What are the direct and indirect actions of the external environment that a manager must know in an organization? Give examples of each.
The external environment of an organization refers to the outside institutions, factors or forces that potentially affect the performance of said organization. The action of these factors may be direct (for example, the actions of competitors) or indirect (for example, changes in business climate). .
For direct actions, we shall be looking at the following factors:.
The first factor is suppliers. Elaborating on this factor, I will introduce the concept of outsourcing. Outsourcing is basically a practice used by different companies to reduce costs by transferring portions of work to outside suppliers rather than completing it internally. As a manager of a jeans retailer, I must form good relationships with multiple suppliers, so as to get the best from the market, i.e: best quality denim for the lowest price. So from that, we can say that we as a company are outsourcing to suppliers because we rely on them for our basic material (e.g. denim, leather, etc.).
The second factor is the customer. As a manager, you must be aware of the market demands. You should keep up to the date with the wants of the customer so your business does not fall behind and lose to competitors. For this factor, I will introduce the concept of customer knowledge. Customer knowledge refers to understanding your customers, their needs, wants and aims. It is essential if a business is to align its processes, products and services to build real customer relationships. As a manager I can make sure that I am well versed in terms of my customer knowledge by conducting polls and surveys for my customers to take part in. From there, I will be able to evaluate their answers and tailor my business strategy accordingly for optimum sales.
The third factor is competitors.