Entrepreneurship

External Forces that Affect Success



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There are several different uncontrollable and controllable aspects of an external business environment that affect the success (or lack there of) of a business. The first uncontrollable factor would be competition. Since everyone has the right to create a business of their own, there is no way to control competition. There will always be someone who believes they can do the same thing you are doing but better. The only way to push this aspect of your external business environment towards success is to be one step ahead of competitors. One way is to research newer products that they may have, or to have competitive prices and sales. You must also have an environment that will make consumers want to shop at your business rather then others. Things such as polite helpful employees, a clean shopping environment, a large array of products to choose from and prices of these products all have a direct affect on how successful a business.

For example, Wal-Mart employees are required to greet a customer that comes ten feet towards them. They are required to "zone" or maintain the appearance of their departments at all times, and Wal-Mart's competitive low prices give other stores a run for their money.

Although companies many not be able to control social or cultural changes throughout their community they do have a way to use the information about these changes to their advantage. Social wise trends are easy to follow and can give business high momentary success. Following what "is popular" to social standards can help a business because they are giving the consumer what they are demanding at the moment. During the 50's the social standard for women was to stay at home and make their husbands happy by being good housewives. Bisquick a well known pancake mix company fed on this social trend by advertising their product with recipes that would "keep their husband's happy". By feeding off social standards, Bisquick ensured success for themselves. Cultural changes within a community can help business success, and second to social behaviors, is one of the more important things a business must look at.

For example, if you are a grocery store and when you first began you had mainly Asian ethnicities within the community, but say in five years you check the census of your community and now the majority is Hispanic, you would want to add or change products within your grocery store to appeal to the majority of your surroundings since they will be your main consumers. Busch's a well known grocery store in my own community has a very small range of "ethnic" products forcing me to search other places when searching for certain spices which means they have lost a customer. Overtime if large cultural changes occur and busch's does not add or change some of their products they may see a large decline in their sales compared to some of their competitors that paid attention to these cultural changes and adapted to them.

A last (and controllable) force is technological. Offering newer technology for consumers may also raise potential success. If a company stuck with older style registers many would have a great loss in success compared to a company that has all the same products, but offers consumers different options on how they would like to pay, such as credit card, check, or debit card. By sticking with technologies different advances you are also staying up to date with your consumers. Offering different options that consumers are not aware of as well, such as "self checkouts" where there is no need for a cashier and the consumers gets to pay for their product as fast or as slow as they want is another way to stick with technology. Within the private aspects of a business, owners must ensure that their company is up to par with technology. Having computers with required training modules, can ensure that the employees know their information. Having websites for the employees where they can communicate, stay up to date on changes within the business, send emails to suggest changes or give complaints give owners a heads up on what is going on within their own business. Technology is also a very easy, cheap way to ensure that a large amount of information is spread quickly and successfully to all persons within the business, especially when the business becomes larger and there is more distance between them. Overall technological advances within the business may be just as important as watching any social or cultural changes or even the environment of your business, these are all things a business must juggle to keep itself above water.

Financial information systems can serve many functions in a business. How might you use them in your business? Which do you think you would need in the beginningfinancial accounting information or managerial accounting information? How might financial information change the way you run your business?

Accounting information systems or AIS are organized procedures for identifying, measuring, recording, and retaining financial information so it can be used in accounting statement and management reports (ebert, griffin, business essentials, 386). In lament terms this means all information money wise that may go in or out of a business. This important for business, especially small businesses that may be on a short leash budget wise. Successful planning and budgeting are due to the AIS and without it business owners may not have any means to set goals, watch or adjust their budget, or evaluate any potential prospects to expand. Not only is a successful AIS important to business owners, but it is also important to the employees as well. Compensation for benefits, health care, vacation time, and retirement pay are only a few things that are important to the employee and depend on the AIS.

There are two aspects of accounting, managerial and financial. Financial accounting systems are for external information users; i.e. Stock holders, government agencies, consumer groups etc. where as managerial accounting systems serve the internal aspect of a business such as, the cost of materials, planning activities, etc. In the beginning I believe a small business is more dependant on the managerial side of accounting rather then the financial. Small businesses may not have things such as unions, stock holders, or many government agencies other then the few that control their taxes and what not, making financial accounting variable a very minute aspect of their business, where as the managerial accounting controls the business as a whole.

Decisions can not be made without knowing if the funding is there, products can not be bought if there isn't enough money. Without management accounting a business cannot know wether they are bringing in enough profit to keep their business afloat. By knowing this sort of information the business can decide whether they must change some things to make more money, or do more of the same thing to increase success they may be experiencing.
As stated before having well organized financial information can help the way you run your business by showing you whether or not changes need to be made within sales, or perhaps you notice that combined with shipping and initial sales prices you are not brining in as much profit as you could be if you bought your products say, from another company. Having good financial information helps with a business financial planning for the future, such as expansion or technological upgrades, or product expansion. Which may lead to need for more focus on financial accounting.

More about this author: Danielle Montalvo

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