Keep an eye on the environment – for succeeding in business
Posted by Prof.G.Jayanth, Adjunct.Professor,HBS,GITAM University
Companies today are operating in a business environment which is challenging and dynamic. The structure and growth drivers of a particular sector might have changed drastically within few years. For instance, 88% of companies which featured in the Fortune 500 list in 1955 do not feature in that list in 2014. They have either gone bankrupt, merged or exist but fallen out of that elite list. This talks volumes about changing business scenarios. It’s fascinating that Facebook, an online social networking site which is valued approximately at $250 billion today was formed only in 2004 and has started trading on Wall Street only since 2012. This is testimonial to the role that technology plays in shaping today’s world.
Let’s look at the banking sector which has been rendering services to consumers for many decades now. Over the years, the nature of products, service offering and customer engagement has undergone a sea change with the use of technology. From an era of visiting branches to withdraw money, today we can transfer funds at click of a button from the comfort of our home. Technological innovations and advancements have also forced companies to revamp their business models. A company manufacturing digital cameras suddenly found competition from mobile phone manufactures that created phones with built-in cameras. Products which were once in vogue like the audio cassettes and floppy disks do not have a market today.
Advancements in technology have also transformed the retail market place. Today, businesses with retail outlets in cities and towns face a serious challenge from E-Commerce players. The E-commerce players forced the traditional players to redefine their pricing and expansion strategies. These companies also use technology to enhance the customer’s shopping experience with a wide range of choices. No wonder they are becoming a force to reckon with.
Sometimes legal and regulatory changes impact the business environment. India’s policy on Foreign Direct Investment (FDI) may attract new MNCs to set up operations in India which could fuel the economic growth of our country. On the flip side, these policies can have a negative impact too – the FDI policy on retail met with firm resistance from small business units since their very existence would be threatened if large foreign retailers stepped into Indian shores. Some of these regulations might have a significant social impact, the ramifications of which could be detrimental to certain sections of society.
MBA students, who aspire to work in the corporate world or dream to be entrepreneurs, must keep themselves abreast of the latest developments in the business environment. To be successful, managers must understand the political, social, economic, technological and regulatory aspects and their impact before taking business decisions.
The author can be reached at firstname.lastname@example.org