General characteristics of environment
Environment of direct influence
Environment of indirect influence
International environment
1. Heads should consider Wednesday as the organization as the open system depends on deliveries of resources, energy, shots, and also consumers. As the survival of the organization depends on the management, the manager is obliged to be able to reveal essential factors in an environment which will affect its organization. He has to offer suitable ways of response to external influences. The first problem which is the head – definition of environment faces. Environment includes such elements as consumers, competitors, government agencies, suppliers, the financial organizations and sources of manpower. One of ways of definition of an environment consists in division of external factors into two main groups. The environment of direct influence includes factors which directly influence operations of the organization and are influenced by direct influence of operations of the organization. It is necessary to carry to such factors suppliers, a manpower, laws and establishments of state regulation, consumers and competitors. The environment of indirect influence is understood as factors which can not make direct immediate impact on operation, but nevertheless affect them. These are such factors as state of the economy, scientifically - technical progress, sociocultural and political changes, influence of group interests and events, essential to the organization, in other countries.
General characteristics of environment:
The coherence of factors of environment is the level of force with which change of one factor uses on other factors.
Complexity of environmentis a number of factors to which the organization is obliged to react, and also the level of variability of each factor.
Mobility of the environment is a speed to which there are changes in an environment of the organization.
Uncertainty of environment is function of amount of information which the organization (or the person) concerning a concrete factor, and also functions of confidence in this information has.
Characteristics of the environment are excellent, but at the same time are connected with its factors. These characteristics describe factors of both direct, and indirect influence.
2. Environment of direct influence:
- Suppliers are a mechanism of transformation of entrances to exits. The main kinds of entrances are materials, energy, the equipment, the capital and labor. Some organizations depend on continuous inflow of materials (the machine-building firms, firms distributing goods, shops of retail trade). The impossibility to provide deliveries in the necessary volumes can create great difficulties for such organizations. Japanese are considered as founders of methods of restriction of stocks. Such system of supply demands close interaction of the producer with extremely the interconnected suppliers.
In other countries search of alternative suppliers or maintenance of considerable volumes of stocks can be necessary. However stocks connect money which should be spent for materials and storage, but not for other needs. For growth and prosperity the firm needs suppliers not only materials, but also the capital. Such potential investors a little: banks, programs of federal institutions for granting loans, the shareholders and individuals accepting bills of the company or buying it bonds. Adequate ensuring with labor the necessary specialties and qualification is necessary for realization of the tasks connected with achievement of goals.
- Many laws and public institutions also influence the organizations. Each organization has a certain legal status and it defines how the organization can run the business and what taxes to pay. The condition of the legislation is often characterized not only its complexity, but also mobility, and sometimes even by uncertainty. The organizations are obliged to observe not only federal and local laws, but also requirements of bodies of state regulation. These bodies provide compulsory implementation of laws in the respective spheres of the competence, and also introduce own requirements which often are also valid the law. In addition the regulating resolutions of local authorities complicate business.
- Consumers. Many accept the point of view according to which the only true purpose of business - to create the consumer. It is understood as the following: the survival and a justification existence of the organization depends on its ability to find the consumer of results of its activity and to satisfy his inquiries. Consumers, solving, what goods and services for them are desirable and at what price, almost all define for the organization, belonging to results of its activity. Thus need of satisfaction of needs of buyers influences interactions of the organization with suppliers of materials and a manpower.
- Competitors are an external factor which influence can't be challenged. The management of each enterprise understands that if not to meet the need of consumers also effectively as it is done by competitors, to the enterprise not to last long. In many cases not consumers, but competitors define, what sort results of activity can be sold and what price can be requested. Consumers – are not the only object of rivalry of the organizations. The organizations can conduct competitive fight for manpower, materials, the capital and the right to use certain technical innovations.
3. Environment of indirect influence:
- The technology is at the same time internal variable and an external factor of great value. Technological innovations influence efficiency with which products can be made and sold, on the speed of obsolescence of a product, how it is possible to collect, store and distribute information, and also on what sort of service and new products expect consumers from the organization. The organizations dealing directly with technology of high level, the knowledge-intensive enterprises have to be able to react quickly to new development and to offer innovations.
- State of the economy. The management has to be able to estimate as the general changes of state of the economy will affect operations of the organization. The condition of world economy influences the cost of all entered resources and ability of consumers to buy certain goods and services. State of the economy can strongly affect opportunities of receiving the capital by the organization for the needs. It is caused by that the federal government often tries to smooth consequences of deterioration of an economic situation, regulating taxes, the money supply and a rate of percent established by the Central bank. If this bank toughens conditions of receiving the credit and raises percent rates, commercial banks have to make the same. As a result to become it is more difficult to obtain loans and they cost the organizations dearer.
