External Factors Influencing Organizations - Essay Example

Business Environment The success of every organization depends heavily on its strategic planning. However, there are several external factors that affect the performance of the organization in either local or international market (Knights & Willmott, 2012). Political factors influence the development of the organization in the market. Different factors such as policies and rules of competition in a country have a major impact on how a business handles itself in the market. This affects the overall competitive advantage of the business in the market (Knights & Willmott, 2012).

The economic factors are of great importance in creating a serene environment for the organization. Different aspects such as interest rates and exchange rates affect the performance of the business. This is through affecting the prices of products or raw materials and cost of production (Strydom & Smith, 2011). Social factors have a major impact on the consumption behavior of the target market. For instance, people’s culture and attitude towards specific products, demographic shift, and fashion trends affects the organization (Strydom & Smith, 2011).

The changing technological factors have a major impact on the business. For instance, the businesses are forced to keep on updating their technologies in order to remain competitive. Other companies are forced to invest heavily in innovation in order to keep up with the changing technological trends (Strydom & Smith, 2011). Environmental factors affect the position of the business in the market. Environmental compliance and participation in reducing the level of global warming are some of the aspects that attract customers towards the organizations.

Therefore, organizations are forced to set up part of their profits to be directed towards environmental conservation (Strydom & Smith, 2011). Legal factors such as laws that govern the labor relations affect organizations in the market. Companies must comply with these laws or risk losing their operating licenses (Knights & Willmott, 2012). Competition is another external factor that affects the operations of the business. The decision made by the management depends on the level of competition in the market.

Therefore, in case the competition levels increases, the business is forced to readjust in order to remain relevant Part 2 Training of the potential subordinates and innovators by multinational companies is one of the current trends in the market. Companies such as Apple Inc and Samsung are collaborating with institutional of higher learning in order to provide financial support to young innovators. These students are later adopted by the organizations and become key strategist. These strategies have enabled these firms to develop innovative products that have attracted the loyalty of the customers (Noe, 2006).

Subordinates have become a critical source of information to the organizations. Initially, firms used to employ researchers who will enable them to understand the tastes and preferences of the target market. However, with the changing focus towards customer relationship management, organizations are training their employees on how to handle customers and retrieve crucial information regarding their consumption behavior. Furthermore, organizations are using their employees to participate in corporate social responsibility.

This is offering the workforce with an opportunity to interact with the customers. This enables them to understand different aspects that affect their consumption behavior. Information is then passed to the top management which initiates changes in order not to lose the target market to the competitors. This strategy is also enabling the top-level management to involve the employees in making critical decisions that affects the future of the company (Dessler, 2000). This motivates the employees by making them feel appreciated and valued by the organization.

References Dessler, G. (2000). Human resource management. Upper Saddle River, NJ: Prentice Hall. Knights, D., & Willmott, H. (2012). Organizational behaviour & management. Andover: Cengage Learning. Noe, R. A. (2006). Human resource management: Gaining a competitive advantage. Boston, MA: McGraw-Hill. Strydom, J. W., & Smith, M. B. (2011). Principles of business management. Cape Town: Oxford University Press.