Why Is It important for Managers to Understand the External Forces Acting on Them and Their Organisations - Essay Example

?Why is it important for managers to understand the external forces acting on them and their organisations? Robbins and Coulter 2007, p. 73, succinctly define the external environment as those factors and forces outside the organization that affect the organization’s performance”. The every day role of a manager involves a range of activities all directed towards the achieving a high level of performance for the organization. In other words, being a good manager involves succeeding in achieving a high level of performance for the organization (Daft & Marcic, 2009). Thus, a key determinant in the success of manager hinges on achieving high levels of performance, which is influenced by the external forces acting on an organization as per the definition of external forces. Hence, it becomes impossible to deny that the common denomination of performance of the organization highlights the importance and interaction of the external forces acting on an organization and the role of managers in the organization. It is quite obvious that an understanding of the external forces acting on the organization makes it possible for managers to make use of the resources and create an environment that negate any impact of external forces that enhance stress in the organization and through that reduce job tension and enhance job satisfaction and job commitment that go towards improving the performance of the organization (Pool, 2000). Any organization exists in an external environment and necessarily has to interact with this environment and transact business within this environment. Such a relation between an organization and its environment is clear indication of the direct relationship between the external forces and organization. In which case, it goes without saying that effective interaction between the organization and the external forces is a key determinant for the success of the organization. What is the nature of the interaction between the external forces and the organization? External forces can impose a number of constraints on an organization that have a strong influence on the scope and direction of the activities in an organization and through that the performance of the organization, while the organization has limited control over these external forces. The key aspect of handling the constraints imposed by external forces is in the managers of the organization identifying and understanding the external forces and the constraints brought on by them and developing policies and actions within it’s the environment of the organization to take advantage of the situation that is impacting on all organizations operating in that sector of industrial activity. In fact, it is the understanding of the external forces coupled with an understanding of the strengths and weaknesses of the internal environment of the organization by managers that allows that to seek out the opportunities in the external environment to exploit them and develop measures to mitigate any threats imposed by the external forces (Shaikh, 2010). According to Robbins and Coulter 2007, external forces acting on an organization can be classified into two elements of the external forces of the specific environment and the external forces of the general environment. Such a distinction of the external forces is useful in evaluating the influence of external influence on the performance of an organization and its implications for managers (Robbins & Coulter, 2007) The specific environment consists of those external forces that have a direct bearing on managerial decisions and activities, because they have a direct relevance to the performance of an organization and the attainment of the objectives of the organization. This may imply that the specific environment for all organizations is static and the same. This is not true for the specific environment is unique to every organization and changes with changes in the condition. For example, let us look at two organizations of Timex and Rolex conducting business operations in the same market of watches. There may be a tendency to assume that the specific external forces are the same for both organizations. The understanding that they operate in different niche markets of the same business activity makes it clear that the specific external forces acting on the two organizations are different and unique to each. It is this uniqueness of the specific external forces to an organization and its impact on the performance of an organization that is important to managers, as they try to cope with the challenges of maintaining a high level of performance for an organization. It is a foolhardy manager that ignores the importance of the specific external forces acting on any organization (Robbins & Coulter, 2007). So what are these specific external forces and why are they so important for managers? The main specific external forces can be classified into four, namely customers, suppliers, competitors and pressure groups. Gupta and Lehmann, 2005, p.3, describe “customers as the lifeblood of any organization”. This is an oft repeated slogan, yet, so very true for any kind of organization. In the absence of customers for an organization, it receives no revenue and no profits and therefore has nil market value (Gupta & Lehman, 2005). Customers are a never ceasing source of uncertainty for any organization through their changing tastes that can leave them dissatisfied with the offerings of an organization. Here is an example of what can happen, when managers do not understand and pay attention to changing customer preferences. The post Second World market remained high for tin cans. In this flourishing environment managers in many of the tin cans manufacturing organization concentrated on facing the challenges of competition and neglected to perceive changes in customer preferences for packaging, with the onset of new packaging materials and