LO1
BUSINESS ORGANISATION AND ITS ENVIRONMENT
Introduction
Just like human beings, business also does not function in an isolated vacuum. Businesses function
within the environment and have to negotiate their way through it. The extent to which the business
thrives depends on the manner in which it interacts with its environment. A business, which
continuously remains passive to the relevant changes in the environment, gradually fade away
from the market. To be successful business one not only have to recognize different elements of
the environment but also respect, adapt to or have to manage and influence them. The business
must continuously monitor and adapt to the environment if it is to survive and prosper.
Definitions of Business Environment
Business environment may be defined as the total surroundings, which have a direct or indirect
bearing on the functioning of business. It may also be defined as the set of external factors, such
as economic factors, social factors, political and legal factors, demographic factors, and technical
factors etc., which are uncontrollable in nature and affects the business decisions of a firm.
Business Environment has been defined by Bayard O. Wheeler as “the total of all things
external to firms and industries which affect their organization and operation”.
According to Arthur M. Weimer, business environment encompasses the ‘climate’ or set of
conditions, economic, social, political or institutional in which business operations are
conducted.
According to Glueck and Jauch, “The environment includes factors outside the firm which can
lead to opportunities for or threats to the firm. Although there are many factors, the most
important of the sectors are socio-economic, technological, supplier, competitors, and
government.”
According to Barry M. Richman and Melvgn Copen “Environment consists of factors that are
largely if not totally, external and beyond the control of individual industrial enterprise and
their managements. These are essentially the ‘givers’ within which firms and their management
must operate in a specific country and they vary, often greatly, from country to country”.
From the above definitions we can extract that business environment consists of factors that
are internal and external which poses threats to a firm or these provide opportunities for
exploitation.
Features of Business Environment
On the basis of the above discussion the features of business environment can be summarized
as follows.
Business environment is the sum totals of all factors external to the business firm and that
greatly influence their functioning.
It covers factors and forces like customers, competitors, suppliers, government, and the social,
cultural, political, technological and legal conditions.
The business environment is dynamic in nature that means, it keeps on changing.
The changes in business environment are unpredictable. It is very difficult to predict the exact
nature of future happenings and the changes in economic and social environment. .
Business Environment differs from place to place, region to region and country to country.
What is a business?
A business is a decision-making organization involved in the process of using inputs to produce
goods and/or to provide services. Thus, business organizations deal with the environment by
undertaking following transactions:
(i) They Receive Inputs- The manufacturer receives raw materials, a stock broker receives the
latest financial information and a local authority receives data on housing needs.
(ii) They Transform Inputs- The Manufacturer produces the goods from the raw materials the
stock broker interprets the information and the local authority produces housing plans.
(iii) They Produce Outputs- The manufacture sell products, the stock broker advice and the local
builds houses.
Different departments and their functions
As a business gets larger, it becomes more important to have clearly defined functions,
such as human resource management, production, marketing and finance. These functions are
likely to be carried out by specialist departments.
Marketing Department
The marketing department is a division of the company with responsibility for the
marketing function. This department aims to sell as many products as possible in a
sustainable manner. The team designs marketing strategies and combines the right
marketing mix to satisfy customer needs and wants. They design the right product
at the right price to the right consumer, at the right place, and at the right time. They
are also responsible for developing promotions and managing long-term
relationships with customers.
The Marketing Department plays a vital role in promoting the business and
mission of an organization. It serves as the face of your company, coordinating and
producing all materials representing the business. It is the Marketing Department's
job to reach out to prospects, customers, investors and/or the community, while
creating an overarching image that represents your company in a positive light.
Managing customer relationships
Customer relationship management (CRM) is one of the fundamental practices
