How Environmental Factors Can Affect the Business Organization - Essay Example

Explain the open system approach to organizations, and how environmental factors can affect the business organization Introduction The paper takes into consideration the open system approach to organizations, besides reviewing how environmental factors affect the business organization. In order to put these concepts into consideration, the paper will utilize Icy Foods Ltd. as a case study. The company was established in the year 1999 having been founded by the Smith family. The company deals in manufacturing of a range of frozen “ready meals." Since its inception in 1999, the company has expanded its scale of operation significantly. By 2005, it had over 80 employees and several customers, which ranges from supermarkets, restaurants, cafes, and households. The company will be used as a case study to answer the questions in the subsequent paragraphs. Open system approach to organizations An open approach system to organization implies that an organization interacts with its outside environment, which in turn influences the structure and operations at the organization. The fact that an open system interact with the outside environment implies that an organization being an open system should always adapt to changes in the environment. For a long time, Icy Foods Ltd. has been operating on informal basis judging, by the way, operations are loosely divided into five departments with no clear-cut framework. Moreover, the company used to accept orders with less or no regard to quality or quantity specifications of the product. This lack of organization explains why the company lacked customers from major supermarket chains. The other apparent misgiving that characterized Icy Foods Ltd. is the lack of clear division of labor and specialization. This fact is inherent in the way the company conducts job rotations (Weiner, 2002). Job rotation is not a good concept because it does not give the employees the chance to gain experience in a given line of duty. The fact that the company did not embrace quality and efficiency in its operations negatively affected its business performance. Before the takeover by Megastores Plc., the company had adopted an organic organization structure in managing the various operations. The management, prior to the takeover, operated an open-door policy. The management was keen in hearing employee’s ideas on new products and operational improvements. There was also a flexible approach in handling employees’ issues such as working hours and leave. After the successful takeover, the management came up with a raft of new changes that were more bureaucratic as opposed to the organic system that the management had used to all along. The company adopted strict operational procedures that all the workers were compelled to follow to the latter. The new management placed much emphasis on operational efficiency, and work was based on performance. Decisions at the company were made unilaterally by the management without any consultations whatsoever, with the stakeholders. The human-resource department was formed to manage the human-resource issues. This bureaucratic approach to management led to high turnover at the organization. Moreover, it resulted to low motivation levels among the employees (Cassidy & Kreitner, 2009). It is worth noting that bureaucratic approach to management of organization has one critical advantage, which is an improvement of efficiency in operation and management of the resources of the organization. Since the adoption of the bureaucratic leadership style at the organization, the efficiency at the organization has improved by a whopping 35%. How environmental factors can affect the business organization The year, 2005-2010 saw several changes in the business environment that adversely affected the business performance of Icy Foods Ltd. The fact that major supermarket chains dominated the ready foods market drove out of the market the smaller retail outlets from business. The small retail outlets were the major customers of Icy Foods Ltd products, the fact that they were driven out of business, therefore, meant that the company would lack customers for its products. Since the takeover of the Icy Foods Ltd by the Megastores Plc., the level of turnover and lack of motivation has increased significantly at the company. In order to achieve high levels of motivation, the management must ensure that it encourage job enlargement, job enrichment as well as empowerment of the employees. Job enrichment involves providing workers with challenging and more interesting work environment that gives them a sense of achievement while job enlargement involves giving more responsibility and more scope to an employee in a bid to improve efficiency and scrap boredom at the workplace. Finally, empowerment involves delegating more powers to employees to make autonomous decision involving their area of work (Cassidy, & Kreitner, 2009). Currently, the employees are not involved in any decision-making process under the new management and as such the employees feel left out yet they are important stakeholders at the organization. Employees are important part of the organization and as such; on the very least, the organization should involve them in decision making, especially on areas touching on their terms of service. Under the old regime, the employees were paid handsomely at a rate above the national wage minim, and the company was attentive to their demand. The new management has come up with a very new criterion of handling the affairs of the employees, which was decided upon unilaterally (Griffin & Moorhead, 2011). The result of such a move is that there has been a high turnover from the company. In order to restore the morale of the employees the new management should adopt the Herzberg Motivational Model. In approaching the various issues by the new management, the Hersey-Blanchard Situational Leadership Model comes handy. This leadership model embraces four leadership styles, which include telling, selling, participating, and delegating. The model avers that the issues in the organization are always unique and as such, the management must adopt unique ways of addressing each issue within the organization. Landy and Conte (2009) says that the current leadership after the takeover has been unilaterally tackling various issues without involving the stakeholders such as employees. The unilateral approach to leadership has not been taken well by the employees judging by the high turnover and the low morale among employees. The current payment policy, which is adopted by the organization, is self-defeating; the employees are paid the minimum national wages. The management ought to have consulted with the employees’ representatives before coming up with the wage package in order to come up with better packages that are acceptable and motivating to the employees (Bechet, 2008). The company needs to adopt a more participatory style of leadership in which all stakeholders, including the employees are involved in the decision-making process at the organization. Participatory leadership style is a good approach to leadership since it goes a long way to make everyone to feel part of the organization. The changes that characterized the foods environment left Icy Foods Limited in an awkward position forcing them to accept the takeover bid by Megastores Plc. The company was constantly finding itself on the wrong side of the law since it lacked the capacity to meet the threshold that had been set by the new regulations on health and safety at work as well as food hygiene standards. The fact that the Icy Foods Ltd. could not secure any more customers from an independent supermarket resulted to dwindling of their sales considerably. In a bid to respond to the changes in the business environment, which had threatened to kick it out of the market, Icy Foods Ltd. became its subsidiary in 2010. Conclusion This paper has conducted an in-depth analysis of the Icy Food Ltd. under the old and the new management. The open system approach to an organization makes the organization flexible and more adaptive to changes in the business environment. The fact that open system interacts with the outside environment imply that an organization, being an open system, should always adapt to changes in the environment. References Bechet, T. P., 2008. Strategic Staffing: A Comprehensive System for Effective Workforce Planning. New York: AMACOM Cassidy, C. & Kreitner, R., 2009. Supervision: Setting People Up for Success. Boston, MA: Cengage Learning Griffin, W. and Moorhead, G., 2011. Organizational Behavior: Managing People and Organizations. Boston, MA: Cengage learning. Landy, F. and Conte J., 2009. Work in the 21st Century: An Introduction to Industrial and Organizational Psychology. New Jersey: John Wiley & Sons Weiner, B., 2002. Human Motivation: Metaphors, Theories and Research. New York: Sage. Read More