INTRODUCTION TO BUSINESS
A business is an organization or enterprising entity engaged in commercial, industrial or professional activities. A business can be a for-profit entity, such as a publicly-traded corporation, or a non-profit organization engaged in business activities, such as an agricultural cooperative.
Businesses make up a significant portion of a country’s economy. They help people live the lives they want to live and encourage productivity that leads to huge profits and growing revenues. The economy of a country is literary a backbone to its existence. The economy of a country helps determine overall health and growth of a nation.
TELECOMMUNICATION INDUSTRY IN UAE
Telecom sector is one of the fastest growing sectors in uae and the most developed in the entire MENA region. IT has the highest penetration levels in the entire region .
The development of telecommunication sector is based on various political reasons like government stability,taxation policies and many more policies , socio-cultural factors like the attitude and lifestyle of the people or behaviour, level of education of the people , Economical factors like increase in high disposal income, cheap charges for using a network connection .
UAE Telecom market is laso a huge contributor to the GDP of UAE. This growth needs huge resources i.e Capital and Human Resource.
EXTERNAL EFFECTS OF BUSINESS ENVIRONMENT
No business operates in a vacuum, even the most powerfull monopoly. Outside influences that can impact a business. Various external factors can impact the ability of a business or investment to achieve its strategic goals and objectives.
Whether it can be positive or negative impact on the business. These external factors might include Polictical-Legal, socio-cultural, globalization and technological changes, and the economic and competitive environment.
The business world is dynamic and rapidly changing. Organisations can face problems from external factors which can affect products, policies, people and profits.
Businesses prosper when the economy is booming and living standards are rising.The social system is the fabric of ideas, attitudes and behavior patterns that are involved in human relationships. In particular businesses are influenced by consumer attitudes and behaviours which depend on such factors as the age structure of the population, and the nature of work and leisure.
SIX EXTERNAL FACTORS OF BUSINESS ENVIRONMENT
1) POLITICAL-LEGAL:
The political factors affecting business are often given a lot of importance. Several aspects of government policy can affect business. All firms must follow the law. Managers must find how upcoming legislations can affect their activities.
Political factors, in the context of the external environment in which a business functions, are a type ofexternal constraint acting upon a business. They're related to actions of governments and political conditions in the location where the business conducts business or seeks to conduct business.
The political environment can impact business organizations in many ways. It could add a risk factor and lead to a major loss. Increase or decrease in tax could be an example of a political element.
The second thing to recognize is the type of external constraint is political in nature rather than economic, even though the political can certainly affect the economic and vice versa. The most prevalent political factors relate to government activity and administrative practices of government.
2) SOCIO-CULTURAL:
Socio-cultural environment is a collection of social factors affecting a business and includes social traditions, values and beliefs, level of literacy and education, the ethical standards and state of society, the extent of social stratification, conflict and cohesiveness, and so forth.Socio-cultural environment consists of factors related to human relationships and the impact of social attitudes and cultural values on the business of the organization.
The beliefs, values and norms of a society determine how individuals and organisations should be inter-related.Some examples are religion, attitudes, economic status, class, language, politics and law.
Family setting is another socio – cultural factor that influences businesses. For instance; in most developed countries anybody above 18 years could make decision for himself or herself while in some countries or societies, as long as you still live under the roof of your parents, they may continue to take decisions for you.
3) ECONOMIC :
The economy is an external factor that effects the success of your business. The ability of your clients to pay directly impacts your bottom line, regardless of whether you sell a product or service.Economy of the UAE has expanded healthily over the past decade, although the worldwide economic downturn of 2008 and early 2009 has had a dampening effect.
They argue that 31 per cent growth in corporate earnings for the UAE in the first nine months of 2014 over the corresponding period in previous year would help maintain the growth momentum for the economy.
Macroeconomic influences are broad economic factors that either directly or indirectly affect the entire economy and all of its participants, including your business. These factors include such things as:
Interest rates
Taxes
Inflation
Currency exchange rates
Consumer discretionary income
Savings rates
Consumer confidence levels
Unemployment rate
Recession
Depression
4) TECHNOLOGY:
Technology affects all of us. Technology can catapult a business to success or destroy it. In this lesson, you'll learn about technology, technological change and creative destruction. Technology affects all of us. Technology can catapult a business to success or destroy it. A technological process is a means to make and improve products and services.
For example, the traditional manner of 'printing' magazines involved a mechanical printing press. Now, a new technological process has been developed to digitize the magazine to be transmitted and stored electronically.However, while technology did make business communications faster and easier, it has also made, at times, communication more distracting and less clear.
5) COMPETITIVE:
The main factor that affects most business is the degree of competition
– how fiercely other businesses compete with the products that another
business makes.
The most critical external business factors is competition. Whether you operate in a concentrated industry with a few major competitors or a large industry with many competitors, you need to know the competition.
It is concerned with rival firms' affect on a business. Imitation products and price wars are factors that can have a negative affect on profits.
Many companies do competitive analysis to compare their offerings and prices to those of competitors.
When developing business philosophies and products, it is helpful to use your strength in quality production, customer service or operational efficiency to build competitive advantages that benefit your customers.
6) GLOBALIZATION:
The global financial crisis that began in late 2007 and extended intothe 2008-2009 period was perhaps the most severe crisis since the GreatDepression of 1929-1933. Global GDP fell by at least 2.2% in 2009 associatedwith dramatic falls in industrial production and global trade.
Globalization refers to the changes in the world where we are moving away from self-contained countries and toward a more integrated world.
Globalization of business is the change in a business from a company associated with a single country to one that operates in multiple countries.
CONCLUTION
The environmental factors have an important impact on business . The environmental factors are never stable and change quickly. These factors also help in analyzing the changes and implementing them in business.