Essay(1500 words)

Includes all of the forces and conditions that occur outside

the organisation, but nonetheless affect it

What is the Socio-cultural Dimension of the General Environment?

Socio-cultural dimensions include:

Cultural characteristics

The customs, values, tastes, attitudes and behaviours in a given society

These characteristics determine what the society is likely to value

e.g. Flexible working arrangements

The sociocultural dimension of the general environment includes the cultural characteristics and the demographic conditions of the society in which the organisation operates.

Cultural characteristics include the customs, values, tastes, attitudes and behaviours in a particular society. Demographic conditions are the physical characteristics of the population such as gender, average age, level of education, geographic dispersal, income and household composition.

Sociocultural elements determine the standards of conduct and organisational offerings that the society is likely to value and the ways in which the organisation can operate.

For example, sociocultural trends such as increasing concern about global warming have created demand for products and services that reduce greenhouse emissions. (p. 34)

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What is the Socio-cultural Dimension of the General Environment?

Demographic changes:

The physical characteristics of the population such as gender, average age, level of education, geographic dispersal, income and household composition

Demographic characteristics affect:

Markets for organisational products and services

Organisational staffing

Example: The decline in Australia’s fertility rate

What is the Technological Dimension of the General Environment?

The Technological dimension comprises:

Knowledge

Tools

Methods

…that are used to convert resources (e.g. raw materials, information, labour) into products and services.

Advancement along this dimension can change product or process technologies

This dimension includes technological and scientific advancements in society at large as well as specific industries.

Product technological changes lead to the development of entirely new goods and services, or to refinements in the features and capabilities of existing products. For example, new solar cell technologies have enabled the creation of smaller, more efficient solar panels for use on household roofs.

Process technological changes alter how organisations operate. For instance, the bar code readers used at supermarket checkouts have changed sales processes and inventory management.

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What is the Economic Dimension of the General Environment?

The general economic health of the economy in which the organisation operates:

Type of economic system under which a country operates

e.g. capitalist/socialist (most nations combine these)

Current economic conditions

current interest rates, levels of inflation, levels of unemployment

Economic cycles

speed and strength of growth/decline cycles

Type of economy: . In a capitalist economy, individuals or corporations own the means of production and market forces operate. In

a socialist economy, a central government owns the means of production and plans all economic activity.

Most national economies combine some elements of each form. For example, Australia and New Zealand are mostly capitalist economies but their governments do have some market control. The People’s Republic of China is closer to the socialist end of the spectrum but is becoming more capitalist.

Current economic conditions affect organisations by influencing costs, prices and demand for products and services.

For example, when inflation is high, companies pay more for their inputs. When unemployment is low, organisations have to pay hirer salaries to attract and retain the best employees. Both scenarios lead businesses to raise the prices of their goods and services to cover higher costs of production.

Not-for-profit organisations such as the Salvation Army and World Vision are also affected because in economic downturns demand for their services increases but donations typically decrease.

Understanding which stage of the cycle current conditions reflect when and how quickly that might change is very important for effective planning.

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What is the Political/Legal Dimension of the General Environment?

The legal and governmental systems within which an organisation operates:

General conditions and stability of the political system – well established, stable / unstable

Government regulation– legislation on occupational health and safety, environmental protection, competition, consumer protection and product safety, import and export activities and employment practices

The impact of government spending on the economic environment – priorities of government allocations of funds

In Australia and New Zealand, for example, the legal and political systems are stable and well established. Elections are held regularly and even when the ruling party changes, the transition is ordered.

This allows for more accurate predictions of future political conditions, enhancing planning activities.

Federal, state and local governments regulate organisational behaviour by passing legislation that dictates how organisations must handle issues. These establish the rules of the game and force organisations to behave in ways which reflect societal values and preferences.

Such laws create challenges as well as opportunities. For example, complying with anti-pollution laws might increase operational costs for coal-burning power plants. However, such laws might also create new business opportunities for companies that produce filter systems for coal-burning power plants.

Government spending also influences the opportunities and threats faced by organisations. For example, if a government increases spending on pensions, retailers benefit from pensioners having higher discretionary incomes. However, when federal government spending increases the federal deficit, interest rates go up and money becomes more expensive to borrow. Consequently, firms generally borrow less and either reduce or postpone their expansion of business activities.

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What is the Global Dimension of the General Environment?

Factors that operate across national boundaries:

Events or changes that originate in foreign countries - the GFC, global warming, the Internet

Forces and developments having a global impact - transportation and communication technology

The global dimension includes International forces may affect organisations directly or exert an indirect influence by affecting sociocultural, technological and economic trends. For example, advances in transportation and communication technology have essentially eliminated geographic borders as boundaries to organisational activity so any organisation can become a global player .

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The Specific Environment

The organisations’ external stakeholders:

anyone who affects (or is affected by) an organisation’s actions:

Organisations, Groups, and Individuals with whom it interacts as it conducts its business.

Factors in the specific environment have a direct and immediate effect on the organisation’s operations and performance.