of marketing dept. to build a strong relationship between the company and its
customers. CRM requires marketers to develop a client-oriented approach that
could allow attracting more first-time customers and strengthening relations
with repeat customers.
With help of CentriQS the CRM function of marketing department appears to be
easier to the personnel. This business management programallows creating an
enterprise-wide client database which helps in profiling prospects, recording
their needs, and viewing sales state. For example, marketing specialists can view
the details of their customers (incl. name, photo, phone number, etc.), access
links to related files, and label new and regular clients.
Processing orders and payments
Marketing department is often involved in processing orders and payments. In
cooperation with sales teams this department keeps track of sales orders and
payment status. It may also need to report to accounts division on revenues,
costs, margins, and other sales-related parameters.
CentriQS lets create a single view of sales orders to help marketing department
carry out processing of orders and payments. Marketing personnel can track
sales orders by paid/unpaid status, order date, product, etc. The program lets
calculate sales amount, gross margin, COGS, revenue, etc. so this information
can help marketers report on sales performance and state.
Making marketing schedules
The activities of marketing department should be scheduled so that the
personnel would know which activity to perform, when to do it and what
resources to utilize. Scheduling helps department manager assign an appropriate
number of employees to various jobs (ad campaign, presentation, phone call,
negotiation, etc.) during each workday.
By using the Scheduler view in CentriQS, marketers can make schedules of
various tasks and appointments relating marketing activities. Tasks and
appointments can be assigned to certain employees, with certain priority, due
date, project, etc. Overdue tasks and appointments will be highlighted with red,
so employees will see delays directly on their schedules.
Development of marketing goals and strategy
One of the most important functions of marketing department is to design a set
of written goals, objectives and strategies for marketing activities of the
organisation. This means establishing rules and business concept of how the
organization will conduct itself on the market, what marketing instruments
will be used, what goals will be set and what strategies should be applied to
attaining effective advertising campaigns. marketing department develops a
market-based business strategy that provides unique value to the customers on
all services and products of the organization.
The strategy establishes the workflow in the marketing department so that each
process within the workflow can be continually evaluated, measured, and
improved until marketing goals are successfully achieved. The software allows
to design and share marketing goals and strategy and build marketing
department workflow. By using this software, Marketing Director can create a
work structure for coordinating all marketing processes toward the attainment of
organizational goals.
Conducting marketing researches and monitoring customer needs
To introduce products and services into a market and create value in the mind of
the customers, the managers of the marketing department need clear and
appropriate information. marketing research provides the facts and directions
that the managers can use to make their important decisions for marketing and
competitive activities. To organize the workflow for managing market research
and monitoring customer needs, marketing department can business
management software. Then each marketing research can be created as a project
with appropriate stages and to-do lists. In the Scheduler view the managers can
create schedules for marketing researches and set due dates per task.
Advertising and Promotion
Finding new customers is the key challenge for every business. Through
creative advertising and promotion a business can attract new customers and
gain more revenue. The marketing department is responsible for providing
product/service advertising and promotion. The function of advertising and
promotion is especially important when the organization launches a new brand
and it should be promoted by informing the customers of the brand’s features
and advantages. Marketing dept staff can arrange advertising campaigns and
manage promotion activities. The software allows to break down a campaign
into stages and tasks with possibility to track each step of the involved
employees and measure the campaign outcome. It is a convenient tool for brand
and product management.
FINANCE DEPARTMENT
The finance department is like the backbone of an enterprise. It holds everything
together through effective accounting and statistics that keep everything in
check. In a company, the finance department has multiple responsibilities. The
primary responsibility we believe them to hold is bookkeeping, but they are also
responsible for assisting managers in making and updating their strategic
decisions
FUNCTIONS OF THE FINANCE DEPARTMENT

