How the Natural Environment Affects Businesses - PEST Analysis

Summary

In this video, Professor Wolters discusses how macroenvironmental factors, particularly the natural environment, affect businesses. He highlights the uncontrollable nature of weather, natural disasters, and pollution, emphasizing the need for businesses to adapt. Using examples like Domino's adjusting for weather conditions and the challenges of organic farming in polluted areas, he explains how environmental factors influence decisions. Additionally, he touches on the importance of sustainability and government regulations in shaping business strategies, encouraging companies to be more eco-friendly while navigating these challenges.

Takeaways

• 😀 Companies must consider local weather conditions, such as rain or snow, when planning operations, as these factors influence customer behavior (e.g., more orders during bad weather).
• 😀 Businesses need to adapt to the climate and geography of the areas they operate in, like not opening a beachwear shop in a non-coastal region.
• 😀 Natural disasters, such as hurricanes, tornadoes, and earthquakes, can significantly affect business operations, especially in high-risk regions like the Caribbean.
• 😀 Companies in colder climates must prepare for disruptions caused by snowstorms and winter weather, which can affect supply chains and production.
• 😀 Pollution levels have a direct impact on businesses, particularly in industries like organic farming, where contaminated land can prevent the production of organic goods.
• 😀 Businesses must account for environmental factors when deciding where to film or produce content, as pollution can reduce efficiency and affect worker productivity.
• 😀 Government regulations, such as environmental laws enforced by the EPA, influence business decisions and may prompt some companies to move to countries with fewer restrictions.
• 😀 Sustainability is becoming a more important factor in business strategy, as companies look for ways to reduce waste and minimize their environmental footprint.
• 😀 Companies are finding ways to repurpose leftover materials, such as steel from car manufacturing, to reduce waste and improve sustainability.
• 😀 The trend of reducing product packaging, like switching from CD long boxes to jewel cases, reflects a broader push towards minimizing environmental waste in business practices.

Q & A

What is the main focus of Professor Wolters' discussion in the video?

The main focus is on how macroenvironmental factors, particularly the natural environment, impact businesses and how companies must adjust to these uncontrollable factors.

How does weather impact businesses, according to the professor?

Weather can influence consumer behavior and business operations. For example, bad weather, like snow or rain, might lead to more delivery orders as people prefer to stay indoors.

Why would Domino's need to pay attention to the weather forecast?

Domino's needs to monitor weather conditions because bad weather, such as rain or snow, could increase demand for food delivery as customers are less likely to go out.

What role do natural phenomena like hurricanes and earthquakes play in business planning?

Natural phenomena can disrupt business operations, such as hurricanes affecting tourism in the Caribbean or earthquakes influencing the location of sensitive industries like nuclear plants.

Why might a business in Illinois not open a beach-themed store?

In Illinois, the lack of beaches makes it impractical to open a beach-themed store, as there would be no demand for products related to beach activities like surfing.

How can pollution affect businesses, according to the video?

Pollution can impact businesses by degrading the environment needed for certain industries, like organic farming, and can also reduce productivity for businesses that require clean environments, such as YouTubers filming videos.

How does pollution affect organic farming?

Pollution can contaminate the land, making it unsuitable for organic farming. Organic crops require fertile, clean land free from contaminants to meet certification standards.

What challenges do businesses face when it comes to government regulations on the environment?

Government regulations, such as those from the EPA, can create operational challenges. Some businesses may relocate to countries with fewer environmental restrictions to reduce costs or regulatory burdens.

How is sustainability becoming more important for businesses?

Sustainability is increasingly important as businesses focus on reducing waste, reusing materials, and cutting their environmental impact, often driven by consumer expectations and regulatory requirements.

What are some ways companies can improve sustainability, as discussed in the video?

Companies can improve sustainability by minimizing waste, reusing leftover materials (e.g., extra steel from car manufacturing), and finding ways to reduce their environmental footprint, such as reducing packaging waste.