Stakeholder Needs vs Revenue as the Main Organizational Goals - Term Paper Example

? Evaluation of business environments: BY YOU YOUR SCHOOL INFO HERE HERE Evaluation of business environments Introduction Organisations are defined as social entities in which there is a set of collective goals and strategies that are directly correlated with the external environment in which the organisation operates. There are many different types of organisations, with each developed for the purpose of either achieving profit, to produce a series of productive outputs for general society, improve employment opportunities for society, or simply to provide a useful set of product and services to enhance lifestyle for consumers. Whether for-profit or non-profit, organisations embody a very diverse and rich assortment of strategic goals that are designed around a collective objective. Organisations must meet the needs of very diverse and dynamic stakeholders whilst also taking into consideration the economic policies in the region where the organisation operates, consider existing market forces that influence decision-making, and also take into account the potential cultural aspects of important stakeholders if the organisation is to have successful outputs and outcomes. The report explores a broader definition of organisations, their role in satisfying diverse stakeholders, and the market environment that influences organisational decision-making whether for-profit or non-profit. Identifying the purpose of organisations There are many different varieties of organisations, including corporations, non-profits, cooperatives, partnerships and governments. Organisations embody a very rich assortment of goals and visions, either set-up to service the needs of diverse international stakeholders, provide a valuable product or service that enhances the welfare of consumers, elicit some form of political or social change, or improve the social welfare of stakeholders linked to the mission of the organisation. Organisations require leadership and oversight in order to ensure compliance to regulatory frameworks both domestic and international and “have the ability to call upon a common heritage of committee structures or formal meetings” (Smith 2010, p.2) to ensure the organisation is meeting its long-term goals and purpose (mission). One example of this can be found with the UK-based non-profit, the Centre for Better Health, which provides well-being to consumers through counselling services and assists individuals in the London region to better develop their employability skills. This organisation is considered a social enterprise, whereby its purpose is to provide enhanced lifestyle and health promotion to stakeholders in the region. Consisting of 20 different staff members and 50 volunteers, the Centre for Better Health elicits change in social welfare for stakeholders as aligned with its mission and vision. Yet another example of how organisations meet their purpose and satisfy social welfare improvements is the UK company Marks & Spencer, a retail organisation providing valuable products that enhance lifestyle for consumer segments. The company’s mission statement drives the majority of their business practices, aligning corporate ideology with consumer social welfare improvements. The mission statement is to provide aspirational quality that can be accessible for all consumer segments, whilst maintaining a vision of being the standard by which all other retailers are judged. Marks and Spencer maintains a very dedicated focus toward providing corporate social responsibility which again serves their purpose of enhancing social welfare. Marks and Spencer is an ideal example of how an organisation develops systems, best practices, and labour relationships to provide a social good to society. Meeting the objectives of stakeholders The external market environment, with most organisations, dictates internal policies and the necessary organisational structure required to be adaptable to these changing conditions. Contingency theory informs organisational leadership that in order to remain relevant and continuously evolve to meet changing market circumstances, the organisational structure must adapt (Buchanan and Huczynski 2010). This is how organisations are able to meet the needs of important stakeholders: through change practices and flexibility in management and leadership of the organisation. Change, in this context, is akin to planning once specific needs of stakeholders have been analysed and diagnosed (Grieves 2010). Change theory illustrates how companies prescribe to contingency theory in order to remain relevant, gain trust of consumers, and also better service the disparate needs of stakeholders across the world. Internal developments and restructuring of managerial activities provided this non-profit organisation with the resources, planning structures and tangible organisation to include new business practices and ideologies to better enhance its role in succeeding in the organisational mission. Organisations must gain the trust of consumers if they are to trust the organisation’s recommendations and evaluations of different food products. According to Farrell and Knight (2003, p.67), the establishment of trust is “embodied in the roles, rules and relationships by which all men seek to gain acceptance from others”. Organisations must work diligently, both managerially and in terms of internal job role practice, to gain consumer trust and create a holistically-developed organisation whereby a sense of social belonging has been established. As a stakeholder-focused organisation, it is absolutely necessary to foster belonging as a social agent. Trust cannot be over-emphasised when attempting to determine how organisations meet the needs of diverse stakeholders in broader society. Trust is necessary, especially in non-profit organisations, that the managerial competency internally and the mission focus will actually be aligned with legitimate business practices that provide a superior social value to all stakeholders in society. If those impacted by organisational outcomes, such as consumers, find that the organisation has failed to achieve its long-term goals for improving social welfare, they will likely stop buying products and services from the organisation or lobby government representatives to have the organisation dismantled or regulated with more emphasis. Identifying the responsibility of organisations It is the responsibility of organisations to provide some form of economic, product-related, welfare-related or service orientation to the stakeholders impacted by their activities. However, not all organisations maintain access to high volume of resources which can limit the scope and outcome of their mission-related activities. As such, it is common for many organisations to employ new strategies that can assist the organisation in better achieving its purposes in society. Cross-border alliances, joint ventures, foreign partnership developments, and other collaborations (such as the business group or kieretsu concept) can assist an organisation in achieving its long-term goals. Such collaborations allow the business