BUSINESS ENVIRONMENT

Dealing with Changes in the Business Environment



Dealing with Changes in the Business Environment

Introduction

A business or organisational environment could simply be defined as “All elements existing outside and inside the organisation's boundaries that have the potential to affect the organisation” (Hair & McDaniel, 2008). It could be further categorised into the general environment, the task environment and the internal environment. Among the success factors that can be mentioned in the business operations include competitiveness, financial support between the parties and logistics. This aspect is very important because when the actors involved are in different countries or regions, the realization and business success are further complicated (Palmer, 2001). In analyzing the economy, we must review the dimension that transcends the borders of a country, i.e. which addresses the problems international economic purposes. The importance of international relations in the sphere of trade, politics or culture has reached a global level, a deeper meaning to such an extent that one cannot speak only of goods but also exchange programs of integration (Hair & McDaniel, 2008).

The environment of international business is different from the domestic business. The reason is that it located in different countries, and each country has its unique environment. The economic environment differs from country to country. Each market classified according to the environment of that country. Markets can be free-market economy or it can be mixed economy. All business has to work according to the environment of the country (Connor, 2002).

Environment of the international business can also differ according to the political situation of the country. There are different types of political systems such as one -party democracies, multi-party democracies, constitutional monarchies and dictatorships (military and non-military). Governments also changes with the time, which affects the international business a bit. The government business responsibilities differ from country to country (Barney & Hansen, 2004). So the main international business environment is alike throughout but just has few changes according to the environment of the country. Hence only some of the environment differs from country to country.

The value chain is a systematic approach to examining the development of competitive advantage. It was created by M. E. Porter in his book, Competitive Advantage (1980). The chain consists of a series of activities that create and build value. They culminate in the total value delivered by an organisation.

The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities, thereby resulting in a profit margin.

The firm's margin or profit then depends on its effectiveness in performing these activities efficiently, so that the amount that the customer is willing to pay for the products exceeds the cost of the activities in the value chain. It is in these activities that a firm has the opportunity to generate superior value. A competitive advantage may be achieved by reconfiguring the value chain to provide lower cost or better differentiation.

The value chain model is a useful analysis tool for defining a firm's core competencies and the activities ...