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Internal environmental factors of the organization

Paper Type: Free Essay Subject: Business
Wordcount: 4035 words Published: 4th May 2017

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An organization is an association of more than one person or a group of persons who gather and work for mutual objectives. In organization the activities are more complicated and more sophisticated and are required to be performed in a systematic manner to avoid any uncertainty. The organization management has need to work diligently and honestly because current days there is great competition among the organization and each one is in struggle to defeat his competitor to this extent, so that the competitor drop the business activities. Internal factor of the organization are the directors, managers, production department labor, marketing department labor and sale and IT department labor which are the backbone of the organization. There should be integration among the department of the organization in lieu of the organizational objectives. These are also the internal stakeholders of the organization which first work with their skills to manufacture the product line of the organization better in compare of the competitor to defeat his strategies and get him out of the market.

The Company’s Micro Environment

Marketing management’s job is to build relationship with customers by creating customer value and satisfaction. However, marketing cannot do this alone. Marketing success will require building relationship with the company departments, suppliers, marketing intermediaries, customers, competitors, and various publics, which combines to make up the company’s value delivery network.

In designing marketing plans, marketing management takes other company group into account-groups such as top managers, finance, research, and development (R&D), purchasing, operations and accounting. Top management sets the company mission, objectives, broad strategies, policies. Marketing managers make decisions within the strategies plans made by top management.

Marketing managers must also work closely with other company department. Finance is concerned with findings and using funds to carry out the marketing plan. The R&D department focuses on designing safe and attractive products. Purchasing worries about getting supplies and materials, whereas operations is responsible for producing and distributing the desired quality and quantity of product. Accounting has to measures revenues and costs to help marketing kno9w how will it is achieving its objectives. Together, all of these departments have an impact on the marketing department’s plans and actions. Under the marketing concept all these functions must “think consumer”. They should work in harmony to provide superior customer value and satisfaction.

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An organization’s micro environment comprises the market environment the organization operates in and it also includes internal aspects of the organization (such as corporate culture), which could influence the development of marketing strategy. To overcome the market, an organization has to assess the trend of following groups or elements of marketing environment such as suppliers, distributive network, consumers, competition and interest groups. Understanding the behavior of these elements or groups enables the organization to use its marketing strategies to encourage loyalty, obtain preference from suppliers, distributors and influence what competition do and what consumer think.

Organizations need information about the number, size and bargaining strength of their suppliers and they need to establish their ability to guarantee regular supplies, stable prices and quality. The distributive network will often impose constraints on an organization because of consumer knowledge of existing distributors and the degree of market power held by the distribution network. The basic element which is vital when developing a marketing strategy understands consumers because consumers’ satisfaction is the ultimate goal and leads to enhanced the profitability. To overcome the market, enhance the profitability and to procure the satisfaction of the consumer, an organization has to establish a competitive advantage and must understand its competitors, their strengths, weaknesses and the essence of their strategic approach.

Any analysis of the market environment must include the role of interest groups also known as ‘public’. These are groups whose opinions and attitudes may affect the success of an organization. An understanding of the attitudes of these groups enables the organization to consider how best to present itself to them. The internal environment is where the organization can exercise greatest control. The appropriate internal environment will depend largely on the corporate culture- the attitudes and beliefs of personnel at all levels. Organizations with a culture orientated towards rapid innovation and risk-taking will require a more flexible internal environment than a company which sees itself as a low risk market follower with a reliable product range. Internal structures may change to reflect the increased pressures of competitive market place.

Effect Of Macro Environmental Factors On Organization

The macro environment is concerned with broad trends and patterns in society as a whole. Changes will form the basis for evolving marketing strategies, indentifying profitable products and determining the best routes to reach consumers. Careful monitoring of this environment can enable an organization to identify threats to its business and will enable it to adopt a proactive (rather than a reactive) stance in the action it takes. The macro environment can be described in terms of four key components” political/legal, economic, social/cultural and technological (known as PEST factors). The PEST factors are the basic factors of macro environment because without getting information and research about these factors an organization could never formulate its strategies regarding the management and marketing to achieve its goals and the objectives of the organization could never be fulfilled.

How political Factors Effect Organization

The political/legal environment is very much important factor for the formulation of the strategies of an organization because it involves the interaction between organizations and government or regulatory bodies and it also includes legal restrictions imposed to regulate business and the les formal aspects of government relations with industry such as government attitudes towards the industry and the facilities provided by the government for the promotion of such industry to grow the industry and to meet the demands of the consumer by providing stable prices for the consumers and suitable environment for the industry. International developments including formalized trade agreements (e.g. the European Union) are becoming increasingly important.

Effect of Economy upon the Organization’s Activities

A developed economy and a developing economy both are different aspects and the strategies for both the aspects are different which an organization has to formulate for to increase its business and enhance its profitability, which are likely to have an impact on business either directly or as a result of their impact on consumer spending, are critical to business. The important aspects of the economic environment include inflation, unemployment, economic growth, consumer income, interest rates and currency fluctuations.

