Business Environment

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Business Environment

‘Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging business environment, to meet the needs of markets and to fulfil stakeholder expectations'

Introduction:

Strategy is the trend and span of an organisation over the lasting, which configures its resources to achieve advantage for the organisation within a challenging environment and to fulfil stakeholder expectations. These characteristics have some consequences, these are; by nature strategic decisions are likely to be complex. Thus the defining feature of strategy and strategic decisions depend on this complexity. These feature of strategy and strategic decisions are especially for organisations with wide geographical scope of multinational company or wide ranges of products or services. Strategic decisions also depend on situations of uncertainty, its sometime really impossible to realize the future and taking the right decisions. Strategic decisions are also depend on an integrated approach to managing the organisation. Porter (1985) suggested that a firm is able to achieve advantage through product differentiation or cost leadership. These two sources of competitive advantage coupled with the scope of activities for which the firm seeks a achieve them lead to three generic positions: A low cost strategy over a broad target, a differentiation strategy over broad target and a focus strategy involving either a low-cost strategy over a narrow target or a differentiation strategy over a narrow target. A unique asset is one that a firm has that has not been initiated by other firms and allows the firm to carry out some activity or activities better than other firms. A competence encompasses the skill, ability and knowledge that organization members have individually or collectively which allows them to undertake an activity or activities to contribute to the transformation of inputs into outputs directly or indirectly (Williamson, et al, 2004). By disaggregating a business organization's environment into a number of components, it is easy to introduce three important groups of components. The external environment comprises all of those forces and events outside the organization that impinge on its activities. Some of these events impinge directly on the firm's activities - these can be described as forming an organization's microenvironment. Other events that are beyond the immediate environment nevertheless affect the organization and can be described as the macro environment. As well as looking to the outside world, company must also take account of factors within other functions of their own firm. This is referred to as the internal environment. (Palmer and Hartley, 2006) As part of the normal production activity, businesses are involved in buying (inputs- like labour and raw materials) and selling (outputs- the finished products). Buying and selling take place in markets and although there are many different types of markets the basic analysis remains the same. The quantity demanded refers to the quantity of a good or service that households are willing and able to purchase at a particular price. This definition shows that it is effective demand that is important; although many people would like to own a Rolls-Royce they could not afford it and so their demand is not effective on the market. The demand for a good or service depends on a number of factors (Worthington and Britton, 2006). It is also important to understand the expectations of different stakeholders in more detail and the extent to which they are likely to seek influence over an organisation's purpose and strategies. Stakeholders are those individuals or groups who depend on the organisation to fulfil their own goals and on whom, in turn, the organisation depends (Johnson and Scholes, 2003). Good forecasting and successful business strategy can...
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