preview

The Effect of Business Environment on the Effectiveness and Functioning of an Organization

Decent Essays

The Effect of Business Environment on the Effectiveness and Functioning of an Organization

To best answer the question of how different business environments affect the effectiveness of a business it is imperative that we first define what the business environment is and what all its factors are. The business environment perse' is: the environment in which a firm exists, this setting is a dynamic unity of everything inside and outside of the Company which adversely affects the activities of a firm either directly or indirectly. The idea that; "a firm does not exist in isolation and that it works within its overall environment"; just reinforces the importance of this environment to all business' and …show more content…

The factors which comprise the int. environment are: first, the customers, they comprise most of the firm's sales, income and later profits so they must always be satisfied or the company loses money. The second factor in the int. environment is the competition. The importance of which: is knowing and planning the most effective way to beat competitors; either with new ideas or cheaper products. Comprising the third factor of the internal are the employees these are the people who make the company operate and its progress is very much dependent on their work. The firm in turn must look after their well being and keep them happy so they will be motivated to work well. An unhappy labor force usually means an unproductive company. In any form of production it is hard to forget the suppliers; they are the firms who provide other firms with raw materials and tools needed in production. A firm with a good supplier is assured of high quality materials at good prices and on time. Thus making this factor an important consideration. Wrapping up the internal environment are 2 factors which work hand in hand. The first are the share holders, being investors the so called cash cows; these people can influence policies and procedures within the company. They also expect good dividends on their investment and if are not satisfied can withdraw their

Get Access