Social and Cultural Effects

The factor of social/cultural environment is also having great importance in macro marketing environment because it includes demographic change and changing attitudes and perception. Many developed countries have an aging population which has many implications for organizations. The changing role of women may also affect the marketer.

Technological factors

The technological environment is the way in which technology (both the level and the rate of change) will affect the way an organization undertakes its business. The technological environment is basically the environment which makes an organization able to introduce itself by showing its potential and the way it will fulfill the demands of the consumers of the area and how it would be useful for the country in which it is going to start.

So when developing marketing strategy any business needs to consider both the micro and macro environmental factors because a successful marketing strategy needs to fit in to the external operating environment but remain consistent with the internal attitudes and capabilities.

Considerable Analysis Of Environment

Primary purpose of every organization is to earn profits and all the rest objectives are secondary. To achieve its objectives, an organization has to keep in view all the situations and emerging changing’s in the environment to adopt and change the requisite strategy to defeat the same. Analysis of the environment is the only source through which an organization can do the needful to achieve its objective in implicative/emerging changes.

Analysis of the organization is in accordance to its business activities whether on micro or macro level, its strategies are on the basis of the environment in which it operates and vested interests of the organization. That if the organization is working on international level or macro level then the survival of the same could be possible if all the factors, forces and variables of the external macro environment which are uncontrollable, considerably be analyzed properly and the policy made on the basis should be a comprehensive which cover, control and defeat all the possible problems in future. An organization faces numbers of uncertainties and hindrances like substitute product, rival of competitors, entrants of new competitors, sociocultural changes, economical changes, political uncertainties and demographics. Therefore, an organization can only be survive in the long run and the product and price can only be stable if the analysis of the market was conducted in comprehensive manner and the strategies formed on the basis of such analysis should be in a manner that it would defeat the possible uncertainties in future.

How the Interested Groups or Stakeholders of the Organization could be defined?

All those interested groups which are directly or indirectly connected to the activities of the organization or can directly and indirectly affect the organizational activities are the stakeholder so the organization. These groups or stakeholders might be inside and outside of the organization’s boundaries and have social and ethical impact upon the organization. Stakeholders of the organization in many ways affect the organization activities because sometimes they affect the organizational activities and more often be affected by the organizational strategies adopted by the organization to achieve their organizational objectives. These interested groups or stakeholders are directors, managers, employees, labor or labor unions, share holders and the owners which internally affect the organizational activities but on the other hand customers, government, local community members, lenders, suppliers and competitors are external stakeholders of the organization.

It is important to evaluate that why the stakeholders take interest in the activities of the organization and why they intend to invest in the organization or why they use the product of the organization because no person without any purpose did not even spend a single second in any place in any manner whatsoever. These stakeholders are a part of the organization because the labor of the organization has interest in the organization in lieu of their salary, the management of the organizations become a part of the organization for a common purpose of the profits, shareholders as well as invest their savings in the organization if they evaluate from the environment the credibility and goodwill of the organization that it is going to make huge profits and the investment of him shall be secure, government intends and take interest in the industry to collect revenues from the industry and as well as from the organization and lastly the most interested group to whom satisfaction the organization struggle are the public which take interest in the organization’s product because it is good in quality and is saving their funds by providing good services. Therefore, every stakeholder of an organization does not be a part of the organization without any interest that’s why they are called interested groups or stakeholders.

Responsibility of Organization towards Stakeholders

Stakeholders are the interested groups of the persons who directly and indirectly are part of the organization and have impact upon the activities of the organization. These are those persons for whom and with whom the organization plans to work and upon the trust of these groups the organization go beyond its local limits to compete the global market, therefore, the utmost important responsibility of the organization towards the stakeholders is that their trust in the organization activities should not be shacked and the organization should create such circumstances that they feel more protection to work with the organization in compare of the other organization. When an organization plan to work in the global market and want to become a part of globalization then it has need of more trust of such interested groups to generate more capital because in limited capital the venture or organization could not properly introduced its product globally and even it is more difficult for a growing company to survive in such a country where a lot of other person have goodwill in such industry. To compete such competitors the organization must have a lot of resources and the same could be generated from these groups if they have trust in the organization management and their skills.

How to evaluate the performance if the organization plans to work in global market?

Performance of an organization infect speaks about the goodwill and management skills of an organization. When a stakeholder intends to work with an organization before asking from any person such interest group take a bird eye view of the performance of the organization that what is the previous history of the organization, whether the management planning was prosperous in favor of the organization, what are the profit margins offered by the organization in last years are attractable, what is the turnover volume of the organization, whether the organization achieved it projected positions in last years what ever the projected, what kind of security the organization management is providing to the stakeholders in lieu of the investments and finally whether he will more secure in respect of other organization if he will invest in the organization. When one stakeholder satisfies himself for this question then he invest his saving in any organization.

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When an organization intends to discover the market of the product line of the organization globally then it has to evaluate more factors which they considered when the started their organization on micro level or macro level, which country is the best importer of such product, what is the growth rate of such industry in the said country, how many competitors are working in the said market, what re their methods of doing business, assessment of the resources of the competitors to evaluate that whether the organization has sufficient resources through which the organization’s performance will more better to them and it will easily compete them by capturing their home market. It will be succeed to overcome the market if it succeeds to provide them the product quality better than their home industry at a competitive rate with attractable offers.

