Business Organisations And Their Environments - Essay Example

Technology has pervaded every aspect of business and organizations too use technology to overcome and respond to the challenges posed by the internaland external business environment. To remain competitive, firms have to create some point of differentiation from its competitors. Internal environment Learning has to take place in an organization but the internal pressures are such that can undermine the effects of learning and innovation. When technology was introduced in the organization there was resistance to change. People develop certain mindsets and get stuck. They are unwilling to unlearn previous assumptions and in this situation mangers are reluctant to foster learning because it could mean losing control (Field & Ford, 1995). However, when email was first introduced, the employees utilized this communication medium for political manipulation which caused relationships to strain and loss of management control. Thus change brings internal pressures such as resistance to change (fear of job loss) and resistance to enforce change (fear of loss of power by managers). The management also feared loss of control and power and this would hamper their process of achieving the benefits of technology. Implementing learning requires the right leadership because mistakes may occur which may deter the employees from learning for fear of being rebuked. The right leadership would know how to encourage employees to learn and adapt to new technology, as it could empower the employees and regulate the work environment (Field & Ford, 1995). Thus, the management has to be well informed of the perceived benefits from change or adaptation to change and this has to be further communicated to the employees. Effective communication can reduce the resistance to change. Learning cannot occur in a vacuum and without the involvement of the top management it is difficult to develop learning as an organization wide activity. Moreover, to promote learning, there has to be a culture that encourages inquiry, openness and trust (O’Keeffe, 2002). Learning also demands unlearning and this implies that past successes have to be restructured to fit to the changing conditions When new technology is introduced, personnel roles and relationships change and this requires quick interpersonal skills in managing the complex relationships (Harris, 2004). Cultural diversity is another factor that can make the role of the leader more challenging. Building a knowledge culture is essential and this means that the leaders must be able promote synergy in and through the organization. Organizations respond to such challenges by team building and training within the organizations by internal and external consultants. Team environment facilitates group performance. Team participation is itself an intense learning experience. Synergy occurs when team members are able to listen to each other and enter into the world of others. Then the wisdom of the group is greater than the sum of the parts. Thus, the internal environment has to be conducive to change. To foster and create a learning environment, the right leadership is necessary. External environment Firms that are adaptive, flexible and productive will excel (Smith, 2001) as businesses risk extinction if they do not respond to the challenges (Heifetz & Laurie, 2003). This requires the firm to respond to the external environment. To respond to the competitive environment, Pfizer decided to partner with technology which would help them to enhance the customer experience. Customer Relationship Management (CRM) is an interactive process that can personalize customer needs and increase customer loyalty (Smith, 2006). Pfizer used CRM to manage its sales force globally. They used a popular CRM tool Siebel, to integrate data from over 10,000 sales persons spread across Europe. Technology helps them to captures data regarding each salesman’s hospital visits, visits to the doctors, distribution of free samples, and their feedback. Management control is enhanced because the data so collected helps the higher management to integrate, analyze and take decisions. In the airline sector, Ryanair face several challenges from its external business environment. According to Porter, a firm can gain competitive advantage through cost-leadership, differentiation or through focus (Allen & Helms, 2006). Ryanair focused on cost leadership. Their vision was to be the market leaders in the low-cost sector (Lin, Hung & Li, 2006). They offer the lowest price in the industry, so the buyers have no bargaining power. To keep their costs low, they invested in the latest aircrafts. Their main competitors are EasyJet but EasyJet is unable to sustain on sectors where Ryanair operates. They have been using technology and introduced web-based check-ins and priority boarding which is availed of by half the passengers. Thus, they have been able to eliminate the check-in staff, save time and keep the facilities under control. By levying charges on check-in baggage, they have been able to discourage people from carrying heavy luggage. All of these strategic decisions have helped them to reduce costs and increase speed. They absorbed the hike in fuel prices instead of passing it on to the passengers. They have been able to maintain control through effective management. Ryanair has standardized its routes and they do not have competition in most routes. By tailoring their roster, they have been able to maximize their productivity, which in turn keeps the staff costs low. They fly point-to-point and avoid congested airports. They use regional or secondary airports where the charges