Reporting on the business environment provides context for the company’s business model and strategic objectives. It also provides a key link between strategy, risk, and performance. A careful analysis of the business environment can give investors and stakeholders useful context to assess the relevance of a company’s strategy.
• Elaborate on the business model to provide clarity on key changes and trends in the markets where the company operates.
• Include product prices and input prices, drivers of demand and competitors’ supply, and technology
• Describe macroeconomic, legal, regulatory, environmental, and social factors that materially affect business
• Identify industry- and context-specific environmental and social issues (such as climate change, product footprint
• Address legitimate and reasonable needs and interests of stakeholders
• Describe company resources, structures, and processes that can affect the organization’s ability to support strategy.
• Include internal forces driving costs, productivity, and market access. Recognize the potential effects
The African telecom provider describes its external environment and key trends in the telecom market in Africa. The report addresses the regulatory environment in the markets where the company operates. It links key operating environment issues with the company strategy and risk mitigation efforts.
This example presents the external environment for Standard Chartered, a UK-based Bank with operations in many African markets. Their strategy directly responds to specific market trends, including the growing wealth of the middle class and customers’ use of technology.
This example presents the operating environment for KCB, a Kenyan Bank, focusing on the macroeconomic condition in Burundi.
