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Copy of Business Policy

The Total Environment of the Firm
by

Ivan Karl Dayondon

on 25 June 2013

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Transcript of Copy of Business Policy

CHAPTER TWO
The Total
Environment
of the FIRM

INTRODUCTION
FACTORS AFFECTING
THE ENVIRONMENT
OF THE FIRM
EDUCATIONAL
FACTORS
ECONOMIC FACTORS
ADMINISTRATIVE AND
POLITICAL FACTORS
SOCIO-CULTURAL FACTORS
INTERNATIONAL FACTORS
- From the viewpoint of top management, the environment which the firm operates consists of a rich kaleidoscope of CULTURAL, POLITICAL and ECONOMIC FACTORS
-These serves as a combination of constraints and opportunities within which the internal make up of the firm impinges on it as constraints or strengths, weaknesses or capabilities.
-For purpose of establishing the company’s policies and goals, therefore, top management must fully understand and take into account all these external and internal environmental considerations, lest the goals may turn out to be far from being realistic.
-Change also takes place within the firm itself, in those areas where top management in fact, has control over.
* EDUCATIONAL FACTORS
* SOCIO-CULTURAL FACTORS
* ECONOMIC FACTORS
* ADMINISTRATIVE AND POLITICAL FACTORS
*INTERNATIONAL FACTORS
- An integral part of
the environment
-socio-cultural factors that are present in the country should be given critical consideration by top management because these influence both the firm’s external environment as well as its internal system.
-The size of the market is inevitably a critical factor.
This relates to present products, as well as to other
products and/or services into which the firm
might diversify.

-Competition is multi-faceted. The existence and
potential growth of competitors are economic
which are of primary importance in developing
a firm's strategy.
It is important for the manager to remember that the political climate is only a part of the total environment acting upon his firm. Political factors operating in the environment should not,therefore, overwhelm management. It should not prevent the utilization of scientific management. It merely means that the goals and strategy of the firm must take this aspect of the environment into proper perspective in order to be realistic and effective as possible.
International environmental factors
are those which affect a firm’s ability
to most efficiently import equipment
goods, to export part or all of its
production, and to enter into agreements
with the foreign companies so as to gain
access to technology, patent rights, management know-how, financing
and markets.
ENVIRONMENTAL CONSTRAINT:
EDUCATIONAL FACTORS
Literacy Level
Specialized vocational and technical training and general secondary education
Higher Education
Special Management Programs
Attitude toward education
Education match with requirements

FOUR
SOCIO-CULTURAL
FACTORS
* The legacy of the frontier 

-a spirit that has fostered a sense of opportunity pervading American industrial and community life;

* Faith in business and in the individual 

-a faith reflected in the high esteem the American national community gives the businessman;
* Belief in change
-a belief whereby a successful experiment is not allowed to crystallize into mere custom and that an unsuccessful experiment is accepted as an occupational risk, valued for the experience that was gained in the process; and

* The idea of competition
-an ideal that leads ”even those companies which are not operating in a highly competitive market to run their enterprises as though they were…” (American managers) know that their firms must maintain their competitive positions if they are to provide their people with a continuing career
ENVIRONMENTAL CONSTRAINTS: SOCIO-CULTURAL FACTORS
"View toward change...
As a country develops, its culture changes accordingly.

Development, by definition, means change, and the most important aspect of change is neither economic nor technological but the change in people.
-View toward industrial managers and management

-View of authority and subordinates

-Inter-organizational cooperation

-View toward achievement and work

-Class structure and individual mobility

-View toward wealth and material gain

-View toward specific method

-View toward risk-taking

-View toward change
ENVIRONMENTAL CONSTRAINT:
ECONOMIC FACTORS
-Market size
-Central banking system and monetary policy
-Fiscal policy
-Economic stability
-Organization of capital markets
-Factor endowment
-Social ahead capital
-Competition
ENVIRONMENTAL CONSTRAINT:
ADMINISTRATIVE AND POLITICAL FACTORS
-Relevant legal rules of the game
-Defense policy
-Foreign policy
-Political organization
-Government attitudes toward private enterprise
-Political stability
ENVIRONMENTAL CONSTRAINT:
INTERNATIONAL FACTORS
-View toward foreigners
-Nature and extent of nationalism
-General balance of payments position
-International trade patterns
-Memberships and obligations in international
financial organizations
-International organization and treaty obligations
-Power or economic bloc grouping
-Relevant legal rules for foreign business
-Import-export restrictions
-International investments restrictions
-Profit remission restrictions
-Exchange control restrictions
"According to an old saying,
the only things that are
certain are death and taxes.
But that was an old saying.
Today, we know that another
thing is certain, and that is
CHANGE!!! "
THE END
THANK YOU =)
GOD BLESS!!!
Full transcript