Environmental factors can be explained as identifiable elements within the cultural, economic, demographic, physical, technological or political environment which impacts the growth, operations and survival of an organization. Environmental factors can be both internal as well external for the business. External factors can include economic and technological factors whereas; internal factors may include value system, objectives or internal relationships of a business.
business, whether large or small, is affected not only from internal organizational factors but, from several external factors. Company have no control on external environment. Developing marketing strategies should include considering environmental factors so an accurate picture of the market trends and environment can be presented and to understand as to where the company is standing. Ignoring environmental aspects is similar to walking on a path where there are unsuccessful marketing and lost revenues which can ultimately impact the health of the business brand.
Environmental Policies. Environmental policies are considered the major external factor that can impact the strategy of a business. Environmental policy is the commitment of a business to the regulations, laws as well as other policy mechanisms that are concerned with environmental issues. Environmental policy impacts businesses because the law implies organizations to change their operational procedures and equipment so as to meet those standards which can cost businesses some good amount of money.
Climate Change. Climate change became an insidious threat to businesses as its pace can be recognized only when it is taken into consideration on the basis of decade-after-decade. Increasing issue of global warming and adverse weather conditions in the recent few years, it is difficult for companies and organizations to operate equally in every type of weather condition. Businesses that are directly dependent upon adequate water supply e.g., field sports or agriculture will be affected adversely if climatic changes resulted in reduced rainfalls. Even consumers are becoming aware and keen about this factor and are prone towards those brands which are saving the environment or supporting this cause.
Green Agenda. Business-related activities impact the environment; however, the environment also has an effect on businesses and the market environment. Now enterprises have realized that in order to achieve business goals, there is a need to draft environmental-friendly policies. Green agenda is a plan where enterprises manage their operations in such a way so that there is minimal negative impact on the local or global environment. In order to be environmentally responsible, corporations need to devise plans and procedures in their operations and activities which is beneficial not only company but, for the overall environment as well.
Pollution. Pollution can also have an impact over business strategies. Pollution may cause some major environmental events which can result in the disruption of supply chains or an increase in the cost of raw material. Organizations need to monitor such events and develop contingency plans so as to deal with them.
Availability of natural resources. Amongst external environment factors, this factor refers to the physical environment of a business. Natural resources are very important for most businesses and many corporations have natural resources as their major raw material. Lack of natural resources can hinder an organization’s producing ability and hence its output.
Recycling. Recycling is another aspect of a greener environment. The cost of dumping waste in landfills is increasing and is resulting in not only shortage of wastages but, it also provides harm to the environment. Recycled materials not only results in making the production process cost-effective but, it also helps the business to save some money and helping the environment.
Waste Disposal. Although, there has been a positive trend towards recycling of waste materials, still there is several businesses which dump wastage in landfills. This not only increases their cost of dumping waste but, is also harmful to the environment in which the business operates. Businesses, in order to meet their bottom line, should first look at producing less waste and use fewer resources which will reduce their production cost along with making the corporation sustainable.
Environmental Risk can be defined as the “actual or potential threat of adverse effects on living organisms and the environment by effluents, emissions, wastes, resource depletion, etc., arising out of an organization’s activities.” Environmental exposures, whether physical, chemical, or biological, can induce a harmful response and may affect soil, water, air, natural resources or entire ecosystems, as well as the plants and animals - including humans - and the surroundings where they live. With growing oversight, this type of risk is not typically covered under conventional liability protection, but gaps in coverage can be filled by innovative specialty programs made available by insurers. Given the increase in environmental exposures, the global risk and insurance community would be wise to evaluate its awareness, vulnerability, preparedness and response in managing emerging and unforeseen pollution risks.
4. Conclusion Businesses operate in a dynamic, global and uncertain economic environment. This situation puts better pressure on the finance function and its executive for short-term versus long-term strategies for reallocating costs to better allocate resources and identify long-term growth opportunities. There are implications on the skills required to meet the challenges and this paves the way for a career in accounting and finance. This is a challenge and an opportunity for professionals looking for a rich experience. The challenges for the finance department lie both in human resources and its infrastructure and technology. Human resources need to have additional skills to perform their role. The organizational structure becomes more complex with better processes that incorporate technology to gather, analyze, and report critical financial data needed in the decision-making process. There are two main findings of synthesizing: 1. What concerns of finance function change can we identify two key enablers: technology and people. The transformation of the finance function can be made more efficient and effective by using new technologies. But to use this technology at its own cost, a finance department must have the right talent, with a proper mix of skills and knowledge. 2. What concerns the role of CFO is a significant shift and elevation from a traditional shift (reporting on the past) to a transformational, strategic role. CFOs have to initiate more value-added and strategic activities. Research on how financial managers and finance departments adapt to environmental changes will continue with a survey on CFOS in companies operating in Romania to test whether the findings apply to the Romanian market as well, or if we Some of the peculiarities in the approach of companies can be identified.
Identify one environmental factor or risk that affects the decision-making opportunities within your organization. Provide a...