How External Factors Impact Business Organizations

Topic: Business Issues
Words: 670 Pages: 2

From this course, I drew several basic and important, in my opinion, conclusions. The first conclusion I came to based on Week 1 is that for companies in today’s world to make money and have many customers, they must outperform other manufacturers in their niche. To stay competitive and outperform its competitors, a company must create a unique, high-quality product, set a competitive price, and closely monitor and comply with market trends.

The next conclusion I drew from Week 2 is that firms are affected by several external factors, such as political, legal, economic, sociocultural, technological, and environmental. The political element is any government influence that can change a firm’s behavior and is shaped through lobbying, contributions, public relations, and litigation. The next factor is legal, which includes the degree of legal regulation of social relations, the composition of existing laws and bylaws, guarantees of safety of enterprises and citizens, clarity of wording of legal norms, etc. This factor is very important since the timeliness and content of laws and legal standards determine the legality of conclusion and performance of certain agreements or contracts, the legality, and success of business operations, and the ability to resolve disputes and other conflict situations related to the activities of enterprises, carried out within the framework of existing laws and regulations. External economic factors include the general level of economic development of the country, the level of market relations, and competition, i.e., everything that represents the conditions under which the enterprise functions. The socio-cultural factor includes society’s culture, norms, and values constantly changing. External scientific and technical factors, which include the scientific and technological potential of the country, availability and functioning level of scientific and technical infrastructure objects, have a significant influence on the activity of enterprises, leasing of laboratory instruments and equipment, research funds, programs, etc. The presence of scientific and technical factors helps enterprises to produce new and modernization of obsolete products, mastering of new and improvement of applied technological processes, and wide implementation of innovations. And the final factor, which also affects the firms, is ecological. Many firms are concerned about preserving the environment, which cannot fail to please.

The following conclusion that I want to mention is that resources alone do not give a competitive advantage. The mere existence of tangible and intangible resources does not make a firm competitive. It is necessary to allocate these resources correctly to get a positive result. The quality of the resources also affects competitiveness. For example, the people who work in a firm must be highly skilled professionals to achieve a quality product or service.

The fourth conclusion I drew from the discussion of Week 7 is that diversification creates value through economies of scale, market power, and financial savings. Sharing activities and transferring core competencies helps create significant savings, and efficient capital allocation by restructuring the business creates financial savings. Also, through diversification, firms lock out competitors through multipoint competition and vertical integration.

In my opinion, the most interesting question for discussion is the one posed in Week 5. This discussion topic was about creating a new platform that could be useful for today’s society. This topic is very relevant, people are moving increasingly into the digital world, and many cannot imagine life without some platforms. It is very interesting to discuss what other media are needed to meet people’s needs and bring maximum benefit.

It is hard to find an uninteresting question since each is important, but in my opinion, the least interesting question was the one in week 9. This question was about exaggerating the truth about a company’s product or service to attract customers. I don’t think this question is very interesting because it’s very limited. I believe that exaggeration does not always have a positive outcome, as it can ruin a company’s reputation and decrease sales. Companies should tell the truth about their product or service so that people understand what they are buying and decide whether this product or service is worth a certain amount of money.

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