Relationship between an Organisations External Environment and Its Strategy - Case Study Example

Relationship between an Organisations External Environment and Its Strategy Name Institution Introduction Each organization has a distinct structure. The unique structure is a reflection of the history of the company’s, internal politics and reporting relationships. The organizational structure should be able to support the company’s strategy; it should be customized in a way that it fits in the organizations strategy. Nurturing relationships is one of the most significant ingredients for a flourishing strategy implementation. Relationships of employers should grow and develop for the strategic partnerships formed within an organization and employers are internal to the company while vendors are external supporters. Sharing of information should be adequate for the relationships to be effective. Open and honest negotiations on hitch spots to smoothen them out are encouraged. When aspiring to widen a relationship with an external organization or a worker, the objective should be to get resource capacity not a deal only. Marketing environment affects and surrounds an organization. Macro environment, microenvironment, and the internal environment are the three important aspects of the marketing environment (Henry, 2008). The macro environment Macro environment comprises of factors that indirectly control an organization. An organization does not normally influence laws but changes them continually and a company needs to be elastic to adapt. Competitions and opposition in the market are bound to take place. There are always threats of new entrants and substitute products. The extensive environment is also ever varying and marketers need to balance for the changes in technology, politics, economics, and culture (Mayo, 2004). Microenvironment This affects the organization directly. It involves consumers and suppliers who deal indirectly and directly, and other stakeholders. It depicts the relationship between companies and driving forces that manage this relationship. It is a confined relationship and the company may exercise a degree of manipulation. Publics, suppliers, customers, company, intermediaries, and competitors are among forces affecting a company’s ability to attend to its clients (Robert et al, 2005). The internal environment These are features that are confined to the organization are referred to as the internal environment; they are normally Human resource, machinery, and material. Money and markets are important for controlling change as the external environment; managing internal change is called internal marketing. To change management and aid communication-marketing approaches are used. The external environment can be reviewed in more aspects using other approaches such as Michael’s five forces Analysis, SWOT or PEST analysis. Technological, demographic, cultural, economic, political, natural forces are external influences that shape a firms opportunity and pose threat to the firm, they are vital in the strategic implementation of an organization for success to be achieved (Robertet et al., 2005). The environment of marketing An organization functions within the larger structure of the external environment that models prospects and poses threats to the firm. The external environment is a set of composite, rapidly varying and major interrelating institutions as well as forces that influence the organizations ability to serve its clients. External forces are not restricted by an organization but may be subject to or affected by that firm. An organization should understand the environmental conditions because they interrelate with strategy decisions. It has a major blow on the willpower of marketing decisions. Victorious organization scrutinizes their external environment so that they can act in response to profitably to unmet trends and needs in the targeted markets (Kazm, 2008). The organization as a system The firm should be conceptualized as a whole, as a system with interrelated, and mutually supporting parts. The systems approach tackles tribulations by diagnosing them within a skeleton of inputs, transformational processes and feedbacks. Human labour, finances, equipments resources, and materials are inputs that enter a transformational process, which encompass technology used to convert inputs into outputs. Outputs are the innovative inputs as changed by the transformational processes to products and services, and feedback is information about a systems position and performance. An organization is a resource conversion appliance that takes inputs from the external environment and changes them into constructive products which are services and goods making them accessible to customers as outputs. The firm must frequently monitor and become accustomed to the environment if it is to survive and flourish. Turbulence in the environment may spell deep threats or new prospects. A victorious firm should have strategic plans that can be able to spot, evaluate and respond to the various prospects and threats in the environment (Henry, 2008). External macro environment This comprises all the outside organizations and forces that have an authentic or probable interest or impact on the firm’s ability to accomplish its objectives. Political, economic, technological, competitive, legal, demographic, and cultural and ecosystem forces, though unmanageable these aspects need reaction in order to keep positive actions with the targeted markets. A firm with an environment management viewpoint takes forceful actions to affect the forces in its marketing environment rather than examining and reacting to it. Competitive environment The organization must provide greater client value than its competitors, be good than the opponent. It is impossible for a firm to develop strong viable positioning strategies without a good understanding of its competitor’s strengths and weaknesses. There are three levels of competition subsist, direct competitors, organizations competing for the same clients. The second is competition between products that can be stand-in place for one another. The last is competition among firms that try to win customers purchasing power. Strategies should be modelled to meet these needs with knowledge of the competitor’s weakness, and products and services competing. Economic environment This are forces that influence consumer purchasing power and costs patterns. They comprise inflation, business cycles, interest rates and income, and unemployment. Changes in important economic variables