Trends in the future business environment and the tasks they create for managers

Introduction

The business environment is the sum of the forces outside a firm that affect its working. It is dynamic, always changing through new technology, shifts in consumer preferences and the entry of new competitors, and it is uncertain, because future events are hard to predict when change is frequent. Any forecast of the future environment therefore starts from the trends already at work, which are likely to grow stronger.

Trends likely to shape the business environment of the future

1. Faster technological change. Technology will keep producing new ways of making goods and services and new methods of running a business, and an improvement can make existing products obsolete.
2. Intense global competition. As the boundaries between nations and cultures blur and communication technology makes the world a global village, organisations become global and must be managed with a global perspective. Competition, already intense and global, will keep pressing on profit margins. No country can live in isolation, and firms that trade abroad face tariff barriers at home and in other countries.
3. A faster pace of change and greater uncertainty. What matters is not only change but its pace: turbulent markets are already the image of today's environment, and enterprises of every size face it.
4. More demanding customers and divided markets. Customers ask for more, brand loyalty is weaker and markets are splitting into segments; changing fashions and tastes shift demand from old products to new ones.
5. Social change. The social environment is shifting in its expectations of the workforce, the presence of women at work, the concern for quality of life, life expectancy and population movements.

Challenges and tasks for managers

• Understanding the environment. To cope with significant changes, managers must study and examine the environment and work out suitable courses of action.
• Planning for opportunities and threats. Since the environment is a source of both, its analysis is the basis for plans and policies; the entry of new competitors, for instance, makes a firm rethink how to deal with them.
• Responding to competition. Firms meet the threat by improving quality, cutting production costs and advertising harder.
• Change, market orientation and people. The changes in the Indian economy have already brought a necessity for change, a turn towards market orientation and a need to develop human resources; these tasks grow as the trends above gather pace.
• Managing across borders and cultures. Global organisations bring international and intercultural relationships that managers must handle.
• Managing size and complexity. Large, capital-intensive enterprises with wide markets demand a high degree of managerial skill, because risks are large and an error of judgment can be very costly.

Conclusion

The environment of the future will be more technological, more global, faster-moving and harder to predict, with more demanding customers. Managers will have to watch it continuously, plan for both opportunities and threats, and build organisations and people that can change quickly.