FACTORS AFFECTING BUSINESS

Demographic - Demographics refer to the socio-economic characteristics of a population that

businesses use to identify the product preferences and purchasing behaviors of customers. With
their target market’s traits, companies can build a profile for their customer base. They can
determine their key customers or target market and create marketing materials. For instance, man
and women generally have different likes, dislikes, needs, and thought processes. For instance,
few men apply makeup, and most women don’t wear boxers. Also, women typically do most of
the household grocery shopping and are more likely than men to donate to charitable causes.

Socio-Cultural Factors - Socio-cultural factors include consumers' lifestyles, buying habits,

education, religion, beliefs, values, demographics, social classes, sexuality and attitudes. These
factors determine the suitability of an organization’s products and services for its customers'
needs. Consumer’s preferences are evolving as a result of sociocultural influences influencing
firms and business decisions. What was popular and fashionable 20 years ago may not be popular
today or 10 years down the road. For instance, a clothing company must constantly be aware of
changing preferences when developing new products, or it would lose market relevance soon.\

Competition - Competition in business lessens your individual market share. stimulates firms to
lower their own costs and run their businesses as efficiently as possible. But when competition is
restricted – such as by one company acquiring most competitors or reaching agreements on
prices with other competitors – prices are likely to increase and quality is likely to also suffer.
These are businesses offering similar (or identical) products or services in the same market. They
also vye for the same customer base. Some famous examples of direct competitors include Apple
versus Android, Mcdo versus Jollibee, or Pepsi versus Coca-Cola.

Legal Force - Legal factors in a business environment are defined as law-related issues and
proceedings that the owner of a business must consider in order to run the business seamlessly.
Laws that affect businesses include federal regulations, state laws, and customs imposed norms.
These are authority implied structures that business owners need to comply with. For example, a
government's monetary policy, such as setting interest rates, can affect the cost of borrowing for
businesses and consumers, which in turn can impact investment and spending decisions.
Similarly, tax policies can affect a business's profitability and cash flow. Trade policies, such as
tariffs and trade agreements, can also affect businesses, particularly those that engage in
international trade. Changes in trade policies can affect the cost of goods and services, as well as
access to foreign markets.

Political Force - The stability of a political system can affect the appeal of a particular local
market. Governments view business organizations as a critical vehicle for social reform.
Governments pass legislation, which impacts the relationship between the firm and its customers,
suppliers, and other companies. For example, regional laws and regulations can determine how a
company operates or whether it benefits from international expansion. For this reason, aspiring
entrepreneurs, business leaders, and strategists in heavily regulated industries should familiarize
themselves with politics’ effects on business.

Economical Condition - Many economic factors, such as unemployment, exchange rates,

inflation, wages, and supply and demand, typically impact how businesses make a profit and
increase their efficiency. For instance, an increase in the supply and demand of goods can cause
inflation. Likewise, a decrease in supply and demand can lead to a depression. Inflation,
recessions, and boon periods influence consumer habits and business performance. Or demand,
supply, and unemployment rates can affect wages. An increase in wages can boost purchasing
power; a decrease can lower overall spending.

Technology - Technology applications have enhanced the pace and output of various business
activities such as marketing, promotions, sales, and accounting. From internal operations to the
external output of the activities, from minute processes to major activities, multiple aspects of the
business need the use of technology today. For instance are the technological factors affecting
Apple, competitors find little struggle in recreating many of Apple’s products. Growing demand
for mobile technology will make the personal computer a less attractive product. Apple’s quite
restricting native Operating Systems can limit the scope of what is possible on their devices.
Growing numbers of cybercriminals could jeopardize Apple’s reputation for safety and security.