Environmental Factors Affect Business

Marketing strategy is a very important aspect of making a business successful. The absence of a clear strategy, setting up meaningful objectives and goals can be very difficult. While drafting a Marketing strategy, conducting a macro environment analysis within which the business is operating will help in determining the outcomes of a strategy. This analysis includes political, economic, social-cultural, technological, legal and environmental factors that affect business. 

To analyze the six macro factors, we conduct PESTLE analysis and SWOT analysis. These strategic analysis tools consider all the factors that may affect the business operations.  This is worth mentioning that PESTLE analysis responds to external factors while SWOT analysis responds to both internal and external factors to the organization.

Definition of Environmental Factors

Environmental factors can be explained as identifiable elements within the cultural, economic, demographic, physical, technological or political environment which impacts the growth, operations and survival of an organization. Environmental factors can be both internal as well external for the business. External factors can include economic and technological factors whereas; internal factors may include value system, objectives or internal relationships of a business.

How Environmental Factors Affect Business

Every business, whether large or small, is affected not only from internal organizational factors but, from several external factors. Company have no control on external environment. Developing marketing strategies should include considering environmental factors so an accurate picture of the market trends and environment can be presented and to understand as to where the company is standing. Ignoring environmental aspects is similar to walking on a path where there are unsuccessful marketing and lost revenues which can ultimately impact the health of the business brand.

Examples of Environmental Factors Affecting Business

Environmental Policies. Environmental policies are another external factor that can impact the strategy of a business. Environmental policy is the commitment of a business to the regulations, laws as well as other policy mechanisms that are concerned with environmental issues. Environmental policy impacts businesses because the law implies organizations to change their operational procedures and equipment so as to meet those standards which can cost businesses some good amount of money.

Climate Change. Climate change became an insidious threat to businesses as its pace can be recognized only when it is taken into consideration on the basis of decade-after-decade. Increasing issue of global warming and adverse weather conditions in the recent few years, it is difficult for companies and organizations to operate equally in every type of weather condition. Businesses that are directly dependent upon adequate water supply e.g., field sports or agriculture will be affected adversely if climatic changes resulted in reduced rainfalls. Even consumers are becoming aware and keen about this factor and are prone towards those brands which are saving the environment or supporting this cause.

Green Agenda. Business-related activities impact the environment; however, the environment also has an effect on businesses and the market environment. Now enterprises have realized that in order to achieve business goals, there is a need to draft environmental-friendly policies. Green agenda is a plan where enterprises manage their operations in such a way so that there is minimal negative impact on the local or global environment. In order to be environmentally responsible, corporations need to devise plans and procedures in their operations and activities which is beneficial not only company but, for the overall environment as well.

Pollution. Pollution can also have an impact over business strategies. Pollution may cause some major environmental events which can result in the disruption of supply chains or an increase in the cost of raw material. Organizations need to monitor such events and develop contingency plans so as to deal with them.

Availability of natural resources. Amongst external environment factors, this factor refers to the physical environment of a business. Natural resources are very important for most businesses and many corporations have natural resources as their major raw material. Lack of natural resources can hinder an organization’s producing ability and hence its output.

Recycling. Recycling is another aspect of a greener environment. The cost of dumping waste in landfills is increasing and is resulting in not only shortage of wastages but, it also provides harm to the environment. Recycled materials not only results in making the production process cost-effective but, it also helps the business to save some money and helping the environment.

Waste Disposal. Although, there has been a positive trend towards recycling of waste materials, still there is several businesses which dump wastage in landfills.  This not only increases their cost of dumping waste but, is also harmful to the environment in which the business operates. Businesses, in order to meet their bottom line, should first look at producing less waste and use fewer resources which will reduce their production cost along with making the corporation sustainable.

Examples of How Environmental Factors Affect Tesco

Companies are facing increased pressure by government agencies to address environmental issues. furthermore, companies must respond to these issues in ways that benefit society.

Now Tesco encourages its consumer to shop at tesco.com. Tesco Van Drivers will not only use fuel-saving routes but also collect unwanted plastic bags from customers and recycle them.

Also, Tesco is committed to use renewable sources and generate 100% of its electricity by 2030. The company promises to minimize upto 50% carbon footprint by 2020.