IMPACT OF BUSINESS ENVIRONMENT ON ORGANIZATIONAL GROWTH
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IMPACT OF BUSINESS ENVIRONMENT ON ORGANIZATIONAL GROWTH
Chapter one
INTRODUCTION
1.1 Background of the Study
The current business environment is characterised by a variety of dynamic features, including global competition, information technology, the quality service revolution, and corporate social responsibility, all of which are compelling managers to reconsider and reshape their approach to their various operational responsibilities.
Because of this paradigm shift, new businesses are emerging that are more sensitive to both their internal and external surroundings (Luthans, 2005). Internal influences occur within an organization’s operational basis and have a direct impact on several aspects of the business.
These internal factors include firms’ mission, resistance to change, poor quality staff, lapses in internal control, bad resource/financial management, operational weaknesses, high staff turnover, and over-leveraging, while the external factors include government regulation, economic recession, political turmoil
low-cost competitors, changes in customer behaviour, environmental/health issues, technological changes, natural disasters, change in input supply, changes in macro To survive in the long run, a firm must keep up with the various changes in the environment.
Essentially, a business environment should aid to bring a business back to life, at least to a large extent. Business settings have the capacity to either assist a company develop or fail.
This is because the regulations and forces imposed by these environmental factors can sometimes help a firm flourish, while other times they can strike a corporation hard and cause it to cease operations.
Essentially, it might be a government regulation, a capital interest rate, the nature of market competition, or the amount of technical sophistication in comparison to the company’s operations.
The Nigerian business climate differs significantly from typical corporate environments. In general, the Nigerian business climate should be studied differently. This is due to the environment’s ability to either assist or hinder corporate growth.
According to Adebayo et al. (2005), the business environment can be divided into two parts: internal and external. The former includes variables or factors that the firm can control and manipulate to achieve a specific goal, while the latter includes factors that the firm cannot control or manipulate.
As a result, firms must devise a strategy to deal with the numerous environmental factors (Oluremi and Gbenga, 2011). Similarly, the nature of the business environment is defined as dynamic, stable, or unstable, which can assist a firm in selecting appropriate strategies (Ibidun and Ogundele, 2013).
Adeoye (2012) believes that in order for businesses to manage with the dynamic and fast changing business environment, effective strategies must be developed and implemented to protect their operations and produce the necessary results. Similarly, Ogundele (2005) stated that a firm’s view of the nature of the business environment is determined by its size and industry.
Business survival is a firm’s ability to continue operations in the face of diverse problems, i.e. the managerial process of routinely administering a firm’s affairs on a going concern basis and meeting the needs of all stakeholders (Akindele et al., 2012).
Dun and Bradstreet (2009) defined business failures as a circumstance in which a company declares bankruptcy or ceases operations, resulting in losses and fails to pay its numerous financial obligations to creditors. Firms must constantly monitor the numerous actions that determine their survival in order to continue operating.
According to Adeoye (2012), the current types of complications that organisations face include leadership styles, changes, uncertainty, conflict, culture, technology, structure, competitive market, profitability, and workplace motivation.
As a result, businesses must design a strategic plan and tactical procedure that is appropriate and adaptable to the current business climate, allowing them to maximise resource utilisation and achieve their objectives.
According to Burns (2001), small-scale businesses cannot be described as simply scaled-down versions of large firms because they exhibit a number of fundamental differences that can be explained by the absence of economies of scale and scope, which is also caused by a lack of factors of production.
As a result, Ciano (2011) believes that any transformation endeavour for any company entity must consider four key factors. This includes the length of time between milestone reviews; the project team’s performance integrity, which is the ability to complete the initiative on time based on members’ skills and traits relative to the project’s requirements;
the commitment to change of top management and employees affected by the change; and the effort above and beyond the usual work that the change initiative requires of employees.
Alexander (2000) noted that the dynamic and fast changing business environment in which most organisations operate has a substantial impact on organisational survival and performance.
This suggests that the external environment is complicated and ever-changing, with competition playing a vital role. Recognising the presence of intense competition frequently necessitates the need to seek more information about customers for the purpose of evaluation and use such information to their advantage
allowing competition to drive business organisations to look for their customers in order to understand better ways to meet their needs and wants, thereby improving organisational performance (Azhar, 2008).
The relationship between theory and practice has encouraged professionals and academics to conduct in-depth research on general business management and strategic management in particular. Several researchers have developed several theories of strategic management. Wright, Kroll, and Parnell (1996) proposed a strategic management model with five basic frameworks:
(1) opportunities and external threats, which include the macro environment and industry;
(2) the internal environment, which includes the company’s resources, the organization’s mission, and goals;
(3) formula strategies, which include the koporasi level, business unit level, and functional level; and
(4) strategy implementation, which includes organisational structure, leadership Fundamental understanding of essential aspects in this model is the development of a strategy divided into phases at the corporate, business unit, and functional levels.
Furthermore, Wheelen and Hunger (2010) define strategy formation in the context of a higher operational level, including the mission, goals, strategies, and policies.
Regarding the implementation of the strategy described in the degree programme, budget, and processes. Wheelen and Hunger’s pragmatic model of strategic management appears to be easier to grasp and apply, yet leadership, structure, and culture are underemphasized in the model they present.
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