Introduction
Environmental factors that influence decision-making can also be termed as external forces (that are outside) in the organizational environment. These factors play a critical role when a decision is to be made in an organization. Some of these factors are Buyers, Suppliers, government regulations, competitors, Trade unions, Technology, and the Economy.
Buyer/consumer
The attitude of a consumer towards an organization or its products can highly influence the success of its business strategy. Positive attitudes will translate into the success of the organization, and the opposite is true in the case of negative attitudes from clients.
Suppliers
Businesses are highly interdependent on their suppliers; Richard Bowett outlines that the effects of any decision-making will critically depend on the reactions of the other groups in the market.
Government Regulations
Government regulations are imposed in the form of tariffs and taxes. An increase in tax on a product will automatically transform into an increase in prices; hence it will become unattractive to the consumer. The imposition of tariffs on imported or exported goods will make it unattractive for foreign investors and also the local exporters. An argument by Patrick (2005) indicates that political influence is frequently ascribed to business organizational strength.
Competitors
Competitors pose the highest challenge in an organization. Competition can be gained unfairly in an organization if one competitor decides to have counterfeit goods at the expense of the others. Also by lowering the prices of a product so as to gain from your competitor would be termed unfair competition.
Trade unions
Trade unions pose a great threat to an organization’s decision-making since one has to take into consideration the effects on the employees who are protected by the unions.
Technology
Technology advancement in the world today has led to the creation of a competitive market. The use of software like PowerPoint in the introduction of new products gives an organization the niche to advance its products. Another technological advancement is the use of video conferencing, where organizations in different environments can communicate through the satellite. Kirkbride and Karen Ward (2001) came up with some ways in which technology has impacted decision-making in an organization. Technology has increased the speed of communication and decision-making. Also, the quality of decision-making has declined since it’s a computer communicating to the other, and there is no sense of tone and in-depth information. Technology has dissolved the balance between personal life and work.
Economy
The economy can affect the organization in terms of employees lying down. One of the major effects of the economic drop is losing your employees. This can highly affect the amount of output in the organization.
Recommendations
The open systems view of the organization Katz and Kahn (as qtd in Madhukar Shukla n.d) implies that the effectiveness of an organization would highly depend on the ability of the organization to develop mechanisms to cope with the environmental factors. Some of the recommendations that would be used to gain competitive advantage would include advertising, public relation structural re-organization, or even changing the organization’s goals.
Advertising
This has become to be one of the major tools in advancing a competitive advantage in the modern world of business and bring awareness of the business products on offer (Kurtus, 2007). Advertising helps in creating awareness of a new product to the consumers, a thing that may translate to a wide customer base leading to successful realization in the business. Advertising helps to bridge that gap between the organization and its clients. You will also notice that in modern organizations, marketing acts as the backbone of the organization. It also helps in boosting sales in an organization. This will also help you to reach a huge medium of people over a wide geographical area.
Public relations
This would be to engage the public in your decisions and also interacting with them. This comes in a case where clients have lost confidence in your product or have a negative attitude towards your organization. To eliminate this, organizations need to come down and talk with the public while they take suggestions from them.
Changing the goals/re-organization
According to O’Boyle and straddling (2007), restructuring of the organization enables an organization to operate at lower costs with much faster customer response times. Also, groups or organizations that share the same market can merge and form one big company that can extend its tentacles to a wider area.
Incentives
Government should encourage its local businesses by offering incentives. This would enable local products to be more completive in other markets. Also by lowering taxes would enable domestic products to compete with world markets.
Technology
This can be used as a competitive advantage as the world has changed from the stone age of using physical mail to using faster forms like E-mails that enhance productivity in the organization. Technology can also help with productivity within the organization since you can have some employees working from home. This creates more space in the organization. A computer-implemented method for merging the marketability of a product gives the consumer a wide choice of brands (Amit, 1999).
References
Bernhagen, Patrick (2005). American Political Science Association. Web.
Garg, Amit (1999). Integrated marketing and operations decisions-making under multi-brand competition. Web.
Richard Bowett (n.d). Web.
Madhukar Shukla (n.d). Understanding Organizations. Web.
Paul Kirkbride and Karen Ward (2001). Globalization the internal dynamic. Chichester, J. Wiley & Sons.
Ron Kurtus (2007). Using Advertising for a Competitive Advantage in Business, New York, Prentice Hall.
Sandra O’Boyle and Joel Stradling (2007). helping you respond to a dynamic market place. New York, McGraw-Hill.