- Sociocultural factors. Any organization functions at least in one cultural environment. Therefore sociocultural factors among which installations prevail, vital values and traditions, influence the organization. Sociocultural factors influence also production or services which are result of activity of the company. Production of clothes is an example. People are often ready to pay more for a subject of a toilet on which there is a name of the prestigious fashion designer. Ways of conducting the affairs by the organizations also depend on sociocultural factors. The growing attention to social responsibility became result of sociocultural impact on the organizations.
- Political factors. Some aspects of a political situation represent special value for heads. One of them – is mood of administration, legislature and courts concerning business. These moods influence such actions of the government as the taxation, establishment of taxes of privileges or preferential trade duties, requirements for practice of hiring and advance of representatives of ethnic minorities, the legislation for protection of consumers, standards on safety, standards on purity of environment, control of the prices and a salary, a ratio of strength of workers and managing directors of firm. The great value for the companies which are conducting operations or having sales markets in other countries has a factor of political stability. In the host country for the foreign investor political changes can lead to restriction of the property rights or establishment of special duties on import.
- Relations with local population. Almost in all organizations the prevailing attitude towards her of a local community in which this or that organization functions, has paramount value as a factor of the environment of indirect influence. Many organizations make purposeful efforts for maintenance of good relations with communities in which they function. These efforts can be expressed in the form of financing of local schools, charity or support of young talents.
4. International environment
The environment of the organizations operating at the international level differs in the increased complexity. The last is caused by unique set of the factors characterizing each country. The economy, culture, quantity and quality of labor and material resources, laws, public institutions, political stability, level of technological development differ from the country to the country. At implementation of functions of planning, the organization, stimulation, control heads have to take such distinctions into consideration.
Development of management of the international business. Management of the international business extends on fields of activity which are connected with movement of resources, goods, services and labor through national borders. The raw materials, the capital, people, technology belong to the moved resources. If to speak about goods, it can be ready components, products, semi-finished products. Accounting, legal and bank activity get to the category of the moved services. Also experts - first of all technical and managers move. From 60th years the sector of the international business gains the special importance:
1 lower production expenses. Existence of cheap labor abroad allows the organization to lower the expenses.
2 Trade barriers. Restrictions on export can take the form of taxes or their limits for the political reasons. Tariffs, quotas, standards, bureaucratic delays belong to means of restriction of import. Functioning in the foreign market gives to the company the chance to overcome such restrictions.
3 Anti-trust laws limit the maximum share of the market which the company can have.
4 Extraction of benefits from opportunities to work abroad. High rates of development and need for capital investments mean the raised profit on investment in a number of developing countries. The serving organizations like banks and accounting and auditing firms followed on the international markets the clients.
Kinds of the international business. The enterprises can get on the international markets in the different ways.
- Export. The simplest way - export of production. Though the organization continues to make all production in the country, she can create the independent trading company or intermediary service for coordination of export.
- Licensing. The enterprise can sell the license for production of the production of the foreign company or to the state by means of the agreement on royalties.
- Joint ventures. The organization of joint venture is that two or bigger number of the private companies or states make investments in capacities. Participants are equal partners in business and get profit depending on a share of the equity stake of everyone in joint venture.
- Direct capital investments. The strongest commitment to the international business arises when the management decides to let out production of the firm abroad and to keep complete control over production, marketing, finance and other key functions. Multinational corporations own and operate the enterprises in other countries. Hundred largest multinational corporations of the world have branches in more than 20 countries of the world.
Factors of the international environment. To adapt the services and production for characteristics of this or that international environment, heads of the organization have to will learn to understand factors of each international environment. The international business functions on four factors: culture, economy, legislation and state regulation, political situation
- Culture. The culture is understood as the system of the values divided by all, beliefs, customs and the prevailing installations dominating in society. Each society has the culture which influence affects style of everyday life. Language - one more aspect of culture - always creates difficulties for the organization running the business abroad.
- Economy. The firms working in the international environment have to analyze economic conditions and tendencies and to watch economy of those countries in which they run or intend to run business. To number of some economic factors which can influence conducting business abroad, belong: salary level, transportation costs, exchange rate, inflation and rates of bank percent, GNP, taxation and general level of economic development. There are also other factors: number, population, levels of literacy and professional readiness, quality and quantity of natural resources, level of development of technology, feature of competitive fight.
- Laws and state regulation. The firms acting in the international markets are compelled to reckon with a set of laws and the regulating acts. The last treat such questions as the taxation, patents, labor agreements, standards on finished goods, pricing and submission of data to public institutions.
- Political situation. Political factors can affect operations in the sphere of the international business. Social tension can break process of production and limit sale if disorders are directed against the plant which is in foreign possession or a type of production. Political factors need to be estimated to an investment of the capitals or acceptance on themselves obligations for sale.