Internal and External Factors Affecting Four Functions of Management - Essay Example

? Internal and External Factors Affecting Four Functions of Management Internal and External Factors Affecting Four Functions of Management An organization is defined by planning, organizing, leading and controlling all the factors that could affect its performance. Therefore, the management is under obligation to ensure all the factors that could affect the organization are controlled effectively. If these factors are not controlled, the organization will be adversely affected. Apparently, management team that is vigilant on these factors records a stunning performance since the organization is equipped to control negativity (Johnson, Scholes and Whittington, 2010). However, an organization that does not reflect on these factors is likely to flop since the external and internal factors will have dire consequences on its performance. To begin with, technology is one factor that has significant effects on the performance of an organization. In the current developing and developed world, many organizations are embracing technology to perfect service and product delivery. Some organizations were formed long before technology was enhanced. However, these organizations are benchmarking other organizations that have incepted technology in its operations. For instance, IKEA was formed in 1943, when technology was not enhanced. However, the organization has been able to enhance its technology to continue giving savored services. Apparently, it is considered that organizations that embrace technology continue to give unparalleled services and products to its customers (Johnson, Scholes and Whittington, 2010). This is one factor that has enabled IKEA to attract a large market niche for its products. With improvement in technology, the organization has been able to offer high quality products and services. However, the induction of enhanced technology comes with its challenges and setbacks. First, the organization has to settle on technologies that will offer quality services. The technology should offer maximum utility to substantiate the investment in the technology (Caglar, Kesteloo and Kleiner, 2012). Secondly, technology is a huge investment which needs massive resources. Therefore, the organization has to collect massive resources in ensuring it is improving in its performance. Lastly, technology requires apt decision making. The organization has to make sensitive decisions on acquiring the stated technology. The second factor that affects the four functions of management is globalization. Globalization is a factor that has improved the performance of many businesses across the globe. Organizations that embrace globalization are likely to reflect a better performance than other organizations that are operating in a defined location. Spreading to other geographical regions exposes the organization to vast markets which create a greater demand for products and services. For instance, IKEA has embraced globalization by opening stores in many places of the world. Initially, the organization recorded low profits and revenue due to its location. However, the management decided to increase its market share by opening other stores in other countries. This has proved a positive approach as the business continues to sprout (Caglar, Kesteloo and Kleiner, 2012). Though this is a big investment, it is also a source of large amounts of revenue. For instance, IKEA has opened large stores in Sweden, Croatia, China and Germany. Previously, the organization was specialized in offering services in Europe. However, with the influence of globalization, it started offering services and products in many parts of the world. Apparently, the biggest stores that the organization has initiated are not situated in the same geographical region. The largest stores in the organization’s name are in Stockholm, Shanghai, Shenyang, Tianjin and Berlin. This shows that the organization is recording a positive performance from the diversity of its market niche. The availability of many markets across the globe ensures the organization is making substantial profits. Innovation is a factor that affects the performance and management of an organization in many aspects. An organization that does not savor innovation is not likely to record a better performance when compared to other organizations that have an innovative management. Innovativeness depicts the ability to explore any other option in the market to accrue a better performance. For instance, IKEA is one of the organizations that have a soft spot for innovation (Caglar, Kesteloo and Kleiner, 2012). To begin with, IKEA was using extensive resources in manufacture of the furniture and other products. This was expensive to the organization, as it reduced its profitability. To counter this aspect, the organization decided to be innovative and provide other avenues of reducing the expenses. For instance, the organization decided to embark on recycling materials. Some of the materials could be recycled to make quality products. This helped the organization to save resources. Secondly, the organization decided to explore other materials that could make quality products. For instance, the organization decided to make furniture from post consumer waste in form of plastics. This was 100% waste material, which was easy to acquire. This boosted the organization as it would produce products and services from easily accessible materials. This had a positive impact on its profitability levels as they improved significantly. Many businesses have to consider diversifying in other business to strengthen performance in the market. With the increasing competitions, there is need to diversify to other businesses in the same market. For instance, IKEA was facing stiff competition from other organizations which were offering the same line of products. This was a threat to the business as the market was limited. In countering such competition, IKEA decided to invest in credit card services, family mobile, restaurants, food markets, houses and flats (Caglar, Kesteloo and Kleiner, 2012). These are businesses that are flourishing due to high demand. Therefore, investing in such business will improve the performance of an organization. The last factor that affects management is ethical issues. For instance, pollution is an emerging issue that has been affecting many organizations. They have to ensure they are not polluting the environment as stated by governing bodies. For instance, IKEA decided to use recycled materials in manufacture of its products. Similarly, IKEA decided to limit use of timber as it was a threat to the globe. This had its effects on the organization as it had to explore other innovative maneuvers (Johnson, Scholes and Whittington, 2010). In conclusion, organizations have to consider all the internal factors that could affect its operation. This includes globalization, innovation, diversity, technology and ethical issues. These are important factors that could have direct effects on the performance of an organization. Therefore, focusing on these issues prepares an organization to make better performance in the market. References Caglar, D., Kesteloo, M., & Kleiner A. (May 7, 2012). How IKEA reassembled its growth strategy. Retrieved from http://www.strategy-business.com/article/00111?gko=66b6e Johnson, G., Scholes, K., & Whittington, R. (2010). Exploring corporate strategy + Mystrategylab. 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