The firm and its environment in organization and management. 02_The_Firm_and_Its_Environment (2).pdf 2022-12-20
The firm and its environment in organization and management Rating:
8,9/10
1652
reviews
The firm and its environment are important concepts in organization and management that have significant implications for the success or failure of a business. The firm refers to the organizational structure and functioning of a business, while the environment refers to the external factors that can impact the firm. Understanding the relationship between the firm and its environment is essential for effective management, as it allows managers to anticipate and respond to changes in the external environment and make informed decisions that help the firm achieve its goals.
One of the key ways in which the firm and its environment are connected is through the concept of strategic fit. Strategic fit refers to the alignment between the firm's internal resources and capabilities and the opportunities and threats presented by the external environment. A firm that has a strong strategic fit is able to effectively leverage its internal strengths to take advantage of external opportunities and mitigate the impact of external threats. On the other hand, a firm that lacks strategic fit may struggle to compete in its industry and may be vulnerable to external disruptions.
The firm's external environment can be divided into three main categories: the microenvironment, the mesoenvironment, and the macroenvironment. The microenvironment includes factors that are directly related to the firm, such as customers, suppliers, and competitors. The mesoenvironment includes intermediaries that play a role in the firm's operations, such as distributors, regulators, and the media. The macroenvironment includes broader societal forces that can impact the firm, such as economic conditions, technological changes, and cultural trends.
Managers must pay attention to all three levels of the firm's environment in order to make informed decisions and achieve strategic fit. For example, a manager might consider the impact of technological changes on the firm's operations, as well as the impact of cultural trends on the firm's customer base. By analyzing the firm's environment in this way, managers can identify opportunities and threats and develop strategies that help the firm adapt to changing conditions.
In conclusion, the firm and its environment are closely connected in organization and management. Understanding the relationship between these two concepts is essential for effective management, as it allows managers to anticipate and respond to changes in the external environment and make informed decisions that help the firm achieve its goals. By considering the micro, meso, and macro environments, managers can develop strategies that achieve strategic fit and enable the firm to thrive in a dynamic and competitive business world.
The firm and its environment Chapter blog.sigma-systems.com
Geographical Boundary- the internal and external forces and conditions arise within that boundary that affect the organization. In other words, business is influenced by its environment and, in turn, to a certain degree, it will influence the external forces. These organizations evolved because of economics, and no one person understands how to harvest lumber, drill and refine oil, sell furniture, build cars, and act as a salesperson. Kim Seng — Third, the environment shapes the various strategic decisions that executives make as they attempt to lead their organizations to success. Other government organizations acted as taxing authorities on these transactions and government organizations which are different from these provide legal support for any purchase transactions.
Each factor affects all the other factors. Mutual Dependence of Factors- all the factors of the environment are mutually dependent. The business firm consists of a set of internal factors and is confronted with a set of external factors i. The firm can alter or modify internal factors to its advantage. Business firm may be visualized as an institution in society surrounded by environment i.
Three features are common to this web of relationship between business and its environment: 1 There is symbiotic relationship Fig. In biology, organisms that adapted to similar environments often appear to be similar. The oil, natural gas, and electricity which were used in the harvest of the wood, its transport, its sale, and its delivery were provided and administered by other organizations as well. They keep on changing as time passes and so does business. Moreno, MBA, CFE Page 3 INTERNAL ENVIRONMENT - Company Plans and Objectives - Changes in policies that may affect the relationship among managers and between management and employees - Organizational Structure - Simplifying the line of authority that promotes responsibility and accountability and aid in fast decision making - Plant and machinery - Relationship of the organization with the employees and their productivity - Human resources - Relationship of the organization with the employees and their productivity - Financial resources - financial stability to meet production and operation requirement - Corporate image - Reputation of the company in the eyes of the employees and outsiders - Labor management and relationship - relationship helps in increasing the morale of the employees and motivates them to put efforts in the business.
