Ecological, Legal, Environmental, Technological, Economic, Political, Factors Affecting Businesses

Ecological Factors Affecting Businesses

Environmental Regulations

The environment can be conserved by the government by regulating business operations in certain regions. There are set standards for all business to adhere to for purposes of ensuring safety of the environment as a whole. Without such laws most businesses often pollute the environment while operating for purposes of increasing their profit levels. Issues of clean water and air often dictate how they operate their businesses as a whole (Brooke, 2000).

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Permit Requirements

Operating permits are required by all business to operate in their different regions. Without a permit a business cannot be allowed to operate, and this allows for collection of revenue by the government and overall regulations of businesses in the environment. Businesses are required by law to file for permits before they start operating from a local, state or federal agency. Business activities can be monitored with ease when they operate by using a permit. Due to this permits, the government is able to regulate how businesses interact with water bodies and other hazardous waste material that can be harmful to the people surrounding them (Armistead & Machin, 2002).

Compliance Requirements

Various natural environment factors usually affect business operations and their ability to expand or change to new operations. During business development stages businesses are supposed to comply with different regulations for purposes of ensuring safer environments for them all (Floor, 2003). All organizations that desire to purchase a building for example are required by law to ensure that the buildings are complying with various regulations to reduce risks associated with them. Most companies that are known to defy the requirements of compliance are always shut down or given fines in lieu of their mistakes.

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Environmental Contaminants

All business operations that work under hazardous circumstances are made to be responsible of their operations to ensure maintenance of the natural environment. Counterchecking such businesses through the compensation and liability act ensures that businesses are liable for their operations. Such laws and regulations are always applicable to all businesses which desire to purchase areas that are known to be contaminated.

Legal Factors Affecting Businesses

All businesses in the US are usually subject to various legal systems that are placed by the government (Teece, 2010). Most laws apply to the people in general while some of them specifically apply to the various businesses in the region. Doing businesses in different parts of the continent allows people to observe the rules and regulations of people in those countries. This is done with a view of streamlining business operations and also to offer a similar platform to all businesses engaging in different operations. Some of the legal factors that affect businesses include but not limited to:

Organizational laws

Legal entities are supposed to follow after laws and regulations of the states where they are situated. Legal business operations usually include partnerships, limited liability partnerships, limited liability companies and limited liability limited formations (Brooke, 2000). Business operations usually follow after the formation entity under which they are subject.

Securities law

Financed businesses, which have the assistance of investors usually, follow after different security laws that are in place. Companies or businesses that provide promissory notes to investors often see the offering as a security, and it is usually subject to federal and state regulations and laws (Armistead & Machin, 2002).

Employment laws

Business ventures are often informed to employ different individuals owing to their different laws which may include discrimination laws and occupational laws. Such legal provisions allow business owners to fully provide the required services to people without considering their background or ethnicity. Health laws are usually provided for businesses to ensure full provision of health facilities to all the employees of a business venture.

Contract Laws

Contract laws govern businesses when they get into agreement with other entities for purposes of doing business. Government procurement laws usually deal in different government contracts that are provided by the state to individual business owners.

Commercial laws

Commercial laws actively fall under the issues of selling various goods and services to the people. Due to increased business operations the government provides such laws to protect the interests of different suppliers and consumers in the event of doing business operations.


Immigration laws are legal powers that all business operations are required to follow in the event of working with different people from different regions. Due to the diverse nature of work only a specified number of people are usually allowed to work in certain areas in any company abroad.

Environmental Factors Affecting A Business

There are various factors that affect the location of a business due to the environmental factors at play. One of the most important factors in choosing a place for a business location should be planned under the context of reducing costs and increasing profits. The impact of various environmental factors often leads to continuity or failing of businesses before they start their operations (Brooke, 2000). Some of the factors that affect the environment include:

Availability of Raw Materials

Availability of raw materials for a business venture is vital for the location of a business enterprise (Lange, 2007). Most prices set for the cost of products often emanate from the availability of the raw materials used for the products in question. The overall impact of raw materials for a product revolves around their source and nature. Easily located raw materials for a product leads to low costs of goods and increased  purchasing power, and this often lead to increased profits.

Labour Supply

Appropriate skills and available labour is the desire of every business venture. With available supply of labour businesses often tend to reduce their operating costs and prices as a whole. Such operations make it easier for consumers to afford their prices leading to high purchases. Increased labour supply is thus a requirement for any business venture which desires to increase their product offerings and increased profits.

Proximity to the Market

Having businesses near the market is recipe for success as business will not increase their expenses for such purposes. Customer relations can also be improved if businesses operate in regions where their market is near. When operating in far markets businesses increase their expenses, and this will prompt them to increase their costs in overall. High costs lead to minimal purchases and low level profit margins.

Power and Fuel

Available fuel and power is vital for any business operation to ensure uninterrupted operations of organizations. Organizations usually move from one region to another when they find out that their power needs are not met fully. Operating in regions with ready power gives businesses an advantage of spending less time and money in looking for such crucial commodities in their operations (Brooke, 2000).

