Business environment and social responsibility

Hello my dear students! Today, we are going to learn about something very important for any business in Nigeria: the Business Environment and Social Responsibility. Don't worry, it's very simple to understand!

Imagine your favourite Mama Put or a big bank like Access Bank. They don't operate alone, do they? Many things around them affect how they do business. This is what we call the Business Environment.

Business Environment: This refers to the sum total of all individuals, institutions and other forces that are outside the control of a business enterprise but that may affect its performance.

In simple words, it means all the things outside a business that can make it succeed or fail. These are things the business cannot control directly, like the government, customers, or even the weather.

Think of a Keke Napep driver. The price of fuel (PMS) is part of his business environment. He can't control it, but it greatly affects his earnings.

We can divide the business environment into two main types: the Internal Environment and the External Environment.

The Internal Environment refers to things *inside* the business that it can control. Examples include the workers, the machines, the money available, and the business's own rules.

The External Environment refers to things *outside* the business that it *cannot* control. This is the main focus of our lesson today.

The external environment can be further split into the Micro Environment and the Macro Environment.

The Micro Environment includes things directly related to the business's operations, but still outside its direct control. These are usually close to the business.

Examples of micro environment factors are Customers (people buying their goods), Suppliers (people selling them raw materials), Competitors (other businesses selling similar things), and Intermediaries (like distributors or retailers).

The Macro Environment includes larger, broader forces that affect not just one business, but many businesses and society as a whole. These are big picture things.

A good way to remember factors in the macro environment is using the acronym PESTEL or STEPLE.

P for Political Factors: This includes government policies, laws, and how stable the government is. For example, if the government bans importation of rice, it affects rice sellers.

E for Economic Factors: This involves things like inflation (when prices go up), interest rates, exchange rates (how Naira compares to Dollar), and people's income. If people have less money, they buy less.

S for Social/Socio-cultural Factors: This means the beliefs, values, customs, and lifestyles of the people. For example, if Nigerians start preferring locally made goods, it helps local businesses.

T for Technological Factors: This includes new inventions, how fast technology is changing, and access to new tools. Think of how mobile banking has changed how Nigerians do business.

E for Environmental/Ecological Factors: This refers to natural resources, climate change, and environmental protection laws. For example, laws against pollution can affect factories.

L for Legal Factors: These are the specific laws and regulations businesses must follow, like consumer protection laws, labour laws, or tax laws. (Often grouped under Political but good to know separately).

Now let's talk about Social Responsibility. This is about how businesses should act towards society.

Social Responsibility: This is the obligation of businesses to contribute to the welfare of society.

In simple terms, it means a business should not only focus on making money but also think about the good of the people and the environment. They should be good neighbours and good citizens.

Why is social responsibility important for businesses in Nigeria?

Good Reputation: People respect and trust businesses that do good things. This can attract more customers.

Employee Motivation: Workers feel proud to work for a responsible company, leading to better work.

Attracts Investors: Investors prefer to put their money in businesses that are seen as ethical and sustainable.

Government Support: Socially responsible businesses might get support or favourable treatment from the government.

Community Development: Businesses can help build schools, provide boreholes, or create jobs, making the community better.

Examples of social responsibility in Nigeria: A bank like Zenith Bank building a new classroom block for a public school, or Dangote Cement planting trees to fight deforestation, or even a local barber sponsoring a street clean-up.

Businesses need to understand their environment to plan well and achieve their goals. They also need to be socially responsible to gain trust and contribute positively to Nigeria.

Keep studying, my dear students! You are doing great!

Remember these key points for your exams. They are very important!