2010 m. December 3 d.

External Environmental Factors Impacting Lithuanian Businesses

Introduction
First of all, it is very important to mention that every business has its own external factors, that indicate whether the business is going to succeed or not. Then, it is up to the business if they try to study carefully or not these external factors. By doing so, they will try to understand what the social, legal, political, technological factors are, and how they impact the market and their products. These factors have significant impacts into the challenges of the businesses in any country in the world. In fact, forces in the external environment are so dynamic and interactive that the impact of one factor cannot be disassociated from the impact of other elements. My paper will analyze how three chosen factors will stimulate the businesses in Lithuania, based on empirical researches done and then in the end, it will give recommendation upon those factors. The three elements that I have chosen to analyze are: social, competitive and technological.
Factors
In order to find out how these factors influence the business life in Lithuania, then a good source for that is: Enterprise Surveys. The enterprise surveys focus on the many factors that shape the business environment. These factors can be both external and internal ones. As it is mentioned already above in the introduction these factors can be accommodating or constraining for firms and play a key role, in deciding whether the country is going to prosper or not. Thus, Enterprise Surveys give us some information on innovation and workforce detailing it with some statistical data. The innovation in here describes some of the technological dimensions used in the country. In order to look at the technology as an external factor for businesses then the best is to explain the graphs given at this source.
Enterprise Surveys uses two sets of indicators showing how technology helps Lithuanian firms. The first set of indicators measures how much firms invest for getting international certificates upon the technology they use, and the accounting practices. Obtaining the international certificate in here means that they use the high technology and the graphs show that almost 20 % of the firms in Lithuania have a high technology usage in their environments. Another factor within the technology is also internet. The Enterprise Survey shows that at least 63 % of the firms use their own websites, and about 92 % of firms use e-mails to communicate with their clients/suppliers. This data is only for 2009, but I assume that 2010 date would show a higher rate of the firms using the internet and communicating through different sources of connection such as via: Yahoo, MSN, Skype etc.
Thus technological development gives better premises to the businesses in Lithuania as everything is much easier now to product, and better technology means also higher rate of competitiveness. Moreover, InfoBalt is an association in Lithuania that gives information on the technological development in the country. According to InfoBalt (2009), Lithuanian ICT (Change Control Gear) industry is the biggest in the Baltic States. In 2008 where 1777 companies in ICT sector and the number of the companies on the ICT sector increased by 9 % compare to 2007 and this means that technology is an important factor right now for firms.
According to European Bank for Reconstruction and Development (EBRD), Lithuanian Business Environment is one of the best in the region, and competition in business is high which creates favorable conditions for trade, and foreign direct investment in Lithuania which are protected by the national legislation in the country. But the only problem that companies are facing currently is that competition is followed by a high corruption rate, meaning that if you have money, than you can bring even the officials sometimes and thus competition won’t be as fierce as companies would want to. Therefore, corruption is a struggle for firms since is part of the unofficial economy, but still has strong impact on the GDP of the country, but this is not what the competition should be like because it means that small companies cannot compete into the market economy because they don’t know the “right” people or have “power” with other companies. Moreover these companies would go bankruptcy or more likely at least out of the business. Thus conditions are not so favorable for that, and strengthening administrative capacity and intensifying measures to fight corruption should thus remain government priorities. This would help the country for better business environments as they compete in the market. Another problem that stands though is also that Lithuanian organizations should cope with the problems of globalization markets. This simply means that better technology favorites the environment, higher competition, but meanwhile the social preferences as an external factor might change as well.
As I mentioned above both technology and competition in the business environment change the need of the social context. Now more educated people are needed into the market, since technology requires high skilled workers. Technological development needs you to understand how the machine can work, and if you don’t know how to do that then you no longer will be employed in that firm, thus the unemployment rate will be higher. The current unemployment rate in Lithuania is 18 %, which is an indication of people not knowing also how to use the technology. What firms are currently doing is that they are offering training to people, different workshops that help them to get to know the working environment and to get acquainted with the technology used there. We are aware of number of universities in Lithuania offering higher education and that number of students wanting to get in every year is hundred thousand who are willing to learn and get a diploma that will be for them beneficial in future. For the moment I study in LCC and I had a conversation with the Director of Career Development Center, Mrs. Pavlovic and she said that about 40 % of graduate students from LCC are part of the working forces in Lithuania, while 50 % of them going to grad school, with just a small percentage of them looking for job, or even trying to configure out what they want to do in their future. Thus social factor is very important in the business development because more you know about things, more chances of employment you have and better off you will be. Education as part of the social factor is given also on the technological development where firms might pay for the person to attend different seminars and to learn the new technology the company is using.
In conclusion, I want to say that analyzing the external factors of the business environment is very important because you can know what their impact on the economy are, and if country is going to prosper or not. Lithuania offers good conditions for businesses, but still some changes need to be done. These changes then will help the economy of the country to prosper and people to have work, and better conditions. Meanwhile it is also important to relate these factors with each other because a change in one can bring changes in the other factor and vice versa.
Recommendations
I assume that my recommendations would be for more empirical searches. It was difficult to find some data of 2010, therefore more studies needed to be done, to better understand what is happening nowadays. More relatedness to these factors should be achieved meaning to see how they impact the economy by relating to each other: technology-competition-social factors. Also as EBRD (2009) would mention is important for the government to put their forces into fighting corruption and in this way also small companies can survive in the market. But I assume that the best recommendation would be to asses more surveys into business environments and finding out how they related these factors to their firms, and then making the necessary evaluations.

REFERENCES * Enterprise Surveys (2009) Country Profile Lithuania: “Business Environment and its factors” Retrieved from the web on December 1st, 2010 from
< http://www.enterprisesurveys.org/documents/EnterpriseSurveys/Reports/Lithuania-2009.pdf>; * European Bank for Reconstruction and Development, EBRD (2009): Country Report, Lithuania
Retrieved from the web on December 1st, 2010 from
< http://www.ebrd.com/downloads/research/economics/lithuania.pdf>; * InfoBalt Lithuania: Digital Lithuania (2009) “ICT-Change Control Gear” Information retrieved from web on December 1st, 2010 from <http://www.infobalt.lt/sl/add/sl_2009_96.pdf>; * Statistics Institute in the Republic of Lithuania (2010) Statistical Data received from < http://www.stat.gov.lt/en/pages/view/?id=1358>.