to better leverage its resources and competencies by creating a more dynamic knowledge management system where information and tacit knowledge is exchanged between the collaborating agents (Steensma, Tihanyi, Lyles and Dhanaraj 2005; Lane, Salk and Lyles 2001). Not only do the aforementioned strategies for enhancing organisational scope often provide better capital and resource access, but establish the foundation for growth and learning which is so vital to servicing stakeholder needs. It also injects a new type of cultural knowledge into the organisational model so that organisational leaders and employees can better assess and respond to diverse cultural needs. Awareness of cultural needs and differences allows the organisation to homogenise its efforts and diversify more effectively to be more responsive to changing stakeholder needs internationally (Dorfman, Hanges and Brodbeck 2004). All of the aforesaid strategies are how organisations are able to employ new strategies that can better enhance their role in stakeholder service and satisfaction. The models of opportunistic collaboration with other organisations gives the organisation better human capital competencies, new structures and processes that are more efficient and productive, and provides better knowledge resources for training and education internally. It provides more adaptable and competent governance systems which assist in guiding the organisation toward fulfilment of its mission. It is the responsibility of the organisational leadership to ensure that all company practices and outcomes are aligned with the needs of stakeholders, which involves making routine structural and policy-based adjustments to meet its vision or missions goals. If the organisation is not flexible to meet with changing stakeholder expectations in society, it is not meeting its responsibilities for improving social welfare of stakeholders. How economic systems attempt to allocate resources Economic systems attempt to organise labour, motivate production, enhance distribution, and ensure proper circulation of services and products that improve social consumer welfare. The main three types of economic systems utilised by countries and organisations are the free market system, the centrally planned market, and mixed market ideologies. In the free market system, government influence is minimised which gives organisational leaders much more autonomy in decision-making and resource allocation. Free markets give organisations the ability to determine their own pricing mechanisms that are aligned with macro-economic theory related to supply and demand (Boyes and Melvin 2005). What this does is give organisational leadership the ability to determine the most effective methodologies of resource allocation at the executive or senior management levels. Whatever economic system drives national policy, organisations are strongly impacted by the ideology of each. For instance, in Western nations such as the United States and the United Kingdom, corporations and other organisations have much more flexibility regarding how to establish distribution, production, pricing and labour delegation. However, in the centrally planned market, as one example, government plays a key role in the allocation of resources with less influence by the organisation itself. One such example of how organisations are impacted by economic systems can be witnessed in China with the establishment of business groups, which are a set of legally independent firms and subsidiaries controlled and inter-linked by managerial activity within the parent organisation. Between the 1970s and 1990s, the Chinese government served as the firm regulator of business practices, only providing funding and other capital-related support for those organisations that were affiliated with business groups. Hence, through government intervention, smaller organisations were driven out competitively by the emergence of powerhouse, large-scale business groups. Scarce resources that were plaguing the country during the 1970s and 1980s were systematically divided by government organisational leadership to create more competitive conglomerates that could compete with global, developed nations. Research supports that involvement in these business groups greatly enhances firm performance and sustains higher product output (Guillen 2002). This is why in order to establish competitive firms, government authority was required in a country where lending infrastructures were quite immature and where global competition was virtually impossible without establishing large-scale business groups to ensure better production capacity and product/service output. The impact of monetary policy In addition to economic systems, the actual monetary policies of countries greatly impact the potential successes of organisations. For instance, using Brazil as the relevant example, the country established a crawling peg system in which the country’s currency was pegged against a basket of other currencies with established and predictable values in an effort to stabilise a struggling economy with significantly-rising inflation rates. The national fixed rate was periodically adjusted to remove existing exchange rate volatility, which reduced national dependency on interventions with the country’s Central Bank (Startz 2010). Brazil’s inability to remove volatility successfully from the fixed rate of the country illustrates that organisations are not always in control of their fiscal situation and may have to rethink business strategies in order to get the company better insulated from fluctuations in currency that have been driven by monetary policies imposed by government. It shows that organisations must be more proactive in shielding themselves from financial policy. In the aforementioned example, however, this activity did not manage to control inflationary rates in the country and Brazil experienced a period of hyper-inflation that greatly impacted the ability of organisations to control their operating costs. For example, the cost of electricity for businesses and consumers rose a whopping 17 percent in one year and also 19 percent for water and sewage services (Business News Americas 2004). This is how fiscal policy directly impacts the success potential of organisations. The after-effects of improper fiscal policy, such as attempting to control the exchange rate through crawling peg philosophy, are created through risk-adopting behaviours of governmental officials. Hence, the organisation is unable to control the time value of currency and revenues, creating a form of disincentive to continue organisational activities within the nation where inflation continues to rise dramatically. In this situation, the organisations operating as entities in Brazil experienced much higher operational costs, facility costs, and lessened revenue production through low exchange rates with other nations where the business provides services. The impact of competition policy and regulatory influence Regulatory mechanisms, such as the U.S.