blog/how-to-start-a-tour-operator-business> [Accessed 21 February 2022].
Ideas, B. and Agency, T., 2022. How to Start a Travel Agency. [online] HowToStartAnLLC.com. Available at: <https://howtostartanllc.com/business-ideas/travel-agency> [Accessed 21 February 2022].
Linkedin.com. 2022. Internal Factors that May Affect the Business Organization. [online] Available at: <https://www.linkedin.com/pulse/internal-factors-may-affect-business-organization-hatim-abukhames> [Accessed 21 February 2022].
Lee, S. and Lim, G., 2003. The impact of partnership attributes on EDI implementation success. Information & Management, 41(2), pp.135-148.
CGMA. 2022. Porter’s Five Forces of Competitive Position Analysis. [online] Available at: <https://www.cgma.org/resources/tools/essential-tools/porters-five-forces.html> [Accessed 21 February 2022].
Schwenk, C., 1989. Linking Cognitive, Organizational and Political Factors In Explaining Strategic Change. Journal of Management Studies, 26(2), pp.177-187.
Vaishnavi, K., 2022. 9 Indispensable Factors to Consider Before Starting a Business. [online] Litmus Branding. Available at: <https://www.litmusbranding.com/blog/indispensable-factors-to-consider-before-starting-a-business/> [Accessed 21 February 2022].
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