Question

Can you give some examples as to how political, economic, social, technological, legal, and environmental business environments may influence business operations? In your opinion, which has the most influence? Choose a business with which you're familiar and use it to provide examples of how a business is affected by operating in each external business environments.

Answer 1

The business that would be discussed here is my aspiring business which is production and export of organic oyster mushrooms. The impact of the different business environment on the business are-

- Political environment- The government regulations imposed on the quality and processes has a great impact on its production and operations of the farm. For example, if the oyster mushrooms are to be exported to United States, then it requires certifications to meet the regulatory requirements.

- Economic environment- The fluctuating economy and the recession has a great impact on the labor demand and operational costs. For example, the labor costs are high in foreign countries which impacts the operational cost of the business.

- Social environment- Social changes and customers’ preferences to have a healthy lifestyle has resulted in increased demand. Example- Due to the current pandemic COVID-19, people tend to have food diet that increases the immunity to fight the virus.

- Technological environment- Technology has a great impact on production and export of oyster mushrooms. Technology is helpful in operations as well. For example, the inventory (raw materials and produced products) can be maintained in the relevant software.

- Legal environment- The legal environment too is essential for the efficient functions of the business. The organization should not violate laws and regulations to be legally responsible in the environment.

- Environmental factors- Climatic changes are a major consideration in the growth of the oyster mushrooms. The growth of the mushrooms is very high during cold climatic conditions. For example, the number of boxes (100gm per box) or the yield is more than the normal growth.