Why Does the Environment Matter? This is similar to how different biological organisms evolved to participate in an ecosystem. Internal and External- internal is composed of forces and conditions within the organization, whereas external environment is composed of the forcers and conditions outside the organization. Organization and Management Prepared by Mrs. ADVERTISEMENTS: 5 Price to be fixed for the product, etc. With the exception of humans, none of the organisms take classes in environmental science either! As the human body must consume oxygen, food, and water, an organization needs to take in resources such as labor, money, and raw materials from outside its boundaries.
Government organizations manage the roads or waterways that the wood was transported on and which the finished goods were delivered across. Either that same organization or another acted as a carpenter to carve and assemble the wood pieces in that chair. The wood was harvested or recycled by a different organization, which sold it to the carpentry business. Affects Organization- The profitability, growth, prosperity, diversification, amalgamation, expansion, culture and tradition of organization largely depend on the environment in which it exists and operates. This same concept helps explain how firms either change or go out of business when confronted with changes in their business environment. Their wings do not come from a common ancestor: they evolved independently to make flight possible.
3.2 The Relationship between an Organization and Its Environment
However, the geographical limit is determined by the scope of operation of the forces and conditions outside the organization. Subway, for example, simply would cease to exist without the contributions of the franchisees that operate its stores, the suppliers that provide food and other necessary inputs, and the customers who provide Subway with money through purchasing its products. Is the item offered for sale which can be goods or services. Business is an all profit-seeking activities and organization that provide goods and services necessary to an economic system. A collection of people working together to achieve a common purpose. CHAPTER 2 The Firm and its Environment At the end of this chapter the learners shall be able to analyze the various environmental forces affecting the firm and summarize these using Political Economic Social and Technological Analysis PEST and Strengths, Weaknesses, Opportunities and Threats SWOT Analysis frameworks.
For example, social factor affects economic, political, religious, legal, technical, races, and other factors. They just do what they evolved to do, and nature does the rest to mediate their interactions. While most organizations simply react to major technological trends, for example, the actions of firms such as Intel, Microsoft, and Apple help create these trends. None of the organisms fully understands how their organs, cells, or biological systems functions even humans have to break this into different subject areas. Seeking for and sorting through about the environment.
The external or environmental factors are beyond the control of the business firm and the success of the firm will depend to a very large extent on its adaptability to the environment factors i. It is said that business is a product of environment OR Business is the creation of its environment. Moreno, MBA, CFE Page 1 THE FIRM AND ITS ENVIRONMENT What is a business? Complex Factors- it consists of many factors, forces, conditions, events, influences, institutions arising from many so 3. Overall, the environment has a far greater influence on most organizations than most organizations have on the environment. Some aspects of the general environment, such as demographics, simply must be taken as a given by all organizations. For example, organisms found in the desert usually have evolved ingenious ways to conserve water. ORGANIZATION AND MANAGEMENT Chapter Quiz No.
The rebuilding of infrastructure and dwellings requires concrete, steel, and other materials. That chair was sold to her by a retail store, which is a for-profit organization. There are several reasons for this. The Every action that an organization takes, such as raising its prices or launching an advertising campaign, creates some degree of changes in the world around it. An organization cannot survive without the support of its environment. The concept of evolution helps biologists understand how organisms adapt to their environment over time. The examples of internal factors are nature and number of personnel, physical facilities, organisation and functional means, such as marketing mix, to suit the environment.
Environmental conditions also need to be taken into account when examining whether to start doing business in a new country, whether to acquire another company, and whether to launch an innovative product, to name just a few. What Is the Environment? For example, firms in industries with declining sales usually find ways to cut costs to stay afloat. The same is the relationship between other environmental factors too. Japanese concrete manufacturers, steelmakers, and construction companies are likely to be very busy in the years ahead. Exchange of Resources- every organization imports its resources, such as: human, materials, financial, physical and informational, from its environment and exports its good or services outside to its environment.
