U1 - “How businesses will need to adapt to ongoing changes in the future”
The business environment is changing with the changing time, this is a way how the old things evolve and new products or services are created. For example, if earlier the life-cycle of a product was 10 years it has been reduced to 2 years. The world is changing with time, the needs, demands, preferences of the people are also changed greatly (Kew and Stredwick, 2017). It is important to consider all the elements or factors that are affecting the business. There are many factors that are influencing businesses in today's world which are important to be controlled and adapted in order to achieve success and a high rate of profit in the changing business environment. These factors influencing the business environment and the ways in which businesses can adapt them are described below -
- Globalization – A major change or shift in the pace or area where a business is conducted is occurring now. It is estimated that half of the world's largest companies or organisations are been headquartered in emerging markets such as India, Brazil and eastern nations. Pressure from international competitions and various other factors resulted in around 40% of the organisations that were in Fortune 500 in 2000 were not in the list by 2014. They are getting replaced highly by new global companies. The companies can adapt change by entering into global markets which can help them to achieve more success and profit in the business (Cook and Bahles, 2017).
- Demographic shifts – In various economies in the world, decreasing birth rates and advances in healthcare have resulted in a population which includes more old people and a workforce that is reducing. People are working and living longer, with the average retirement age for most people working in present is expected to be between 57 and 66. The medium age individuals are not the largest generation in the organisation within most of the countries, and their ideas or voices are connected by various innovation such as social media. It is very important for the organisation to expand business in various demographic areas so that it can attract variety of customers form various segments.
- Emerging technology – The technological changes in the business environment is influencing organisations and companies the most. Nowadays many organisations and hotels in developed countries like Japan are using robots to provide services. In order run an effective and efficient business it is essential to adapt new or innovative technology in their organisational functions. These technologies can assist and support business to increase productivity and profitability of the organisation which are major objectives of every business. The technology plays an important role in each and every organisation, it assists to perform various business functions in less time as well as with more accuracy as compared to the human resources working in the organisation or company.
- Climate change – Climate change have a strong impact on economy of each and every country, according to OECD by 2050 more than 40% of the world population will live in high water stress. This will result in drought or floods which will create high risk for the economic value of assets. To become efficient with the resources is cost beneficial and socially responsible. The companies require adapting increasing regulations that are supporting energy efficiency, water leakage, waste, urban congestion, lad degradation, efficiency in transportation etc. Permitting employees to work virtually also decreases the need for various facilities and helps organisations decrease their negative impact on the environment (Chattopadhyay and Bhawsar, 2017).
- Increasing competition – The another most influencing change occurring in the business environment is the increasing competition in the global market. There are many types of organisations and businesses that are entering into the market with various new products and services to attract customers. It is important for the organisations to accept and sustain the competitive market. Therefore, the business needs to develop effective business strategies for their organisational activities and functions. The companies can use different strategies such as product diversification, market expansion, pricing strategies etc to attract customers and sustain their position in the market. It is essential for each and every business as there are many substitutes available in the marketplace that can affect customers to switch to another brand.
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- Chattopadhyay, U. and Bhawsar, P., 2017. Effects of Changing Business Environment on Organization Performance: The Case of HMT Watches Ltd. South Asian Journal of Business and Management Cases, 6(1), pp.36-46.
- Cook, G. and Bahles, M., 2017, May. Changing Motives towards Cars in the Younger Generation. In Proceedings of the 17th International Joint Conference on Central and Eastern Europe in the Changing Business Environment (pp. 9-20).
- Kew, J. and Stredwick, J., 2017. Business environment: managing in a strategic context. Kogan Page Publishers.