By Nathaniel Udoh
Background
Xerox introduced the first plain-paper office copier more than 50 years ago. It dominated the industry it had created. The name Xerox became almost generic for copying. Through the years, Xerox fought off round after round of rivals to stay atop the fiercely competitive copier industry. In 1998, Xerox’s profits were growing at 20 percent a year and its stock price was soaring.
Then, things went terribly wrong for Xerox. The legendary company’s stock and fortunes took a stomach-churning dive. In only 18 months, Xerox lost some 38 billion Dollars in the market value. By mid-2001, its stock price had plunged from almost 70 Dollars in 1999 to 5 Dollars.
The once-dominant market leader found itself on the brink of bankruptcy. What happened? Xerox’s failure to adapt to its rapidly changing marketing environment. The world was quickly going digital but Xerox hadn’t kept up.” Adapted from – Philip Kotler and Gary Armstrong- Analyzing the Marketing Environment.
The above story of Xerox is a better explanation for everyone in business to be ready to adapt to the rapidly changing business environment now. If not, be ready to face the consequence. So having a proper understanding of the business environment now is very important.
Here, we look the business environment from the ‘PESTLE’ and customer focused perspectives. It is broken down into six elements. These are: Political, Economic, Social Technological, Environment and Legal & customers.
Political Environment: The political environment has a very strong influence on our large, small and medium scale businesses. It is the stability in the political environment that determines the level of economic growth in any society. Business and economic decisions are largely determined and equally affected by the developments in the political environment.
When our political environment is stable, there is likely going to be growth in various economic sectors of the economy such as manufacturing, transportation, construction, marketing and supply chain, real estate, education, training and research, agriculture, hospitality, banking. The list is endless. Besides, an area that is proned to high level of political instability will have negative impacts on these sectors.
Take for instance the case of Nigeria. Because we do not yet have a stable political environment in some sections of the country, businesses are not really doing well as they should be. The solution to this problem lies in the government finding a means having a stable political environment in those areas because it has a direct consequence on both the economy and businesses.
Economic Environment: The economic environment draws the attention of business owners to the micro and macro-economic trends relating to rate of inflation in the country, consumer purchasing power of the people and spending patterns, unemployment, and income level of people, government policies on the economy. All these will positively or negatively affect business performances. Any company that wants to go into importation and manufacturing businesses for instance, the business owners need to have a clear understanding of how these variables will affect the business directly or indirectly. Business owners must pay close attention to major trends in the country’s economy and across the world.
Social Trends: Here, we look at the social trends across the world and their effects on businesses in the country. Any business that wants to succeed now has to follow these social trends. For instance, the need for businesses to interact with their target audience particularly the youth segment of the market has positively influenced the use of social media platforms by brand owners for marketing their products and services. Any business that wants to succeed now must follow these social trends. These social media trends offer the following benefits to businesses:
- Social media marketing, online marketing, online advertising and online PR businesses
- They help to spread business message from brand owners to consumers in short time. This is why business owners these days need the services of twitter influencers, bloggers, bulk SMS to spread business information fast
- Social media networking sites and blogs allow followers to tweet and post comments made about products or brands promoted
- They increase business visibility and awareness on a global scale across various segments of the market
Technology: This is perhaps the most dramatic force now shaping the world and businesses. Here, we look at how new technology will affect business performance. For instance, the new innovations in color production have positively impacted on product packaging and ad designs. Any company that does not embrace this new technology is out of business. Equally, the new media opportunities created in the internet through technological innovations have opened up many opportunities for doing businesses online. This helps to give global exposures to businesses.
At the same time, it has pushed in so many marketing communications agencies who did not key into this innovation out of businesses. Today, most advertising creative designs are done using modern technology unlike what it used to be some years back. And any creative agency without this technology will be out of business now. This also applies to other areas of businesses. New technological advancements create new market and opportunities. Business owners should watch opportunities created by new technologies now. Companies that do not follow new technologies will soon find their products outdated and they will miss market opportunities. Technology as a business environment is changing rapidly.
Legal Environment: Business activities and decisions are strongly affected and influenced by developments in the legal environment. Here, we look at how laws made by governments at various levels and other regulatory bodies can positively or negatively affect the doing of business in a particular area. In Lagos for instance, business owners must have to comply with so many laws made by the federal, state, local governments, as the relate to taxes and the Lagos State Signage and Advertising Agency (LASA) in order to operate in the state. These do not really go down well with business owners. In a situation like this, small and medium scale businesses are really challenged- and many of these laws are stii coming up.
Environment: In today’s business world, environmental issues are major concerns for both the government and other stakeholders – local and international. Our environment needs protection by businesses operating in the environment. This is a commitment and a responsibility for business owners to show concern to the environment. Every business owner must now take into consideration our immediate environment when taking business decisions. The reason is that in today’s business world, corporate social responsibility in terms of the environment can be a strong platform for business marketing and winning consumers’ patronage and loyalty.According to Peterson, organizational involvement in social causes such as the environment generally enhances an organization’s reputation.
On their part, Wright and Cropanzano argued that when the corporate social responsibility (CSR) of a firm is engaged in the direction of environment, it will cause the customer to feel that their money is put into meaningful work, and in the end, customers will be more passionately attached to the company with which they transact business. In this direction also, Turker maintains that CSR projects of companies aimed at customers and their community can bring about stronger pride for the company and recognition by members of the public indicating it is a socially responsible company to environmental cause. According to Idy Enang, any brand that comes into any community and fails to be socially responsible can never stand the test of time.
Customer Focused Perspective: The Xerox transformation started with a new focus on the customer. Before developing new products, Xerox researchers held seemly endless customer focus groups. Xerox’s Chief Technology Officer then, Sophie Vandebroek, called this “dreaming with the customer.” The goal she argued was “involving experts who know the technology with customers who know the pain points…Ultimately- innovation is about delighting the customers.” Xerox even employed anthropologists, ethnographers, sociologists, and psychologists-what it calls “work-practice specialist”- to spend time with customers, understand their problems, and help develop customer- focused solutions.
The new Xerox believes that understanding customers is just as important as understanding technology. As a result, the Xerox now offers a broad portfolio of customer focused products, software, and services that help its customers manage documents and information. Xerox is highly innovative etc. According to Philip Kotler and Gary Armstrong, “Xerox is once again growing and profitable. But the message remains clear. Even the most dominant companies can be vulnerable to the often turbulent and changing business environment. Companies that understand and adapt well to their environment can thrive. Those that don’t risk their survival.”
Similarly, study conducted by Lawrence Crosby and Sheree Johnson has shown that companies that directly engage their customers in the new product innovation process had twice the return on assets and triple the growth in operating income of firms that don’t. Again, for products ranging from consumer packaging goods to power tools, the study of Lawrence Crosby & Sheree Johnson revealed that today’s innovative companies are getting out of the research lab and mingling with customers in the search for new customer value. This is the strategy to adopt in 2024.
