Business environment
The concept of a business environment is rather broad since it seeks to transcend cultural differences and embrace solely the issues associated with managing a company. Therefore, the term “business environment” can be defined as the organizational setting in which business-related operations, transactions, and the associated processes occur. Namely, a business environment is a combination of components that constitute the setting in which business-related events and transactions take place.
External and internal business environments
As a rule, a business environment is understood as a combination of several internal and external elements defining the course of business processes. The internal elements viewed as core constituents of the business environment include the core stakeholders, namely, employees and the board of directors, the company’s organizational culture, its organizational structure, and the labor union. The specified components might seem disjointed; however, they, in fact, are linked intrinsically. Specifically, the organizational culture of a company defines the relationships between staff members, whereas the board of directors determines the formal organizational structure and development of the company. In turn, the labor union serves to protect the rights of employees and support them.
Similarly, the external elements of the business environment can be split into four major types. Specifically, the factors affecting a company’s performance may be categorized as economic, political, sociocultural, or technological ones. Political factors involve the legal standards and regulations defined by the country in which a business is set, whereas economic factors are represented by the economic situation within the country or market in question. In turn, sociocultural factors are shaped by the culture and traditions guiding decision-making of main stakeholders, namely, customers, suppliers, partners and company members. Finally, technological issues include innovative opportunities available in the target setting, as well as the requirements that the existing technologies dictate, such as the need to transfer key financial transactions into the digital realm.
Market segmentation
In order to cater to the needs of their target customers, companies often use segmentation techniques. Market segmentation can be succinctly summarized as the process of categorizing the target market population into groups based on specific characteristics such as their age, sex, or any other characteristic that defines their needs as prospective customers. Furthermore, market segmentation implies dividing a specific population into groups according to their needs as far as the products or services offered by the company are concerned.
Types of market segmentation
Several types of market segmentation can be identified when it comes to arranging the target population into groups based on their needs or specific characteristics. Though market segmentation typology may be approached from different perspectives, therefore, introducing a variety of ways for grouping the existing marketing strategies, a certain system can be introduced. First, market segmentation may be carried out based on the target demographic, namely, buyers’ age, sex, etc.
Geographic segmentation represents another approach to categorizing the subject matter, implying that the target population is grouped according to the area in which they live. Furthermore, one may apply behavioral segmentation to market a product or a service to customers based on how customers interact with the product. Finally, psychographic segmentation is used to cater to people based on their beliefs, values, interests, and personality. The specified approach to distinguishing between different types of market segmentation allows improving its precision.
SWOT analysis
Understanding the unique properties of an organization is the first step toward helping it succeed in the target economic setting. For his purpose, the SWOT (strengths, weaknesses, opportunities, and threats) analysis is typically used. Allowing to identify the four factors above, the SWOT analysis is a tool that helps determine the internal and external factors contributing to a company’s performance in the target economic setting. Therefore, SWOT analysis s must be recognized as a vital tool in assessing a company’s performance and potential.
SWOT analysis: advantages and limitations
Though the SWOT analysis deserves to be recognized as a universal tool for determining the core performance factors of any organization in any setting, one must also admit that it has not only advantages, but also several disadvantages. Starting with the positive aspects of SWOT, the tool in question should be appreciated for the opportunity to compress a vast amount of data into a manageable set. Indeed, with four distinctive categories and learn labels, SWOT helps split the available information into useful categories. Another obvious benefit of using SWOT concerns the chance to establish a connection between the identified factors and characterize them as either useful or harmful for the organization.
However, the SWOT tool also has several noticeably large limitations. First, the objectivity of SWOT as a tool may be questioned given the fact that it is compiled based on one’s individual interpretation of the essential factors affecting a company’s performance. Therefore, the outcomes of the SWOT analysis may not necessarily be as objective as one might want them to be. Another remarkably big disadvantage of SWOT as an analytical tool is linked to its tendency to be vague, mostly due to the oversimplified representation of complex information. Therefore, the results of a SWOT assessment may turn out to be highly unprecise and, therefore, not quite useful for the further identification of a strategy that an organization can use in the target economic setting.
Budget
The notion of a budget represents an essential part of any organization’s functioning. A budget can be defined as the summary of key costs required for maintaining a company’s performance and achieving set goals within a certain period of time. Therefore, determining the corporate budget should be considered a vital part of managing an organization.
The benefits of budgeting
Budgeting provides undeniable benefits to an organization, offering a chance to allocate resources wisely and ensure that a company progresses in the target economic setting. Firstly, budgeting provides control over spending, thus, curbing the rates of expenses. Secondly, with the help of budgeting, one can determine the core priorities of an organization, thus, allocating finances responsibly. Thirdly, budgeting created opportunities for avoiding major debts in the future, mostly due to the opportunity to forecast financial changes in the corporate context. Another vital benefit of budgeting concerns the opportunity to address uncertainty, which represents an unfortunate yet unavoidable aspect of any market. Finally, budgeting allows introducing consistency into the manager of finances and creates premises for future financial planning. Therefore, the subject matter must be seen as an integral part of managing any company.
Tangible and intangible goods, performance objectives
There are different approaches to classify products offered in a specific market; one of the ways to do so is to split them into tangible and intangible goods. As the name suggests, tangible goods are represented by material goods. In contrast, intangible goods are the products that do not have a physical form, such as virtual goods.
The performance objectives in operations management
In managing a company’s performance, one must meet a range of goals and ensure that all processes occur seamlessly. However, of all the objectives to implement, five key ones need to be outlined. These include the need to maintain quality, the necessity to minimize expenses, the task of keeping flexibility rates high, the importance of maximizing dependability, and the goal of increasing speed of production. Meeting the specified objectives leads to a rise in the corporate performance and an increase in competitiveness.
Motivation
The notion of motivation can be summarized as the willingness to implement specific tasks and meet set goals.
Maslow’s hierarchy of needs
According to Maslow’s hierarchy of needs, maintaining employees’ motivation requires satisfying their needs at different levels. Basic needs include physiological ones, safety needs require physical security, belonging implies being a part of a community, esteem needs require recognition, and self-actualization suggests creativity.
HRM
HRM stands for human resource management, namely, the set of theories and strategies for coordinating employees’ performance and enhancing it.
Factors that affect on HRM decisions
When determining what HRM strategy can be applied to a specific scenario in a particular context, one is typically guided by five key factors. These are cultural, social, psychological, personal, and information-related factors. Specifically, a manager may be guided by individual values and standards (personal factors), the specifics of the sociocultural context (cultural and social ones), the unique characteristics of staff members (psychological), and the issues associated with information management (information). Relying on the specified components allows one to build an effective HRM approach.