Take the classic example of Mark & Spencer PLC, which began in 1894 as a single high street store owned by two men selling all items that are said to cost a maximum of a penny to the customer. Over the years, the retail sector has won segments with leading branches throughout Britain, and in overseas territories, a total of more than 885 stores. Marks & Spencer not only developed into the giant company today, by reading the changes in the environment well and meeting the growing needs of more and more wealthy consumers. It also affects customers shopping habits. The company is not a faceless entity. At best, it may be an icon of social and economic development and, in the worst case scenario, be overcome by its inability to read the environment, Woolworths and MFIs are two recent examples of such a failure.
How the environment affects the companys wealth is nowhere more obvious than collapsing many companies, including financial institutions such as banks in todays global economic downturn. Even stronger is the effect of still bad weather, either in the form of floods or snow on the profitability of a large number of companies in the UK. If the environment represented by the British government did not provide a lifeline to any of the major banks in the form of taxpayer contributions or acquisitions, they would not have survived. Different political ideologies at different times affect the businesss activities in different ways.
Before we go deeper it is necessary to find out what is meant by the companys company and what its goals are and continue to analyze the process and effects of this rapid globalization. A company is a legal entity. Unlike a single trader or partnership, it must be incorporated into the rules and objectives that are documented. It can be activated by borrowing or by shareholder contributions. While the shareholders own the company and are entitled to share the profits, they can be managed daily by paid employees.
A company that is currently in the news is Blacks Leisure, which was on the verge of bankruptcy, when the current bad weather conditions improved their wealth by offering a market for their thermal wear products. Now, it plans to expand further. At the same time, the negative economic environment has encouraged Poundland to offer cheap goods to fill the gap provided by Woolworths decline. The British salt producer Ineos Enterprises chose to cancel a 12,000-tonne shipment of industrial salt that was promised to Germany, which led to the relocation of local warehouses in Great Britain to an urgent need for snow-covered supplies. It is a good example of the environment that affects decision makers from private companies to act in a socially responsible manner.
It is now generally understood that a company is not, and can not work in a vacuum. It must respond to events occurring outside the factory and office walls. The very first concern should be closely aware of the competitors strengths and weaknesses vis-à-vis their products and services. In addition, most analysts demand awareness about the environment in terms of political, social, economic and technical factors that affect the companys businesses.
Other analysts have extended these to politically - how changes in government policy can affect decision making in the company. For example, the British governments concern about clean energy has resulted in a decision to invite foreign companies to bid on the supply of offshore wind turbines in the next few years. Not only can suppliers of wind turbines but also a variety of companies that need to provide complementary products and services make use of this decision. Socially - how consumers convince and interest change over time. One example is the changing demographics that many more elderly people are present in the population and worry about their health. Economically - how taxation eg tax, interest rates, exchange rates and the credit crunch affect individual companies. Technologically - how innovations and new technologies like proliferation of mobile phones, iPads, change consumer preferences. Legal - how changes in law, the implementation of minimum wages and the regulation of working hours affect the business. Last but not least, the ethical problems underpin social responsibility issues. One example is the refusal to deal with regimes that are known to violate human rights law. All of these factors affect changing markets that companies need to take into account and respond to, if they are not losing market shares and compromising their long-term profitability.