(See related pages)
|
|
|
A business is an open system. No business that has an impact on external entities (customers, demand, and so on) can function without itself being influenced by external forces. The forces that exist within a particular business's environment often depend on competitive and regulatory forces within the industry, but there are also many environmental forces that cross industry boundaries. GlobalizationThe first and probably the strongest environmental force that product- and service-oriented firms must cope with is the increased competition and emerging markets resulting from the globalization of most businesses. This phenomenon has resulted in increased competitive pressures in a firm's home country and increased opportunities in foreign markets. This trend will have a negative impact on firms unable to mobilize and seek new markets, but firms wishing to expand their markets will perceive this as a wide-open field in which they can excel. However, it's important to remember that along with expansion into emerging markets comes risk associated with political unrest, unknown competitive forces in those markets, unexpected expectation for products and services, and uncertainties associated with transportation, supplies, labor, and financial exchange rates.
The globalization of business has substantial effects on operations. Moving into global markets with products and services creates new definitions of value. As value changes, so does the creation of value, and so do requirements for processes and capabilities as well as cost, quality, and timeliness. It creates new objectives, but it also creates new challenges. Geographic distances translate into time differences, creating an entirely new set of challenges for managing all resources. In addition to moving into global markets with products and services, businesses also move readily into global markets for purchasing products and services they need. Extending the supply base into global markets creates a new set of advantages and management challenges as well. Time necessary to obtain inputs increases. Infrastructures must be built. Employees must be trained. Along with these challenges come advantages. New ideas are generated. New skills and talents are identified. Extending the supplier base sometimes involves extending the location of facilities into foreign countries to take advantage of resources, talents, and markets. All of these decisions affect the way resources are obtained, utilized, and brought together in the value-creation process. They provide great potential, but they require managers to recognize the diversity of cultures and the talent, creativity, and views those cultures bring as well.
The Internet and Other TechnologiesThe second environmental force being felt by most businesses is coming from the increased levels of communication and competition brought about by technologies. One of these technologies, the Internet, has created a business environment that makes geography a nonissue for many firms. Businesses that were successful simply because of their location must develop other capabilities to maintain a competitive advantage.
The Internet has also placed a tremendous amount of pressure on businesses that act primarily as intermediaries between the producer and consumer. Manufacturers can deal directly with consumers, and do so at low cost. Intermediaries are finding it difficult to add enough value to warrant their markup. This phenomenon is not limited to product-oriented firms. Banks, investment houses, insurance companies, and numerous types of retailers must compete against firms that exist solely online, with no expenses tied to brick and mortar facilities.
Other technologies create environmental pressures as well. Geographic information systems (GIS), for example, have merged database technology and mapping technology to create new capabilities in location planning. Global positioning system (GPS) technology has enhanced our abilities to locate shipments precisely. Radio frequency identification (RFID) has the potential to enable businesses to track inventory through the supply chain and evaluate and count the contents of containers and trucks without opening them. These technologies and others enhance the information manager's capabilities, but can enhance the capabilities of competitors as well. Disruptive technologiesA new technology that displaces an existing technology., as they have become known, wreak havoc and create opportunities. Napster, for example, turned the recording industry upside down. That same technology has enhanced collaboration efforts for many businesses. General Motors uses E-vis. IBM uses E-workplace. As more disruptive technologies emerge, managers adapt or watch as their competition takes advantage of new capabilities. Not surprisingly, the product that is the newest disrupter may, in a year or so, be the target of new disrupters. The Natural EnvironmentChanges in the natural environment constitute a third force exerting pressures on businesses. Air and water pollution are still a vital concern, even though the “point-source” origin of these pollutants is no longer the most significant source. Automobiles and homes have become the most significant threat to the health of our air and water. Greenhouse gas levels have raised global warming concerns. Household consumption levels threaten to overflow landfills, endanger drinking water supplies, and fuel a demand for agricultural products that may cause deforestation half a world away. Businesses now assess environmental impact as part of their decision-making processes. They have begun to accept the fact that sustainable use patterns must be developed for many of our resources, including process inputs as far-ranging as timber, fossil fuels, and fish.
Minimizing environmental impact has numerous implications for a business. Sometimes it increases processing costs in the short term. Sometimes it means that what appears to be a prime location from one perspective really isn't acceptable. Sometimes it opens new markets for “greener” products and actually gives the firm a competitive advantage over firms that haven't addressed these issues.
Regional PressuresIn addition to global forces, regional pressures also influence business decisions. Included among these pressures are population growth and land development in rural areas. In some parts of the country there are concerns about maintaining the levels of undisturbed forests or wildlife habitat. In other parts of the country, such as the Midwest, there are concerns about the loss of farmland and the family farm. In the West, there are concerns about water use and water rights. In large cities there are health worries related to the number of smog days. Clearly, businesses have begun to recognize their role in a larger natural system and are learning how to minimize the negative impact on that system. The importance of these issues for future decisions can only be expected to increase.
| |||||||||||||||||