has an important impact on the marketplace, income influences consumer expenditure which affects sales of a firm. Humans save, spend invest and try to create personal assets with different quantities of money. How people deal with money is of importance to marketers. According to Robertet al. (2005), marketers cannot manage the challenges that have cropped up and they may keep on developing various hot spots across the global economy but should take aggressive steps to protect their firm from redundant consequences of a universal downturn. When firm’s primary finances are strong, it is able to take advantage of competitors, weak spots, prosper and continue to develop even in poor economic times. Technical environment This refers to latest technologies, which create new products and market chances ,this are the most uncontrollable forces faced by marketers, company’s need to be informed of the new technologies in order to turn these advances into chances and a competitive end. Technology has a terrific effect on, consumer patterns, economy and lifestyle. Progress in technology can start new industries, alter existing industries and inspire entirely separate markets. This radical change in technology has forced firms to quickly adapt in terms of how they can promote, distribute, and price their goods. Political and legal environment Firms must work within framework of legislation and governmental policies. Government relations with companies envelop; tariffs, import quotas, subsidies and deregulation of industries. The political environment encompasses special interest and governmental groups that affect and limit various firms and individual in a given people. Firms employ lobbyists to control legislation and run advocacy advertisements that state their points of views on public issues. Special interest groups have increased, confining marketers. Like the use of biodegradable packing bags as part of marketing strategy. The main function of business legislature encompasses protection of firms from unjust competition, unfair business practices and the security of interests of society from unbridled business behaviour (Robert et al, 2005). Demographic environment It informs marketers on current and probable customers, the number likely to buy their products, and where they can be located. Demography studies human population in terms of location, sex, age, size, density, race, occupation, and other statistics. Demographic environment can influence major opportunities and threats presenting themselves to the firm. These trends of marketing include global explosive population growth; ethnic, a varying age and educational mix; new types of households and geographical swing in population. Strategic plans should be able to effectively relate with this demographic environment for the organization to advance. Ecosystem environment These are the natural systems and there assets, that are required as inputs by marketers. Concerns about the environment have enlarged in the last few years, to avoid shortage in resources firms can recycle law materials and alternatives like wind and solar energy, for nonrenewable resources such as coal and oil, firms can increase efficiency by limiting their energy usage. Deliberately, taking part in pollution avoidance activities and natural resources (Robert et al, 2005) External microenvironment This encompasses forces that are part of a firm marketing process, but external to the organization, these are forces like the organizations market, marketing mediators and producer suppliers, this are exterior, and organizations are capable of excreting more power to these than influences in the microenvironment. Cultural environment Cultural and social forces are more difficult to control and predict, marketers should understand and value the cultural values of the environment in which they control, the cultural surrounding is made up forces that influence society’s basic values, preferences, behaviours and perceptions. In addition, this should be considered in strategy formation. Changes in social/cultural environment influence consumer behaviour affecting sales of products. Developments in the cultural environment are; individuals altering the view of themselves, others, the world around them and the progress towards self-fulfilment, immediate satisfaction and secularism (McCabe, 2010). The market Firms closely check their customer markets in order to adjust to varying tastes and preference, each target market has unique needs, which need to be checked, a firm should know its clients, how to get at them and when clients need change in order to adapt to its marketing efforts accordingly. The market is the central point for all marketing decisions in a firm (Mayo, 2004). Suppliers This are individuals and organizations, which provide the needed resources, they are significant to a firms marketing victory and vital link in its value delivery system. Marketers must watch supply availability, and price trend of key inputs, if there is a break in the link between the suppliers and the firm the effect is shortage and delay that can negatively influence the firms marketing plans. However, positive and supportive relationships between the firm and its suppliers can lead to better service and customer fulfilment (Robert et al, 2005). Marketing information External environmental sources give law data for marketers to expand into actionable marketing information, environmental forces form challenges and chances for the firm, marketers must adjust and react to changes in the external environment, an example of opportunity for a company is globalization. Enhancing technologies such as communication and transportation has made firms grow into universal markets. Conclusion Marketers should be able to deal successfully with multiple cultures and political organizations in the middle of rapidly varying technology and markets; they must be able to build up competencies at all heights in the vibrant future. References Robert, E. et al. (2005), Understanding business strategy: concepts and cases, London: Cengage learning public. Mayo, A. (2004). Creating a Learning and Development Strategy: The HR Business Partner's Guide to Developing People. Edition2. NY: CIPD Publishing. McCabe, S. (2010). Corporate Strategy in Construction: Understanding Today's Theory and Practice. London: John Wiley and Sons. Henry, A. (2008). Understanding Strategic Management. Oxford: Oxford University Press. Kazm. (2008). Strategic Management and Business Policy. Edition3. Melbourne: Tata McGraw- Hill Education. Read More