Sample Essay on Impact of Changing External Environment Organisation

The external environment of any organization consists of all entities that exist outside the in-house domain, and that significantly influence organizational programs for expansion and survival (David & Lord, 2000). An organization continuously monitors the external environment operations and develops adaption mechanisms to counter these external factor aspects. In a global context, successful management and leadership of organizations is a prerequisite for effective achievement of an organization’s objectives and general operation of primary organs (David & Lord, 2000). The most precise managerial roles include employee recruitment, relations, and enhanced behavioral changes that predetermine the ultimate accomplishment of the institutional goals, efficient management of externalities, and leadership competence. External environments include all entities interacting with the organization and influencing the major decision-making processes in the organization (Michael & Freeman, 1997).

This document critically analyses impacts of changing external environments on management and leadership within an organization and objectively proposes ways in which an organization can improve its external environmental management strategies within a global context, to realize ultimate improvements in general operations (Michael & Freeman, 1997). Globally, the organizational management of an external environment is a challenge and, if not checked, can in the long run outdo business achievements. The emergence of new technologies has arguably seen all companies cut production costs, but these new technologies must keep pace with the external factors to remain relevant in the global market (Michael & Freeman, 1997).

A prerequisite for effective externalities management is the productive employees’ relations with the management and customers, and effective planning of the daily organizational operations (Michael & Freeman, 1997). A prerequisite to effective externalities management entails all employees and customers concerns, market competitions, preferences of the customers, technological advancements, and availability of raw materials, finance and demographic characteristics of the organization’s target population (Michael & Freeman, 1997).

In any organization, a viable human resource management responsible for the welfare of employees, capable and competent top management is a plus. For instance, while an effective human resource management ensures a correct number of workers in an organization, a reduction in the costs of hiring employees, and effective nurturing and retention of a productive workforce, a strategic decision manager ensures that the organization remains competitive enough in the global market. Management sustainability of an organization’s external factors, simply put, refers to the art of efficiently satisfying the institution stakeholders’ current external challenges, and at the same time allowing healthy market competitions and profit maximization in an organization (Michael & Freeman, 1997).

Otherwise, sustainability is important in any major organization, and employees must be updated with contemporary and emerging management issues that can otherwise be detrimental to an organization’s long-run performance. Active externalities management decisions tap efficiently into each employee’s potential and customers’ trust to ensure maximum profits, and therefore facilitating an upward growth trend in an organization (Michael & Freeman, 1997). Sustainable organizational management entails application of techniques that are innovative and attainable, both in the short-run and long-term. A good organization will go overboard and make sure that a profitable rapport is created between its organs and the external environment. This requires financial and logistic support for the executive and efficient constant monitoring to ensure impartiality in its operations.

External environment impacts on management and leadership

Competition comprises of all organizations producing or offering similar products and services, especially in analysis of the geographical locations of the rival organizations and the demographic characteristics of the rival organizations’ customer base (Michael & Freeman, 1997). The management of an organization must ensure that they have a list of all relevant rival organizations, understand their organizational structures, size of their operations, level of competence of their workforce, their competitive advantages, the strategies they employ in marketing, and their global competitiveness (Michael & Freeman, 1997).

The World’s economic growth is currently on an upward trend, with emerging economies mostly in Asia and Sub-Saharan Africa making the global trading activities much more competitive and challenging. Organizations in any part of the world must ensure that they remain relevant and competitive in the global market by producing competitive goods and services acceptable by international standards (Michael & Freeman, 1997).

Customers refer to the end-users of an organization’s goods and services and are the most important aspect of an organization’s external environment evaluation. A profit maximizing firm targets a broad and loyal customer base with high purchasing power (Jeffrey & Salancik, 2003). To maintain a good rapport with the customers, efficient management of an organization must ensure customer satisfaction and preferences (Jeffrey & Salancik, 2003). The products should be specified to the requirements of the customers and their diverse craving for change and improvements in product quality and taste. An organization should always anticipate possible change in tastes and preferences, in line with the emerging technological trends that can affect product usages.

The demographic characteristic of the targeted customer base should be evaluated (Hannan, Michael and John 940). Their social backgrounds (culture), economic parity, and educational levels should be analyzed critically to see how they affect the global market trends and customers’ preferences. Changes in customers’ preferences and demographic characteristics concurrently affect the organization operations and profit maximization (Jeffrey & Salancik, 2003).

Resources entail the organization’s skilled workforce, strong financial base, and raw materials necessary for its efficient management and productivity. A deficiency in skilled and competent workforce can dramatically affect the general output capacity of any viable organization (Jeffrey & Salancik, 2003). When the demand and usage of specialized skills considerably drop in an organization, the supply of such skills to the organization consequently falls and adversely affects the organizational operations in the long run. A profit oriented organization should ensure hiring and retention of competent workforce to compete globally with other firms.

