Professional Documents
Culture Documents
Isita
Isita
A business concept that looks perfect on paper may get on imperfect in the real world. Sometimes
failure is due to the internal environment – the company's finances, personnelor equipment.
Sometimes it's the environment surrounding the company. Knowing how internal and external
environmental factors affect your company can help your business thrive.
In a bad economy, even a well-run business may not be able to live through. If customers lose
their jobs or take jobs that can barely support them, they'll spend less on sports, recreation, gifts,
luxury goods and new cars. High interest rates on credit cards can hold back customers from
spending. You can't control the economy, but understanding it can help you spot threats and
opportunities.
Unless you're a one-person show, your employees are a major part of your company's internal
environment. Your employees have to be good at their jobs, whether it's writing code or selling
products to strangers. Managers have to be good at deal with lower-level employees and
overseeing other parts of the internal environment. Even if everyone's capable and talented,
internal politics and conflicts can mess up a good company.
Unless your company is unique, you'll have to deal with competition. When you start your
company, you fight against established, more experienced businesses in the same industry. After
you set up yourself, you'll eventually have to face newer firms that try to end up your customers.
Competition can make or break you – look at how many brick-and-mortar bookstores crashed and
burned competing with Amazon
Even in a great economy, lack of money can determine whether your company struggle with of
kicks the bucket. When your cash resources are too limited, it affects the number of people you
can hire, the quality of your equipment, and the amount of advertising you can buy. If you're flush
with cash, you have a lot more flexibility to grow and expand your business or cope with an
economic downturn.
Changes in government policy can kicks the bucket on your business. The tobacco industry is a
classic example. Since the 1950s, cigarette companies have been required to place warning labels
on their products, and they lost the right to advertise on television. Smokers have fewer and fewer
places they can smoke legally.
The percentage of Americans who smoke has dropped by more than half, with a corresponding
effect on industry revenues.
Your internal culture consists of the values, attitudes and priorities that your employees live by. A
cutthroat culture where every employee competes with one another creates a different
environment from a company that emphasizes collaboration and teamwork. Typically, company
culture flows from the top down. Your staff will infer your values based on the type of people you
hire, fire and promote. Let them see the values you want your culture to bring together
External: Customers and Suppliers
Next to your employees, your customers and suppliers may be the most important people you
deal with. Suppliers have a huge impact on your costs. The clout of any given supplier depends on
scarcity: If you can't buy anywhere else, your negotiating room is limited. The power of your
customers depends on how fierce the competition for their dollars is, how good your products are,
and whether your advertising makes customers want to buy from you, among other things.
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