Area of Study 1: Large-scale Organisations in Context

Chapter 2: Environments of businessArea of Study 1: Large-scale Organisations in ContextStakeholders in LSOsStakeholder: individual or group that has a direct or vested interest in the activities of an organisationShareholdersDirectorsManagersEmployeesTrade UnionsCustomersSuppliersCreditors/BanksCommunityGovernmentCompetitorsThree levels of the organisational environmentInternal EnvironmentOwners/ShareholdersPressures and forces from within the organisationManagement has a fair degree of certainty and control over these pressuresIndividual shareholders will find it difficult to influence a companyCan attend meetings and vote at AGMsMay wish companies to become more environmentally sustainable

Internal Environment continuedBoard of directors and managementEmployeesWork to manage corporate risk and eliminate poor corporate conductMust adhere to corporate governance, social rsponsibility, ethical and honest behaviourSeek to work in a non-discriminatory and ethical workplace that provides workplace flexibility options, equal employment opportunities etc.Organisations want to be regarded as having best practice regarding providing for employees makes them the employer of choiceInternal Environment continuedOrganisational StructureCorporate CultureRecent moves such as downsizing has placed greater emphasis on use of teams and empowerment of workersCreated opportunities for non-core activities to be outsourcedEvolves over time and can reflect the personality of the original founderReflects the shared values, beliefs and expectations of employeesMust incorporate flexibility and adaptability into their culture to remain dynamic and responsiveOperating EnvironmentCustomersFactors directly interact with the business and its operations Can provide both opportunities and threats to a business relating to its success and ability to be competitivePose potential uncertainty to the profitability and ongoing successCustomers are now more discerning and educated in their consumer choicesMay look at the social responsibility and ethical nature of an organisationOperating Environment continuedCompetitorsSuppliersMust monitor competitors products or servicesCan gain an edge over competitors by offering inducements and incentive programsAny provider of input into a business operationsBusinesses must ensure a steady, reliable flow of needed inputs at the lowest possible costOperating Environment continuedTrade UnionsLobby/pressure groupsRepresent workers and act on their behalf to negotiate with management on issues such as wages, working conditions etc.Organisations can cooperate with trade unions and work towards mutual organisational goalsAttempt to influence the actions of organisationsCan be environmental issues, worker conditions, ethical productionCan cause organisations to lose brand value overnightOperating Environment continuedFinancial InstitutionsRegulatory bodiesDeregulation of financial industries means more competitionNeed to keep up to date with interest rates, loan arrangements, credit facilities and electronic bankingAll three levels of government place pressure on businessesNeed to interact with bodies such as ATO, ASIC and ACCC, OHS etcStated with which the business must complyMacro Environment Economic forcesFactors that can influence the operation and performance of an organisationThe organisation has no control

Business cycle is the pattern of grown and decline in the economy and goes in cycles (periods of growth followed by downturns)Level of impact by these changes is based on the type of business in a downturn sales industries sufferMacro Environment continuedGovernment forcesFederal and state governments both affect the operations of businessesMonetary policy Federal government and RBA set target interest rate which affects the rate charged by banks. High interest rates slow down consumer spending

Budgetary policy governments revenue raising and spending activitiesGovernment spending on certain industriesTaxation policiesMicroeconomic Reform changes made in the internal business environment of a country, placing emphasis on improving efficiency, e.g. privatisation, deregulation

12Macro Environment continuedLegal forcesTechnological developmental forcesBusinesses must comply with legislationLaws are set in place to guide, protect, and control businesses and consumersSome examples include: fair trading, business licensing, workers compensation, anti-discrimination and so on. Can result in criminal charges or civil suits where monetary damages are imposed

Organisations need to be responsive to advantages offered by technologyAssist a business to lower costs, improve quality, become environmentally responsible and deliver goods and services more quickly

Activity 2.8 question 1

Macro Environment continuedGlobalisation forcesPolitical forcesOrganisations cannot ignore foreign competitionSome companies merge to deal with this and remain competitive in a shrinking world

Affect the general stability in the countryIf operating internationally political environment in that country needs to be considered

Macro Environment continuedSocial and cultural forcesEnvironmental forcesMust be aware of and respond to changing conditions in societyPick three to write down as examples

Under increasing pressure to take care of the environmentEither self-regulatory or government mandated measures are put in placeEnsure organisations now work from sustainable buildings