Availability of adequate raw materials is a necessity for any organization initial and consequent production processes. A disruption or changes in the supply of these raw materials such as increasing costs (transportation and production costs), and scarcity affects the operations of the organization significantly (Jeffrey & Salancik, 2003). The availability of strong financial background (credit lines that can fund new ventures, venture capitals, stock markets and investors) provides operational backup to the organization and ensures continuity. An organization with a narrow margin of capital finds it hard to maintain consistency within its functional designs (Jeffrey & Salancik, 2003). Therefore, changes in an organization’s skilled workforce, strong financial base or raw materials availability directly impacts on the daily operations of an organization.

Technology entails all the technological requirements in the production processes in an organization and includes the technical tools used in product production (Jeffrey & Salancik, 2003). The group should be updated with all emerging technological advancements to remain competitive in the global market. The organization for instant, should employ the services of social networking websites (Facebook, Yahoo) for their marketing campaigns, and frequently updating their pages to keep pace with the trending technological advancements (Jeffrey & Salancik, 2003). Changes in technology entail both short-run increases in production costs (as the organization is obliged to procure and employee these trending technological advancements) and long term reductions in cost of production.

Apart from the mentioned external factors, organization serving global markets must abide by some accepted laws and legal frameworks. Concurrently, these organizations must be relevant to new laws that are frequently altered by diverse political and social changes (Jeffrey & Salancik, 2003). Complying with any change or additional law consequently results in increased operational costs as relevant legal team at extra cost is constituted (increased legal fees), developing a new technology and, additional tax burdens. For example, a company involved in carbon emission may be forced to adhere to new low carbon emission requirements failure to which strict legal penalties maybe be constituted against the business (Jeffrey & Salancik, 2003).

Uncertainties in the external environment factors

These refer to the rate at which the external factors possibly change during the planning processes in an organization. Any viable planning process in an organization should be visionary, and goal-oriented with clear strategies for dealing with any externality within organization’s operational framework (Jean-Louis, Lamothe & Langley, 2001). Stability of the ever complex external environment should be pursued in line with organization’s core values, missions, and visions. Attaining balance within the external environment involves determining predictability of an environmental domain and developing a trend for future forecasting (Jean-Louis, Lamothe & Langley, 2001). An external environment is said to be unstable if it possesses dynamic fields that abruptly shifts, and therefore not easily predicted. In the global market, marketing strategies by rival firms, political climates, and market alliances are some elements of the external environment domain that are unpredictably causing instability (Jean-Louis, Lamothe & Langley, 2001).

Environmental intelligence

The leadership of any credible global organization should in fact possess environmental intelligence (ability to repeatedly scan the domains within the external environment) for detecting any possible hiccup or changes that may adversely affect particular operations of the organization, collect relevant information, performance of methodical insight analyze and report to the very top management of the organization (Jean-Louis, Lamothe & Langley, 2001).

Ways of detecting changes in the external environment

An organization should ensure that all its operational units have some ties (direct or indirect) with the external environment and have adequate information about any likely changes in its external domain. The organization’s marketing manager should critically gather relevant tip or information about rival products in the market, customers’ locations, emerging marketing strategies and new pricing policy in the global market (David, 2001). The human resource manager should ensure competencies in their workforce through retention and regular update of the new laws and regulations regarding employees’ treatment and conduct. Similarly, the department in charge of organization’s procurement policy should detect changes in supplies and finance, inquire availability of credit, and analyze the organization’s purchasing parity (David, 2001). An organization can create more functional units to bridge the gap between other groups and encourage sharing and flow of competitive information for strategic decision-making and planning.

Applying for the services of external consultant in strategic planning and competitive intelligence through the use of tools such as issuing questionnaires and conducting a market survey, performing a scan of the information gathered from the public and analyzing data collected on organizational performance is important (David, 2001). The external consultants involve the domains within the external environment and recommend strategies to be employed in obtaining stability in the external environment and the organization.

Scanning and monitoring of the external environment focuses majorly on the necessary resources that spans around technological innovations, economics, politics (both local and global), and social ethics (David, 2001). The process involves a quick overview of the external environmental domains, challenges and way forward. The primary goal is to alert decision makers of any external impinging field before crystallization to enable effective planning and preparation for any slight change in the foreign market. Monitoring follows immediately after scanning, and it involves detecting any changes in the external environment and developing trends in occurrences (David, 2001).

Strategies an organization can use to adapt to an external environment

An organization should efficiently plan and forecast to reduce the impact of an external environment on the functional units of an organization. Planning and forecasting in any organization prepares it to survive in even a harsh environment and makes the organization more responsive and coherent to any external condition. A well planned management in an organization is well prepared to face the unstable environmental condition and to be more adaptive to environment inflictions.

Developing robust organizational designs (structural dimensions) for essential control and efficient management, which demand environmental stability and clearly defined hierarchical structures. All the operational units in an organization have different uncertainties; therefore, coordination and control is essential for successful operations of an organization in any external environmental conditions.

