10 Change Factors That Can Affect a Business (With Benefits)
Updated March 29, 2023
Social, cultural and scientific developments can affect the profitability and operations of a business. Change factors are forces or events that might influence an organization's decision-making. Knowing about potential change factors can help you predict which factors might affect your business and help you prepare to respond to them.
In this article, we explain what change factors are, list 10 change factors that can affect a business and explain some benefits of change factors.
What is a change factor?
A change factor is an internal or external event or idea that might affect a business in a variety of ways. Businesses might respond to a change factor by updating a work process, building a new product, entering a new market or shifting their internal culture. These factors can influence business variables like:
10 change factors that can affect a business
Here are 10 change factors that might influence your business:
1. The environment
Many businesses strive for sustainable business practices in response to the changing climate. Shifts in temperature, water levels and natural resources can lead organizations to change their production processes, materials, development locations and products. The changing environment can also create a demand for solutions to ecological problems. For example, businesses in the auto industry might respond to increased demand for electric and hybrid vehicles by producing more of them. Natural disasters can also affect prices, demand and consumer needs in tourism, healthcare and real estate.
2. Economic shifts
Many businesses experience the effects of major economic shifts. Economic markets can transform rapidly, and events like recessions, depressions and periods of prosperity can influence business variables like consumer behavior, investment value, prices and employment rates. Organizations might freeze hiring, select more cost-effective materials, limit production quantities and pursue new credit lines to withstand economic downturns.
3. Social norms
The public's social and political interests change over time, and these shifts in culture can affect business. Cultural attitudes influence consumer behavior, and as societal norms shift, certain products and businesses may rise or fall in popularity. Social changes might be internal or external change factors for your business. For example, shifting attitudes about professional presentation could lead an accounting firm to revise their employee dress code to allow jeans. Externally, a food supply organization might add more vegan items to its inventory in response to changing cultural attitudes about nutrition.
4. Technological developments
Technology is essential to most industries, and it can make a significant impact on business practices. Cell phone and social media use has shifted many businesses' marketing strategies, and some industries even operate their products entirely on the internet, like streaming entertainment services or customer service portals. Developing technology can also lead to internal changes like new equipment, automated processes and new consumer products.
5. Talent pool changes
Strong employees are essential to most operations, and a business's ability to attract and keep talent can be vital to its success. The job market changes based on both trends in hiring and candidate behavior. For example, an increase in remote opportunities might create challenges for businesses seeking new hires to work in person. Some organizations might use resources to attract and keep employees, like improving development opportunities and offering more on-the-job training. Candidates with in-demand skills might leverage their qualifications to attract more competitive offers from companies.
Related: Guide to Talent Acquisition
6. Laws and regulations
Many industries are subject to regulations that can dictate their operations. Local and federal guidelines are subject to change, and when the government approves new laws or dismisses previous laws, these new rules might drive businesses to make changes. Regulations might be important in industries like finance, health care and law because, in these fields, guidelines heavily shape organizations' responsibilities and actions.
7. Market trends
Consumer trends can shape business, especially in industries that sell products. Certain products come in and out of fashion in industries like clothing, music, entertainment, technology, toys, real estate and auto. Popular trends can change an organization's profitability, hiring plans and marketing strategy. For example, an increased interest in electronic music might lead music studios to hire more sound engineers who can use new technology to mix electronic and dance music.
When businesses experience growth, it can cause internal changes. Growth typically results in increased revenue, more demand from customers and a larger workforce to manage the increased workload. Leaders in upper management may choose to refine the organization's goals, plans and values after a period of rapid growth to ensure new employees and clients understand the business objectives. Organized operations, consistent messaging and a strong workplace culture may all help a growing business succeed.
10. Public health
Public health events like epidemics, pandemics, local health initiatives and new medical information can be change factors for businesses. For example, the Covid-19 pandemic led many businesses to operate remotely, connect with customers digitally, make personnel changes and enter new markets. These events might also present new business opportunities, like medical technology companies pioneering telehealth solutions to meet increased customer demand.
Benefits of change factors
Here are some benefits of change factors:
They can reveal growth opportunities
External changes like world events, popular social and political ideas or public health concerns can reveal new consumer needs. Businesses might capitalize on these changes by developing new technologies to offer solutions. Customer preferences change, and analyzing change factors might equip you with more detailed insights into what the public wants and needs.
They can encourage company creativity
Unexpected challenges can drive businesses to think creatively. Changes to your market and industry might require you to replace old methods with newer, more innovative solutions. You might also respond to change factors by implementing unconventional work methods or promoting the practice of testing new ideas continuously to find the best practices.
Read more: The Importance of Creativity in Business
They can strengthen employee satisfaction
These change factors sometimes create opportunities to develop a happier, more engaged and more productive workforce. Responding to both internal and external change factors with structural change and actionable values might improve your organization's culture. For example, in response to sociopolitical demand for more gender equality in the workplace, a business might choose to hire more women in leadership positions and offer extended parental leave. This could help women in the organization feel more comfortable expressing their opinions at work and more motivated to accept additional responsibilities in pursuit of career growth.
Empower businesses to make a positive impact
When complex societal problems arise, some businesses might help the greater good. If you're interested in bettering your community, it might be helpful to analyze the change factors that touch your business and evaluate which of your resources and capabilities can offer an effective solution. For example, a grocery business might evaluate the environmental impact of their businesses practices and replace their packaging with reusable containers.
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