The organization and the environment in which it operates in are not closed systems because they influence each other. The organization thus cannot be successful if it is not in step with its environment. The simple fact that the organization interacts with the environment means that the organization is is acting in an open system and will be both affected by the environment and also impact on the environment. This means that the organization draws its inputs such as human, financial and informational resources but to mention a few from the environment and distributes its products and services back to environment.
This therefore leads us to the conclusion that the external environment definitely effluence the conduct of the organization’s business. The organization is influenced by an number of factors in the external environment namely, economic,socio-cultural forces, political forces, glorifications, labor unions, competitors and customers. If rusty the socio-cultural environment is concerned with the society’s attitudes and cultural values.
When the organization conducts its business it will need to do so in a way that respects and bears in mind the fact that the socio- cultural environment is characterized by different people and therefore it has o conduct it business in a way that respects and accommodate this environment. Failure to do so can result in bad publicity, losses and even the folding up of the business due to public pressure. The organization due to new trends in the socio-cultural environment are creating a different type of consumer and thus a need for different products, different services and consequently different strategies for its conduct.
In a nutshell, the organization has to conduct its business in a way that is adaptable to socio-cultural changes and environments. The technological environment also has a bearing on the conduct of the organization. Technological changes affects many aspects of society and the organization. The effects primarily occur through new products, processes, and materials. All of these effectively make the organization conduct itself in a way such that it avoids obsolescence and promote innovation.
Therefore the organization’s business conduct WI be influenced by this environment in such a way that it is kept on its toes all the time looking for constant change and to always try to be and edge ahead of its competitors in terms of technological advancement and trying to maintain a high market dominance. A good example can be that of Microsoft. The ecological environment refers to the relationship between human beings and thus organizations, and the air , soil and water in the physical environment.
It refers to the limited natural resources from which an organization obtains its raw materials. With regards to the above to conduct of the organization’s business. The organization will conduct itself in a way that is conscious of the ecology and will try to preserve it. For example if an organization’s core business is farming, with regards to the land it will treat it in such a way that it is reserved and prudent farming practices are put in place to ensure maximum yields and preservation of the land.
An organization will conduct itself also I such a way that with regards to waste for example, these are disposed of in the proper way as stipulated by statute so as to avoid bad publicity an run ins with the legal authorities that may even leaded theorizations either paying huge fines or even being forced to shut down due its failure to observe gazettes environmental statutes that may be in place. Economic conditions are impacted by the prevailing interest rates, inflation dates, stock market indexes, the trend of the Gross National Product (GNP), and other related factors.
Improved economic conditions naturally stimulate an increased demand for products and services, thus creating additional opportunities for organizational growth. Depending on the different economic conditions the business conduct of an organization can be influenced In a number of ways. Taking for example the economic situation that is prevailing in Zanzibar where there is a shortage of force, the business is forced to conduct its business in a manner that may be considered unethical by rouging the force it needs to operate normally on the parallel market.
This will result in the business having to increase its prices to be able to cover its cost and remain viable. To add to this it may be forced during times of depression to conducts itself in a manner that by all costs, cost are to be minimized and sometimes even at the expense of quality. During these times its conduct will also have to shift to a more prudent conduct that maximizes profits and closely monitors the scofflaws of the business. Political conditions are stimulated by general stability within a country and pacific policies of government officials.
In the United States, organizations generally enjoy substantial benefits and continuous encouragement of new business ventures as a result of the free enterprise system. When the political environment on which a business operates in is unstable businesses tend to conduct themselves in a cautious manner so as to try not to agitate the current government and go against its policies. I the organization conducts itself in a manner that does not please the government it may face difficulties in the form of say for example price controls or forced closure or takeover by he government.
Small and many medium-sized companies are generally not affected by Labor unions. It’s only when the company really starts to grow and employ a substantial number of people, labor unions usually begin to play a significant role. Labor unions were established to protect the interests of specific categories of employees and to regulate the negotiating process between employers and workers. Organizations constantly need employees with different skills and experience who often belong to a specific labor organization.
Unions are very powerful and the organization when I conducts its business just do so in way that does not cause tension between itself and the unions it is surrounded by. For example unjust dismissal Of an employee can cause the organization to fold up due pressure from the unions that will be fighting for the rights of their members. In addition to this when an organization is a member itself a union, the way it conducts its business must be with in the confines of the rules it is bound by due to its membership to that union.
Business owners and managers, therefore, need to be familiar with the labor legislation which regulates employment procedures, collective bargaining recesses (for larger companies) and other labor-related issues. Competitors constantly influence a broad range of managerial decisions related to routine business activities and to the development of an organization. If the marketplace is highly competitive, managers must ensure that the organization remains competitive and provides high quality products or services to customers at the right price.
Competitors represent a significant factor in formulating the organization’s marketing plan and adopting suitable product development, price setting, promotion and distribution strategies. It is important, therefore, that business wines and managers monitor relevant trends in the marketplace in relation to competition in order to secure the company’s survival and growth in a highly competitive environment. According to Peter F. Trucker:” The only valid purpose of a business is to create and satisfy a customer. In fact, the identification of Customers and their needs is the first Step toward survival Of the organization. Customers are the ones who generate the need for products and services, thus initiating business interaction in the marketplace. Since their needs change over time, customers represent uncertainty to any organization. It is important, therefore, to ensure timely identification of customers’ needs in order to exploit the opportunity of satisfying those needs at a profit.
It is also essential to remember two important rules related to customers, as presented below. If the business conducts itself with regards to customers in these way it may ensure it growth and survival, Rule No. 1: The customer is always right! Rule No. 2: When the customer is wrong – use Rule No. 1! Part B The organization can shield itself against external environment pressures in a number of ways. If rusty with regards to the socio-cultural environment the organization can held itself by paying attention to changes and preferences that exist within the market.
Another Way is to create acceptance by the society through carrying out activities that are aimed at bettering the society for example the poor. A good example of this is Connect which has done so through its AIDS awareness drive and its donations to charity. By doing so the organization is accepted by the society as it begins to see it as a person with the people at heart and not as a drive to milk the society of money. Technology is also another way that the organization can shield itself. It is a,able to do so obstinately pursuing innovation and new products.
The end result is that it is always a step ahead of its competitors and also tends to have the greatest market share and market dominance. Again Connect is a very good example of this as due to its innovation and technological superiority Of its t-van. Or other rivals has enabled it to be largest network in the country. Another widely known example is that of Microsoft which against the market due to it constant pursuit of innovation. With the economic environment it is rather difficult for the organization to held itself as it is an environment that is unpredictable.
However by practicing prudent business practices an organization will be able to survive and shield itself. A good example locally is that of the commercial banks who were not sticking to their core businesses and engaging In unprinted policies. In conclusion the environment in a nutshell can shield itself effectively by carrying out constant environmental analysis. By scanning, monitoring , forecasting and assessing constantly the organization is able to anticipate changes in the environment before they occur and act upon them accordingly.