Reducing dependence on external resources by finding appropriate modalities to control some of its aspects. For instance, inter-organizational mergers (loss of departmental autonomy) can be undertaken by like-minded organizations to facilitate scarce resource sharing, to minimize costs of production and associated risks. This can be done by acquiring similar firm, contracts and joint competitive ventures. The merged organizations can also decide to keep the extra resources at their disposal at an additional cost, and to maintain a relatively large workforce to provide cushioning against any changes in the external environment and minimize operational risks.

Ways in which the external environmental conditions can be controlled

Intensify activities and lobbying for political forums- these influence government policies and laws to favor the organization or rather to cushion any possible competition (Alina, 2010). For instance, when the political class lobbies for ‘green legislation’, the firms with the technology to offer it will see it as strategic advantage cushioning competition from rival firms with no appropriate technology to deliver the same. Similarly, unfavorable market policies such as price controls on goods and services can be lobbied against to ensure free market operations (Alina, 2010). Through political lobbying, the government can create a competitive market system devoid of any monopolistic behaviors.

Develop strong advertisement campaigns using the social networking website and print media documents to assist effectively in influencing the customers’ choices (product taste and opinion). This gives an organization a competitive edge over any possible competition and also ensures that the organization remains relevant in market operations (Alina, 2010). The organization should also employ product differentiation to ensure strong comparative advantages over other firms.

The organization shifts its core competency by changing its business activities to a trending product and in the process creating changes in the external domains against possible competitions. The organization creates an entirely new customer base in the process, monopolizing the market in the short run, and profit maximization follows. All these requires managing an organization to become more focused and with the maximum support from all relevant associates to the group (Alina, 2010).

Social capital organizational effectiveness and external environmental management

For an effective administration in an organization, there must be effectiveness in units of operations and social capital system which refer to the total sum of resources within an organization provided through, and developed from networks of cooperation between an external environment and an organization. This means significant system of social environmental relationship with other agencies to improve the general performance and deliveries (David & Lord, 2000). The above concept encourages cognition in sharing risks and successes as well as developing a high formal organizational structures and customer relations programs.

Strategic management techniques that can be applied in an organization to stabilize the external environment

Strategic management in this context refers to methods used in the creation of favorable operational conditions to foster a positive relationship between an organization and its external environment (David & Lord, 2000). This entails involving all organization’s stakeholders to envisage the most suitable relationship that can be developed between an organization and the external environmental factors. In an organization, the key to strategic management is developing good communication and working rapport with the external environmental factors (David & Lord, 2000). Strategic management integrates all management techniques (planning, budgeting, marketing, monitoring, reporting and controlling) broadly with an account of the external environment resulting in purposive decisions and clear directions (David & Lord, 2000). This is congruent with consistent and continuous improvement in management philosophies more ready to tackle any challenge in the competitive global market. Each organization has a unique experience in strategic management depending on organization’s embedded culture, style of management, resource management and the control of the external factors domain (David & Lord, 2000).

In an organization, strategic management must be in relation to the external environment factors domain. Successful external analysis with practical strategic management policies results in organizational changes and development enhancing cooperation between the external areas and the management of the firm (David & Lord, 2000).

Conclusions and recommendations

The external environmental, therefore, if not carefully monitored, can cause unprecedented changes inside an organization that could be otherwise avoided or minimized. Though most of these external factors exist beyond the control of an organization, an effective leadership and management of an organization makes their effects on functional domains of an organizational limited. Therefore, ignoring these external factors can be detrimental to any manager’s roles in an organization (Burke & Litwin, 2005). As such, managers in particular organizations should continually and carefully monitor the external environment and design adaptive mechanism to survive and maintain competitiveness at all times. Managers should be ready to make proactive change when called upon to do so, rather than taking reactive approaches when the effects of the external factors are already being felt in major production systems.

References

Alina, V. (2010). “The impact of an external environment on organizational development strategy.”

Burke, W. W., & Litwin, G. H. (Eds.). (2005). A causal model of organizational performance and change. Journal of management, 18(3), 523-545.

David, D. V., & Lord, R. G. (Eds.). (2000). “Executive leadership and organizational performance: Suggestions for a new theory and methodology.” Journal of Management 14.3: 453-464.

David, W. A. (2001). “Does leadership matter? CEO leadership attributes and profitability under conditions of perceived environmental uncertainty.” Academy of Management Journal 44.1: 134-143.

Jean-Louis, D., Lamothe, L., & Langley, A. (2001). “The dynamics of collective leadership and strategic change in pluralistic organizations.” Academy of Management Journal 44.4: 809-837.

Jeffrey, P. & Salancik, G. R. (2003). The external control of organizations: A resource dependence perspective. Stanford University Press.

Michael, H. T., & Freeman, J. (1997). “The population ecology of organizations.” American journal of sociology: 929-964.