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THE ENVIRONMENTS OF LARGE ORGANISATIONS

THE ENVIRONMENTS OF LARGE ORGANISATIONS. CHAPTER 1.3. THE ENVIRONMENTS OF LARGE ORGANISATIONS. The term environments is used to describe the context in which business is carried out. The environments of organisations are divided into: Internal External

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THE ENVIRONMENTS OF LARGE ORGANISATIONS

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  1. THE ENVIRONMENTS OF LARGEORGANISATIONS CHAPTER 1.3

  2. THE ENVIRONMENTS OF LARGE ORGANISATIONS The term environments is used to describe the context in which business is carried out. The environments of organisations are divided into: • Internal • External Management has most control over it’s INTERNAL environment: staff structure and policies. The EXTERNAL environment presents managers with more difficulties. It provides opportunities and threats, the external environment consists of: • The operating environment • The Macro environment

  3. MACRO ENVIRONMENT Economic conditions Society’s attitudes OPERATING ENVIRONMENT Customers INTERNAL ENVIRONMENT Competitors Suppliers and creditors Special interest groups Education and training conditions Legal – Political conditions Technological factors

  4. THE OPERATING ENVIRONMENT The operating environment of a large organisation consists of four main factors: • Customers • Suppliers and creditors • Competitors • Special interest groups

  5. CUSTOMERS Customer satisfaction is central to business success. Customers have the ability to determine how thriving or unsuccessful a business will be. Therefore it is essential to maintain communication and relationships with customers in order to acquire feedback and criticism. This advice can initiate positive change for the future.

  6. SUPPLIERS AND CREDITORS In order to operate, large organisations need reliable suppliers of all the inputs necessary for production. Businesses also require a source of finance to fund their activities and growth. Creditors include banks, finance companies, fund managers and other businesses. A business needs valued creditors in order to afford premium products. If a businesses products are not of peak quality, customers are less likely to be satisfied and therefore less likely to return to the organisation.

  7. COMPETITORS Competition from other producers is a key part of an organisations operating environment. Competition is always changing and there is always potential for new opposition to emerge. Competitors are essential to an organisation as they give a basis for comparison and standard, therefore pushing a business to strive for ultimate success over it’s opposition.

  8. SPECIAL INTEREST GROUPS There are three types of special interest groups. Trade unions, consumer groups and special issue groups. These groups are responsible for creating awareness to the public and the corporate sector in order to alert them of legislation, social issues, advertising and safety. This pressures organisations to perform at their upmost standards.

  9. THE MACRO ENVIRONMENT The macro environment of a large organisation consists of five main factors: • Economic conditions • Society’s attitudes • Education and training conditions • Technological factors • Legal – Political conditions

  10. ECONOMIC CONDITIONS Economic conditions are a major part of the external environment faced by large organisations. The current state of the economy can be shown through: • Consumer spending • Level of unemployment • The rate of inflation • Wages rates • Business investment • Interest rates • Foreign exchange rates (value of the Australian dollar) These have many powerful effects on a business. A slowdown in consumer spending directly affects sales. An increase in interest rates makes it more difficult for organisations to borrow, and so on. Economic conditions especially effect a business if the products or services are want of society rather than needs such as an expensive restaurant.

  11. SOCIETY’S ATTITUDES Large organisations must take into account society’s attitudes and values. Society both constrains the activities and provides opportunities for businesses an example of this is ‘going green’. Looking for ways to be environmentally friendly would be approved by society but may be time consuming to begin with. Society’s prevailing attitudes influence many areas of corporate life: from acceptable products to employment practices such as equal opportunity.

  12. EDUCATION AND TRAINING CONDITIONS Modern organisations need highly educated and skilled employees. While most organisations provide training, they cannot afford to train staff in all the aspects of a complex business. Most of education and training is provided by schools, colleges, TAFE and universities. Educated and highly trained employees enhance a businesses infrastructure and growth, they also aim to set a high standard of service.

  13. TECHNOLOGICAL FACTORS Technology enhances a business as it helps utilize its facilities and assists with staying ahead of its competition. Failure to take the benefits of available technology almost always condemns a business to an uncompetitive position. For example, if a business doesn’t provide an EFTPOS machine as an available method of payment, it can determine whether a customer will continue using the business as it has limited facilities.

  14. LEGAL – POLITICAL CONDITIONS Large organisations operate within a complex framework of laws and regulations. Elected governments continue to make and amend laws that impact organisations these legal and political conditions are important in determining a businesses future. If an organisation fails to comply with legislation it can cause immense damages to the business. For example ‘Worksafe’ laws protect employees safety and provide benefits, if employers do not obey this legislation they can be fined, shut down and possibly imprisoned in extreme cases.

  15. GLOSSARY TERMS Macro environment: The broad or general elements in society that affect all organisations. Elements of this environment include economic conditions, legal – political conditions, technological factors, education and training conditions, and society’s attitudes. Operating environment:The factors that interact directly with an organisation as it seeks to do business, including customers, suppliers and creditors, competitors and special interest groups. Internal environment: The factors over which an organisation has most direct control, including staff, management structure, corporate culture and policies. Outsourcing: Allocating work to independent businesses. While the work is for the organisation, it is undertaken by a contractor who is not an employee of the organisation. Exchange rate: The value of one currency in terms of another. (The value of the Australian dollar in other countries) Regulation: The set of laws and rules made by parliament with the intention of controlling commercial behaviour. Tariff: The tax on imports as they enter a country e – commerce: The buying and selling of goods on the internet. Values: People’s idea of what is right and wrong, their moral standards, ethics, ideals and general morality. Australian Council of Trade Unions (ACTU): The peak trade union organisation with which the majority of Australian trade unions are affiliated.

  16. QUIZ www.proprofs.com/quiz-school/story.php?title=stj-environments-13

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