Business Environment Analysis
Political Factor
One of the political factors that can affect the business company environment is government stability. The government has the mandate of controlling the increase and decrease in taxes for business operations. In a situation with instability, it implies that there will be fluctuations effective in the activities that are supposed to take place. For instance, there can be an increase in intakes, abruptly leading to a rise in expenses. The business will not function normally, leading to a disruptive organizational culture. The acquisition strategy will equally be impacted negatively since the merging cannot occur without stability (Stohr, Budzinski, and Gaenssle, 2019). Lack of an effective and efficient organizational culture will be impossible since there is no integration of the duties and responsibilities among the employees. There will be two organizations with different domains that cannot be brought together because of the instability issues.
Economic Factor
Interest rate is one of the economic factors likely to impact the organizational business environment. The main effect will be felt on the liquidity of the cash transacted. If there is an increment in the investment cash flow, the liquidity will decline. A higher return on investment will attract investors and make the acquisition process much more possible and smooth. That is because it will be expected that the acquisition will lead to a positive outcome in the end (Seo and Lee, 2019). However, the situation will be different in cases where there is an increase in the interest rate for loans making it impossible to attract investors. The end goals will be creating challenges to the acquisitions, especially those mainly focusing on a merger. An increase in liquidity will affect the functioning of the economy and the approaches that the companies undergoing an investment are taking towards each other.
Sociological Factor
Sociological factors within an environment focus on the forces present within the society. Culture norms and expectations top the list of sociological factors. There are expectations within the community on how an organization is expected to conduct its operation. In the process, companies’ business environment has been clouded with corporate social responsibilities and guidelines on how employees are supposed to behave. The acquisition will be impacted with the factor wince the culture of the two organizations are different (Stohr, Budzinski, and Gaenssle, 2019). How business operations are taking place in one is not the same, forming the employees’ customer. There will be a failure to integrate the two cultures making it challenging for employees to work together if the acquisition has been a success. A strategic solution that can be used to address the sociological factors is training the employee before making sure they quickly adapt to the expected changes in the future.
Technological Factor
Innovation and advancement are technological factors that affect a business environment. There are trends in business and the adoption of new technology by an organization to make their operations easy. Keeping up with the changes is a technological factor that affects the business environment (Stohr, Budzinski, and Gaenssle, 2019). Some employees will willingly adopt the advancement, but there is an anticipation of resistance from others. The acquisition will be impacted because the technological development between the two organizations will not be the same. One might be more advanced than the other, making it hard for the integration to occur successfully. Employees from a less progressive organization will equally have challenges coping with the acquisition since how they carry out their duties and responsibilities is expected to change (Seo and Lee, 2019) equally. The end goal of the acquisition will be to ensure there is successful linking of the technology in both organizations.
Environmental Factor
One of the environmental factors is demographics, which is used to describe the business’s physical location. If there is no strategic location, an organization suffers from a denial of entry into some markets and a lack of consumers to purchase the offered service and products. In the process, the business environment will be filed with credit acquisition to ensure the business remains afloat (Stohr, Budzinski, and Gaenssle, 2019). The investment will equally be affected by demographics since merging will be challenging. It will be technical to transfer its offices and location to a new destination. There is a high chance some clients will be lost, posing a risk to their operation.
Legal Factor
Lastly, legal factors will affect the business environment for a company, such as an employee protection law. Different jurisdictions affect how compensation of workers’ issues are being addressed. More so, they differ from one organization to another. Applying a universal employee protection law in an acquisition arises with some challenges (Seo and Lee, 2019). It is expected that there will be resistance from some workers due to the variation in service delivery. Therefore, the nature of the sign company’s protection to its workers needs to be applied to the new employees. Discrimination issues are likely to arise, but the end goal will be to ensure adequate provision of the required working environment for all the employees in the business environment.
References
Seo, Y. & Lee, Y. (2019). Effects of internal and external factors of business performance of start-ups in South-Korea: The engine of a new market dynamics. International Journal of Engineering Business Management, 11(1), 1-12.
Stohr, A., Budzinski, O., & Gaenssle, S., (2019). Happily Ever After? – Vertical and Horizontal Mergers in the U.S. Media Industry. Ilmenau Economics Discussion Paper, 25(126), 1-42.
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