In a business set up, various dynamic business environments may affect the performance of the firm negatively or positively. One of the key concepts in the area of dynamic business environment is economic changes. Economic changes refer to changing trends of general performance in an economy.
Economic changes comprise of economic boom and recession. Economic boom has a positive effect on the business environment because businesses generate supernormal profits.
Economic recession has a negative effect on business environment because it results into a slowdown in demand and thus a reduction in production. Firms and businesses wind up during economic cycle.
Another concept in the area of dynamic business environment is market conditions. Market conditions refer to the extent of demand and supply of goods and services in the market. Demand and supply are the main determinants of prices of goods and services. The presence of many competitions in the market results into a reduction in prices of goods and services.
To beat this odd, Beaumont noted that a firm must differentiate its products by producing goods and providing services of high quality and standards as well as developing good relationships with the customers.
Boone and Kurtz observed that maintaining good customer relations increases the sales revenue generated by the firm even when market conditions are unfavourable. The other concept in the area of dynamic business environment is changes in government policies and regulations.
Governments change regulations and business policies to regulate business activities. Such regulations may include high taxes imposed on businesses, changes in business registration requirements and policies for reduction in carbon emissions. Failure to observe these changes in government policies may lead to increased conflicts between the government and the firms thus destabilising business operations. Critical business functions An organization is divided into operation units that perform different functions.
Such functions include human resource, sales and marketing, information technology, production or operation, research and development, finance and accounting and customer service.
These functions are undertaken in different levels of management in the organization. These functions are interconnected in different ways. For example, the human resource trains people to work in customer service.
The quality of customer service affects the sales generated by the firm. Research and development, generates new methods of production and operation. Information technology affects the extent to which the sales and marketing teams reach the customers in the market. The accounting and finance departments must work to ensure that the human resource receive their salaries in time as a way of motivating the human resource to perform their duties with dedication.
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