|The Business Environment |
| |
|Karron Lay |
|February 2, 2013 |

BUSINESS IN THE ECONOMY

To understand how a business affects the economy we must first understand the meaning of what a business is by definition. A business is “an organization or enterprising entity engaged in commercial, industrial or professional activities”. (Investopedia, 2013) A business or firm produces the products or services that consumers need, want, or desire. Most businesses or firms operate for profits, which is “the financial reward that comes from starting and running a business”. (Kelly & McGowen, 2012) When a business is not making a profit they are operating at a loss. This could be due to the amount of funds that a business or firm must cover such as their expenses to produce products or services. If the business or firms expenses are more than the profits, then business or firm is operating at a loss. If a business is running at a loss it could be due to key economical dimensions such as the economical environment, competitive environment, technology environment, social environment, or global environment.

How a business or firm deals with these key economical dimensions can make or break them. If the economy is in any way in a fiscal crisis, many consumers can be unemployed or saving their earnings for harder times to come. With the competitive environment, if more than one business or firm is offering the same product they must compete with each other to get the consumer to purchase their product. Most businesses or firms rely on advertising to promote their product and make it appealing to the consumer so they will be more motivated to purchase their product. They will also exploit their competitor’s weakness to show consumers that their product is not up to the standards that they require. This could be the way the company treats the environment, if they give to charity, or if they care about global issues.

With business technology which “includes the tools that the businesses can use to become more efficient and effective”. (Kelly & McGowen, 2012, p. 11) If the business or firm doesn’t keep their producing tools current it could affect their production of the products and could lead to slower production. This could lead to the company making less profit and losing to the comparators that are using current technology to produce their products.

The social environment is the “values, attitudes, customs, and beliefs shared by groups of people”. (Kelly & McGowen, 2012, p. 11) It also covers the demographics of a population. This is very important to so that they reach each and every person that could be a potential customer. Knowing the diversity of the population in the areas that the product will be offered to can help in the way you advertise your product. A business can run as a for-profit or as a non-profit entity.

Lastly, we have the global environment. In global environment this will allow your product to be introduced into other countries and potentially increasing the business or firms economical funds. Thought having your product introduced into the global environment can be costly due to tariffs that will be imposed on the transportation of the product and the exchange rate from one country to another. With the free trade and the technology of the internet, many times the costs of shipping the product to other countries fall to the consumer. This could make the product unappealing to some consumers. Having an export agent that would handle the foreign sales of your product and whom lives in the foreign country, would handle to international financing and shipping for your product. This would allow the consumer in other countries to become more familiar with your product and feel more comfortable in their purchase. Having the product introduced buy an export agents allows the company to focus more on the product than the way the product is presented in other geographical areas in foreign countries.

FOR-PROFIT AND NON-PROFIT ORGANIZATIONS

Both for-profit and non-profit organizations provide a service or need to the consumers. The largest different between them is that the for-profit organization is doing business to receive funds from the consumer for the service or goods that they provide. A for-profit organization is usually privately owned by owners or shareholders and is in business for the profits. The for-profit organization has to pay taxes for any and all profits that they receive. If a for-profit organization goes out of business “its assets can be liquidated and the proceeds distributed to the owners or the shareholders”. (Fritz, 2013)

Non-profit organizations run their business for the “great good of the community, society, or world”. (Fritz, 2013) The non-profit organization can make a profit from doing business, but the funds are to help the general public at need. The profits usually come from private donations that are tax deductable to the person or company that has donated the funds. All non-profit organizations are considered by the IRS as a 501(c) (3), which gives them the ability to run business as a tax exempt organization. If a non-profit organization goes out of business, any remaining funds must go to another non-profit organization.

With our current fiscal and monetary policies that have affected the economy, non-profit organizations are providing more to the public than they have in the past. With interest rates on mortgages that have increased and less credit being given to consumers to purchase homes, refinance their existing homes, and the increase of unemployment rates that are currently at 7.9% (United States Department of Labor, 2013), non-profit organizations are trying to help ease the trouble times that so many Americans face. Without the change in unemployment rate, non-profit organizations will face the reality of having to turn many families away that are in need of their service, due to the decrease in the amount of funding that is being provided to them.

ACCESSING GLOBAL MARKETS

As a consumer I see products that are introduced in the market that are made from other countries and are being sold in my local store, knowing that not long ago this very same product was once made in the United States. If I were to produce a product and attempt to introduce it in the global market it would have to be a product or service that is in need. Currently many consumers are looking for a product that saves them money and time. Having a product that would instantly heat water, filter the water, and save the amount of water used would be a product that all consumers would want to purchase. This product would use little electricity or even be able to run from solar power. This way it could be used in areas hit by disaster that would not have the ability to plug the unit into the electric outlets or even used in areas that have no current availability of such conveniences. I do believe that this product would be used not only by the general public, but also by non-profit organizations as well as military services. With these types of organizations using the product it would make it easier for it to reach the global market in a faster pace and have many export agents wanting to introduce it in their market.

SOCIAL RESPONSIBILITY

Social responsibility by definition as “the obligation of an organization's management towards the welfare and interests of the society in which it operates”. (Businessdictionary.com, 2013) Proctor and Gamble® not only have the social responsibility to protect their consumers from harm, but they also have the obligation to provide services to the public that they serve. According the their web page “for over 175 years they have helped children in need around the world to get off to a healthy start, receive access to education, and build skills for life”. They also provide clean drinking water to under developed countries and during disasters. P&G® Paper vaccination and UNICEF have been working together since 2006 to vaccinate over 100 million children worldwide so that they can have a better chance of surviving. “Always and Tampax: Protecting the Futures of Girls”, has been reaching girls in underdeveloped countries to help them have schools and stay in school so that they may have a future. They have helped over 720,000 girls since 2006. (P&G, 2013) Procter and Gamble® has the ability to help not only people in the United States, but also people around the world that are either in undeveloped countries and are in need of clean drinking water to children in need of a vaccination, to girls wanting an education. Looking through their page for their charitable organizations each one is named after one of their products which help them promote their product and introduce it in other countries.

Works Cited

Businessdictionary.com. (2013, February 02). Retrieved from social Responsibility: http://www.businessdictionary.com/definition/social-responsibility.html

Fritz, J. (2013, February 02). about.com. Retrieved from How Is a Nonprofit Different from a For-profit Business?: How Is a Nonprofit Different from a For-profit Business?

Investopedia. (2013, February 02). Retrieved from http://www.investopedia.com/terms/b/business.asp#axzz2JmilHtdZ

Kelly, M., & McGowen, J. (2012). BUSN 4, 4th Edition. Mason: Cengage Learning.

P&G. (2013, February 02). Retrieved from Social Responsibility: http://www.pg.com/en_US/sustainability/social_responsibility/grant_application.shtml

United States Department of Labor. (2013, February 02). Retrieved from Bureau of Labor Statistics: http://www.bls.gov/

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BUS 100

Strayer University

Dr. Matt Keogh