What is Globalization?

When the countries of the world unite themselves in one unit to work together for common objective at the same time such process through with the whole countries of the world gather is called globalization. Normally countries gather for a common purpose to overcome global problems which cause danger to the life on earth or to work together for the betterment of the whole world countries. In business sense when an organization who is engaged in more than one business at a time wants to enter or discover the market of other countries for the development of the organization and to fulfill the requirements of the countries by providing their requisition for working in such countries then it is oftenly to say that such organization is working globally.

With the passage of time and development in the strategies of business as the e-commerce and e-business are more common ways of business through which the buyers and seller from different countries transact and deal with each other without the interference of any other person is the best example of working at global level because these transaction could be any where in the world and at any level of resources.

Analysis of Global Environment Before working in new country

The urge of all the business communities is to work round the world but for this sake they have to generate huge funds and to search the countries where the product line of the company is acceptable and what are the technologies for doing such business are available in such countries, is the trend of the peoples of such countries towards the product, is the culture and traditions of the country accept the usage of such product? These are the questions which an organization has to assess while it is planning for to work in the other countries globally. An organization must have to assess the product demand in such country and is the organization will be able to compete the competitor in such countries.

It is a tough decision but much successful decision for an organization when it plans to work globally. The main factors which are required to be assess before starting business in such country. What is the traditions and culture of the country where the business is proposed to be started. If the company start their business in such country then what technological factors are available in such country and how the company can avail to them.

What is the policies of the country regarding the said industry and what are the political circumstances available in the country. Is the government intended to offer any attractable offer for the development of said industry. What are the policies of the banks regarding the financing and if it provide financing then uptill what level it is offered.

What is the tactics and strategies are using by the proposed competitors in such industry. What is the economy conditions of the country. If the policies of proposed country is favorable for the industry and the new entrant or the organization is in a position to compete the competitors. If the new entrants has some new skills and competitive advantages which leads the new organization dominant upon the other the some other groups of the same country will be ready to be the stakeholders of the organization and such offers attain the acceptance of the peoples of such countries because their own and reliable persons are becoming a part of the organization. The main benefit of global level working to the government of such country is that it develop more vacancies for the people of the country and establish confidence of investors that they can safely invest in such country. Globalization also improve the economy ratio of such country.

How an Organization can enter in the market of other country?

An organization can enter in the market of an other country in the following manners and ways;

By Exporting the product in such country

An organization can enter into the market of the other country by exporting its product in such country to attain the acceptance of the company products

By Contracting

An organization can enter into some other countries by contracting the local contractor or relevant business individual to save further financing. In this way the other contractor just can sell the organization products by the name of the organization brand remain the same.

By Getting Licensing

All the countries have different trends in business development in accordance to their culture and econmic requirement. An organization can also enter in an other country by getting licence from such country and doing the needful to start his business or to getting licence from an other organization of such country to produce its products by the brand name and manufacturer shall be the same company getting licence for doing the needful.

By Starting Franchise

More sophisticated and new intrudced concept of the business now-a-days is to start the franchise of a company working in a country and the offering attractable offers to the franchisers. A company can also introduced it product or enter in the global market by opening its franchises in such countries. In franchises the business and and product brand name remains the same but the only investment of the person is invested so interest in franchise.

By Doing Joint venture

An organization can also enter in the market of an other country by doing a Joint venture with the other company of such country. It is an establishment of a newly born compnay which come into existence by the joint venture of old or interest company for joint venture. Normaly joint venture is establish on the basis of equal profit and loss basis but in rare cases this ratio gets change in accordance the involvement and investement of the other company.


Stakeholders of an organization is the key persons who has to check and manage all the arrangements and control the all activities of the organization. If the organization is of the opinion to appear in the global market or any oversea market, the whole responsibility regarding the launching and marketing of the product referred to the said market lied upon the stakeholders. If the organization wants to introduce its product line in the oversea market then the manager of the organization has to scrutinize the external macro environment of the market and has to observe the opportunities and weaknesses available to the organization and how the company can use its strengths in a strategic way to convert the threats into its strengths. Finally manager of the company who keep informed the director or the interested groups of the company aware of the facts and benefits if so and with the discretion of the other members formulate such strategies which hopefully in favour of the organization and helps the organization to achieve its goals.

Before entering into the market of new country or globally the basic aspects fo the business could not be neglected. It is as much as more difficult to enter in the market of a new country as a person thinks to start a new business. When a person thinks to start a new concern and satisfy himself for sudden and important questions such as what would be the business and what shall be the nature of the business? How the funds for the business would be generated? In what size the business would be started? What shall be the place and location for the business? And lot of other questions should have to be satisfied when a venture is plan to start in a new country.

The management of the every business knows very well about the conditions of the business and also aware of the facts for entering in the market of a new country globally. So the management of the organization can betterly plan, monitor, implement the plan so proposed to open a new venture in an other country. The key person in the whole efforts is the manager of the company. A good manager with the help of diligent management can change in impossibilities into possibilities.


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