What Are Some Business Environmental Factors?
- Although business sectors like the service industry deal primarily in intangibles and many manufacturing and retail sectors attempt to add value to raw materials through design and marketing functions, many business processes are still ultimately dependent on the availability of raw materials like oil, paper and foodstuffs. Even services have some material dependency on raw materials for transportation and administrative functions. As a result, the supply of natural resources plays a critical role in determining the price of business inputs and as a result the kinds of goods and services businesses produce. Naturally, environmental factors like the abundance of certain natural resources and the health of ecosystems in terms of their ability to produce renewable resources act as critical factors in determining business activity.
- Business takes place within a social context and an important part of that context is the regulatory and state apparatus that governs society. From an environmental perspective, government regulations designed to protect the environment and public health from serious degradation establish the range of possibility for business activity. Bans on the commercialization of certain endangered species, heavy taxes on polluting activities or laws requiring certain standards like car fuel efficiency or emissions restrictions all affect the nature of businesses and economic activities possible.
- What businesses see as the supply of a qualified workforce, environmentalists tend to see in a public health perspective. In fact, both are concerned about exactly the same thing, the health of the population (or workforce) and its ability to pursue education, complete work and secure the means of its own reproduction. Environmental health issues like the prevalence of respiratory diseases or infections caused by environmental toxins also mean higher employee absenteeism, losses in productivity and higher medical insurance costs for employers.
- Economic activity, particularly long-term planning and capital investment, assume a certain degree of certainty and consistency in economic and social conditions into the future. Major environmental disruption threatens to change the conditions of resource availability and public health in the medium and long term. Environmental concerns such as global warming could cause major disruptions in economic activity through changes in land use, distribution patterns and the frequency of natural disasters. The potential social and economic uncertainty caused by looming environmental crises like climate change and biodiversity loss are major factors affecting business prospects into the future.