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Organization, Business Environment

and Information Technology

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Organization

- A social unit of people,systematically structured and managedto meet a need or to pursue collective goals on acontinuing basis. All organizations havea managementstructure that determines relationships between functions and positions, andsubdivides and delegates roles , responsibilities,and authority to carry out defined tasks.

Organizations are open systems in thatthey affect and are affected bythe environment beyond their boundaries.

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Organizational structures

� Pyramids or hierarchies

� Committees or juries

� Matrix organizations� Ecologies

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Pyramids or hierarchies

� A hierarchy exemplifies an arrangement witha leader who leads other individual members of the organization. This arrangement is oftenassociated with bureaucracy.

� These structures are formed on the basis thatthere are enough people under the leader to givehim support. Just as one would imagine a realpyramid, if there are not enough stone blocks to

hold up the higher ones, gravity wouldirrevocably bring down the monumentalstructure.

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Hierarchical Organisation

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Committees or juries

� These consist of a group of peers who decide as a group, perhaps byvoting. The difference between a jury and a committee is that themembers of the committee are usually assigned to perform or lead furtheractions after the group comes to a decision, whereas members of a jurycome to a decision. In common law countries legal juries render decisionsof guilt, liability and quantify damages; juries are also used in athleticcontests, book awards and similar activities. Sometimes a selectioncommittee functions like a jury. In the Middle Ages juries in continentalEurope were used to determine the law according to consensus amongstlocal notables.

� Committees are often the most reliable way to makedecisions. Condorcet's jury theorem proved that if the average member

votes better than a roll of dice, then adding more members increases thenumber of majorities that can come to a correct vote (howevercorrectness is defined). The problem is that if the average member issubsequentlyworse than a roll of dice, the committee's decisions growworse, not better: Staffing is crucial.

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Matrix organization

� This organizational type assigns each worker two bosses intwo different hierarchies. One hierarchy is "functional" andassures that each type of expert in the organization is well-trained, and measured by a boss who is super-expert in the

same field. The other direction is "executive" and tries toget projects completed using the experts. Projects might beorganized by products, regions, customer types, or someother schema.

� As an example,(this is not reliable) a company might haveseparate individuals with overall responsibility for Product Xand Product Y, and different individuals with overallresponsibility for Engineering, Quality Control, etc.Individuals responsible for quality control of project X withtherefore have two reporting lines.

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Ecologies

� This organization has intense competition. Badparts of the organization starve. Good ones getmore work. Everybody is paid for what theyactually do, and runs a tiny business that has toshow a profit, or they are fired.

� Companies who utilize this organization typereflect a rather one-sided view of what goes onin ecology. It is also the case that a natural

ecosystem has a natural border - ecoregions donot in general compete with one another in anyway, but are very autonomous.

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Business Environment?

� The term Business Environment is composed of two words Business and Environment. Insimple terms, the state in which a person remainsbusy is known as Business. The word Business initseconomic sense means human activities likeproduction, extraction or purchase or sales of goods that are performed for earning profits.

� On the other hand, the word Environment refers

to the aspects of surroundings. Therefore,Business Environment may be defined as a set of condition

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Business Environment has two

components:

� Internal Environment: It includes 5 Ms i.e.man, material, money, machineryand management, usually within the control of business. Business can make changes in thesefactors according to the change in the functioningof enterprise.

� External Environment: Those factors which arebeyond the control of business enterprise are

included in external environment. These factorsare: Government and Legal factors, Geo-PhysicalFactors, Political Factors, Socio-Cultural

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� Two types of External Environment:

1. Micro/Operating Environment

2. Macro/General Environment

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Micro/Operating Environment:

� The environment which is close to business and affects its capacityto work is known as Micro or Operating Environment. It consists of Suppliers, Customers, Market Intermediaries, Competitors andPublic.1. Suppliers: They are the persons who supply raw material and

required components to the company. They must be reliable andbusiness must have multiple suppliers i.e. they should not dependupon only one supplier.

