ASSIGNMENT 3 5
Whatgeneral and macro-environmental forces enhance an organization’schances of success and failure?
Organization’smacro-environment forces refer to nonspecific aspects in a firm’ssurrounding that have potential effects on the organizationstrategies. Compared to task environment, microenvironment haslimited impact on the organization. Macro environmental variablesinclude among others the technological, economic, social cultural,political-legal and international variables. The macro environmentalforces cannot be altered by organization actions. Organization’scan influence internal matters but cannot influence aspects occurringoutside their environment (Fredrickson,1984).
Macroenvironmental forces shapes and influences organization’s mode ofdoing business. For instance, economic forces influences such asinterest rates, inflation and price of inputs affects organizationproduction and overall profits. Firm’s tries to maximize productionoutput by minimizing the costs of inputs such as labor and the costsof raw materials. Improved technological advancement may meanimproved business operation if the technology is adopted. Forinstance, many modern firms are hesitant in embracing foreigntechnology in the production if such technology does not result inefficiency in production.
Governmentpolicies influence how organizations conduct their business(Fredrickson, 1984).For instance, fiscal laws that increase tax or interests rates onfinancial loans may affect the production process leading to highprice of produced goods and this consequently influences theleveraging aspects on organization’s clients and competitors. Forinstance, demand for effective environmental policies such as waterpollution and waste disposals by governments significantly affectshow various firms conduct their business. For instance, Shell hasfaced great pressure from international environmentalist to cut onenvironmental pollution in Nigeria and this affects how the firmengages its production process.
Inother aspects, macro-environmental forces such as social culturalforces influences such as values, lifestyle and education determinesorganization’s clients or employees. For instance, MacDonaldproducts have often faced criticism in the past with their productsin India and Muslim countries and these affected customers’perception on their goods.
Whydoes uncertainty exist in an organization’s environment? By whatmeans can an organization respond to such uncertainty?
Macroenvironments presents businesses with uncertainty because theseexternal influences may have adverse effect on the organization, areuntimely and organization’s have less control over theirinfluences. For instance, change in government policies, politicaland social crises may adversely affects business operations. Changesin social cultural values, age and education may also affect theorganization.
Majorexternal changes such as inflation, rise in interest rates of someinputs and taxes presents uncertainty to many firms.Gareth (2006.page 75) argues that, ‘Environmental complexity is afunction of number, strength and the interconnectedness of specificgeneral forces.” The more the differences the more complex,uncertain and hard it is to manage the environment. For instance, anorganization may face significant challenge when designing productsand services for various societies with different cultures. Inaddition, a firm may have easy operating environment in one countrywhile face difficulties operating in other countries.
Dynamismin the external environment of a business is determined by how thegeneral environment changes over time leading to uncertainty in theorganization business operations. Dynamic environments are moredifficult to predict and manage and this may adversely affectorganizations (Gareth, 2006). For instance, many African countrieshave rich environmental resources but political and social crisishampers effective exploitation of these resources. To this end, anorganization working in such areas may find it increasingly hard tooperate. Organization can respond to microenvironment dynamicsthrough future production, planning for uncertainties and adoptingwide range of alternatives when faced with uncertainty (Dess andBeard, 1984). However, it is imperative that organizations beresourceful in identifying, measuring and predicting variables inorder to make rational decisions about the environment.
Howmight the main ideas of resource dependence theory be summarized insix sentences?
Resourcedependency theory (RDT) focuses on how external resources affectorganization’s behavior and decision making (Davis and Cobb, 2010).The availability and procurement of external resources presentsbusiness with options to make tactical and strategic managementdecisions. The RDT theory is that organization’s depends onresources and these resources are sourced from external environment.The procurement of these resources is a basis of power between oneorganization and the other (Davis and Cobb, 2010). To this end,resource dependency creates interdependence between organizations andthis is one macro environment challenges to an organization. Thereare complexities, dynamism and uncertainty in resource dependence andorganizations should minimize this reliance. However, organizationsneed to exact influence when getting resource and respond to thedemands of external environment(Dess and Beard, 1984).
Davis,G. F. and J. A. Cobb (2010). "Resource dependence theory: Pastand future." Stanford`s organization theory renaissance,1970-2000: 21-42. Bingley, NY: Emerald Group.
Dess,G. G., & Beard, D. W. (1984). Dimensions of organizational taskenvironments.Administrative Science Quarterly,29, 52-73.
Fredrickson,J. W. (1984). The comprehensiveness of strategic decision processes:Extension, observations, future directions. Academyof Management Journal.27,445-466.