The Market Environment drives the company’s action in a specific geographical, cultural, economic, or even political framework. Therefore, it is imperative to know the market environment to take into account each of its particularities.
The Political Dimension Market Environment
In the market environment, it is necessary to be interested:
- Public officials make decisions in matters of taxation and social protection. These decisions can have a direct impact on business finances.
- The country’s policy which the company established in terms of international trade (protectionism, free trade, etc.)
- The stability of the regime in place must also be considered. If its power could weaken (military putsch, for example), this would very quickly question the political environment.
- The consular condition is a vital factor. Tensions could lead to an embargo, fatal to import-export.
This information can find in several ways. On the Internet or in the newspapers, first of all. A chartered accountant – specializing, if necessary, in international development – can also be of great help in matters of taxation and regulations. Finally, the CCIs have experts in the field capable of advising on the state of the various markets targeted.
The Economic Dimension Market Environment
The economic realities of the country or territory are part of the market environment and directly impact the potential turnover of the company.
- What are the growth and unemployment rates in the catchment area?
- At what level is the average income, and how is it changing? Provides data on buying power.
- How high are interest rates? The inflation rate applies to the prices.
- So many basics that can help determine the strategy of the company.
Finding this information is quite simple: many websites publish this type of statistics (INSEE, World Bank, OECD, etc.). Structures such as incubators also provide entrepreneurs with this kind of data.
The Socio-Cultural Dimension Market Environment
The market environment requires a sociological study of consumers, taking into account several factors:
- Demographic characteristics. Age, CSP… And the evolution to come (ageing population or high fertility rate) for a long-term vision;
- Buying behaviors. Frequency of purchase and consumption (consumption habits), media influence (prescribing element), culture (perception of the usefulness and interest of the product), to detect the market’s appetite for the product;
- The level of education. It impacts purchasing behavior but also the ability of a market to be seduced by a new product;
- Possible resistance. Boycott, militancy, consumer associations: certain social factors can represent obstacles to setting up a new market.
Therefore, it is mainly a question of knowing the demand by evaluating its needs and expectations. Specialized firms can conduct such a study following meetings with potential brand consumers. It is undoubtedly an investment, but it will prove beneficial for continuing the entrepreneurial adventure.
The Technological Dimension Market Environment
Technological innovations can strongly influence the market environment; it is, therefore, necessary to be informed of developments, especially among the competition. These are also development opportunities for the company—several tools for this: the general and specialized press, Google alerts, and the Mention application.
The Ecological Dimension Market Environment
Knowing the market environment increasingly means not neglecting the company’s ecological footprint, so looking closely at the origin of the products, the composition of the materials used, the management of resources, etc.
The environment is also a resource that can become scarce and whose price can fluctuate, which impacts the cost of production. It is also the climate and, therefore, the weather, or even the risk of natural disasters, which have consequences of being assessed. Finally, the risk of pollution and regulations for protecting the environment may require the implementation of costly processes.
The Legal Dimension Market Environment
The legislation in force in a sector of activity is unavoidable in the market environment.
- The right to work
- Competition law
- Consumer rights
- Health and safety regulations
The Implies carrying out permanent legal and regulatory monitoring. Professional federations generally offer this type of service, as does…, chefdentreprise.com