These
are the uncontrollable factors otherwise known as macro environmental forces.
They pose a lot of challenges to decision makers in any organization. These
variables changes from time to time and it is sometimes difficult for the
average company or organizational leaders to change with them
are the uncontrollable factors otherwise known as macro environmental forces.
They pose a lot of challenges to decision makers in any organization. These
variables changes from time to time and it is sometimes difficult for the
average company or organizational leaders to change with them
The
inability of many companies to adapt to these changes always spell doom to
their existence since the society in which we live is dynamic, there is need r
businesses to be flexible in order to change along with these variables. These
variables are usually forces outside business influences and control but these
factors have influence on the business since both are members of the larger
society
inability of many companies to adapt to these changes always spell doom to
their existence since the society in which we live is dynamic, there is need r
businesses to be flexible in order to change along with these variables. These
variables are usually forces outside business influences and control but these
factors have influence on the business since both are members of the larger
society
The
interactions between business firms and its environment affect business firms
and the public attitude as they try to produce good s and services for human
consumption at a profit. These external environmental factors include:
interactions between business firms and its environment affect business firms
and the public attitude as they try to produce good s and services for human
consumption at a profit. These external environmental factors include:
·
The economic environment
The economic environment
·
Technological environment
Technological environment
·
Socio-cultural environment
Socio-cultural environment
·
Political environment
Political environment
·
Physical environment
Physical environment
·
Legal environment
Legal environment
Others include:
·
Moral environment
Moral environment
·
Behavioural environment
Behavioural environment
- The economic environment: the economic environment
examines the ways in which the society allocates its scare resources to satisfy
the wants of the members of the society. The productively of any economic
system depends on how that system combines its economic resources. The Nigerian
economic environment encompasses monetary and fiscal policy decisions,
taxation, tariff system, competitive forces, labour union activities etc. Each
of these influences Nigerian businesses to a reasonable extent. The economic
environment recognizes also the purchasing power of the people that live in
that societ6y and their ability to discharge the exchange function. Because the
economic environment is all embracing it is difficult to see which sector of
human life: household, firm and national life that will not be affected. Hence
when there is inflation, the effect covers every one. The state of the economy,
whether it is in recession, depression or stagnation are all pertinent economic
challenge which a nation’s leadership and other actors within the economic
system must grapple with.
- The technological environment: in Nigeria today, we cannot boast of
living in advanced technological age because we still depend upon the western
nations of the world for even the most basic of techniques and technology. Thus
Japan, Europe and Malaysia have become our hope and natural support-source
where we import technological gadgets. The government of the day scarcely
encourages people with innovative ideas to invent and process goods to finished
state, which can compete with foreign technology. At best what we do is kill
the people who have such bent. A case in point is the strange death of
Professor Awojobi of the University of Lagos. He developed a blue print of a
car, among several such designs. Strangely the man was poison and till date all
his inventions has been abandoned with no one to take over from where he left.
Technology is universal in that knowledge and techniques developed in one
society can be copied by another society and applied to suit any business
environment. The Romans developed the technique of counting things and
numbering them and today it has become a universal technology for recording,
analyzing and forecasting. The income and wealth of businesses and other
entities can only be quantified by digital means. An important technological
breakthrough that has had a spill over effect on Nigeria is the electronic
computer, which is essential for the assembly and analysis of statistical data
for business decision making. Automation is another breakthrough as far as
technology is concerned. Industries like the petroleum and beverages etc all
rely on sophistically technology to power their operation. These days the
technology that has taken over everywhere is that of information &
communications technology ICT. This permits knowledge sharing across
continental and national boarders.
- Socio-Cultural Environment: The socio-cultural
environment consists of sociological institutions that direct social values and
norms, such institutions include family, business firms, churches and mosque,
reference groups and educational institutions and systems etc. since businesses
function within the constraints imposed by the social and cultural values of a
particular society. Those who engage in business must therefore try to
understand the institution’s characteristics and the business environment and
how they affect the organization. Any business, whether domestic or
multinational, must do well to be aware of the peculiar variables that shape
the behaviour and belief of the local community in which they exist and must
tailor their policies and strategies to suit peculiar communal idiosyncrasies
and expectations. Society provides the environment and people, which help the
business to organize its productive efforts. Businesses have to factor these
considerations in their missions and broad objectives
- Political/legal environment: This environment
consists of the government and the law. The government is the legal constituted
body of our social economic system. It is further divided into federal, state
and local government units for purpose of wider and effective administration.
Each unit or level is empowered to make its own law. Government influences
business by means of legal instruments and restraint. The federal government of
Nigeria has promulgated laws to guide the conduct of business and business
organizations are expected to operate in conformity with these laws. Business
enterprises cannot operate successfully without some kind of legal framework.
Every prospective business enterprise in Nigeria today is expected to confirm
with the provisions of Company and Allied Matter Decree (CAMD) of 1990. Also
there are various laws in all the functional areas of business such as finance,
production, marketing, personnel. Insurance companies, industrial relations
leader all know that business enterprises are expected to comply with these
laws. Government therefore exists as the agent of the state and it overseas the
country on behalf of the people. Governments can either be military and
dictatorial or democratically elected. Where they exist democratically, laws
are made for good governance and peace by the legislature. While government
come and go, the state exists in perpetuity.
- Physical environment: the physical environment
comprises of all those things that are external to the business itself but
which influences the way the business system functions. Physical environmental
factors influence the activities and practice of managers in a number of ways.
For example, the existence of natural structures likes mountains, rivers and
swamps. The physical environment also includes the demography of the society.
Demography recognizes the population and its constituents, its class
distribution and income distribution, which impact on business transaction.
Physical structures like mountains, rivers, etc earlier described most often
impact on transportation requirements. Sometimes it is very difficult to cross
or ferry a company’s inputs through rivers and swamps. Accessibility to factory
points may become very cumbersome and expensive. Railway and airways existence
or lack of it has a lot of impact on the effectiveness of business operations.
And could be very costly. The weather condition is another meat to chew when
considering physical environment. The condition of the weather may have great
influence on the products that a company can produce, when and how best to
price, promote and distribute them.
- Moral environment: this constitutes a vital element
in business operations and in the business environmental system. It sets the
standards for distinguishing between right and wrong actions by members of the
society regardless of self interest or immediate consequences of those that are
acting.
Behavioural environment: Behavioural environment examines the
psychological forces that cause human beings to behave his way they do
particularly in group situations. Behavioural environments attempts to explain
how inter personal and inter group relationships influences the actions of
individuals in the society especially with regards to business