Climatic Considerations

Climatic conditions of regions usually determine the placement of businesses in certain regions. Considerations like topography, drainage system and level of ground are aspects that are determined before businesses decide where to operate their businesses. There are companies that require humid regions for purposes of opesating effectively. Cotton textile industries for example, require such humid regions for their operations. It is therefore vital for businesses to determine the climatic conditions that positively affect their businesses to ensure overall success.

Technological Factors Affecting a Business

Organizational change

During routines modifications, workers are usually not able to keep with the pace leading to low quality provisions. Such instances lead to consumer outcry and low purchasing from businesses. It is crucial to inform all workers to change in advance to suit the technological changes in the business environment to ensure success (Blank, 2013).

Business Processes

Using new integrated modern technologies assists in achieving organizational goals and objectives. This can only become possible if business operations solicit different requirements that are in line with the business operation. Using more sophisticated technological advancements lead to quality provision and high customer demand (Piercy, 2012).

Cost Involved

Businesses benefit immensely if they are geared towards changing the outdated systems in their operations (Burnett, 2008). Such moves lead to increased expenses due to training, but beneficial to both consumers and business operators. Most organizations are usually hesitant to make changes due to the high costs involved leading to poor quality products and services.


Accuracy can only be enhanced in organizations if they desire to make use of various efficient methods in their operations. Such moves lead to low manual labor costs and high productivity. To ensure efficiency businesses make use of technological advancements and often do away with outdated methods of operation (Piercy, 2012).

Contingency Planning

All technological improvements are crucial for business success, but businesses ought to check on the responsibilities that come with the changes (Shepherd, 2000). Planning ahead is a tool that can assist business operations to soar into high heights while involving different technological facets. Businesses have a mandate of mitigating various risks like cyber crime to ensure continuity and increased profits from their operations. Businesses need to adopt all technological aspects of their business to be able to compete effectively in their niche.

Economic Factors Affecting A Business

There are different economic factors that affect a business venture (Piercy, 2012). Most entrepreneurs desire to fulfill their clients’ needs, but most business are affected by various economic trends (Heirman, 2004). It is therefore crucial for business owners to account for trends to ensure better decisions. Economic factors that affect most business in all industries include interest rates, employment, confidence of consumers and inflation.

Consumer Confidence

Consumer confidence is vital indicator that checks on the consumer optimism about the economy. Consumers with high level confidence tend to spend more money compared to consumers who have low confidence (Schick, 2002). With high level of confidence, consumers tend to purchase more leading to prosperity for businesses. Periods with high confidence lead to the emergence of new business and increased economic growth as a whole.


Sahlman (1997) states that “there is a business cycle that is followed by the economy and this can lead to periods of stagnation or decline in the business arena. Boom periods present economies with more jobs hence more workers for organizations to satisfy the rising demand in the market”. Subsequently, unemployment leads to low spending activities because consumers usually have little to spend.

Interest Rates

Lenders charge an interest rate to individuals when they borrow money from various institutions (Cessar, 2004). Most small and medium corporations rely on banks and other financial institutions to borrow money for their operations. Businesses with debt find it hard to run their operation when interest rates increase. Consumer spending also decreases when interest rates are high because most of the consumers find it hard to take loans and purchase various products and services for their consumption (Shepherd, 2000, P. 449).


Arias (2010) confirms that inflation refers to the rising prices in an economy. Inflation always increases business expenses such as utilities, rent and the cost of all the raw materials required for production. Due to high costs, businesses often increase their prices to cater for the rising costs in the market. This is done with a view of maintaining profits and overall operation of business in various industries. Consumers tend to have low purchasing power during inflation leading to low purchases.

Political Factors That Affect A Business

Impact in the economy

The political nature of a country is crucial for any thriving business venture (Rodriquez, 2009). They usually affect the economic position of the area leading to changes in the business cycle. In the US for example, there are differences that are seen in the operations of the democrats and the republicans. Such changes have occurred due to their different policies and ideologies. With such differences there are different implications that occur in the government arena leading to changes in the business cycle. Policies that encourage high spending in any economy, lead to improved economies and increased business participation.

 Changes in Regulations in the Government

Any change made in the government regulation is recipe for business changes. When the rule of law changes there is usually a change in the economy and this may affect businesses positively or negatively. Corporate compliance has become a rule in the US because of the accounting scandals that have been witnessed in the 21st century. Public companies have been forced by the Oxley-Sarbanes compliance to be more responsible in their acts. Such regulations lead to increased or decreased business operations in the economy as a whole.

Political Stability

Political instability usually affects business operating internationally. This is also true for all local businesses as consumers usually change their way of shopping towards favorable products. Overthrowing a government for example, may lead to looting and other vices that reduce the desire for people to start new ventures in their regions. Most business people operate well in politically stable nations as they are able to operate without any interference.

Mitigation Risks

There are many risks that are encountered in most businesses around the globe. This has been mitigated by various methods like buying insurance policies. Buying insurance policies can assist a business to operate fully and avoid any uncertainties in the event of providing products and services to various players.

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