MANAGEMENT ENVIRONMENT

February 20, 2018 ,

MANAGEMENT ENVIRONMENT

Concept
  What?
   - Existence of organization: surrounded by environmental components
  - Aggregate of all conditions, events, circumstances, influences that surround the organization
  - A set of internal and external forces
  - Internal: objectives, structure, resources, culture
     External: political, economic, socio-cultural, technological, legal
  - Business activities are carried on with interaction to environmental forces
  Why?
   - Influence on operations and effectiveness
  - Assessment: strength & weakness from internal environment
          opportunity & threat from external environment

  - A business gets human resources, capital, technology, information, energy, raw materials from environment
Characteristics/Features
  * Complex and interrelated
  * Dynamic
  * Multifaceted
  * Far-reaching
  * Sub-elements
  * Unpredictable
  * SWOT
  * Uncertainty


  POLITICAL/LEGAL ENVIRONMENT
Concept
  - government regulations and the legal system
  - Influence of three three institutions
 
   legislature  executive  judiciary
  - Organizations spend a great deal of time and money to meet government regulations
  - Managers have to perform business activities within the boundary through legislation
Components:
Constitution     - fundamental law of country for all the people
            - a formal document of democratic system of government
             - define of framework within which all the people have to perform their activities
            - different sections and subsections describing basic principles to protect public interest

Political Philosophy  - an ideology a state has adopted
  - three types of philosophy: democratic, socialism, mixed
Political Parties  - organization of people that have common goal of public welfare
  - comes in government through election
  - when they form government, their declaration affect business activities
Legal Institution- levels of courts: district court, appeal court, supreme court
     - legislative: formation and enactment of rules, regulations, laws
     - executive: implementation

nging; text-align: justify; text-indent: -.56in; text-justify: inter-ideograph; unicode-bidi: embed; word-break: normal;">      - judiciary: ensuring whether the rules and laws are effectively implemented or not
  - Refers to all factors which give shape and form to development of economic activities
  - factors:
  interest rate,   inflation,
  change in disposable income,   stock market fluctuation,
  stage of business cycle,   economic growth rate etc.
  - Affects the demand of products/services
  - Business organizations get inputs from economic environment and supply output
Components:
Economic System  - economic philosophy adopted by government
        - three economic philosophy: open market economy, state owned economy, mixed economy
Economic Policies  - guidelines adopted by the government for economic prosperity of the nation
         - policies: industrial policy, commercial policy, monetary policy, fiscal policy etc.
Economic condition  -  economic strength and weakness of the nation
             - conditions: per capita income, economic growth rate, business cycle, inflation, stage of economic      development etc.
Capital Market  - involves in fund mobilization, scattered monetary resources
  - consists: central bank, commercial banks,development banks, finances, insurance, stock      market  etc.
Globalization     - integration of world into a huge market
  - free flow of goods/services throughout the world without any administrative restrictions
  - opportunities and threats for domestic business in terms of market, capital, technology

ECONOMIC ENVIRONMENT

Concept:
  - The total social forces within which an organization operates
  - Includes: tradition, social values, believes, norms, attitudes, customs, demographic variables
  - It determines the products, services and standard of conduct that the society is likely to value
Components:
Demography  - composition of population: size & distribution of population, age groups, sex ratio, urbanization,      migration etc.
Lifestyle  - pattern and living standard: changes in level of income, fashion, education, social inter-relationship
Social Values  - beliefs and norms of society
Social Institutions  - family: family members and relations
         - reference group: prestigious individuals and models   of society
Religion  - belief and trust people have accepted since long ago foundation for perception

Language  - medium of information exchange

SOCIO-CULTURAL ENVIRONMENT

Concept:
  - The total social forces within which an organization operates
  - Includes: tradition, social values, believes, norms, attitudes, customs, demographic variables
  - It determines the products, services and standard of conduct that the society is likely to value
Components:
Demography  - composition of population: size & distribution of population, age groups, sex ratio, urbanization,      migration etc.
Lifestyle  - pattern and living standard: changes in level of income, fashion, education, social inter-relationship
Social Values  - beliefs and norms of society
Social Institutions  - family: family members and relations
         - reference group: prestigious individuals and models   of society
Religion  - belief and trust people have accepted since long ago foundation for perception

Language  - medium of information exchange

TECHNOLOGICAL ENVIRONMENT

Concept:
  - Systematic application of knowledge/methods/process to convert inputs into outputs
  - Provides resources with which people work
  - Focus on: machines and equipments, transmission of information, new techniques and process, R & D
  - Input resources: manpower, machines, materials, money, management
    Process: methods and technology
    Outputs: finished goods/services
Components:
Nature of Technology  - manual: labor based or automatic: capital based
              - low investment or high
Pace of Technological Change  - grab opportunities with dynamic technology
Technology Transfer  - transfer of technology from developed to developing countries through: joint venture with     multinational companies, direct technical assistance, project support, training and     publication
R & D Budget  - customers demand change due to fashion, design, quality,   price etc.
                - a certain part of budget allocation to R & D to meet demand

CORPORATE SOCIAL RESPONSIBILITY

  What?
  - Obligation to protect social norms and rules within which the organization operates
  - All the business activities within rules, regulations & society norms:
  production & distribution,   expansion & diversification, utilization of natural resources
  - fulfill the common objectives
  - Mobilize certain part of profit to promote social welfare and preserve social values
  Why?
  Responsibility towards:
  investors  consumer  employee  community
Areas of CSR:
Towards Investors/shareholders
  * To ensure safety of capital investment
  * To provide fair and regular return on investment
  * To provide correct and regular financial & other information
  * To offer reasonable opportunities to shareholders for participating in planning and policy making
  * To maximization of value through optimum resource utilization
Towards Consumers
  * To supply better quality goods/services at right time right place reliable price
  * To take necessary steps to improve quality, reduce price and develop network for distribution
  * To provide after sales service on the basis of product nature
  * To perform R & D work for better quality and for new products
  * To avoid unfair trade practices like black marketing, adulteration, false advertising
Towards Employees
  * To provide job security
  * To provide fair wages and other benefits like bonus, allowances etc.
  * To ensure welfare facilities like further education, promotion, medical facilities, foreign visit, training etc.
  * To provide favorable working environment and recognition of performance
  * To provide opportunity to participate in management and career development
Towards Government
  * To follow strictly the government rules, regulations and laws
  * To pay tax honestly and regularly
  * To avoid monopolistic and unfair trade practices
  * To support to solve national problems as unemployment, poverty, illiteracy, family planning etc.
  * To emphasize on fair dealing in import/export trade
Towards Community
  * To check environmental pollution and maintain environmental ecology
  * To create employment opportunities
  * To take necessary steps for maximum resource utilization available in society
  * To maintain and develop social and cultural values and norms
  * To involve in social welfare programs like education, health, games etc. or through charity to deprived sector

BUSINESS ETHICS

Concept:
  - A set of moral principles and rules guiding an individual’s behavior
  - A basis of determining right or wrong in a given situation
  - An individual’s personal perception and belief while taking a decision
  - Managerial ethics is the standard of behavior that guides individual managers in their work, standard of social norms and values, truth and justice accepted by managers while decision making
  - Moral principles and rules of conduct that is applied in business
  - Ethical or Unethical behavior depends upon factors: individual’s morality, values, personality, experience etc.
Significance:
*Goodwill and Image  *Better relation with stakeholders
*Less interference from government  *Promotes fair competition
*Promotes social responsibility  *Improve working environment

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