Business Environment

• The business environment incorporates all elements that dynamically affect a company's commercial ambition---changing things like the way it designs its products, where and how it sells them, the logistical mechanisms it sets and how it copes with competitive tedium. Although there is a number of factors permeating the business landscape, market strategists often cite five forces as the most prominent and typically group them under the term "Porter's five forces." These include the bargaining power of suppliers, the commercial influence of customers, the threat of market entrants, the threat of substitute products and the competitive dynamics within an industry. Other factors affecting the business arena include regulations and technological trends.
  
  

Cost and Profit Analysis

• Cost and profit analysis enables a company to invent specific techniques aimed at monitoring administrative expenses, determining manufacturing processes that cost money, figuring out innovative ways to save cash and helping top leadership rein in waste. This study also has a profit orientation, allowing department heads to tackle perennial problems---especially with market share expansion, revenue growth, product quality improvement and customer service enhancement. In a sense, an expense-and-revenue evaluation helps a business make more money and figure out where it's competitively weak---a useful exercise, especially if the company is on the prowl for potential game-changing growth opportunities.
  
  

Symbiosis

• Changes in the business environment may affect a company's income and expenses and, ultimately, its cost-and-profit profile. Events such as adverse business legislation and a bad economy can negatively impact an organization's bottom line. Accordingly, company principals could use discussions about expense management and revenue growth to offer a critique of cost-cutting tactics in money-losing segments. They might complain, for example, about a lack of visible progress in the way segment leaders analyze costs, prevent excessive spending and chart a sound path for long-term commercial success.
  
  

Tools and Technology

• To effectively analyze operating costs and profits, a company uses certain tools and equipment, most of which enable management to study how the external environment affects operating activities. The tools of the trade include customer relationship management software, enterprise resource planning programs, financial analysis software and mainframe computers. Other tools include process re-engineering software and disaster recovery applications.