Internal Environment & Micro Environment ( Week 3 )

 

Today's topic is INTERNAL ENVIRONMENT & MICRO ENVIRONMENT

Internal Environment is the conditions, entities, events, and factors within an organization that influence its activities and choices, particularly the behavior of the employees. Factors that are frequently considered part of the internal environment include the structure, objectives, culture, leadership, finance, people and technology.

First of all, the structure of an organisation is the key issues fro internal environment :

1.  Lines of Communication -- the flatter of the communication, the faster responsible between the manager and the employees thus to increase the motivation in having quick reply from the manager.
2. Job Responsibilities -- it states clear that what are the duties, purpose, responsibilities and working conditions of a job and also make sure that the organisation knows what the employees are actually doing.
3. Departments -- more departments within an organisation could make jobs done more organisable as each department has the specific work force therefore can they can be more focusing, however, to many departments could affect the communications and the decision making because there will be too many ideas and each department has one manager so that its hard to be compromised.
4. Management and Hierarchy -- less layer of hierarchy in management will lead to faster and more effective decision making.
5. Centralisation & Decentralisation -- they are the two method of how an organisation is going to make their decisions, if the organisation is requiring centralisation, the decisions will make by the managers, on the other hand, the decisions will make by the employees and customers.

Secondly, the objectives that the organisation have will influence people act and the activities :

1. Corporate ~ Department -- corporate objectives are the aims that the whole organisation wanted to achieve, for each department, the objectives will be more specific and small as different departments have to achieve their own objectives to be able to achieve the corporate.
2. Divisional Objectives -- they are the objectives that set to achieve the corporate objectives.

The culture of an organisation is the way that things are and there are some factors that are going to affect the culture of the organisation :

1. Bureaucratic -- this will be an external influence for organisations to enter the markets.
2. Creative -- if the staff are creative, the culture of an organisation will tend to be more creative as many creative ideas will come along the production.
3. Power -- it depends on which type of structure will be used in an organisation, centralisaed or decentralised, that means who are going be more powerful in the organisation, the managers or the employees.
4. Fear -- what are the factors that the organisation is concerning about and therefore affecting its culture of what they should do to improve and what are the thing that they shouldn't do.
5. Hard working -- if the staff are hard working in the organisation, the way that things are will be different, may become more effective as an example, also the productivities and profitabilities will be high.

The leadership will influence the organisational culture according to the leader's behavior, to decide if the organisation is going to be more autocratic or democratic.

Then, the financial availability of an organisation is going to affect the activities within the organisation :

1. Investment Decisions -- they are going to decide which products will the organisation invest in and which one will be invested most money on.
2. Investment Return -- if the return is not great, the organisation may decide to stop investing in the project or production
3. Cash Flow -- it is the key factor of affecting the activities in the organisation because it is the money that flowing in and out within an organisation and the most financial problems are paid by the cash in the organisaiton, the cash is also used by paying the liabilities in the organisation so that without having enough cash, the activities in the organsation will be affected.

Also, the knowledge that people have will influence their behavior and how they will perform in their workforce, therefore :

1. Training -- is important to improve staff's skills thus to improve their performance.
2. Recruitment Methods -- is an organisation going to recruit people from external which will bring new ideas and new culture of people behavior or internal which promote the people within the organisation and will have well known of the organisational culture.

Finally, the development of technology influences the organisations :

1. Research & Development -- rapid development in technology helps the research and development department to do research of what the customer needs and what they like and also to help in creating more good and services.
2. Sales -- nowadays, organisations could sell their goods and services on the Internet, as a result of,  the sales will increase by selling products in different markets.
3. Support Services -- this helps the managers to manage the staff more easily and make the communication become faster.

Micro Environment affects the organisaton directly, for example cost of leadership, differentiation and focus. They are the generic strategies.
The 5 Forces :

• bargaining power of suppliers -- the power of suppliers to drive up the prices of your inputs
• bargaining power of buyers -- the power of your customers to drive down your prices
• potential threat of new entrants -- the strength of competition in the industry
• substitutes -- the extent to which different products and services can be used in place of your own
• competitive rivalry -- the ease with which new competitors can enter the market if they see that you are making good profits

To solve the problems, organisations can consider developing strategies which are the generic strategies and alternative directions ( Ansoff's Matrix ).
Also, organisations need to think of 4 factors :

1. Strengths ( internal influences )
2. Weaknesses ( internal influences )
3. Opportunities ( external influences )
4. Threats ( external influences )

In conclusion, there are many factors that influence the internal environment and the micro environment such as the objectives and the culture of the organisations. They should be aware of all the feature of the factors in order to find the solutions.