Offer superior customer service by providing information in a clearly
understood, concise and professional manner to Fayette County taxpayers
and Citizens in the areas of business licenses, budgeting, financial, and
operational data inquiries.

Issue business licenses following the relevant code of ordinances of the
County, collecting corresponding appropriate revenues.

Produce account receivable invoices for jail occupancy, roadwork and
other miscellaneous contractual charges. Maintain accurate records by
monitoring monies collected, making deposits and recording to the
general ledger on a daily basis. Timely assign past due accounts to
collection agency.

Timely issue account payable checks insuring only those amounts due are
paid with all appropriate discounts applied. Meet time sensitive deadlines
to assure timely and accurate payroll processing for direct deposit, check
distribution, monthly, quarterly and annual reporting and transmission of
liabilities to the appropriate agency and preparation of employees W-2
forms.

Maintain current fixed asset listing, conducting a periodic physical
inventory for the purpose of safeguarding the County’s assets, providing
information for insurance coverage and annual audit purposes.

Oversee the County’s purchasing card program by establishing policy and
procedures, reviewing training manual, coordinating the issuance and
cancellation of cards, reviewing and communicating changes to card
dollar and transaction limits, monitoring the program’s activity for
compliance with established guidelines, conducting an annual audit of
card use and a physical inventory of all cards issued under the program,
and ensuring proper accounting treatment for the charges incurred.

Accurately maintain administrative, financial and budgetary controls over
County vehicles, including tracking of ownership, replacement and
financing. Obtain ownership records, tags and titles; prepare lease-pool
reimbursement requests and schedule of replacements as needed in the
capital budget.

Perform treasury related functions including a daily cash forecast to
maximize use of the County’s funds in meeting cash disbursement
obligations. Maintain up to date bank reconciliation's on all accounts.
Monitor and analyze investment activity to ensure fiscal responsibility
and superior bond rating.

Apply accurate and timely accounting treatment for County services and
activities. Review financial reports and analyze fund balances on a regular
basis to ensure financial statements are accurate, complete, reliable and
conform to generally accepted governmental accounting principles.
Maintain organized and up to date work papers, schedules, procedures
manuals, and files for the purpose of quick retrieval, reference, and
support of the Annual Audit.

Secure insurance coverage for County property when placed in service,
facilitate annual renewals, and prepare request for proposal (RFP) for
property and casualty services on a periodic basis. Serve on the Insurance
Committee, recommend and present recommendations to the County
Administrator.

Timely prepare balanced annual operating and capital budgets for each of
the County’s budgeted funds in accordance with statutory laws, criteria
established by the Governmental Accounting Standards Board (GASB),
and the Government Finance Officers Association (GFOA). Budgets
developed should follow established management parameters, and adhere
to policies, procedures, and generally accepted accounting principles
(GAAP).

Assist departments in the development of annual departmental budgets by
conducting recurrent training. Monitor all department budgets and
effectively communicate any concerns to departments and management.

Administer budgets throughout the year in accordance with the budgetary
laws of the State of Georgia.

Prepare and submit periodic financial reports for management and the
Board of Commissioners relating to performance of financial activities
including results of operations and statement of financial position on a
periodic basis.

Complete special projects requiring research and analysis as requested.
Includes collecting raw data, analyzing data, forming conclusions,
proposing recommendations, and preparing timely reports in a logical and
understandable format.

Financial reporting including preparation of annual financial reports,
quarterly reports, monthly budget reports, and other reports of fiscal
information on a routine basis. Examples include but are not limited to
Comprehensive Annual Financial Report. Annual Operating Budget
Document, Capital Improvement Program, and other similar reports. All
reports should be accurate, timely, and prepared in conformity with
established applicable standards.
Depending on your company, the duties of the Marketing Department may include
one or more of the following:

Defining and managing your brand. This involves defining who you are,
what you stand for, what you say about yourself, what you do and how your
company acts. This, in turn, defines the experience you want your customers
and partners to have when they interact with you.

Conducting campaign management for marketing initiatives. Marketing
proactively identifies the products and services to focus on over the course
of your sales cycle, and then produces materials and communications that
get the word out.