The exact components of an organisation’s specific environment depend on its industry and the nature of its operations. For example, when the costs of coffee beans increased worldwide, all coffee-related businesses increased their prices but the size of the increase differed between organisations.

For most organisations the specific environment includes customers, suppliers, competitors, industry regulators and government agencies, employees and labour markets, interest groups, and strategic partners.

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How Do Customers Affect Organisations?

Customers: people and organisations that acquire goods or services from the organisation, usually in exchange for money.

What the customers want and need influences:

Products type

Product quality

Product prices

For example, a customer who buys a lot of the organisation’s output would be able to demand lower prices, more attractive financing terms and customised products and services because the organisation would concede to their requests rather than lose their business.

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How Do Competitors Affect Organisations?

Competitors - individuals or organisations competing for resources with the organisation

Commonly, competitors mean other organisations in the same industry that offer products which customers see as acceptable substitutes.

Government agencies and departments compete for funding from tax revenues. Charities such as Doctors Without Borders and the Fred Hollows Foundation compete for donations, volunteers and clients. Employers compete for the best staff, the most advanced technology or the best strategic partners.

Competitors compete for customer dollars.

Understanding the substitutes for products helps managers determine who their competitors actually are.

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How Do Suppliers Affect Organisations?

Suppliers - companies and individuals who provide the organisations with input

Inputs - material or physical resources, human resources, financial resources, informational resources and business services

Suppliers determine the quality, availability and cost of inputs

Suppliers influence organisation’s product and service quality, production capacity, competitiveness and profitability

How Do Regulators Affect Organisations?

Regulators - create and enforce regulations to protect consumers, workers and society

Government agencies - provide services and enforce compliance with laws and regulations at local, state and federal levels

Regulatory commissions

Regulators affect organisations by enforcing ‘the rules of the game’

State and federal law enforcement agencies such as the Australian Federal Police or the Victorian Police Force investigate possible breaches of Australian law and arrest offenders for trial. The Australian Taxation Office provides advice to individuals and organisations about complying with tax regulations but also enforces compliances through audits, fines and prosecution. An organisation’s specific environment might require interactions with a number of different regulatory bodies, such as occupational safety agencies, police, workplace standards boards and consumer affairs. This can require a lot of time and energy

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How Do Interest Groups Affect Organisations?

Interest groups - organised to serve the interests of their members by influencing business activities

Interest groups are generally organised:

Around a geographic locality

A specific social issue

An industry or profession

They attempt to influence organisations by:

Negotiating directly with organisations

Lobbying governments and local residents to exert pressure

An interest group examples:

The Australian Medical Association liaise with universities, hospitals and governments about issues that affect the medical profession.

Environmental conservation groups that wish to prevent residential development of natural areas might pressure local government bodies to stop the development by canvassing signatures from local residents for a petition.

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How Does the Labour Market Affect Organisations?

Labour market – a set of individuals who labour is exchanged for payment

Labour markets provide the knowledge, skills, effort and creativity that support organisational operations

Thus, they are critical for organisational performance

The labour market or labour supply

The balance between supply and demand for labour affects organisational performance by influencing costs and organisational capacity

Example of labour supply influence - if demand for a particular type of employee outstrips supply, then the market rate for those workers goes up. This increases labour costs for the organisations that employ them. If the knowledge and skills of those workers is critical to organisational products and services, then the availability of those workers will determine production capacity.

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Diversity and Multicultural Organisations

Diversity describes differences in race, gender, age, ethnicity, physical ability, culture and sexual orientation, among other individual differences.

Inclusivity

The degree to which the organisation is open to anyone who can do the job, regardless of their diversity attributes. The ‘best’ organisational cultures in this sense are inclusive, because they value the talents, ideas and creative potential of all members.

Diversity and multicultural organisations

Diversity includes mainly age, race, ethnicity, gender, physical ability, disability, personality, culture and sexual orientation. But workplace diversity is a broader issue still, also including such things as religious beliefs, education, experience and family status, among others.

A key issue in the culture of any organisation is inclusivity — the degree to which the organisation is open to anyone who can perform a job, regardless of race, sexual preference, gender or other diversity attribute.

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Diversity and Multicultural Organisations

Multiculturalism: A multicultural organisation is based on pluralism and operates with respect for diversity.

Characteristics of a truly multicultural organisation:

Pluralism: Members of both minority cultures and majority cultures are influential.

Structural integration: Minority-culture members are well represented at all levels and functions.

Informal network integration.

Absence of prejudice and discrimination.

Minimum intergroup conflict.

The term multiculturalism refers to pluralism and respect for diversity in the workplace. The model in this regard is the truly multicultural organisation with these characteristics:

• Pluralism. Members of both minority cultures and majority cultures are influential in setting key values and policies.

• Structural integration. Minority-culture members are well represented in jobs at all levels and in all functional responsibilities.

• Informal network integration. Various forms of mentoring and support groups assist in the career development of minority-culture members.

• Absence of prejudice and discrimination. A variety of training and task force activities continually deal with the need to eliminate culture-group biases.

• Minimum intergroup conflict. Diversity does not lead to destructive conflicts between members of majority and minority cultures.

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Challenges faced by minority groups