-based antitrust laws, greatly impact organisational competitiveness and growth. This type of regulation ensures that organisations cannot establish market-based monopolies in order to promote fair competition (Blumenthal 2013). Organisations are greatly impacted by such regulations. Antitrust laws prevent monopolies from occurring, thereby allowing new market entrants to compete in the U.S. and internationally. Essentially, these regulatory frameworks provide the consequences for attempting to drive out competitive forces, coercing organisational leadership to seek out more differentiated strategies without predatory activities. Now, from an ethical perspective, antitrust laws protect the consumer and new market entrants in an industry. However, regulatory frameworks that demand ethically-oriented, fair competition limit the success scope of organisations for expansion, price establishment to benefit revenue production, and a wide variety of other organisational practices. It is clear that competition policy and regulatory influence have significant implications for organisations and serve as a foundational catalyst for radical internal restructuring or new policy formation to better thrive in a highly regulated operational environment. Market structure influence, pricing decisions and output Outside of the regulatory environment, organisations are also strongly impacted by changing market dynamics. For organisations that are devoted to tangible, priced merchandise production and distribution, market forces shape the internal structure of the organisation and its long-term competitive strategies. For instance, Nandan (2005) indicates that it is becoming much easier for business competitors to replicate existing products and attempt to exploit shortening the product and service life cycle of competing products through these efforts. Some organisations must face intense competitive rivalry, such as price discrimination toward disparate consumer market segments or even growing buying power of competitors along the supply chain which impacts raw materials pricing. With companies facing the ongoing threats of having their business or service models reproduced, it acts as a driver for coming up with contingency scenarios, rethinking strategic motivations, or even conducting research on changing market conditions. Price competition is one of the most potent competitive tools today which greatly impacts a firm’s ability to achieve profit in saturated markets where buyers have very high price elasticity. The market structure, therefore, strongly influences how organisations manage their practices and how they generate output. How market forces shape organisational responses Organisations must be diligent about assessing the changing external markets and determining cost structures that will satisfy the goal of increasing consumer demand whilst also satisfying rising costs along their procurement models. Consumer demand levels pose threats to the organisation as it will provide new expectations in the mind of the consumer that must be satisfied in order to stay competitive and profitable in the market. Organisations show how an organisation changes their pricing structures to meet market demand. Where growth in a market may have once been explosive and provided many opportunities for profit attainment, now the market in which they operate is saturated with competition and in the decline stage along the industry life cycle. If there were to be sudden shift in consumer preference, a competing organisation would be required to assess its pricing mechanisms, whilst taking into consideration procurement costs, and lower prices to keep the market relevant in consumers’ minds and ensure demand remains high. Changing market and consumer-driven preferences could also force organisational leadership to alter output volumes and consolidate distribution, which would have significant implications for profit production. Business and cultural environments Furthermore, cultural models of sociology and psychology indicate that nearly all societal stakeholders require a sense of belonging either to their organisation or to their preferred in-group of peers (Maslow 1998). World class and successful organisations must develop a human resources system or decentralise activities (thus creating a horizontal structure) to ensure shared decision making throughout varying ranks of authority within the organisational structure. Modern views on successful organisations indicate that creating a sense of belonging with all employees and managers provides the incentive and motivation to build commitment to achieving organisational goals and satisfying the organisational mission established. Many businesses, due to the disparate needs and cultures of internal employees, establish governance systems under stewardship theory in which the barriers between corporate governance teams and management (as well as employees) are broken down and decentralised. Stewardship theory states that managers are capable and competent stewards of the organisation and are granted more autonomy in decision-making as well as influence in guiding corporate governance philosophy and strategic planning. Successful organisations provide a greater sense of corporate social responsibility to ensure stakeholder needs, internally, are also satisfied in order to be successful. Hence, organisations must be ever-aware of the cultural characteristics of their employees or volunteers and attempt to create policies and human resources-based strategies that are aligned with these social aspects. Especially in organisations with many diverse ethnic and cultural backgrounds, it becomes even more paramount for organisational leadership to build policies and team ideologies that will gain more productivity and ensure that there is a cohesion among disparate groups within the organisational dynamic. Conclusion As shown by the research, organisations are impacted significantly by economic and monetary policies, market changes in the industry, culture and consumer preference, and overall stakeholder demands that fluctuate regularly over time. Organisations, if they are to succeed and achieve mission, must be adaptable to changing trends and therefore inject flexibility into the organisational structure and human resources models. Stakeholder needs are the most paramount of most organisations and it is the role of a successful organisation to service these needs efficiently and with the utmost responsibility. However, at the same time, revenue production and profit (with most organisations) is also important to ensure longevity, adaptability to changing market conditions, and total output to improve social welfare of citizens domestically and internationally. Organisations, all things considered, are dynamic and ever-changing entities that must meet mission goals and establish trust in order to be considered a competitive or service-oriented success. References Blumenthal, W. (2013). Models for merging the US antitrust agencies, Journal of Antitrust Enforcement, 1(1), pp.24-51. Boyes, W. and Melvin, M. (2005), Economics, 6th edn. Cengage Learning. Buchanan, D.A. and Huczynski, A.A. (2010). Organisational Behaviour, 7th edn. Essex: Pearson. Business News Americas. (2004). 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