Wednesday 15 February 2012

Large-scale organisations in context

Distinguish between an internal and external environment of an organisation

Distinguish between a macro and operating environment of an organisation

Learning Objectives

The internal environment of an organisation includes all the conditions that are related to its performance and over which it has the most control. For an LSO such as BHP Billiton, the internal environment will include its employees and management, how they are trained, the policies and procedures that are in place to guide their work practices, technology and resources used within the organisation (e.g. machinery and its maintenance) etc. The external environment includes the operating and macro environment. The organisation has limited control over these conditions. Factors in the external environment include relationships with stakeholders such as suppliers and creditors, customers (e.g. BHP exports to manufacturers in China) and shareholders.

Homework Review

Question 1a, page 22

The macro environment are the conditions outside of an organisation’s control which impact on it. Factors in the macro environment include the forces of globalisation (which include advances in technology and communications that help organisations and their competitors to operate in many countries), legal changes such as the implementation of the new carbon tax and social attitudes such as increasing consumer/customer/shareholder awareness and concern for environmental responsibility.

Question 1b

Factors (operating environment)

Brief explanation

Impact on organisation

Shareholders Own shares in company, expect company to issue dividends

Must keep production costs low, maximise efficiency and sales to produce higher profit Question 2

The macro environment differs from the operating environment in that organisations have no direct control over conditions in the macro environment whereas they have some control over factors in the operating environment. For example, LSOs cannot control or stop the forces of globalisation, however, it can change the way it interacts with its stakeholders such as customers and suppliers.

Question 3

Factors (macro environment)

Brief explanation

Impact on organisation

Social attitudes The values and expectations of members of the community influences their behaviour

Organisations must try to satisfy the needs and expectations of a range of stakeholders. This may mean that companies have to be seen to be more environmentally friendly for example, as a result of greater community awareness and demand.

Question 4