Change in Business Environments (External and Internal factors) Essay

Change in Business Environments (External and Internal factors) - Essay Example This paper discusses the external and internal factors that impact a business. External Environment Economy The economic condition of a country plays a big role in determining how successful a business may be. In this regard, it is very crucial for a manager to determine the economic state of a country when making business decisions. The economic factors that must be analyzed here includes the country’s gross domestic product, its per capita income, exchange rates, inflation, capital market strength, goods and service market among others. Understanding these economic aspects is very crucial because they determine they improve the speed of economic growth, which determines business success (Fernando 2011, p.42). Managers also need to consider the economic policies adopted by a country in making business decisions. This based on the fact economic policies adopted by a country have a direct influence on the operation of every business venture. The policies also keep changing from time to time, meaning the managers must be vigilant to adapt to the changes as and when they are made. The economic policies managers need to consider when making business decisions include policy of the industry, fiscal policy, monetary policy, export and import policy and country’s foreign investment policy (Fernando 2011, p.42). ... Oman also has a very strong monetary policy, which has kept its inflation rates to less than 3.5%. The country also has a favorable fiscal programme that has ensured that duty on products is kept low, no personal income tax charged, as well as establishing a moderate corporate tax to encourage investment (Oxford Business Group 2009, p.9). Social environment The social environment of a country also influences the operation of a business. The social environment consists of the social factors such as beliefs, values, customs, traditions, poverty level and the life expectancy rates among others. In this regard, findings have shown that the social structures that a society cherishes impacts hugely on the operation of a business. For instance, the increase in literacy level has made consumers more conscious of the quality and type of products they consume. In addition, the changing family composition has seen an increase in the nuclear family concept thereby increasing demand for different types of products and services. Nevertheless, the social environment varies from one social and cultural structure to another and from one country to another. Managers, therefore, must study the social trends and make rational and informed decision to that effect (Kumar and Sharma 1998, p.81). Political environment The political environment of a country also determines whether a business in likely to be successful or not. The political factors include the attitudes and policies of the government towards the business community. The strategic decisions of a company depend hugely on these aspects. A country’s political stability also impacts on the operation of a business greatly. A stable government usually sends good signal, which