Understanding today’s commercial environment

The commercial environment of the 21st century is a complex, rapidly evolving landscape. While business environments have always been shaped by wider economic, social, and cultural factors, modern commercial conditions are influenced by a number of other important elements, too. These include:

• Significant advancements in technology.
• Seismic shifts in consumer behaviour, especially online.
• Globalisation, particularly its impact on business expansion, new markets, and transport opportunities.
• The impact of the COVID-19 pandemic, specifically with regard to the global supply chain as well as consumer preferences and demand.
• Changes to government legislation and regulations, especially in areas such as sustainability and climate change, and as a result of the United Kingdom’s withdrawal from the European Union.

In this environment, businesses have needed to adapt in order to remain competitive. They need to be agile, innovative, and customer-focused – and they need to keep their finger on the pulse of the latest developments and trends in their commercial environments.

The latest developments and major factors at play in today’s business environment

The rise of e-commerce and new technology

The emergence and popularity of e-commerce sites and online marketplaces such as Amazon are among some of the most significant changes in the modern commercial environment. With the increasing popularity of online shopping, businesses typically need to have an online presence in order to remain competitive, and even companies that once relied on their physical shops are now investing heavily in their channels and shops in online spaces. In fact, some businesses operate exclusively online, with no physical storefronts at all. 

In addition to the efficiency and immediacy of online shopping, advanced technology and innovation has enhanced the shopping experience in other ways. For example, online shopping today offers:

• Enhanced product details that provide more in-depth information to consumers. For example, online shops can showcase real customer reviews on a product-by-product basis, with ratings, and authentic images.
• A faster-than-ever checkout experience. Gone are the days of lengthy backorders from physical shops, and negotiable instruments such as cheques. When shopping online, consumers can save their favourite items, add them to their online shopping trolley, and checkout quickly with saved payment information, all with just a few clicks.

Businesses operating online, however, also need to be aware of requirements or challenges that are specific to digital spaces. For example, they need to take online accessibility into account, ensure they have a return policy that’s appropriate for online purchases, and a privacy notice that outlines the ways that the business gathers, uses, shares, and manages their customers’ data.

Big data

Another significant shift in the commercial environment is the increasing importance of data, and big data in particular. Companies can collect vast amounts of data about customer:

• Behaviours.
• Preferences.
• Motivations.
• Shopping habits.
• Demographics.

Using this information can help businesses with their decision-making, and also helps to ensure they can meet their customers’ needs – and stay ahead of their competition.

The role of social media

Social media has helped reshape the business landscape, particularly for business-to-consumer (B2C) enterprises. This is because social media platforms like Facebook, Twitter, Instagram, Snapchat, and TikTok connect businesses to massive audiences, and help them engage with their customers in new, meaningful ways. Niche markets also have their own targeted social media platforms. For example, Goodreads is a good place for publishers, authors, and readers to connect and build a relationship.

Social media also provides an efficient customer service channel, which means businesses don’t have to rely solely on call centres.

The impact of globalisation

The commercial environment, like many other environments, has become more globalised than ever before. With the rise of the internet and advances in transportation, businesses can now easily sell their products and services to customers all over the world. This has created new opportunities for businesses to expand their reach and enter new markets, but it has also increased competition and created new challenges for businesses operating in multiple regions, both in terms of regulation as well as the legal environment in which businesses operate. Commercial and business law courses, for example, frequently cover international themes now, as does training in topics such as intellectual property.

An increased focus on environmental sustainability

With climate change necessitating urgent action around the world, the commercial environment has become increasingly focused on sustainability as well as social responsibility and business ethics. Consumers are aware of the impact their purchases have on the environment and society, and they are demanding that businesses take steps to address these concerns. Companies that can demonstrate their commitment to sustainability and social responsibility are more likely to attract and retain customers, and remain relevant – and profitable – in the long term.

For example, a 2021 research brief from IBM, Sustainability at a turning point, reported that more than half of consumers globally say they’re willing to pay a premium for brands that are environmentally responsible, and keep a keen eye out for greenwashing campaigns.

“Consumers know that companies can drive big changes, if they’re only willing to make

the investment. That means organisations need to practice radical transparency and

candor to earn the trust of consumers, investors, and employees,” the IBM report states. “The world is watching. And people have become less forgiving of companies that

choose to sit out. They’re proactively looking for brands and businesses that match

their values, using ethical shopping platforms, carbon trackers, and other technologies

to inform their decisions. They’re talking to each other and setting a new bar. Today, sustainability is a competitive advantage. But tomorrow it will be business as usual. Don’t get left behind.”

Further resources

For further reading on the topic of understanding today’s commercial environment, there are a number of popular, relatively new books on the topic. These include:

• The World is Flat. Written by Thomas Friedman, this book provides an analysis of globalisation and its impact on the world economy, as well as the opportunities and challenges it presents for businesses.
• The New Rules of Marketing and PR. Written by David Meerman Scott, this book offers practical advice on how to use social media and other digital marketing tools to reach customers in today’s digital age.
• Business Law: Principles for Today’s Commercial Environment (5th edition). Written by David P. Twomey, Marianne M. Jennings, and Stephanie M. Greene, and published by South-Western Cengage Learning, this book offers a comprehensive look at important business law topics through the lens of the authors’ own experiences, and is used to help people preparing for their certified public accountant examination – also known as the CPA exam – in the United States. 

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