The Environments of Organizations and Managers

Md. Soleman Mollik

Lecturer
Department of Business Administration in Marketing
Bangladesh University of Professionals, Mirpur Cantonment, Dhaka-1216

THE ORGANIZATION’S ENVIRONMENTS

The external environment is everything outside an organization’s boundaries

that might affect it.

There are two separate external environments: the general environment and
the task environment. An organization’s internal environment consists of
conditions and forces within the organization.
General environmental factors
(external environmental factors)

The Economic Dimension: The economic

dimension of an organization’s general
environment is the overall health and vitality
of the economic system in which the
organization operates.
Particularly important economic factors for
business are general economic growth,
inflation, interest rates, and unemployment.
The per capita income of Bangladesh has
increased by $643 to $2,765 in the last five years
(2019-2023), according to the latest data from
the Bangladesh Bureau of Statistics (BBS). It
was $2,122 in 2019, the first year of the 11th
election, while it was only $91 in 1972, shortly
after Independence.
Considering Bangladesh's recent economic
growth and rising middle class, how can a
clothing company known for its fast-fashion,
budget-friendly garments adapt its marketing
strategy to target this growing demographic
while also addressing increasing environmental
concerns among young consumers in
Bangladesh?
This question incorporates several key economic and environmental factors that impact marketing in Bangladesh:

1. Economic Growth: Bangladesh's growing economy creates a larger consumer base with more disposable income, making the
expanding middle class a lucrative target market for the clothing company.

2. Inflation: The clothing company needs to consider how potential inflation might affect production costs and consumer
purchasing power.

3. Interest Rates: Interest rates can influence the company's access to capital for expansion or production upgrades.

4. Environmental Concerns: The question highlights the growing environmental awareness among young consumers, prompting
the clothing company to consider sustainable practices or eco-friendly options in its marketing strategy.

By addressing these factors, the clothing company can develop a marketing strategy that resonates with the evolving Bangladeshi
market.
 The Technological Dimension
The technological dimension of the general environment is made up of the methods available for converting resources into
products or services. Although technology is applied within the organization, the forms and availability of that technology come
from the general environment.

Computer-assisted manufacturing and design techniques, for example, allowed Boeing to simulate the more than three miles of
hydraulic tubing that runs through its 787 aircraft. The results include decreased warehouse needs, higher-quality tube fittings,
lower labor costs, and major time savings.

Although some people associate technology with manufacturing firms, it is also relevant in the service sector. For example, just
as an automobile follows a predetermined path along an assembly line as it is built, a hamburger at McDonald’s follows a
predefined path as the meat is cooked, the burger assembled, and the finished product wrapped and bagged for a customer.

The rapid infusion of the Internet and web-based technologies into all areas of business also reflects the technological dimension.
Another recent advancement is the rapid growth of integrated business software systems. New modes of communication, ranging
from social network sites like Facebook and Twitter to hardware like smartphones and the iPad, are also influencing businesses in
many different ways.
 Question 1: What is the necessity of knowing or
studying the technological environment from the
management perspective?

Question 2: A traditional sari manufacturing

company in Bangladesh, known for its high-
quality, handcrafted fabrics, is facing
increasing competition from online retailers
selling mass-produced saris. How can this
company leverage the technological
environment to:
maintain its competitive edge and target a
wider audience?
adapt its production process to potentially
reduce costs or improve efficiency?
 1. E-commerce Rise: The traditional
company needs to consider
Question 2 explores how a
establishing an online presence or
Bangladeshi business can adapt to the
partnering with existing platforms to
changing technological landscape:
reach a wider audience accustomed to
online shopping.
2. Automation: The question prompts
them to explore if specific aspects of
production can be automated to
potentially reduce costs or streamline
processes while maintaining the quality
their brand is known for.

