The New Business Environment

Conditions are changing simultaneously in different fields, social, political, economic and technological, and they are often in conflict. It is difficult to forecast the area where changes will most affect business. For each specific business, it is important to keep in touch with the key changes in each area of the business environment and to update the forecast.

Technological Environment

This is probably the easiest to identify:

• Accumulated technical knowledge (general exponential curve)
• World-wide communications system (transport, satellites, etc).
• Data processing (mini-computers, data banks, office systems, electronic mail (E-mail))
• New processes aimed at lower energy consumption and higher feed/raw material utilization, new energy sources
• High investment cost.
• New technology for basic human needs (biotechnology, synthetic food, genetic engineering)

 Economic Environment

These changes in the following areas:

• Obsolescence of all past theories
• Irrelevance of past extrapolation
• World-wide population growth, but concentrated in certain areas
• High energy/raw material costs
• Inflation coupled with lower economic growth (stagflation)
• Monetary instability and disparity between developed countries
• (DC)/Organization of Petroleum-Exporting Countries (OPEC) and LDC.
• Shortage of capital, credit squeeze, very selective investments
• Shortage of people able to understand the new environment
• Potential shortage of food world-wide

 Social Environment

Changes occur in:

• Collapse of tradition and structures
• New education, new expectations, new motivations
• New life styles, mobility, quality of life, health care
• Consumerism/ecology/anti-business attitudes
• Unemployment and shorter working time
• Crime/terrorism
• Participate working conditions

 Political Environment

The political environment is subject to

• Nationalism versus grouping of industries
• Higher government intervention/trade and job protection
• Price control and income equalization
• Political instability/wars

Relative importance of the external factors: Generally speaking, the changes in social environment and to some extent the political factors will play a much larger part in shaping the business environment than they did in the past.