Environment is most complex part of changing forces for an organization. Business environment constitutes the set of forces around it which can affect the way it operates and its access to resources. Sources include the raw materials and skilled workers; information technology; stakeholders, shareholders; financial institutions.
Forces in the environment that can affect a business organization include competition from rivals, swift change in technology, rapid change in prices etc.
Forces can be specific or general environmental forces. Specific environment forces are those which directly affect an organization’s ability. General environment forces affect all the organizations’ ability in a particular environment.
Specific environment forces include competitors, customers, distributors, suppliers, government and unions. General environment forces include economic, environmental, technological, political, international and demographic forces.
Specific environment forces:
Forces in the environment that can affect a business organization include competition from rivals, swift change in technology, rapid change in prices etc.
Forces can be specific or general environmental forces. Specific environment forces are those which directly affect an organization’s ability. General environment forces affect all the organizations’ ability in a particular environment.
Specific environment forces include competitors, customers, distributors, suppliers, government and unions. General environment forces include economic, environmental, technological, political, international and demographic forces.
Specific environment forces:
Competition affects ability to access scarce resources and survival in industry. Competition can be domestic or international. For example, during the 1990s, Japanese car companies operating in Europe established plants with the capacity to produce 450,000 new cars a year and thus threaten the prosperity of Volkswagen, Renault, fiat and Volvo.
Changes in the taste and preferences of customer are a force which can affect an organization negatively. Therefore it is important for a business to analyze the customers’ requirements.
Managing good relationships with suppliers and distributors is become an important factor for the business, because their access to resources and market depends on them.
Outside stakeholders like government, unions and customers interest groups can restrict or force to do something. Government has its own rules and regulations and every business has to follow them. For example, unions pressures Gerber to secure favorable wages and benefits, and to protect the jobs of their members.
Scenario of competitions and customers’ forces is rapidly changing and suppliers and unions, interest groups are demanding more and are more aware then before.
General environment forces:
Demographic, cultural, social forces shape consumers’ tastes and preferences. Economic, political and environmental forces put some restrictions on organizations. Technological forces drive organization capability to survive among competitors.
GLOBALIZATION
Globalization is becoming most important force and change in the business environment. All the
forces describe above, become more complex because of globalization.
In a global environment, satisfying customers’ needs presents new challenges because customers differ from country to country. For example, customers in Europe – unlike – Americans don’t like their cereal sweetened, so Kellogg and General Mills modify their products to suit local European tastes. In United States, Sony, Toyota, Phillips, Mercedes – Benz, and other overseas companies compete with American companies for American consumers.
Example of increased competition: Airline companies, such as American, continental, delta, are currently experiencing a highly uncertain environment. New, low-cost airlines are entering the industry competition.
GLOBAL VILLAGE
Ease in communication channels around the globe, reduce in barriers to cross national borders gave rise to creation of a world market that it becomes a “global village”. Out of the top 100 economies, 51 are multinational corporations and the remaining 49 are countries. “Global village” has fostered an increase in cross-border corporate mergers and the number of multinational corporations.
Today’s, company tend to specialize in their core competencies and outsource what remains or alternatively, merge to integrate the suppliers into their own organizations.
Statistics reveal that $3.4 trillion in merger took place in 1999, compared with less than $1 billion in 1995. a Goldman Sachs study estimated that 300,000 to 500,000 jobs were lost between 2001 and 2003 to overseas relocations and that as many as 6 million jobs could move overseas by 2013.
In 2000, a business week/Harris poll indicated that 72 % of Americans agreed with the statement that the business has too much influence. In 2002, 77 % of respondents thought large corporation has too much power. In 2004, a Chicago Council on foreign relations worldviews survey revealed that 64 % thought that international trade was bad for job security of American workers.
Continual technological advances also have made it difficult for companies to prevent both positive and negative for news about them from reaching individuals in virtually all corners of the world. Media outlets have expanded their reach such that events are no longer confined to local communities; rather, they can create reverberations felt worldwide.
By 2010, 3 billion people worldwide are expected to own mobile phones, 236 million U.S. consumers are expected to own a mobile phone, representing 75 % of the population.
Development in Advance technology, reduction in trade barriers across borders, globalization, global village are driving the rapid changes in the business environment.
(Book reference). Argenti, Paul A. (2007). Corporate communication (4th ed.), McGraw-Hill Irwin, ISBN: 0072990546
(Book reference). Jones, Gareth R. (2006). Organizational theory, design and change (4th ed.), Pearson education, ISBN: 81-7758-075-2
GLOBALIZATION
Globalization is becoming most important force and change in the business environment. All the
forces describe above, become more complex because of globalization.
In a global environment, satisfying customers’ needs presents new challenges because customers differ from country to country. For example, customers in Europe – unlike – Americans don’t like their cereal sweetened, so Kellogg and General Mills modify their products to suit local European tastes. In United States, Sony, Toyota, Phillips, Mercedes – Benz, and other overseas companies compete with American companies for American consumers.
Example of increased competition: Airline companies, such as American, continental, delta, are currently experiencing a highly uncertain environment. New, low-cost airlines are entering the industry competition.
GLOBAL VILLAGE
Ease in communication channels around the globe, reduce in barriers to cross national borders gave rise to creation of a world market that it becomes a “global village”. Out of the top 100 economies, 51 are multinational corporations and the remaining 49 are countries. “Global village” has fostered an increase in cross-border corporate mergers and the number of multinational corporations.
Today’s, company tend to specialize in their core competencies and outsource what remains or alternatively, merge to integrate the suppliers into their own organizations.
Statistics reveal that $3.4 trillion in merger took place in 1999, compared with less than $1 billion in 1995. a Goldman Sachs study estimated that 300,000 to 500,000 jobs were lost between 2001 and 2003 to overseas relocations and that as many as 6 million jobs could move overseas by 2013.
In 2000, a business week/Harris poll indicated that 72 % of Americans agreed with the statement that the business has too much influence. In 2002, 77 % of respondents thought large corporation has too much power. In 2004, a Chicago Council on foreign relations worldviews survey revealed that 64 % thought that international trade was bad for job security of American workers.
Continual technological advances also have made it difficult for companies to prevent both positive and negative for news about them from reaching individuals in virtually all corners of the world. Media outlets have expanded their reach such that events are no longer confined to local communities; rather, they can create reverberations felt worldwide.
By 2010, 3 billion people worldwide are expected to own mobile phones, 236 million U.S. consumers are expected to own a mobile phone, representing 75 % of the population.
Development in Advance technology, reduction in trade barriers across borders, globalization, global village are driving the rapid changes in the business environment.
(Book reference). Argenti, Paul A. (2007). Corporate communication (4th ed.), McGraw-Hill Irwin, ISBN: 0072990546
(Book reference). Jones, Gareth R. (2006). Organizational theory, design and change (4th ed.), Pearson education, ISBN: 81-7758-075-2
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