3. Digital Marketing: The company

By strategically using technology, the
could leverage social media and
sari manufacturer can stay competitive
targeted advertising to maintain brand
and cater to the evolving needs of the
awareness and connect with potential
Bangladeshi market.
customers online.
 The political–legal dimension of the general environment consists of government
regulation of business and the relationship between business and government.
The This dimension is important for three basic reasons. First, the legal system
partially defines what an organization can and cannot do. Although the United
Political– States is a free-market economy, major regulation of business activity still exists.
Legal McDonald’s, for example, is subject to a variety of political and legal forces,
including food preparation standards and local zoning requirements.
Dimension
Cite an example from Bangladesh’s perspective in accordance with the above
statement.
Second, pro- or anti-business sentiment in government influences business
activity. For example, during periods of pro-business sentiment, firms find it
easier to compete and have fewer concerns about antitrust issues. On the other
hand, during a period of anti-business sentiment, firms may find their competitive
strategies more restricted and have fewer opportunities for mergers and
acquisitions because of antitrust concerns.
Finally, political stability has ramifications for planning. No business wants to set
up shop in another country unless trade relationships with that country are
relatively well-defined and stable. Hence, U.S. firms are more likely to do
business in England, Mexico, and Canada than in Syria and Afghanistan. Similar
issues are relevant to assessments of local and state governments. A new mayor or
governor can affect many organizations, especially small firms that do business in
only one location and are susceptible to deed and zoning restrictions, property and
school taxes, and the like.

Could you correlate the understanding of the above statement to the

Bangladesh Perspective?

Question: What are the merits and demerits of a free-market economic system
in a developing country like Bangladesh?

Question: What are the outcomes of understanding the political-legal

environment of a country from the Management perspective?
The Task Because the general environment’s impact is often
vague, imprecise, and long-term, most organizations
Environment tend to focus attention on their task environment,
which includes competitors, customers, suppliers,
strategic partners, and regulators. Although the task
environment is also quite complex, it provides useful
information more readily than the general
environment because the manager can identify
environmental factors of specific interest to the
organization, rather than deal with the more abstract
dimensions of the general environment.
 Competitors
An organization’s competitors are other organizations that
compete with it for resources. The most obvious resources
that competitors vie for are customer dollars. Under Armour,
Adidas, and Nike are competitors, as are Albertson’s,
Safeway, and Kroger. McDonald’s competes with other fast-
food operations, such as Burger King, Wendy’s, Subway, and
Dairy Queen; it’s also taken on Starbucks with its McCafe
line of premium coffee products. But competition also
occurs among substitute products. Thus, Ford competes with
Yamaha (motorcycles), Schwinn (bicycles), and various
public transportation systems for your transportation dollars;
and Walt Disney World, Carnival Cruise Lines, and the
National Park System compete for your vacation dollars. Nor
is competition limited to business firms. Universities
compete with trade schools, the military, other universities,
and the external labor market to attract good students; and
art galleries compete with one another to attract the best
collections and exhibits.
Question: Select a particular company in
Bangladesh and identify its competitors.
Customers
A second dimension of the task environment is
customers, or whoever pays money to acquire an
organization’s products or services. Most
McDonald’s customers are individuals who buy
food. But customers need not be individuals.
Schools, hospitals, government agencies,
wholesalers, retailers, and manufacturers are just a
few of the many kinds of organizations that may be
major customers of other organizations. Some
institutional customers, such as schools, prisons,
and hospitals, also buy food in bulk from
restaurants such as McDonald’s.
Question: Who is on the list of customers of Walton, Bangladesh?
Supplier
Suppliers are organizations that provide
resources for other organizations. McDonald’s
buys soft drink products from Coca-Cola;
individually packaged servings of ketchup,
salt, and pepper from various wholesalers;
Big Mac ingredients from wholesale food
processors; and napkins, sacks, and wrappers
from packaging manufacturers. Besides
material resources such as these, businesses
also rely on suppliers for information (such as
economic statistics), labor (in the form of
employment agencies), and capital (from
lenders such as banks). Some businesses
strive to avoid depending exclusively on
particular suppliers. Others, however, find it
beneficial to create strong relationships with
single suppliers.
Regulators
Regulators are elements of the task environment that have the potential to control, legislate,
or otherwise influence an organization’s policies and practices. There are two important
kinds of regulators. Regulatory agencies are created by the government to protect the public
from certain business practices or to protect organizations from one another. Powerful
federal regulatory agencies include the Environmental Protection Agency (EPA), the
Securities and Exchange Commission (SEC), the Food and Drug Administration (FDA),
and the Equal Employment Opportunity Commission (EEOC). Many of these agencies play
important roles in protecting the rights of individuals. The FDA, for example, helps ensure
that food is free from contaminants; thus, it is an important regulator for McDonald’s and
Starbucks. Numerous state, regional, and local regulatory agencies also affect businesses.
Perhaps it is no surprise that some managers complain that there is too much government
regulation. Most large companies must dedicate thousands of labor hours and hundreds of
thousands of dollars a year to complying with government regulations. To complicate
managers’ lives even more, different regulatory agencies sometimes provide inconsistent—
and even contradictory—mandates.
Question: Could you identify/recall a few Regulators in Bangladesh affecting
businesses?

