ibay business policy
TRANSCRIPT
TOTAL ENVIRONMENT OF A FIRMTOTAL ENVIRONMENT OF A FIRMTOTAL ENVIRONMENT OF A FIRMTOTAL ENVIRONMENT OF A FIRM
• From the viewpoint of top management, the environment which the firm operates consists of a rich kaleidoscope of cultural, political and economic factors.
• These serves as a combination of constraints and opportunities within which the internal make up of the firm impinges on it as constraints or strengths, weaknesses or capabilities.
• For purpose of establishing the company’s policies and goals, therefore, top management must fully understand and take into account all these external and internal environmental considerations, lest the goals may turn out to be far from being realistic.
THE TOTAL ENVIRONMENTOF THE FIRM
•Once top management has set the company’s goals, it must establish its strategic plan toward achieving these goals. As noted in the preceding chapter, this plan is basically a strategy for “getting from where we are now to where we want to be.”
•Again, it is essential that, during the planning process, top management should be fully cognizant of the firm’s capabilities as well as the weaknesses (“to know where we are now”), and to understand where the firm stand at all times in relation to its environment.
THE TOTAL ENVIRONMENTOF THE FIRM
• Change also takes place within the firm itself – in those areas where top management in fact, has control over: its financial structure, the physical plant or factory, the capabilities of its management and its workers, and so on.
• These changes must be considered hand-in-hand with the external environment in accordance with the goals and the overall targeted plan established by top management.
THE TOTAL ENVIRONMENTOF THE FIRM
Educational factors Socio-cultural factors Economic factors Administrative and political factors International factors
FACTORS AFFECTING THE ENVIRONMENT OF THE FIRM
EDUCATIONAL FACTORS
an integral part of the environment
the literacy level and the percentages of the population that belong to the different educational strata for one, bear upon the marketing approach for the products which the firm is to produce.
EDUCATIONAL FACTORS
the types-even qualities of goods will be in demand vary according to individual tastes, which in turn are shaped by the educational backgrounds of the prospective consumers.
media and techniques used in advertising these products are also largely dictated upon by these same factors.
EDUCATIONAL FACTORSEDUCATIONAL FACTORS
percentages of literacy and educational levels also affect the type of workers and managers the firm will be able to hire in the course of working towards its goals.
EDUCATIONAL FACTORS
there is little the individual firm can do to affect the external educational environment
but there is much the firm can do about the educational levels of its workers and managers. (e.g., literacy and technical training)
EDUCATIONAL FACTORS
personnel development must thus be an important part of any long range plan if the firm wishes to strengthen its ability to achieve its set goals.
SOCIO-CULTURAL FACTORS
socio-cultural factors that are present in the country should be given critical consideration by top management because these influence both the firm’s external environment as well as its internal system.
SOCIO-CULTURAL FACTORS
Four socio-cultural factors:
1. The legacy of the frontier: a spirit that has fostered a sense of opportunity pervading American industrial and community life;
2. Faith in business and in the individual: a faith reflected in the high esteem the American national community gives the businessman;
SOCIO-CULTURAL FACTORS
3. Belief in change: a belief whereby a successful experiment is not allowed to crystallize into mere custom and that an unsuccessful experiment is accepted as an occupational risk, valued for the experience that was gained in the process; and
4. The idea of competition: an ideal that leads “even those companies which are not operating in a highly competitive market to run their enterprises as though they were…” (American managers) know that their firms must maintain their competitive positions if they are to provide their people with a continuing career.
SOCIO-CULTURAL FACTORS
Although, socio-cultural factors that work within the firm greatly affect management style, practices and the contents of the operating policies, this should not preclude top management from drawing up company policies and objectives, designing strategic plans, organizing, formulating operating policies, controlling operations, etc.
SOCIO-CULTURAL FACTORS
“view toward change”
--- As a country develops, its culture changes accordingly. Development, by definition, means change, and the most important aspect of change is neither economic nor technological but the change in people. And, change in people ultimately means change in culture, in the attitudes, in the value system.
ECONOMIC FACTORS
The size of the market is inevitably a critical factor. This relates to present products, as well as to other products and/or services into which the firm might diversify. Hence, corporate goal-setting and the strategic planning effort must depend closely on prospects for future growth in GNP, in per capita income, and on income distribution. Every effort must be made to look as far into the future as possible to anticipate this. A government’s five-year plan, for instance, can be of great assistance.