refrigeration as storage facilities. The organizations in which managers failed to understand the impact of the changing tastes of customers on the performance of an organization went into decline or perished (Daft & Marcic, 2009). Managers who fail to place a premium on understanding changes customer preferences and its impact on the performance of an organization place themselves and the organization at jeopardy. Customers purchase products from an organization on the basis of a combination of factors that include cost, quality, availability, maintainability and reputation. When there is satisfaction of requirements and expectations from such purchases, customers are wont to continue doing so. However, if there are nay changes to the factors that combined to give a satisfactory purchase experience, then customers will cease to buy the products, leading to a drop in revenue and profits of the organization. In other words the performance of the organization is badly affected. Suppliers as a specific external force of the many inputs that go into ensuring that products are manufactured with cost effectiveness, quality, in adequate quantities to meet the demand and with minimal service requirements thus become important to the performance of the organization. Suppliers can act as a point of uncertainty. Managing this point of uncertainty is critical to the performance of the company and it is an important management role played by managers. Managers can ignore this role only at peril to themselves and the organization (Wisner, Tan & Leong, 2009). Irrespective of the type and size of an organization it faces many competitors in the market place. U.S. Post may occupy a monopoly position in the postal mail market, and yet it competes UPS, FedEx, fax machines, e-mail etc. as other forms of communication. In fact competition remains a major worry for managers, who seek ways and means to offset the challenges posed by competition (Robbins & Coulter, 2007). A frequent strategy in modern times to offset competition is to make use of innovation. However, for innovation to work as a successful strategy, it is essential for managers to understand the impact of competition and its nature, to help them to develop the required innovation strategy and then lay the groundwork for social, technical and intellectual inputs that will also require the building of coalitions through coordination and conflict resolution (Damanpour & Schneider, 2006). Pressure groups are special-interest groups that seek to influence the actions of organizations in the direction they want. For example People for the Ethical Treatment of Animals (PETA) were able to put pressure on McDonald’s to cause them to introduce standards in the slaughtering process of their suppliers. In the current scenario degradation of the environment is a pet issue for such groups and managers need to understand the implications that these pressure groups have in their markets and keep in mind their corporate social responsibility image in their markets (Robbins & Coulter, 2007). The forces that exist in the general environment consist of the political, economic, socio-cultural, technological, legal and ecological factors that have an impact on the performance of an organization. Though these factors do not have as strong an affect on organizations as with the case of the specific environmental factors, it is essential for managers to understand these factors. The importance of this lies in the understanding of these external forces in the general environment that makes it possible to effectively perform their management roles of planning, organizing, leading and controlling. In the absence of such an understanding it goes without argument that a manager will be ineffective in performing the required management role, which will have a negative impact on the performance of the organization (Robbins & Coulter, 2007). Two clear pictures emerge from the evaluation external forces acting on an organization that needs to be recognized by a manager. The first is the complex nature of the external forces and the second is the uncertainty that these factors pose on the fortunes of the organization and the manager. Coping with complexity and uncertainty requires an understanding of the factors that are likely to cause it. Failure to address these complex factors that through their uncertainty can have a strong negative influence on the performance of the company, so much so that it can cease to exist. It is this possible doom of an organization that external forces acting on an organization can bring about that makes it imperative for managers to understand these external forces, so that can take the appropriate actions to turn the challenges posed by the external environment into opportunities for growth and prosperity. Mangers may choose to grow with their organizations, through an understanding of the external forces acting on an organization, or the may choose to die with the organization by failing to understand them. Literary References Daft, R. L. & Marcic, D. (2009). Understanding Management. Mason, Ohio: South-Western Cengage Learning. Damanpour, F. & Schneider, M. (2006). Phases of the Adoption of Innovation in Organizations: Effects of Environment, Organization and Top Managers. British Journal of Management, 17(3), 215-236. Gupta, S. & Lehmann, D. (2005). Managing Customers as Investments: The Strategic Value of Customers. New Delhi: Dorling Kindersley (India) Pvt. Ltd. Pool, S. W. (2000). Organizational culture and its relationship between job tensions in measuring outcomes among business executives. Journal of Management Development, 19(1), 32-39. Robbins, S. P. & Coulter, M. (2007). Management. Ninth Edition. New Delhi: Dorling Kindersley (India) Pvt. Ltd. Shaikh, S. (2010). Business Environment. Second Edition. New Delhi: Dorling Kindersley (India) Pvt. Ltd. Wisner, J. D., Tan, K. & Leong, G. K. (2009). Principles of Supply Chain Management: A Balanced Approach. Mason, Ohio: South-Western Cengage Learning. Read More