Operating Environment

Competitors in the Industry

The first aspect to assess operating environment is to evaluate competitors in the market. Below are some of the questions businesses need to ask themselves to better understand the competitive environment.
1.Enlist all the competitors and explore their fundamental traits.
2.Explore their positioning in the industry.
3.Explore the forte of each of these competing companies.
4.Find out the tools and technique they utilize to sustain in the competitive environment.
5.Find out the extent and nature of their competitiveness in terms of the aggressiveness.
6.How do they perform product differentiation?
7.What are the different factors that may affect the industry dynamics?


Just like exploring the competitive environment, the dynamics of consumers holds equal significance. Below are some of the questions that businesses should ponder on while exploring the nature of customers.
1.Explore the various tiers of customers and the percentages of businesses they represent.
2.Explore the demand generation in each segment. 
3.How can you develop new markets?
4.Explore the costs of switching and evaluate them with your bottom line.
5.Explore the extent of price sensitivity of customers in each segment.
6.Is backward integration an option for your business? Can that be threatening?
7.Explore the bargaining power of each tier of customer.
8.How do you think all these factors will change in the coming 5 or 10 years?


Financial institutions are another major external entity that affects the operations of a business. This includes banks. Normally, businesses require raising huge portion of money if they are operating in businesses and domains that are large scale. Thus, when a loan is offered, it comes with clauses and conditions that have to be met. This further means that the hefty amount has to be repaid by generating enough cash flow in the coming future and do whatever to make it possible.
Labor and Trade Unions or Pressure Groups
There is usually a large chunk of employees that are part of a union formed in order to protect the rights of employees if company takes any steps that are against their interests. Thus, whenever there is a disagreement, largely in the wages and salaries, the union becomes active and begins pressurizing the employer. In the same way, there may be a variety of other pressure groups that need to be dealt with and their conditions have to be met to operate in the region smoothly. 


Government makes laws and regulations for international trades as well as some aspects of the business like how the products will be packaged and shipped. There is a likelihood that these may increase your per unit cost and decrease your profitability to a significant level. However, you need to manage all these things because complying by the state regulations is a must. Apart from your own country’s government laws, there are international laws as well that need to be adhered to if you are also operating in international markets. 


The economic factors need to be assessed time and again and it is important for the businesses to predict the trends and function within than accordingly. It is important that you respond to the economic changes in a timely manner and not try to manipulate it because this will be a futile activity. 


Many a times, it is your competition that drives you to change or alter your business strategies and even your business niches. This is because usually business wants to find their blue ocean strategy and would like less or no competing players so that the profitability margin remains high. Moreover, your own marketing planning becomes the source of success or failure for your competition. In the same way, if you get to know that any of the competing firm is cutting off, you should be immediate and strategic in the alteration of your market penetration strategies to benefit from the situation. 

Public Opinion

Your public relations department is a very crucial wing in this aspect. They keep circulating the good image of your company to the general public so that their perception of you company remains favorable. This is crucial because only a favorable response can help your sales boost and affect the kind of stability you will have in the market in future. You always need to be on the lookout to explore public opinion of you and if you think there is a hint of potential issue, you should be immediate to solve it before it aggravates. 

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