The company environment refers to the external factors that influence the company and its activity and, of course, is as relevant as the daily activities of employees.
The company environment in business strategy
To address this section, it is necessary to define, first of all, what business strategy is. Thus, business strategy refers to the set of actions that lead to a long-term competitive advantage, which is essential to carry out the analysis of the company’s environment, since it is necessary to adapt to it.
However, the environment is really difficult to study, so, in order to facilitate its analysis, it is convenient to divide its study into two types. They are the following:
- General Environment or Macroenvironment: this includes all the factors that affect companies in a specific society or a specific geographical area.
- Specific Environment or Microenvironment: this includes all the factors that influence those companies that belong to the same economic sector.
What are the microenvironment and macroenvironment of the company?
The analysis of the microenvironment and the macroenvironment of companies is of extraordinary importance to determine the lines or guidelines of action that must be implemented.
- Study of the Company’s Microenvironment: the elements that will be part of the microenvironment are customers, suppliers, and competitors. It is vitally important to analyze the behavior of these three factors that make up the company’s microenvironment.
- Study of the Macroenvironment of the Company: when making any business decision, it is of great importance to analyze the macroenvironment of the company, since the more complicated and dynamic it is, the more complicated it will be to make any business decision. To analyze the macro environment, the methodology called PEST analysis must be used, through which political, legal, economic, socio-cultural, and technological factors can be analyzed and observed, which must be classified into the following large groups:
The first large group is political factors, which include fiscal policy, the organization of public administration, regulations regarding the environment and international trade, political stability and legislation regarding the fulfillment of contracts, consumer protection, and employment.
The second large group is economic factors, in which we can find factors such as the interest rate, public spending, monetary policies, and the economic growth of a country.
The third large group is technological factors, in which we can observe factors such as public spending on research, the use and cost of energy, and technological obsolescence, among other technological factors.
The fourth large group is that of socio-cultural factors, among which we find the factors of income distribution, the demographics of the country, social and labor mobility, and the educational level of the population.
The previous factors are factors of the general environment. However, to achieve an analysis of the company’s macroenvironment, it is necessary to also analyze the factors of the specific environment.
The specific environment is made up of the set of factors that affect the company directly depending on the sector in which it operates or in which the services or goods are provided or marketed.
Among the factors of the specific environment, we find the following factors: the degree of rivalry between current competitors in the market, the threat that the entry of new competitors may pose, the threat of the existence of substitute products, and the negotiating power they possess. suppliers, and the bargaining power that is predicated on customers.
SWOT analysis
In addition to the PEST Analysis, we find the SWOT Analysis (Weaknesses, Threats, Strengths, and Opportunities), which is carried out in all types of business projects.
This analysis aims to clarify the weak points or weaknesses of the company, as well as its strengths or strengths. We could frame this within an internal analysis, which is of great importance to know the competitive position of our company in the environment.
On the other hand, this analysis studies the threats and opportunities offered by the environment, which we could frame within an external analysis. This is of great importance to study how the market evolves and how to act accordingly.
What can analysis contribute to the business environment?
The analysis of the environment of any company involves a very in-depth study and is of great importance. However, this analysis, more frequently than desired, is not done with the depth and detail required. However, the ideal is to carry out this analysis with the necessary depth to be able to make any company decision according to its environment.
