Quarter 1 | Module 3: Environmental Forces and Scanning, Local and International Business Environment of the Firm (1/2) Flashcards
may be classified into two types (internal and
external) that affect a company’s operations. and include strengths, weaknesses,
internal power relationships, orientations of the organization, nature of economy
and economic conditions, social cultural factors, demographic trends, natural
factors, global trends and cross-border development, clients and suppliers,
technological developments, laws and government activities.
Business Environment
Two parts of the business environment
Internal and External Environment
consists of conditions and forces
within the organization which consists of the owners, board of directors, employees,
the organization’s culture, the physical work environment and the various
departments that make up the organization.
Internal Environment
The internal environment consists of
Owners, Board of Directors, Employees/Managers, and Culture
e those who have legal property rights to
business; can be a single individual who establishes ad runs a small business, partners who jointly own the business, individual
investors who buy stock in a corporation, or other organizations.
These sets of people have a stake in the business and are mindful of
how the business is being managed.
Owners
elected by the stockholders and is
charged with overseeing the general management of the firm to
ensure that it is being run in a way that best serves the stockholders
interest.
Board of Directors
the workers who perform the day to
day operation of the organization and ensure that work is being
accomplished to achieve the organizations desired goal. These sets of
people are being supervised and managed by the managers of an
organization.
Employees
are responsible for combining and
coordinating the resources of an organization including the workers to
ensure that organizations achieve their goals.
Managers
the collective
behaviour of humans that are part of an organization. The extent to which this is shared by all, leads to an
important factor contributing to success.
Culture
has profound impact on the operations of a firm. It includes
suppliers, competitors, distributors, customers, labor markets, and financial
institutions.
External Environment
External Environment is also known as
the immediate operational environment
The External Environment consists of
Suppliers, distributors, customers, and competitors
These are individuals and companies that provide an organizations
with the input resources (such as raw materials, component parts, or
employees) that it needs to produce goods and services. In return, the
supplier receives compensation for those goods and services.
Suppliers
are organizations that help other organizations sell their
goods or services to customers. The decisions that managers make
about how to distribute products to customers can have important
effects on organizational performance. if they become so large and powerful that they can control
customers’ access to a particular organizations’ goods and services,
they can threaten the organization by demanding that it reduce the
price of its goods and services.
Distributors
They are individuals and groups that buy the goods and services of an
organization; may be an individual, an institution such as
school, hospital and other organizations or government agency.
Customers
Organizations that produce similar goods and services to a
organization; are organizations that
compete for the same competitors
Competitors
A high level of rivalry often results in
price competition, and fallen prices reduces access to resources and lower profits
a management
method whereby an organization can assess major external factors that influence
its operation in order to become more competitive in the market.
PEST analysis
PEST stands for
Political, Economic, Social, and Technological
This environment is primarily concerned with complex
laws, regulations and government agencies and their
actions which affect all kinds of enterprises in varying
degrees. The government, in improving the standard of living of the
society, uses the resources within which the company is
endowed to play the three major roles of participants,
facilitators and regulators of business activities.
Political Legal Environment
The general pattern of the economy can be viewed from
three dimensions: the economic system, the general
business cycle and the economic policies.
The main economic effect is on business organizations
today are usually classified as fiscal and monetary policies.
Economic Environment
deal with the use of government spending
and taxation to improve the position of the economy.
Fiscal policies
refer to the use of monetary instruments
through the Central Bank of the Philippines, to influence
the money in circulation.
For example, the tight monetary control measures
implemented by the government as part of the national
economic development strategy have a considerable impact
of business.
Monetary policies
The way of life of the people. These are made up of
attitudes desires, expectations, beliefs, degree of education
and customs of the people. The attitude of the society to a business also depends on
whether the firms have been responsive to the needs ad
aspirations of the society.
Socio-Cultural Environment
This comprises the innovations and improvements in
methods, machines and materials. Technology can be
acquirement through indigenous technology or transfer of
technology. Technology has considerable impact on business by
enhancing competitive provision of a variety of products,
efficiency of products ion, mechanization and automation
of the organizational system and improving the method of
planning, scheduling and controlling of the industrial
system.
Technological Environment