Producing marketing and promotional materials. Your marketing department
should create the materials that describe and promote your core products
and/or services. They should be kept up-to-date as those products and
services evolve.

Creating content providing search engine optimization for your
website. Your website is often the first (and possibly the only) place people
go for information about you. Your marketing department will be
responsible for keeping Web content current, while also working to ensure
your site comes up quickly when someone searches for your type of
business.

Monitoring and managing social media. Marketing should contribute to,
manage and maintain your social media pages. It should also manage
accounts and carefully watch what’s being posted about you online.

Producing internal communications. Your employees need to understand
your company, its values, its goals and its priorities. Marketing is often
responsible for employee communications through a newsletter and/or
intranet.

Serving as media liaison. When your company is cited in the media, a
member of the marketing department often acts as spokesperson for your
company, or guides executives in how to respond to media queries.

Conducting customer and market research. Research helps you define target
markets and opportunities and helps you understand how your products and
services are perceived.

Overseeing outside vendors and agencies. Marketing is typically responsible
for selecting and managing the agencies and vendors who produce
marketing materials and or/provide marketing support. These may include
ad agencies, print vendors, PR agencies or specialists, Web providers, etc.
FUNCTION OF HR DEPARTMENT
Human resources departments are often considered an essential part of many
organizations. They are present in numerous industries, and take on many different
functions in their day-to-day responsibilities.
HR departments act as a liaison between employers and employees to help ensure
both are well equipped to do their jobs safely and effectively. While some
organizations have their own in-house HR department, others may use an outside
firm. In either capacity, HR managers help maintain the structural and
organizational integrity of the workplace. While HR may sometimes be regarded
as the disciplinary arm of a company, in reality, HR holds many supportive
responsibilities like the ones we’ll discuss on this page. From making sure
employees are paid and receive benefits to overseeing employee development, HR
departments and managers aim to create workplaces where both employers and
employees can thrive External link . On this page, you’ll find the main functions of
an HR department, and what each entails:
Recruitment and Hiring
For many organizations, attracting and retaining the best talent in the industry is a
priority. HR managers play an important role in this, helping to build the future of
the company by overseeing the recruitment and hiring process. To begin, HR may
work with a department manager or supervisor to learn about an open position,
including its requirements and ideal candidate qualities. The HR department may
then set forth a recruiting strategy. This might include creating internal and
external job postings, screening incoming applicants’ resumes and other
application materials, and conducting initial interviews. HR may also be
responsible for professional reference checks and background checks to verify that
candidates are eligible to work for the company.
Training and Development
Hiring qualified employees is just one aspect of an HR department’s job. In order
to retain talent and remain competitive, HR managers may also be responsible for
launching employee development initiatives. This could entail additional on-thejob training, professional development programs, or educational opportunities that
allow employees to grow and develop in their current roles—or prepare them for
career advancement within the organization. HR departments know that investing
in training and development benefits both employers and employees External link .
For employers, it may mean higher employee productivity, and lower turnover
rates. For employees, seeing the company invest in their development may help
them feel more valued, increase job satisfaction, and incentivize them to stay with
the company.
Employer-Employee Relations
Another aspect of the workplace that HR departments manage is employeremployee relationships. With this function, HR departments strive to help
employers and employees see each other as mutual contributors to the company,
fostering a positive dynamic between the two. HR managers may also help craft
and determine company policies that ensure fairness and equity in the workplace.
When an employee has a workplace grievance—whether regarding compensation,
benefits, workloads, work hours, or anything else—HR may step in to act as a
liaison between the employee and employer, helping to settle any disagreements.
Overall, when HR departments succeed in creating positive employee relations,
employers may trust their employees and value their input more, and on the flip
side, employees may respect and appreciate their employers more.
Maintain Company Culture
Elements of company culture may include sound hiring practices, ongoing
development, and strong employee relations. However, it’s not necessarily
