Internal and External Environments of a Business and the Government and Market Economy
INTERNAL AND EXTERNAL ENVIRONMENTS AND THE GOVERNMENT AND THE MARKET ECONOMY
MID-MODULE ASSIGNMENT 1
EXTERNAL AND INTERNAL ENVIRONMENT
4 - 6
GOVERNMENT INTERVENTION IN THE MARKET ECONOMY
7 - 9
During this report there are a number of areas which will be discussed. The report will begin by looking at the internal and external environments by looking at what these mean to a business and the advantages and the disadvantages to each environment and why they are important to an organisation, along with the impact the internal environment have on an organisation generally and how its imperative not to ignore the internal environment.
This report will also assess ‘how the government intervention in a market economy and why it is necessary for the government to intervene sometimes to help balance out issues within the economy. But what the advantages and the disadvantages of the government’s intervention.
EXTERNAL AND INTERNAL ENVIRONMENTS
The internal environment of an organisation is referring to the following: -
Plans and policies
Financial and marketing resource
Corporate image and brand equity
Inter-personal relationships with employees
Quality and size of infrastructure
Although some of the internal environment affects the employees but mainly it’s the manager who is affected due to the employee’s direct leadership style has an impact on the employees. It is traditionally expected that the manager would supply clear instructions on what is expected to be done by the employees, however, or more progressive manager may encourage other employees to make their own decisions.
As discussed in ‘The organisation’s internal environment and its importance in the organisation’s development’. The organisation can be a complex socio-economic system, which is an open character and part of the economy and society. There are a few environmental factors to consider: -
The Organisation’s structure
Mission and objectives
Financial and marketing resources
Plan and Policies
The internal environment isn’t only influenced by activities and decisions their employees make; they also affect the way their employees behave within the organisation.
Employees behaviour within the workplace and their ability to make decisions.
An example of the internal environment could be within a typical organisation where the relationship between and employees is strict. This kind of environment means employees are given commands on what to do and are expected to do as asked. However, in a modern environment management more lenient with their employees, assigned work, respect their input and allowing them to expand their career.
Refers to the way information follows in an organisation
Is the employees and labour in an organisation
Also known as the organisation’s philosophy
Refers to the tangible assets of an organisation
Plays the role of deciding the future position of an organisation and where the organisation is in the market
Is what is referred to as the organisational culture
Refines the income or capital of an organisation
These are developed to help achieve the organisations’ goal
Important for the organisation’s corporate image
This is how an organisation deals with its employees and labourers
Implies to the technology the organisation uses
The simple definition for the external environment as described in the Cambridge Dictionary is ‘As the organisation’s external environment evolves, its goals must evolve to reflect this changing environment’. However, what does this mean?
For a business to keep ahead of their competitor it is important for them to keep ahead of their competitors and to continually adjust their strategies to fit in with the forever changing environment within the business sector they work in.
An external environment is an important part of the process and plays a critical place in building a future within the business sector your organisation is operating within. To help aid with analysing the external environment an organisation should consider using a PEST analysis, this will help give you an idea of the external environment you are in and what factors that could affect it.
POLITICAL – Is looking at the stability of the region, legal framework, trade regulations and tariffs
ECONOMIC – This relates to the economic system in the countries you operate, how well the financial markets work, the infrastructure, and the level of workforce
SOCIAL – Considers the demographics, education and class system, culture, and environmental awareness
TECHNOLOGICAL – Ensuring your organisation has all the up-to-date technology, impact on cost, new developments, and rate of diffusion
The external environment has several advantages and disadvantages which need to be considered: -
PRICE ELASTICITY – Takes into consideration the increases and dec