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Wednesday, May 18, 2022

Think Entrepreneurship: Environment and policy

By Abosede Ajala

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Environment and Government policy:  Business environment is the sum total of all external factors to the business/firm and that greatly influence their functioning, it covers factors and forces like customers, competitors, suppliers, government and the social cultural, political, technological and legal conditions.

Entrepreneurship is an important engine of growth to any nation.  Government policy, in turn, shapes the institutional environment in which entrepreneurial decisions are made.  Thus government policy is important for entrepreneurship.  Then what policies are more conducive to productive entrepreneurship?  Entrepreneurship policy should be one of the facilitator rather than regulator and one that seeks to enhance the ecosystem components rather than supporting isolated actions with limited economic impact.  As stated above many factors influence the firm in general and on unified trade.  This happens in a variety of collections, for instance, a healthy and safety regulations both external and internal factors influences the environment of business.

The external and internal factor could influence each other and work beyond ones control in affecting the business either positively or adversely.  Talking about these external factors often times can be called external constraints.   They are; Political factors, Economic factors (Macro-economics and Micro-economics), Social factors and Technological factors.  While internal factors lump up from within the organisation which impact the approach and success of the business operations.

External factors; Political factors: this are governmental activities and political conditions that may affect the business it includes; Laws, regulations, tariffs, war, social unrest and other business barriers.

Economic factors: is divided into two, the (Macro-economic factors): this affect the aggregate of the nation’s economy and not just a particular business, which are, the interest rates, unemployment rates, currency exchange rate, consumer’s flexible income and savings rates, recessions, etc.  and Micro-economic factors which affects the business such as, demand and supply, distribution chain, also the number and strength of the company or business competitions.

Social and Technological  factors:  they are factors that are related to general society and social relations that affects businesses, such as environmental movements, consumer preferences, changes in fashion etc.  Technological innovations that can either benefit or hurt the business.  Innovations can increase the productivity and profit margins. Developed software can also aid production and on the other hand technological innovations pose an existential threat to a business such as internet which challenges the retails of goods.

Internal factor includes Organizational culture, Mission and objectives, Management Structure and nature, human resources,

Therefore the growth of an entrepreneurial activities are largely due to economic crises, but it is also worth noting that opportunities do not stop arising and re-inventing.

Consequently, entrepreneurship is based on the idea of creation and the income generation initiative, configuring itself as a vehicle that contributes to economic growth, if the nation or an entrepreneur will reposition and quickly embrace it.

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