Gaining Competitive Edge in a Changing Business Environment

According to an ancient adage, change is the only thing that is permanent. It is just a question of speed that mainly set the various types of changes apart. The rate of change is particularly pronounced when it comes to online business. Those who are unable to adapt to the rapid changes are unlikely to survive.


There are many internal and external factors that affect the profitability of a business. Internal factors include the management of the business, capitalization, model of operation, technological infrastructure and quality of products. External factors, on the other hand, include macro and micro-economic forces, political situation, business rivals, market demographics, and technological innovations.

Businesses that are primarily operating online and getting their leads online are the most susceptible to the rapid changes in the business environment. Case in point: the latest updates of Google in its search algorithms have radically affected many web-based businesses. Some were forced to close shops while others had to re-invest significant sums of money to regain their online presence.

Being highly visible online and attracting the target market are the primary goals of any online business. These goals are only possible with extensive and comprehensive online marketing strategies. However, strategies need to be continually fine-tuned or even radically changed in consonance with the changes being made by search engines.


In order for an online business to survive and thrive in the rapid changing business environment, it has first to adapt to the demands of search engines. It must first be able to comply with the requirements of the search engines’ algorithms. For instance, the Google Panda update has penalized low quality websites that have thin relevant content and have many advertisements. Over-optimized websites were also penalized.

Consequently, many online businesses had to redesign their websites by updating the content and restructuring the code infrastructure. This meant additional expenses for many online businesses, almost equivalent to starting from scratch. Business entities that have enough capital funds were able to comply immediately and regain their rankings.


In most cases, changes in the business environment are unexpected and may have unintended consequences. Many of these changes are beyond the control of business entities but those that can find solutions and adapt are likely to be rewarded. Hiring the services of expert consultants is oftentimes necessary to make the necessary adjustments.

Adapting to the requirements of search engines is only a basic survival technique for an online business. Maintaining a loyal customer base and continually improving the quality of products are still the best strategy to have a thriving business online.

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Defining the Business Environment – A Thorough Analysis of External and Internal Environment!

Business firms wishing to adopt an open system of management approach, find it difficult to define the business environment. The management has to limit its consideration of the environment, only to those aspects of the outside world which are of major importance to the success of an organization. The concept of business environment is too broad and it would be hopelessly confusing to consider each and every aspect in it. Customers, competitors, government units, suppliers, financial institutions and labor pool are part and parcel of the external environment, and available resources, be it physical or human, behavior, synergy, strengths and weaknesses and distinctive competence determine the nature of the internal environment of a business firm.

Further, you can divide the business environment into two categories, the direct-action environment, that has an immediate effect and influence on the organisation’s decisions, say, government regulations, labor unions, suppliers, customers and competitors. The other category, namely, the indirect environment does not have a direct effect, but nevertheless influence the operations of a firm. These would include factors such as, technological, economical, socio-cultural and political, to name a few.

Each and every organization is bound to form its own strategies to define the scope or network of operations, in a business environment. What is a general environmental factor, may be specific for another. Precisely speaking, a firm has to consider both the macro and micro environments, that affect its life and development. Corporate strategists must be aware of the fundamental features of the current environment to plan accordingly.

SWOT analysis or environmental scanning, is the basic monitoring system, that helps a firm to compile, process and forecast the necessary information gathered from the external environment. This is also helpful in determining the opportunities available for the success of the firm in the market, and gives a clear picture about the threats to be handled. As the business environment is highly dynamic and volatile, it is inevitable for a business organization to visualize and perceive the opportunities and constraints in store for it.

While swot analysis is a tool that helps in scanning the external environment, using the value chain in internal analysis, proves to be an useful approach to determine the organisation’s strength and weaknesses. It is equally important, that a firm must be competent both externally and internally. Adoption of a disintegrated view of the firm helps in diagnosing a company’s key strengths and weaknesses. The value chain is a framework that disintegrates a firm into its strategically relevant activities, to understand the behavior of the company’s cost and potential sources of differentiation.

A firm gains competitive advantage by performing these key internal factors or strategically important activities, in an efficient manner than its competitors. Identifying the primary activities of a firm such as, inbound logistics, operations, outbound logistics, marketing and sales, followed by service denote the distinct activities that are performed to design, produce, market, deliver and support its product. The support activities such as procurement, technology development, human resource management and the infrastructure of the firm should not be overlooked, since they are the ones that are essential throughout the entire chain of operations.

It is therefore an indispensable fact that, the management should attempt to predict changes in different environmental forces and discern the opportunities and threats emanating from the environment.

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