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In an effort to achieve all this, a business entity has to interact with its internal as well as its external environments. According to Janis, Teheran and T reran (201 0), business environment refers to those aspects of the surroundings of business enterprise which have influence on the functioning of business. The world is dynamic and at times it undergoes through some changes which the business entity should be able to read so as to adapt well to these changes and hence be in a position to be able to continue its operations.
It true that the managers cannot always regulate or control their environments, so it is always better to be aware of any changes that occur or that may occur, simply because these changes ultimately affect their daily day actions and decisions. For example, media reforms in Zanzibar that led to the opening up of airwaves in broadcasting to other players has had an impact on the operations of the Zanzibar Broadcasting Corporation’s radio and television channels.
Also, related to this, was the coming on board of the free to air satellite dishes, which have made it possible for people in Zanzibar to have access to other channels other than the CB channels. Thus, for the managers of those existing channels, it was not at all possible to ignore the increased service and competition brought about by the coming on board of competitors.
It is therefore a fact that, If managers do not respond to competition in appropriate time, then this will turn lethal for their organization. A business can never be profitable if it is ignoring the dynamic internal and external environment. By examining the internal and external environment, an organization develops its long term objectives and then it chooses a particular strategic pathway to achieve those objectives.
But this entire recess can be completed only after a careful analysis Of internal and external environment. According to objectifications. Com, the internal environment of business are the conditions, entities, events and factors within an organization that influence its activities and choices, particularly the behavior of the employees. An organization’s internal environment is actually, composed of multiple elements existing within the organization, including management, current employees and most importantly corporate culture, which ultimately defines the employee behavior. Teheran et al (2010) concur with this when hey state that, internal environment includes internal factors of the business which can be controlled by the business.
It refers to environment within the organization. It includes objectives of the business, managerial policies, different departments of the organization, management and employees of the organization, labor management relationships, brand image and corporate images, physical resources including infrastructure available within the business, vision and thinking of top management, research and development activities of the organization, working conditions in the organization, morale and commitment of human resources and so on. The components of internal environment are usually within the control of business. Quality of human resources, a component of internal environment is largely responsible for success or failure of the business entity. If employees of an organization are skilful and committed, then they can take the business entity to great heights.
However, on the other hand, if they are disgruntled, to an extent that they can even go on an industrial action, the activities of the organization can be jeopardized. If directors of an organization have broad vision and creative thinking, they can foresee changes that may affect the organization. As a matter of fact, they can then craft appropriate policies to deal with such changes on time. To some extent, the National Railways of Zanzibar can be cited as an example of an entity that failed to adapt to changes in the transport business environment and as a result it is struggling to survive. Marketing activities, which include research and development, are also part of the internal environment of a business unit.
If the company is good at research and marketing activities, it can take an edge over competitors and can get larger market share. Connect Wireless can be given as an example of a many that has a strength in its research and development, whereupon after realizing that people were being charged exorbitant rates for transactions in the banking sector, it came up with a facility to transfer money using phones. Available physical and financial resources are also part of the internal environment. If the business enjoys sufficient financial resources, it can afford to spend more on research and promotional activities. Such activities aim at getting to know more information of the market and its needs and it is based on such a strength that new, appropriate products can be developed.
For example, the need for people in Zanzibar to have access to internet in their homes led to availability of USB modems to people from mobile service providers such as African, Powerful, Telltale, Connect and others. Working conditions in an organization is another factor that can be looked at when the internal environment of an organization is being looked into. Where working conditions are unfavorable, employees will not stay long in the organization. As a result, there will be high labor turnover in the organization which in turn will result in poor service delivery by the organization. Dilemma (2012) in his research on the impact of high labor turnover on the service delivery of Mutual Rural District Council found out that excessive turnover had been costly and harmful to the operations of the entity.
Gain et al (2010) define the external environment of a business as, “the set of external factors such as the economic factors, socio-cultural factors, government and legal factors, demographic factors, ego-physical factors which are uncontrollable in nature and affect business decisions of a firm or company”. Reinforce and Schools, cited by Gain et al (201 0), “The environment of equines consists of all those things to which it is exposed and by which it may be influenced directly or indirectly’. The external environment factors of a business can be categorized into: l) Micro/operating environment, which includes suppliers, customers, market intermediaries, competitors and public as well as ii) Macro/General environment, which encompasses economic environment, political environment, socio-cultural environment, technological environment, natural environment, demographic environment and international environment. This presentation will explain customers, public, economic environment, genealogical environment as well as demographic environment. Customers are a central point of any business organization.
Success of a business organization depends upon identifying customers’ needs and then making efforts to produce products that will satisfy such needs. Because of many players in several sectors of the economy it has become challenging for some business entities to satisfy the needs of customers. As a result, those that fail to adhere to customers’ needs will lose Customers to competitors. An example is that of Intone, a mobile service operator that has lost a lot of customers to Connect Wireless. According to Gain et al (201 0), public is any group that has actual or potential interest in the business.
To achieve this interest, it has its impact on the business. An example of public is media. This includes newspapers, magazines, or journals which may publish favorable or adverse remarks about the company. Both types of remarks in media have effect on the reputation of the company. For example, negative reporting about the Zanzibar Open University in 2011 led to a sharp drop in the enrolment statistics of that institution.
The economic environment refers to those economic factors which have impact on the working of business, that is, economic system, economic policy, nature of economy, trade cycles, economic resources, level of income, distribution of income and wealth and so on. For instance, the level of income of the working class determines the disposable income of those employed. As a matter of fact, the more disposable income workers have the more products they would buy. For example, if a lot of people have significant disposable incomes it means that for a business entity that is into car selling, more cars may be bought. Technological environment comes about as a result of systematic application f scientific or other organized knowledge to practical tasks.
The past fifty years or so has seen a substantial development of technology, enabling man to save lives, generate and distribute energy, discover new materials and substitutes as well as introduction of machinery in place of manpower. Some developments resulting from technological innovations have been seen to wonders while some are destructive. For example, knowledge that was developed leading to SUCCessfUl operations of hearts and transplantation Of kidneys have been seen as wonders whilst the production of hydrogen bombs have proved to be a horror. Demographic environment is the study of features of population such as its size, growth rate, age composition, sex composition, education level, income level, family structures and so on.