are much lower. Because of this, they had not been paying heed to customer comfort, security and value-addition. Their low cost image affected customer perception. However, they are the least favourite airline and according to Porter (1996), all of these strategies can be duplicated by rivals and competitive advantage is at best, temporary. Ryanair had responded to the external pressures by focusing on speed and productivity but they could not sustain the quality. Operational effectiveness is not a strategy, contends Porter. Ryanair was trying to thrive on low prices but without a customer-focused approach. Cost advantage appears only up to a certain point (Vandermerwe, 2000). Thus, Ryanair could not respond effectively to the challenges that the external environment posed. They could not implement technology for innovation, management control and could not meet the economics of the markets. They did not use technology to maintain e-relationship with their customers as it could add value to the relationship that is difficult to imitate (O’Toole, 2003). Analysis As far as the internal environment is concerned, training and development pose a challenge when new technology is introduced. An organization cannot function without taking into account the individual differences in talent and culture. These influence how they would accept or reject or resist accepting and incorporating technology into their daily work practices. However, these challenges are known and an organization should take precautions before implementing change or before introducing any new technology. The employees need to be informed of why technology is being introduced, its perceived benefits and the limitations. Then, they should be given training in how to utilize technology to enhance the work. They should also be encouraged to find innovative ways to utilize technology. Proper information flow and effective communication can reduce the incidences of resistance. This would help the organization to attain higher levels of productivity. This may require the right leadership. People do not want to challenge the tried and tested methods for fear of failure and consequent loss of job. This fear has to be eliminated by accepting mistakes as the learning process. This means the employees have to be given a free hand to learn through mistakes. Understand the internal environment is very critical to the successful implementation of technology. Management control can be effective only when it is a strategic decision and well planned in advance. It is no more possible to thrust something on the employees and expect them to accept and continue. An organization would have to recognize talent and entrust leadership. An organization cannot function independent of the external environment. In fact the external environment urges an organization to changes its strategy and policies, to ensure that it is able to sustain competition. The external environment becomes a cause for its competitive strategy. The external environment would include the country and the industry policies as well. But in this case, only the competition in the sector has been considered. However, just trying to beat competition through prices is not enough. Ryanair did not take into account the impact of this strategy of low-cost leadership on customer loyalty and retention. They expected to thrive merely on price but such strategies cannot provide long-term benefits. While taking into account the external environment, at all times, its impact on the overall business, including financial perspective as well as the customers, has to be borne in mind. They may have achieved operational effectiveness but that as Porter says, is not a strategy. They focused on speed and productivity at the cost of quality. An organization has to respond to the challenges of the external environment but not by compromising on the basics of the business. It cannot remain immune to the changing customer demands and preferences. The management focused on gaining the market share but started losing the market share as it could not understand the dynamics of the relationship of the organization and the external environment. References Allen, R.S., & Helms, M.M. (2006). Linking strategic practices and organizational performance to Porters generic strategies. Business Process Management Journal. 12 (4), 433-454. Field. L., & Ford, B. (1995). Organisational learning: basic concepts. Harris, P.R. (2004). European leadership in cultural synergy. European Business Review. 16 (4), 358-380 Heifetz, R.A., & Laurie, D.L. (2003). The leader as teacher: creating the learning orgnaization. Ivey Business Journal Online, London: Jan/Feb 2003 Lin, B., Hung, S., & Li, P. (2006). Mergers and acquisitions as a human resource strategy Evidence from US banking firms. International Journal of Manpower, 27 (2), 126-142 O’Keeffe, T. (2002). Organizational learning: e new perspective. Journal of European Industrial Training. 26 (2/3/4), 130-141 OToole, T. (2003). E-relationships - emergence and the small firm. Marketing Intelligence & Planning, 21 (2), 115-122 Porter, M.E. (1996). What Is Strategy? Harvard Business Review. SD. (2007). Building and managing a successful brand with the three Cs. Strategic Direction. 23 (1), 19-22. Smith, K.M. (2001). peter senge and the learning organization. Infed, Retrieved online 03 June 2010 from http://www.infed.org/thinkers/senge.htm Smith, A. (2006). CRM and Customer Service: strategic asset or corporate overhead? Handbook of Business Strategy, pp. 87-93 Vanvermerwe, S. (2000). How increasing value to customers improves business results. 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