What is commercial awareness?

There is no universal definition of what commercial awareness means and what it entails. It is vague and ambiguous.

What is commercial awareness?

Firstly, commercial awareness is about being informed about what is happening in the business world and being able to analyse how a factor may impact a business or influence a business decision.

Commercial awareness also encompasses the following-

Business - You must have a sound understanding of the business. This includes understanding their business model and how the business generates revenue (and what affects their profitability).

Industry - Knowing about the industry and any commercial factors that affect the industry. For example, have there been any mergers & acquisitions in the industry.

Competitors - It is important to know their competitors (what differentiates a business from their competitors, what is their unique selling point and how does the culture differ in comparison to other firms).

Clients - Applying the above to their clients. For example, understanding their client's business model, their industry, their competitors and their clients (or customers).

Individuals - Being aware of any commercial factor that impacts us as individuals. For example, if interest rates increase, it is less likely that businesses will borrow and invest. This is because it is more expensive to invest (as the cost of borrowing money has increased.) On the other hand, individuals (me and you) are less likely to borrow and spend money (according to economic theory, individuals like ourselves are likely to save rather than spend when interest rates are high).

An important aspect of being commercially aware is being informed of all the potential factors that may impact a business and being aware of their stakeholders. We will be exploring these factors in a separate section.

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