The operating or task environment is composed of the factors that are directly related to the competitive position of a business. It consists of different stakeholders who have a direct or indirect interest in the performance of the business. Stakeholder’s support and response play important roles in the growth and development of a business. A business can influence the stakeholders through effective strategy.
The components of the task environment are mentioned below:
The customer is the most important component of the task environment. All the business activities are directed towards satisfying customer needs and retaining them effectively. Customers may be an individual, family or business. Besides purchasing goods and services, they are also the source of information and ideas for the business. Strategic management should always focus on addressing the changing needs and demands of customers and build a long-term relationship with them.
Suppliers are the person or firms who provide inputs to the business needed to produce goods or services. The quality of a product depends on the quality of input. Besides quality; price, delivery time, and other terms and conditions are also very important for a business. A good relationship with the suppliers always creates opportunities for the business.
Competitors are the firms that provide similar products in a similar market. Businesses complete for customers. Hence, a business needs to analyze the competitors through competitive intelligence in which a firm gathers data and information to understand competitors’ objectives, strategies, assumptions, and capabilities. The competition takes place within the strategic group. A strategic group is a set of firms emphasizing similar strategic dimensions to use a similar strategy. Hence, the activities of key competitors from the same strategic group are very important for a business.
4. Creditors/Financial Institutions:
Financial institutions are very important for a business since they provide funds for short as well as long-term financial requirements. Besides funds, they also provide other services. They may be banks, insurance companies, and other institutions related to the capital market. A sound relationship with the financial institutions always creates opportunities for the business.
Distribution management is an important factor that determines the effectiveness of a business. A sound distribution system enables a business to avail of the product and services to the consumer in the stipulated time. Distributors even provide strong manpower and cash support to the supplier or manufacture’s promotional efforts. Hence, it is essential for a business to have a close relationship with the distribution.
A business is very closely related to media. Media always have a very close look at the business activities. They largely influence the image of a business. A number of opportunities may be created with continuous interaction with the media. It is necessary to address the media promptly.
The government regulates the business system. It further formulates different policies for the development of business in the country. It attempts to protect the interest of the consumer as well as the general public. Hence, the regulations and policies of the government exert considerable impact on the operation of a business.
8. Pressure groups:
Environmentalists, consumer advocates, and women’s groups are some of the pressure groups that influence business activities directly. They exert pressure on the business on the issues of price, quality, employment, and environmental protection. A business needs to address the issues raised by the pressure groups as promptly as possible.