Environments of LSOs

Environments of LSOsEnvironments is the term used to describe the

context in which business is carried out.

There are two main environments:

Internal: inside the organisation, areas that the organisation has most control and influence over.

External: outside the organisation, areas that the organisation has little or no influence. Made up of the Operating and Macro Environments.

Operating EnvironmentsOperating Environment is that

external environment which the organisation has some influence over but cannot control.

The organisation interacts directly with this environment in the course of conducting business.

Macro EnvironmentMade up of broad factors which

affects the LSO.

The LSO has no control over these factors.

Environments of LSOsInternal External

Operating MacroPolicy and Procedures

Customers Social Attitudes

Resources Suppliers & Creditors

Economic Factors

Structures Competitors Technological Developments

Styles Interest (Lobby) Groups

Political and Legal influences

Culture Globalisation (international factors)

Staff (People) Education and Training

Operating Environment: CustomersCustomers are the reason the

organisation exists.

Customer satisfaction is central to organisation success.

Customers want high quality products and value for money.

Operating Environment: Suppliers and CreditorsSuppliers are the people and businesses that

supply resources to an organisation.

Creditors provide finance and include banks, finance companies and other businesses.

In order to operate LSOs need a reliable source of resources and funds.

Building positive relationships with suppliers is a key to success.

Operating Environment: CompetitorsCompetitors are other organisations that

offer rival products.

Organisations need to monitor existing and new competitors in the market.

Organisations need to maintain a competitive edge over rivals.

Organisations may need to respond to moves from competitors.

Operating Environment: Interest GroupsAlso known as Lobby groups.

These are groups who try and convince organisations to adopt particular policies.

These include -◦ Trade Unions: These represent employees and aim to

improve working conditions for their members.◦ Consumer Groups: These aim to protect consumers in

relation to product safety, price and advertising.◦ Specific Issue Groups: focus on one specific issue such

as environmental protection, ant-gambling etc.

Macro Environment: Social AttitudesThis is concerned with what

society views as right and wrong. This constantly changes.

This can include pressure to protect and preserve natural environment, treat people with respect, and being responsible corporate citizens.

Macro Environment: Economic FactorsCurrent state of the economy plays an

important role for LSOs

Global financial crisis highlights the importance of economic factors.

Factors include: levels of consumer spending level of unemployment rate of inflation wage rates Interest rates.

Macro Environment: Technological DevelopmentsTechnological innovation is constantly

changing.

Businesses need to keep up with technology to maintain competitiveness.

Technology can lead to increased productivity and reduced costs.

Mobile communication and e-commerce examples of recent technological innovations which has transformed how we do business.

Macro: Political and Legal Influences LSOs operate within a complex

framework of laws and regulations made by governments.

Changes in legislation can heavily impact on LSOs. For example OH&S and Employee Relations Laws.

Changing governments also can introduce different policies which will affect the way organisations do business.

Macro Environment: GlobalisationOrganisations now operate in a

worldwide market.

Technology improvements have largely led to this through improved transportation and the Internet.

This is both an opportunity and a challenge as organisations have access to bigger markets but also more competition.

Macro Environment: Education and TrainingModern organisations need highly

educated and skilled employees.

Most organisations provide internal training but rely on the country’s educational institutions to provide high quality education for students.