ECONOMIC FACTORS
Experience has shown, however, that governments tend to overly optimistic in operating their development plans. Such plans are often drafted by dreamers and readjusted politicians. Thus, the firm cannot base its plans on the assumption that the government will be realized. It will have to make a critical appraisal of the development plan.
Of particular importance, beyond GNP growth is the popular growth. This is usually underestimated, resulting in increased consumption decreased investment, slower growth, lower per capita income, and a sharper but broader-based pyramid of income distribution. All these results are critical to the demand for different types of products and services and to many other aspects of the environment.
ECONOMIC FACTORS
Competition is multi-faceted. The existence and potential growth of competition are economic factors which are of primary importance in developing a firm’s strategy.
The amount of competition versus cooperation between firms in the same field is partially a socio-cultural factor, while the government’s attitude toward monopoly or oligopolistic agreement is a political factor. Top management must be lightly sensitive to each of these, particularly to the latter.
ADMINISTRATIVE AND POLITICAL FACTORS
Operational aspects of a business firm that need a permit from the government:
1. Start a company2. Buy land for factories3. Utilize foreign exchange import equipment
or raw materials4. Export goods and services5. Enter into an agreement with a foreign firm6. Increase prices
ADMINISTRATIVE AND POLITICAL FACTORS
The government gets involved in labor negotiations. The government has a monopoly on the importation of many critical items, etc. Government laws, policies, and the ways in which these are administered in effect become crucial to the firm’s operations. On top of these, since permits and other pertinent actions cannot usually be obtained by writing a letter, the chief executive officer (or his assistant) must normally attend to these in person, instead of using his time as an effective internal manager. This is, hence, a major cause of inefficiency in management.
ADMINISTRATIVE AND POLITICAL FACTORS
In many developing countries, however, the environmental factor that is of overwhelming importance to industrial managers is the attitude of the government toward private enterprise per se, which at times threatens the actual survival of the firm.
ADMINISTRATIVE AND POLITICAL FACTORS
It is important for the manager to remember that the political climate is only a part of the total environment acting upon his firm.
Political factors operating in the environment should not, therefore, overwhelm management
It should not prevent the utilization of scientific management.
It merely means that the goals and strategy of the firm must take this aspect of the environment into proper perspectives in order or be realistic and as effective as possible.
INTERNATIONAL FACTORS
International environmental factors are those which affect a firm’s ability to most efficiently import equipment and goods, to export part or all of its production, and to enter into agreements with the foreign companies so as to gain access to technology, patent rights, management know-how, financing and markets.
ENVIRONMENTAL CONSTRAINTSENVIRONMENTAL CONSTRAINTSENVIRONMENTAL CONSTRAINTSENVIRONMENTAL CONSTRAINTS
EDUCATIONAL FACTORS
Literacy level
Specialized vocational and technical training and general secondary education
Higher education
Special management program
Attitude toward education
Education match with requirements
SOCIO-CULTURAL FACTORS
View toward industrial managers and management
View of authority and subordinates
Inter-organizational cooperation
View toward achievement and work
Class structure and individual mobility
SOCIO-CULTURAL FACTORS
View toward wealth and material gain
View toward specific method
View toward risk-taking
View toward change
ECONOMIC FACTORS
Market size
Central banking system and monetary policy
Fiscal policy
Economic stability
Organization of capital markets
Factor endowment
Social ahead capital
Competition
ADMINISTRATIVE AND POLITICAL FACTORS
Relevant legal rules of the game
Defense policy
Foreign policy
Political organization
Government attitudes toward private enterprise
Political stability
INTERNATIONAL FACTORS
View toward foreigners
Nature and extent of nationalism
General balance of payments position
International trade patterns
Memberships and obligations in international financial organizations
International organization and treaty obligations
INTERNATIONAL FACTORS
Power or economic bloc grouping
Relevant legal rules for foreign business
Import-export restrictions
International investments restrictions
Profit remission restrictions
Exchange control restrictions
THE TOTAL ENVIRONMENT OF A FIRM
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