Meaning and Nature of the Physical environment

The business environment refers to the set of conditions or forces that affect the functioning of the business. They may be outside or inside the organization.

Understanding the nature of the business environment and their changes is a vital part of business analysis and in designing competitive strategies. That’s to make sure the company has the right success strategy, not only now but also in the future.

The physical environment for a business is the material objects that are used for a business. For instance, a business may be located in an office building with tables and chairs, or it may consist of a factory that makes products. All of the things that are in the area are part of the business physical environment.

The natural environment or natural world encompasses all living and non-living things occurring naturally, meaning in this case not artificial. The term is most often applied to the Earth or some parts of Earth. This environment encompasses the interaction of all living species, climate, weather and natural resources that affect human survival and economic activity. The concept of the natural environment can be distinguished as components:

• Complete ecological units that function as natural systems without massive civilized human intervention, including all vegetation, microorganisms, soil, rocks, atmosphere, and natural phenomena that occur within their boundaries and their nature.
• Universal natural resources and physical phenomena that lack clear-cut boundaries, such as air, water, and climate, as well as energy, radiation, electric charge, and magnetism, not originating from civilized human actions.

When planning international marketing activities, the possible impact of the physical environment should take into account. For example:

• Population distribution will be affected by topography (i.e. a country’s rivers, mountains, deserts, etc.) and climate people tend to settle where the climate is temperate, and there is an adequate supply of water.
• Certain climatic conditions may dictate adaptations to the product some glues and oils, for example, will not function in very cold climates.
• Climate should also influence the arrangements made in respect of packaging (in the marketing context) and protective packing for the purposes of safeguarding the product while it is in transit or in storage. Products which are particularly vulnerable to climatic conditions are those that are adversely affected by extremes in temperature or excessive humidity changes (fruits being transported to hot climates or across the equator, for example).
• Abnormal weather conditions (e.g. typhoon season in Asia) can disrupt the transportation of export products while unforeseen changes in the weather can threaten companies which produce seasonal goods.
• Topography will influence the routing of goods and the choice of transport mode, which in turn will affect cost and thus impact on the price offered to the buyer.

Physical Environment

The way you design your business and display your merchandise can elicit different physical and emotional responses from consumers. For example, a small boutique tastefully designed with eye-catching displays and the smell of complimentary, fresh-brewed tea in the background can create a warm, comfortable physical environment. A crowded, noisy retail center with long lines, weary customers and jam-packed aisles can make consumers feel nervous, anxious and eager to leave.

Comfort Levels

Physical comfort determines emotional responses from consumers. A fast food restaurant with uncomfortable chairs and paper napkins, for example, may make a customer want to get in and get out as quickly as possible. An elegant restaurant with plush seating, candlelight and soft music is more likely to prompt customers to relax and enjoy themselves. The physical environment, in this sense, is directly and positively linked to the customer experience.

Perception of Value

The way a business is maintained can influence how the customer perceives the value of the products and services it offers. For example, a clothing store that features crowded racks of similar styles of clothing and plastic hangars promotes the idea of a low-quality bargain items. The same clothing displayed on back-lit mannequins wearing accessories can change the perception and add value — even for an identical product. Clean stores and businesses show management takes pride in the company, while a poorly maintained physical environment may cause customers to suspect the company’s commitment to quality.

Sensory Elements

 The five senses play a role in how the physical environment of a business is perceived. For example, a spa that smells of lavender oils, features soft, relaxing music and showcases a fountain in the center of the reception area speaks to pampering and elegance. A spa with paper robes, trained concrete floors and a medicinal aroma does not project the same image in the mind of a consumer.