Business Environment Revised Edition

Elearn

• Publisher: Routledge
• Year: 2009
• ISBN:
  9781136423628
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Stuck for ideas, inspiration or just want to work differently? Management Extra brings all the best management thinking together in one package. The books are practical and well structured to provide an in depth treatment of these management topics. Titles in the series:
* Business Environment
* Change Management
* Development for High Performance
* Effective Communications
* Financial Management
* Information and Knowledge Management
* Leadership and Management in Organisations
* Leading Teams
* Making Sense of Data and Information
* Managing Markets and Customers
* Managing for Results
* Managing Health, Safety and Working Environment
* Managing Legal and Ethical Principles
* Managing Yourself
* Positive Working Relationships
* Project Management
* Quality and Operations Management
* Reaching Your Goals Through Innovation
* Recruitment and Selection
* Reputation Management The series fuses key theories and concepts with applied activities to help managers examine how they work in practice. The books are created with individuals in mind. They are designed to help you improve your management
skills. Management Extra can also be used in conjunction with management programmes of study aligned to standards. Each of the books has case studies, self assessments and activities all underpinned by knowledge and understanding of the frameworks and techniques required to improve performance. Management Extra provides managers and trainers with a handbook for action and development. "You found it – what a find! A practical resource packed with all the relevant theory and suggested activities to support your professional development. An essential resource to have at your fingertips, jump in and enjoy."
--Russell Jeans, Learning and Development Manager,
ntl "All the essential concepts are here, presented in an easily digestible format with lots of up to date case studies and
references – but, most importantly, with plenty of thought provoking activities and self-diagnostic exercises to make the learning personal and transferable."
--Peter Manning, Head of Training & Development, News International Newspapers Ltd

1 The organisation in context

Business environment is about exploring the nature of the organisation you are working in. This first theme considers a number of fundamental questions about the organisation: What’s the organisation for? What major factors influence organisations? Why are there different types of organisation? What is your organisation’s vision for the future? And how is the vision translated into a strategy for every level?

Think of this big picture as a fly-past in an aeroplane at altitude before the detailed plotting of the landmarks and features of your business.

‘Perception is strong and sight weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.’

Miyamoto Musashi

(1584–1645)

Within this theme you will:

◆ Review the core components of your

◆ organisation and what makes it different from others

◆ Identify ways to communicate the goals of an organisation

◆ Identify your organisation’s vision, mission and values and how these translate into strategic objectives

◆ Develop a strategic understanding of your business.

The nature of organisations

A simple way of looking at what an organisation is and what it is for is to picture the core of the organisation as a system that transforms inputs into outputs that are provided to customers. See Figure 1.1.

Figure 1.1 A basic transformation process

◆ Inputs include labour, raw materials, expertise, capital, data and information

◆ Transformation processes include business operations and production processes

◆ Outputs include goods, services, profits and wages, and information and waste products.

Transformation processes may involve converting inputs, transporting, combining or adding value to them in some other way in order to produce outputs that customers want.

This system for transforming inputs into outputs does not exist in a vacuum. It is not isolated from the environment in which it operates. On the contrary, the system exists in a unique context and it interacts with factors in this context in a dynamic way – constantly influencing and being influenced by them. For a start, the system provides its outputs to customers outside the system, and if there are no customers then the system is unlikely to continue to operate for long.

This suggests that the organisation can be seen as an ‘open’ system – the effectiveness and efficiency of the basic system are affected by major factors in the context in which the organisation operates.

Figure 1.2 The context in which the organisation works

The internal environment

This includes the system (inputs, transformation processes and outputs) and all of the resources, knowledge and the actions of decision makers and employees that make up the organisation. All these factors may be controlled and deployed to enable the system to operate effectively and efficiently. The organisation as a whole has most control over its internal environment; it can shape its strategy and organise and direct its resources to achieve what it wants to achieve.

The industry environment

This is the external environment closest to the organisation. It is the organisation’s marketplace, where it buys its materials, resources and other inputs and provides goods and services to customers. It also includes competitors, those organisations that compete for the same customers. The industry environment affects the organisation’s scope for action, but the organisation can also take action to influence the industry environment. For example, it may develop partnerships with suppliers or enter into a price war with competitors. In some industries it is also vital to influence standards and regulations and the more aggressive organisations also set out to change the structure of their industry and the way in which the competitive game is played.

The macro environment

This is the ‘playing field’ for all businesses in the global and national economy. It is the external environment that provides a general background in which all organisations operate. It is made up of political, economic, social, technological, legal and eco-environmental forces. These act on organisations and their industry environments. For example, legislation affects an organisation’s ability to hire and fire, merge with other organisations and dispose of its waste products. The organisation cannot control these forces, and it may not be able to influence them. However, much of the lobbying of political parties and governments by organisations is aimed at influencing these macro forces.

The following brief example shows how the system of inputs, transformation processes and outputs interacts with its internal and external environments.

Marks & Spencer plc, the UK-based retailer, uses its shops, staff, supplies and capital (inputs) to deliver (transformation processes) food, clothing, homeware and financial services (outputs) to its customers (industry environment). Poor performance in its market sector (industry environment) has led to changes in product design, business relations and corporate strategy (internal environment). A decision to close 18 shops in France in March 2001 brought the threat of legal action from the French Prime Minister, Lionel Jospin, over lack of consultation with store staff (macro environment).

Different strokes for…

It soon becomes apparent why there are so many different types of organisation. Each has different inputs, transformation processes and outputs, and operates in different industry environments.

Consider the examples in Table 1.1.

Table 1.1 The influence of operating context on organisations

Why analyse the organisation’s environment?

Environmental influences have implications for the organisation’s direction and strategy

You analyse your organisation’s environment in order to make decisions and take action. If you can analyse the organisation you are part of and the major factors that are likely to impact on performance, then you can begin to understand and make plans, albeit for an uncertain future. Everyone, whatever their level in the organisation, should be involved because strategy cascades to all parts of an organisation. You will make better decisions at your level if you understand how your organisation works in its environment and how your area fits into this, and you will contribute to more informed decision making. This book will enable you to make decisions based on your business awareness. Business awareness is not an end in itself.

A good example of the sort of environmental impacts that businesses have to contend with is that of the recent ‘mad cow’ disease in the UK. Farmers were working within the regulations and competing with other farmers in producing beef, milk and dairy products. But one unexpected microbe and they all had to abide by regulations that required herds to be decimated. Farmers engaged in plenty of lobbying to have the regulations softened, but all of these failed. The major threat, from the farmers’ view, was from the government and the external environment. Other organisations, such as the McDonald’s hamburger chain, supermarkets and restaurants, all had their own way of dealing with this national event but the impact was felt nevertheless. This issue demonstrates that the impacts rippled across from the external envi...

Table of contents

• Cover
• Halftitle
• Title
• Copyright
• Contents
• List of activities
• List of figures
• List of tables
• Series preface
• Uncover the challenges facing your organisation
• 1. The organisation in context
• 2. The organisational landscape
• 3. The key players
• 4. The macro environment
• 5. SWOT analysis
• References