External Business Environment

External Business Environment

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Institution

External Business Environment

A business does not exist alone. It exists within an environment where it engages in exchanges with its stakeholders. An internal business environment is those factors within the business that is responsible for its operations. These factors, and their influences, can be effectively controlled through proper stakeholder management. On the other hand, the external environment is those factors outside the control of management. It consists of political, economic, social, technological, ecological, and legal situations. For Knightsbridge firm, it has to analyze its industry-related opportunities and threats concerning each of these external environmental factors. Knightsbridge management has to be able to promptly manage the impact of the dynamic changes of the external environmental factors to stay afloat.

Australian legislation and regulations governing wealth management business have allowed Knightsbridge to expand its operations to other areas and increase the range of its services. Political instability and unfavorable industry-related legislation, however, may cause the business to fail. The global economic environment in which Knightsbridge operates has to be suitable. It has to consider the effect of the rise in inflation in Australia and other markets it intends to enter on its cost of operations. It also has to conform to the social norms of the community it operates within or otherwise risks losing its popularity and, consequently, its customers.

Knightsbridge management has to ensure it is keeping up with the dynamic technological advancements in investment management. To avoid losing its customers, it has to provide the best quality and newest products compared to its competitors. It also has to adapt to new and cost-effective ways of delivering its services and distributing its products to the market. Businesses are also expected to adopt sustainable business strategies. In the contemporary business environment, companies must manage pollution and espouse ethical practices. Knightsbridge has ensured it is socially responsible. Thus, it has mitigated the risk of losing the trust of its stakeholders.

In conclusion, a proper analysis of the external business environment is a requirement of each entity. Consequently, Knightbridge can forecast any external changes that might affect the wealth management industry. Since they cannot control the changes, they have a chance to mitigate the negative effect such changes may have on the business.