something you can achieve and move on from. HR departments engage in ongoing
work to ensure that their company culture remains solid overtime.
In the employee onboarding process, HR managers may share the company’s
values, norms, and vision with employees—familiarizing them with the overall
ethos of the organization. Team outings, community building, and any reward
systems or recognition programs are additional ways HR departments might keep
employee motivation and morale high. Maintaining company culture also means
being equipped to identify any shortcomings within the organization and having
the ability to address them effectively.
Manage Employee Benefits
On the administrative side, HR departments oversee both mandated and voluntary
company benefits. While employers are required to provide some benefits like
Social Security, unemployment, and worker’s compensation, other benefits like
paid time off, disability income, and gym reimbursements, are provided on a
voluntary basis—and serve as additional incentive for potential and current
employees to work at the company.
Of course, employee benefit programs vary by organization. Some may offer
employer matching programs (in which employers match an employee’s
contribution to their retirement fund), while others may offer enticing
comprehensive health insurance plans. Regardless of the specific benefits an
employer may offer, managing all of these components is a complex job. It
requires HR managers to be well-versed in their understanding of company benefit
programs External link and have the ability to clearly explain and answer any
questions employees may have regarding their policies.
Create a Safe Work Environment
In addition to managing benefits, HR is responsible for protecting employees’
safety at work—both physical and emotional. In the physical sense, HR must
ensure the workplace is free of danger External link , typically through worksite
analysis and hazard prevention and control. HR may also establish safety programs
through risk management training and provide information on procedures and
protocol for any potential emergency scenarios.
Workplace safety also entails ensuring that the organization acts in accordance
with federal and state employment rules and regulations. HR departments have a
responsibility to maintain work environments that promote respect and dignity for
all employees. They must also ensure that employees are protected from behaviors
like harassment, discrimination, intimidation, and exploitation. They may provide
training sessions for employees, managers, and supervisors to learn to identify
harmful practices and know how to report them when needed.
Handle Disciplinary Actions
Disciplinary procedures and terminations are delicate and sometimes complicated
matters. HR managers must know how to handle them fairly and consistently to
keep situations running smoothly External link —and prevent any additional
conflict or escalation. This may involve having a clear disciplinary process,
whether that includes starting with a written warning and increasing in severity
with suspensions or demotions—or following another proven system. Regardless
of the specifics, HR managers must have a set system in place to hold employees
accountable.
Additionally, HR may consult with legal counsel to ensure the company acts in
accordance with the law, avoiding any mishandled situations and subsequent
lawsuits. At the end of the day, HR departments have a responsibility to enforce an
organization’s policies and the requirements of the law, while still maintaining the
dignity and humanity of its employees.
Marketing functions
1. Distribution,
2. Selling,
3. Financing,
4. Market Information Management,
5. Pricing, Product/Service Management,
6. Promotion.
Finance functions
1. Making payments for expenditure incurred in business,
2. Fulfilling the requirements of working capital,
3. Purchasing office premises and office buildings,
4. Purchasing plant and machinery.
Human resources functions
1. managing change and facilitating training and development,
2. recruitment, selection and employee relations,
3. pensions and benefits,
4. communicating with employee
RESEARCH WORK
Highlight 4 functions each of the following departments:
-
Procurement
-
Sales
-
Accounting
Why do we have Changing market?
Markets are changing all the time. It does depend on the type of product the business produces,
however a business needs to react or lose customers.
Some of the main reasons why markets change rapidly:
etitors enter a market.
Business and Competition
Though a business does not want competition from other businesses, inevitably most will face a
degree of competition.
The amount and type of competition depends on the market the business operates in:
Many small rival businesses – e.g. a shopping mall or city centre arcade – close rivalry.
A few large rival firms – e.g. washing powder or Coke and Pepsi.
A rapidly changing market – e.g. where the technology is being developed very quickly – the
mobile phone market.
A business could react to an increase in competition (e.g. a launch of rival product) in the following
ways:
Cut prices (but can reduce profits)
Improve quality (but increases costs)
Spend more on promotion (e.g. do more advertising, increase brand loyalty; but costs money)
