Environmental factors of the organization
Absolutely all organizations are concerned about the external environment in their environment. This is done in order to identify favorable opportunities and use them in the future to achieve various corporate goals and at the same time avoid the threat of obstacles. This process is the analysis of environmental factors of the organization.
The very first step in analyzing environmental factors is to collect information on economic, social, technological and political trends that relate to changes in the environment of an organization. For this, a specific employee can be appointed or an external consultant is invited, who should monitor different sources of information, these can be:
- newspapers and books
- professional magazines,
- Information Systems,
- Scientific research,
- the Internet,
- buyers, competitors, suppliers, etc.
It is these experts who submit survey reports to management, which is responsible for organizing research on environmental factors.It should be noted that in very large organizations it is carried out constantly.
After the work done on the collection of information, it is discussed and evaluated. If questions arise, they are raised in meetings with managers. Because their task is to identify opportunities and threats and develop basic indicators of high efficiency depending on the identified opportunities and threats. As an example, an analysis of the environment can easily determine the growth of base interest rates, and as a result, an organization could, on the basis of these indicators, reduce the amount of borrowed funds, which in turn would increase its profits and income. After processing, managers determine the priority of all these indicators and, thus, make a list of important success factors. After that, it is transferred to the divisions of the organization itself.
All environmental factors of the organization are divided into 4 large groups:
- Legal and political.
- Cultural and social.
Each of them in its own way is a part of the analysis of the environment, taken together, they give a complete analysis of it.
Legal and political
Various factors of state and legislative nature affect the level of opportunities and threats directly in the activities of the organization. Foreign and national governments may well be for some organizations the most basic regulators of their activities. This means that the influence of external factors on the organization is very important to see in advance. Thus, the most important aspect of a complete analysis of the external environment may be an assessment of the political situation.
There are a lot of such factors, but their combinations are even more common. Here are the most frequent combinations in the process of analyzing the external environment.
- The alignment of political forces
- changes in tax laws,
- patent law
- government spending
- federal election
- money-credit policy,
- size of state budgets
- political conditions in foreign countries
- government relations with other states.
Some of these factors have an impact on commercial organizations. It may even be a change in current tax legislation.Some affect only a small number of firms in the market (antitrust laws). The rest are important for political organizations (election results or the distribution of political forces).
But despite everything in one way or another, directly or indirectly, legal and political factors have an impact on all organizations, because the laws apply to the quality of a particular raw material and to the import and export of goods.
There are a large number of economical factors that have an impact on the organization. This includes currency exchange, and lending, and taxes, and much more. The very ability of an organization to be profitable is particularly affected by the state of the economy and the stage of development of its cycle. The macroeconomic climate will primarily determine how high a level of organizations are able to achieve their economic goals. Naturally, bad economic conditions will reduce the demand for goods and services of organizations, and good, of course, will increase it.
Also economical external factors affecting the organization, have a number of indicators, which, in turn, are also important.
These are such as:
- interest rate (in the economy has a large impact on consumer demand). This means that often the buyer takes a loan before purchasing a product. But, if the interest is large, he will not do it, because he simply will not be able to pay it.
- currency exchange and its rate (the value of the ruble in the ratio of the European currency and other monetary units of different countries). Everything is connected with export and import to the world market. If the value of the ruble is too small or too large, then the benefit is lost, as the export, and the importation of various goods.
- economic growth, its rate (with an increase in growth in the economy, consumer spending increases automatically, and this in turn puts pressure on the organization; and a decrease in economic growth leads to competitive pressure and the threat of crisis).
- inflation (with inflation, organizations cannot plan further actions because they do not know how much the value of money will increase, so to speak.)
- economic conditions in other states;
- consumption structure, its dynamics;
- change in demand;
- trade balance indicators;
- trends in the securities market;
- monetary and financial policies;
- GNP dynamics;
- tax rates;
- level of labor productivity.
Cultural and social
Cultural and social factors of external influence on the organization, in turn, shape our life, more precisely its style (consumption, work). They have a great impact on all organizations. As an example, we can take the fact that many people refused to use fluorine hydrocarbons in production and began to use recyclable packaging. What influenced both cultural and social environment. In determining the most significant opportunities, consideration should be given to the fact of an aging population and the increased number of women who work.
The main socio-cultural factors include:
- birth rate
- disposable income
- attitude to quality
- energy savings
- shopping habits
- educational standards
- life expectancy ratio
- attitude to work
- goods and services
- life style,
- inter-ethnic problems
- social welfare,
- attitude to the government
- Social responsibility,
- attitude to rest.
It so happened that their influence on organizations is the most fundamental. The revolutionary change in technological processes has greatly influenced organizations. With the advent of nanotechnology, everything has changed. For example, the factories for the production of plates and cassettes closed, because it was all replaced by computers and other inventions of modern science.
Thus, the environmental factors of the organization are very important for its productive work. And when observing them, it is much easier to help organize the work of this or that organization.