External Environment Factor

8 August 2016

There are 7 external environmental factors. They are political, economic, sociocultural, technology, customers, competitors and suppliers. Each of these factors have a great impact to an organization. They offer both opportunities and treats to organization. POLITICAL factors refer to the relationship between a business and a government. Every organization must spend a great time and money to meet with governmental regulation. ECONOMIC factors refer to the conditions of the economic system which an organization operates. Every organization should focus on economic growth and stability to survive long term.

Economic factors will also affect customers buying power and pattern. For example, when economic is good, customers will spend their money wiser if compared to a bad economic. SOCIOCULTURAL factors refer to customer preferences and tastes. 3 factors should be consider in social cultural factors. They are demographic, lifestyle and social values. TECHNOLOGY factors refer to the relationship between technology and organization. High technology are used to increase efficiency and effectiveness.

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To success long term, an organization should respond well in the changing on technology.

CUSTOMERS are clients who absorb the organizational output. It is important for an organization to understand and fulfil customers’ needs and wants. COMPETITORS can produce competitive forces. Competitive forces can provide opportunities and threats to an organization. Every organization should build a strong relationship with their SUPPLIER. It is important as it can ensure a steady needed input and the lowest price and delivery time. KEY ELEMENT WHEN DESIGNING ORGANIZATIONAL STRUCTURE CENTRALIZATION means decision making is concentrated at upper levels in the organization.

DECENTRALIZATION means decision making are delegated to the lower levels of the management. Centralization usually common in a field that are sensitive, such as finance. Decentralization usually common in a field that require immediate decision making, such as marketing. DETERMINANTS OF CENTRALIZATION AND DECENTRALIZATION are: The nature of the business Size of organization The external environment Management level Management functions Organizational strategy Organizational Culture Geographical SPAN OF CONTROL is the number of employees who that are directly supervised by a manager.

The width of span of control is affected by skills or abilities of the manager, characteristics of employees, characteristics of the task and the characteristics of organization. The wider the span of control, the better the communication system. A more centralized organization will have a narrow span of control; a more decentralized organization will have a wide span of control. BASIC TYPE OF ORGANIZATIONAL STRUCTURE There are a few TYPE OF ORGANIZATIONAL STRUCTURE. The first one is SIMPLE STRUCTURE. It is low departmentalized, wide spans of control, centralized authority and little formalization.

The second one is FUNCTIONAL STRUCTURE. It is departmentalized by function. The third one is DIVISIONAL STRUCTURE. It is a separate business units or divisions with limited authority, and under the control of the parent corporation. The fourth one is MATRIX STRUCTURE. It is a structure that certain individuals report to more than one superior. MARKETING – CONSUMER BUYING BEHAVIOUR HUMAN RESOURCE PROCESS HUMAN RESOURCE MANAGEMENT is an organizational activities in effort at attracting, developing, and maintaining an effective workforce. The first stage in HUMAN RESOURCE PROCESS is human resource planning.

Human resource planning ensures that organization have the right number and kind of people in the right place at the right time. Job analysis, job description and job specification are conducted during human resource planning. The organization will assess current HR resources. After that, organization will need to forecast HR demands and supply. They need to forecast both internal and external demand. Internal demands are the number and type of employee that will be in the firm in future time. External demands are the number of people that will be available for hiring in the market.

Next, they need to assess current employees by preparing replacement chart and employee information system. Replacement chart will list each management position, who occupied it, how long will that people service, and who is qualified for the replacement. Employee information system is a computerized system that contain all employees’ information such as education, skill work experience and career aspiration. Then, they will recruit human resource. Recruiting is the process of attracting qualified people to apply for job in the organization that is seeking to fill.

There are two type of recruiting, internal and external. Internal recruiting is considering current employee as candidate. External recruiting is attracting people outside an organization to apply for job. After that, they need to develop the newly recruited employee by providing training. The type of training are on-job training, off-job training, and vestibule training. They also need to maintain them by giving reward according to their performance. The reward can be in the form of incentive, bonus, compensation and benefit. QUALITY IMPROVEMENT AND TOTAL QUALITY MANAGEMENT (TQM)

TOTAL QUALITY MANAGEMENT (TQM) is an activities involved in getting high-quality goods and services into the marketplace. There a several TOOL FOR TOTAL QUALITY MANAGEMENT. ISO 9000 is a tool. It is a program certifying that a factory, laboratory, or office has met the quality management standards set by the International Organization for Standardization. Next is ISO 14000. It is a certification program attesting to the fact that a factory, laboratory, or office has improved its environmental performance. Competitive product analysis is another tool.

Competitive Product Analysis is the process which a company analyzes a competitor’s products to identify desirable improvements. The next one is quality improvement team. It is a collaborative groups of employees from various work areas work together to improve quality by solving common shared production problems. Getting closer to the customer is also a tool. Customers are the driving force for all business activity. To be the most successful firms, they should keep close to their customers and know what they want in the products they consume.

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