Bangladesh T Bangladesh E Bangladesh E Bangladesh E Bangladesh F Bangladesh I Bangladesh S Bangladesh S Insurance De Microcredit Public-Privat Seed Certific University Gr
elecommunic conomic Zon nergy Regula xport Process ood Safety A nvestment De ecurities and ericulture De velopment an Regulatory A e Partnership ation Agency ants Commis
ation Regulat es Authority tory Commis ing Zone Aut uthority velopment A Exchange Co velopment B d Regulatory uthority Authority sion (Bangla
ory Commiss sion hority uthority mmission oard Authority of desh)
ion Bangladesh
Interest Group
The other basic form of regulator is the interest group. Prominent interest
groups include the National Organization for Women (NOW), Mothers Against
Drunk Driving (MADD), the National Rifle Association (NRA), the League of
Women Voters, the Sierra Club, Ralph Nader’s Center for the Study of
Responsive Law, Consumers Union, and industry self-regulation groups such as
the Council of Better Business Bureaus. Although interest groups lack the
official power of government agencies, they can exert considerable influence by
using the media to call attention to their positions. MADD, for example, puts
considerable pressure on e producers (to put warning labels on their products),
automobile companies (to make it more difficult for intoxicated people to start
their cars), local governments (to stiffen drinking ordinances), and bars and
restaurants (to refuse to sell alcohol to people who are drinking too much).

Question: Identify some Interest Groups in Bangladesh and their consequent

effects on particular businesses
Strategic Partners
Another dimension of the task environment is strategic partners (also called strategic allies)—two
or more companies that work together in joint ventures or other partnerships. McDonald’s has
several strategic partners. For example, it has one arrangement with Walmart whereby small
McDonald’s restaurants are built in many Walmart stores. The firm also has a long-term deal with
Disney: McDonald’s promotes Disney movies in its stores, and Disney has allowed McDonald’s
to open restaurants near its resorts. Many of the firm’s foreign stores are built in collaboration
with local investors. Strategic partnerships help companies get the expertise they lack from other
companies. The partnerships also help spread risk and open new market opportunities. Indeed,
most strategic partnerships are among international firms. For example, Ford has strategic
partnerships with Volkswagen (sharing a distribution and service center in South America) and
Nissan (building minivans in the United States). Even bitter rivals Ford and General Motors are
working together as strategic partners designing a new 10-speed transmission.

EBL-GP (29 JAN, 2024), PRAN-RFL,

Could you mention some SP in
MEGHNA BANK-NAGAD (28 FEB, 2024),
Bangladesh? DUTCH-BANGLA BANK
The Internal Environment
Owners
The owners of a business are, of course, the people who have legal property rights to that business.
Owners can be a single individual who establishes and runs a small business, partners who jointly own
the business, individual investors who buy stock in a corporation, or other organizations. McDonald’s
has 1.02 billion shares of stock, each of which represents one unit of ownership in the firm.
Board of Directors
A corporate board of directors is a governing body that is elected by the stockholders and charged with
overseeing a firm’s general management to ensure that it is run to best serve the stockholders’ interests.
Some boards are relatively passive: They perform a general oversight function but seldom get actively
involved in how the company is really run. But this trend is changing as more and more boards
carefully scrutinize the firms they oversee and exert more influence over how they are being managed.
McDonald’s has a board of directors composed of 14 members. This board includes 4 inside members
(full-time executives of the firm) and 10 outside members (individuals who do not work directly for the
firm). This presumably allows decisions to be made in ways that protect the interests of diverse
stakeholders.