Environment of Firms

Topics: Monetary policy, Public finance, Fiscal policy Pages: 8 (1938 words) Published: September 13, 2013
Environment of Firms

Business environment consist of all those factors that have a bearing on the business. The term "business environment" implies those external forces, factors and institutions that are beyond the control of individual business organizations and their management and affect the business enterprise. These forces are customer, creditors, competitors, government, socio-cultural organizations, political parties national and international organizations etc. some of those forces affect the business directly which some others have indirect effect on the business.

Types of Environment

1Internal Environment

The internal environment is the environment that has a direct impact on the business. Here there are some internal factors which are generally controllable because the company has control over these factors. It can alter or modify such factors as its personnel, physical facilities, and organization and functional means, like marketing, to suit the environment. A) VALUE SYSTEM

The value system of the founders and those at the helm of affairs has important bearing on the choice of business, the mission and the objectives of the organization, business policies and practices. B) MISSION,VISION AND OBJECTIVES

Vision means the ability to think about the future with imagination and wisdom. Vision is an important factor in achieving the objectives of the organization. The mission is the medium through which the objectives are achieved. C) Organizational Structure

It includes the values and expectations of your firm's stakeholders; its mission, goals and objectives; and its resources. These factors combined determine what your organization is trying to accomplish and how successful it is likely to be. 5 basic parts of organization: Operating core, Strategic Apex, Middle line, Technostructure, and Support staff basic organization structure:

a) Functional

b) Divisional

c) Hierarchical

d) Line and Staff Structuree) Task Force

The Need for Organizational Structure Organizations needs structuring so that lines of authority along with individual duties and responsibilities can be understood by every company member.

f) Matrix Structure

The growth in retailing, both on-site and off-site, has required merchants to readdress their tables of organization so that they will better serve the needs of their customers and make their companies more profitable. Some of today’s trends in organizational structuring for the fashion-retailing arena are described in this section. Restructuring to Accommodate Multichannel Expansion

When department stores in particular expanded their catalog operations, many initially opted to make this division part of their brick-and-mortar operations. Similarly, when retailers saw that the Internet had the potential to increase revenues, they changed their organizational structure to reflect this and to make the overall operation function more efficiently. Today, the trend is for the major multichannel retailers to adjust and expand their tables of organization and separate the three functions into separate channels. Macy’s, for example, is one of the giants in the industry that has changed to that format.

Consolidation of Divisions
The acquisition of department stores by major retail groups has become a dominant trend. May Department Stores and Federated Department Stores, for example, are two companies that have expanded their operations by purchasing other retail companies. In their pursuit of maximizing profits, these groups have, in many cases, decided to merge the new acquisitions into some of their own stores. May, for example, purchased sixteen Wanamaker’s stores and three Woodward & Lothrop stores and merged some into their Hecht’s division and some into the Lord & Taylor group. Through this practice, fewer buyers and merchandisers were needed as were other executives who previously...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • environment Essay
  • Essay about The Firm and Its Environment
  • Essay about the firm
  • IT firm Essay
  • Significance of external environment to the firms in kenya Essay
  • Essay about The Firm
  • Ecnomic Environment Essay
  • Business Environment Essay

Become a StudyMode Member

Sign Up - It's Free