2. Business activity is constrained (limited) by
the environment in which the business
operates. There are a number of important
components of this environment including:
The actions of competitors.
legal requirements. E.g. what is legally
expected
social requirements and expectations. The
sorts of expectations that society has of
businesses e.g. to operate in an ethical way
3. economic constraints e.g. the amount of
income that consumers generally have to
spend
technological constraints. Often what
businesses are able to produce and sell
and how they operate is determined by the
technologies available to them.
4. Anticipatory approach
Businesses need to be constantly aware of
these environmental constraints and how
they alter over time. They need to take what
is termed an anticipatory approach ie. to
anticipate changes that are likely to take
place in the future in the business
environment. By anticipating change
businesses are able to adjust the way they
operate to be ahead of competitors.
5. Reactive approach
Businesses that take a reactive
approach i.e. which only change when or
after the environment alters will be left
behind.
Studying environmental constraints and
environmental change is important to
businesses that want to plan ahead.
6. Some of the most important
environmental constraints on a
business include:
the actions of competitors
changes in consumer demand and
changing tastes
legal changes
changes in technology and
changes in the economic environment.
