External environmental factors

Answer 1

HRD Paper 2008 Q1.External influences on employee Behavior

All outside factors that may affect an organization & an employee make up the external environment. The external environment is divided into Three parts: · Basic Factors · Directly interactive forces · Indirect interactive forces Basic Factors · Economic conditionsEconomic environment is an important element of general environment. Inflation, interest rate, unemployment etc. are its main elements. As these elements directly affect the business organizations, as well as employees. Decisions should be taken after having deeply studied and analyzed them. These elements do not remain under control of business. So, the business organizations cannot affect these elements. Rather the organizations are affected by them. i. Inflation: The price of goods and services goes high during the time of inflation. Companies have to pay high price for the necessary resources to produce goods or services. As a result, the cost of goods or services increases. The companies compulsorily increase the price of their goods or services to recover their investment. In this way, the price hike of goods or services directly affects the demand, or demand goes down. ii. Interest rate: If the rate of interest increases, the customers do not like to borrow money. Similarly, the companies also have to pay the interest rate if thy borrow. In this way, the cost of only increases resulting to price hike of goods or services. This affects demand or demand goes gown. iii. Unemployment: the unemployment situation also affects the demand of goods or services. So, this is also one of the important elements of economic environment. Companies get good chances to select employees. As only a small number of people decreases. As a result, the demand declines. ·Technological changes Advances in technology are the most frequent cause of change in organizations since they generally result in greater efficiency and lower costs for the firm. Technology is the way tasks are accomplished using tools, equipment, techniques, and human know-how. · Labour market conditions Scaricity of labour and employees improve the bargaining power of employees. They can demand better salary from there employees. · Labor unions Labor unions motivate employees time to time. · Law & regulations Political and legal environment is also included in general environment. Political philosophy, political system, political organizations, legal system, court, legal administration etc. are included in this. Theses elements also do not remain under the control of organizations. So, decisions should be taken after deep study and analysis of these elements. · Directly interactive: This environment has an immediate and firsthand impact upon the organization. A new competitor entering the market is an example. · Indirectly interactive: This environment has a secondary and more distant effect upon the organization. New legislation taking effect may have a great impact. For example, complying with the Americans with Disabilities Act requires employers to update their facilities to accommodate those with disabilities. Directly interactive forces include owners, customers, suppliers, competitors, employees, and employee unions. Management has a responsibility to each of these groups. Here are some examples: · Owners expect managers to watch over their interests and provide a return on investments. · Customersdemand satisfaction with the products and services they purchase and use. · Suppliers require attentive communication, payment, and a strong working relationship to provide needed resources. · Competitors present challenges as they vie for customers in a marketplace with similar products or services. The third type of external environment is the indirectly interactive forces. These forces include sociocultural, political and legal, technological, economic, and global influences. Indirectly interactive forces may impact on employee behavior. The sociocultural dimension is especially important because it determines the goods, services, and standards that society values. The sociocultural force includes the Demographics and values of a particular customer base. · Demographics are measures of the various characteristics of the people and social groups who make up a society. Age, gender, and income are examples of commonly used demographic characteristics. · Values refer to certain beliefs that people have about different forms of behavior or products. Changes in how a society values an item or a behavior can greatly affect a business. (Think of all the fads that have come and gone!)

Answer 2

To evaluate the company performances based on opportunities and threats from external