Business Management - Factors Affecting Organisations

These factors create certain expectations and requirements for organizations, which in turns determine the organization's direction and strategy. Whereas internal environment is made-up of several internal subsystems. Internal subsystems work together systematically and drive the organization in the direction which is in conformity to external environment demands; thereby making the organization effective and a good fit with external environment. (McShane & Steen, 2012, p.6)

The external environment or external audit are the factors outside the company that affect the company's ability to function. (Writer, L. G. 2011) It is made up of three components. The first being the general environment. Legal, political, social, technology, environmental, and economic factors are all included in the general environment.

A company’s external environment includes all relevant factors and influences outside the company’s boundaries. By relevant means important enough to have a bearing on the decisions the company ultimately makes about its direction, objectives, strategy and business model.

Internal environment is the events and trends inside an organization that affects management, employees, and organizational culture. For example, where I work the internal environment is all about the production and numbers. Even though we as a team get the production done on time the employees don’t feel appreciated. Better said, there are no employee incentives to keep us motivated. Therefore, it is really important to focus on organizational culture because it affects the way individuals work, feel, and think about an organization. There are three components that make up organizational cultures, which are creation, success, and change.

The internal and external fact of functions affects management every day. It is the performance that an organization or company within itself could turn out positive or negative. This also pertains to the outside world, where the factors can be beyond the control of the organization in positive or negative situations. The concepts in management implements the four functions needed for the core requirement in management. Planning is the foundation base which all others areas are built. There may be sudden strategies required to be implemented

Sociocultural factors are society’s norms, cultures and values. This may impact Ralph Lauren because the company has to learn the demographics of different areas. The demographics show the different characteristics and attributes of people so companies such as ours can understand the buying power of the people. When the company learns this information they can determine whether or not products will appeal to customers and how many potential customers for these products might arise. Also with the growing trends of people and different styles Ralph Lauren has to make various pieces to fit all their needs.

External environmental factors are the macro environment affecting a business; they are factors outside the company and which they have no control over (Kotler & Armstrong, n.d.) these external factors bring about impacts to the company thus a company should always be prepared to react.

The internal influences of an organization will refer to events, factors, people, systems, structures and conditions inside the organization that will be generally under control of the company itself. The company’s job statement, organizational culture and style of leadership are the factors that are typically associated with the internal environment of an organization. In fact it is the internal environment that influences organizational activities, decisions and employee behaviour and attitudes. Also changes in the style, organization’s job or culture could have a major impact on the organization.

External factors are outside influences that can impact a business. Various external factors can impact the ability of a business or investment to

An analysis of the external environment includes the factors in a business’s external environment about a business's industry, competition, and political and social environments, and affects the firm’s strategy (Aaker, 2001).

1.First, describe each of these areas and discuss why they are important to self-awareness and effective managerial performance.

Technological - how the rapid pace of change in production processes and product innovation affect a business.

In the process of manufacturing, packaging, marketing and other necessary business activities, businesses interact with internal and external factors which may affect the business and can be affected by the business as well. A combination of both of the factors comprises the business environment in which the business operates. The internal factors refer to the factors those function within the business organization and the business can control or facilitate them as needed. Some prominent internal factors are the working conditions, employees, employer to employee relations, organizational culture and organizational structure etc. For a British-American online chain store like ASDA, the total numbers of employees working for the organization (140,000 employees working in 500 stores) is a key internal factor. On the other hand, external recruitment are factors as such as political factors(Laws and regulation system, governmental activities and ownership module, tariffs/ Taxation and trade barriers, conflict between political parties and socio-political unrest etc.) Macroeconomic concerns (interest rate, exchange rate of currency, employment rate, unemployment rate, discretionary income, GDP, recessions, depressions, inflation etc.), microeconomic concern (market size, demand and supply diagram, distribution channel and delivery mode etc.), social and technological factors which are not in the control of the business but affect the business by their activities

In today’s business industry, there are a number of management and external factors that each organisation has to deal with during day-to-day circumstances. These factors include topic areas such as technology, sustainability, leadership and management and the common environmental factors. On a global scale, every organisation will act differently which brings the number of competitive elements to rise. Within my essay I will discuss these issues in relation to Marks and Spencer, a major British multinational retailer. As a leading high street name, they specialise in the selling of clothing, home goods, and luxury food products making it a major competitor to other retailers.

External environment is quite important for the any company, because it creates the conditions that the organization need to run the business in. In order to develop company strategy successfully, the external environment need to be analyzed properly. One of the best techniques to do that is Five Porter’s Forces analysis.