Cut costs, e.g. use cheaper materials, make some workers redundant
Social Environment and Responsibility
Social change is when the people in the community adjust their attitudes to way they live.
Businesses will need to adjust their products to meet these changes,
-
E.g. taking sugar out of children’s drinks, because parents feel their children are having too
much sugar in their diets.
The business also needs to be aware of their social responsibilities. These are the way they act
towards the different parts of society that they come into contact with.
Legislation covers a number of the areas of responsibility that a business has with its customers,
employees and other businesses.
It is also important to consider the effects a business can have on the local community. These are
known as the social benefits and social costs.
A social benefit is where a business action leads to benefits above and beyond the direct benefits
to the business and/or customer. For example, the building of an attractive new factory provides
employment opportunities to the local community.
A social cost is where the action has the reverse effect – there are costs imposed on the rest of
society, for instance pollution ( e.g. noise or air)
Governments encourage social benefits through the use of subsidies and grants (e.g. regional
assistance for undeveloped areas). They also discourage social costs with fines, taxes and
legislation.
INTERNAL AND EXTERNAL ENVIRONMENT OF A BUSINESS
Generally, organization environment is composed of two types of environment: internal environment and external environment’
- Internal environment includes all those forces, which are inside the organization and have
capacity to influence the organization and its performances. They are factors, which are within
an organization and impart strengths or cause weaknesses in management process.
These forces are
-
owners and shareholders,
-
the governing board,
-
employees,
-
organization culture, etc.
The specific environment is the part of the environment that is directly relevant to the achievement of an organization’s goals. It includes different stakeholders like suppliers, customers,
competitors, and marketing intermediaries. Specific environment is individualistic in approach
and treats each organization in different way. So it has unique characteristics and changes with
conditions prevailing in surroundings.
They are controllable
-
External environment incorporates all the factors which are outside the organization
and influence the ability to achieve organizational goals. It is generally defined as all
factors outside the organization and that are relevant to its operation. Thus, the external
factors are outside the organization and provide opportunities or pose threats to the
organization.
-
There are two approaches direct and indirect action elements.
Direct action elements are those elements which directly affect the business operation from its
outer world viz., customers, suppliers, government, competitors, financial intermediaries, labour
unions, media and special interest groups. Some authors treated these factors as part of the task
environment or operating environment.
On the other hand,
indirect action elements are the factors which affect the climate in which an organization’s
activities take place but do not effect the organization directly. These elements are political
variables, economic variables, social variables, technological variables and international
variables. Characterization of environmental factors as direct action elements or indirect action
elements is generally governed by the prevailing situations.
General environment is the portion of external environment that contains the external forces that
have a more general influence on the organization. It encompasses conditions that they affect the
organization but whose relevance is not clear and predictable.
Thus, general environment incorporates everything outside the organization viz., economic
policy, political conditions, socio-cultural influences, technological conditions and globalization
issues. The general assumptions about the business organization sure that they are neither selfsufficient nor self-contained. Actually they exchange resources with and are dependent on the
environment.
They are uncontrollable
In practice, business environment is composed of micro environment and macro environment.
Micro environment is concerned with immediate environment of business organisation.
Macro environment deals with external environment in which business organisation operates.
Actually, there is a direct relationship between the organization’s performance and its surroundings.
Micro and macro environment both have a positive or negative impact on the working of
business organization. However, management of the business organization is required to
maintain an effective adjustment for achieving organizations goals and missions.
Needs for Business Environment
It is essential for a business enterprises to keep itself informed about its surrounding
environment because:
1. If a business enterprise is aware of the fact that environment is getting hostile, it individually
or along with other business enterprises can make efforts to make the environment hospitable
according to the requirements of business.
2. The information about changes taking place in the environment enables a business enterprise
to adjust itself accordingly.
3. Due to its knowledge about the changes in the environment, a business enterprise remains alert
and dynamic.
4. The success of a business enterprise depends to a great extent on its awareness about its
surroundings environment.
5. A business enterprise can expand itself as and when favourable changes take place in the
environment. Therefore a disregard for environmental changes proves very costly.
Significance of business environment
A study of business environment is highly significant for management for the following
reasons:
(i) Smooth functioning of business cycle depends on availability of inputs and disposal of output.
Business enterprises obtain inputs like raw-materials, machines, technology, manpower etc. from
the society (which is part of business environment); and dispose of output i.e., finished goods to
society. Hence, business managements must study business environmental factors so as to be
aware of changes in input supplies, changes in social factors like consumers, competitors etc., for
ensure smooth functioning of business cycle.
(ii) A study of business environment is essential to take full advantage of opportunities for gain
hidden in the business environment.
Some examples of opportunities for gain might be:
a. Export concessions offered by the government.
b. Rising demand for many products (due to expanding markets)
c. Availability of skilled man-power (clue to rising levels of education in society).
d. Availability of latest technology.
(iii) Legal – regulatory factors are an important dimension of business environment. By studying
business environment intelligently, management can avoid legal consequences which many arise
due to non- adherence to legal provisions applicable to the business enterprise. It is better to
swim with the current than against it.
(iv) By studying business environmental factors (particularly competitive and technological);
management can ensure better competitiveness and higher profitability for the business
enterprise.
(v) A study of business environment is a great aid in ensuring survival and growth of the
business enterprise amidst volatile and turbulent environmental factors (Volatile and turbulent
factors are those which are re likely to change suddenly and easily becoming dangerous). For
ensuring survival and growth under the circumstances management can do better planning;
introduce organisational flexibilities; come out with innovations; resort total joint ventures and
merges or follow a policy of systematic adaptation (These concepts are explained in the next
sub-title i.e., managerial response to changes in business environment).
(vi) By studying business environment, management can plan to better meet social
responsibilities and add to the prestige and goodwill of the business enterprise.
(vii) By studying social-religious-cultural factors; business management can capitalise on (i.e., to
take advantage of) changing social values like emerging fashions, craze for a higher standard of
living (creating demand for new types of luxurious goods/services) etc.
CENTRAL THEMES
Interaction with the environment
open system, the business organisation is in constant interaction with its
environment.
outputs and these in turn may engender further changes in the organisation’s environment. The
internal and external environments should be seen as interrelated and interdependent, not as
separate entities.
Interaction between environmental variables
arious
external influences affecting business organisations are also frequently interrelated.
important bearing on business activity.
overnment to influence the level of demand could exacerbate the
situation and this may lead to changes in general economic conditions, causing further problems
for firms.
ich could
result in uncertainty in the minds of managers. Failure to respond to the challenges (or
opportunities) presented by such changes could signal the demise of the organisation or at best a
significant decline in its potential performance.
The complexity of the environment
all organisations.
to consider them all.
of the external environment and to pay greater attention to those influences which appear the most
pertinent and pressing for the organisation in question, rather than to attempt to consider all
possible contingencies.
Environmental volatility and change
environmental change.
arly prevalent in some areas (e.g. technology) or in some markets
or in some types of industry or organisation.
for its sub-units) and this makes decision making more difficult
Environmental uniqueness
environment in which it operates and which will affect it in a unique way.
generalisations about the impact of the external environment
on the firm, it is necessary to recognise the existence of this uniqueness and where appropriate to
take into account exceptions to the general rule.
Different spatial levels of analysis
ernal influences operate at different spatial levels – local, regional, national, supranational,
international.
influences outside their immediate market(s).
Two-way flow of influence
and its environment operates in both directions.
uence their
environment and this is an acceptable feature of business in a democratic society which is operating
through a market-based economic system.