2. Customers: - Customers are regarded as the king of the market.Success of every business depends upon the level of their customerssatisfaction. Types of Customers:(i) Wholesalers(ii) Retailers(iii) Industries(iv) Government and Other Institutions(v) Foreigners

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3. Market Intermediaries: - They work as a link betweenbusiness and final consumers. Types:-(i) Middleman(ii) Marketing Agencies(iii) Financial Intermediaries(iv) Physical Intermediaries

4. Competitors: - Every move of the competitors affectsthe business. Business has to adjust itself accordingto the strategies of the Competitors.

5. Public: - Any group who has actual interest in business

enterprise is termed as public e.g. media and localpublic. They may be the users or non-users of theproduct.

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Macro/General Environment:

�   It includes factors that create opportunities and threats to business units.

Following are the elements of Macro Environment:

� (1) Economic Environment: - It is very complex and dynamic in nature that keeps

on changing with the change in policies or political situations. It has three

elements:

(i) Economic Conditions of Public

(ii) Economic Policies of the country

(iii)Economic System

(iv) Other Economic Factors: Infrastructural Facilities,

Banking, Insurance companies, money markets, capital markets etc.

� (2) Non-Economic Environment: - Following are included in non-

economic environment:-

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� (i) Political Environment: - It affects different business unitsextensively. Components:(a) Political Belief of Government

(b) Political Strength of the Country(c) Relation with other countries(d) Defense and Military Policies(e) Centre State Relationship in the Country(f) Thinking Opposition Parties towards Business Unit

� system, caste system, religion, education, marriage etc.

� (ii) Socio-Cultural Environment: - Influence exercised by social andcultural factors, not within the control of business, is known asSocio-Cultural Environment. These factors include: attitude of people to work, family

� (iii) Technological Environment: - A systematic application of scientific knowledge to practical task is known as technology.Everyday there has been vast changes in products, services,lifestyles and living conditions, these changes must be analysed byevery business unit and should adapt these changes.

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� (iv) Natural Environment: - It includes natural resources,

weather, climatic conditions, port facilities, topographicalfactors such as soil, sea, rivers, rainfall etc. Every businessunit must look for these factors before choosing thelocation for their business.

� (v) Demographic Environment :- It is a study of perspective

of population i.e. its size, standard of living, growth rate,age-sex composition, family size, income level (upper level,middle level and lower level), education level etc. Everybusiness unit must see these features of population andrecongnise their various need and produce accordingly.

� (vi) International Environment: - It is particularly importantfor industries directly depending on import or exports. Thefactors that affect the business are: Globalisation,Liberalisation

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Information technology (IT)

� We use the term information technology or IT to referto an entire industry. In actuality, informationtechnology is the use of computers and software tomanage information. In some companies, this isreferred to as Management Information Services (orMIS) or simply as Information Services (or IS). Theinformation technology department of a largecompany would be responsible for storing information,

protecting information, processing the information,transmitting the information as necessary, and laterretrieving information as necessary.

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� Basic Elements of Information Technology

Software and ApplicationsSoftware is an important part of information technology which relates tocomputer applications that enable a company to generate, store, program, andretrieve data as and when needed. There are many softwares developed fordifferent purposes. All operations in the business sector are carried out bysoftware that are assigned for executing specific tasks. Without these computerapplications the businesses wouldn't have been able to carry out their functions

in a proper and efficient manner. Operating systems, ERPs, special purposeapplications, and web browsers are some examples of different softwares.

Hardware DevicesThese are various computer equipments that house the softwares. Devices likemicrocomputers, mid-size servers, and huge mainframe systems are someexamples of hardware. Businesses have to maintain a huge collection of important data. For this purpose, they employ these devices which are

responsible for storing confidential company data and retrieving it back whenrequired. Other hardware devices include network devices that are used forproviding Internet access to the businesses to work and communicateexpeditiously. There are even devices which enable manufacturing tools andequipments to work accurately in the industrial sector.

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� Running Businesses with Information Technology

Small scale businesses need to buy software packages that would cater to their

specific management, operational, and functional needs. For this purpose, theyneed to approach firms and IT manufacturers who deal in such software

applications. Other IT services include Internet marketing and email

marketing, web hosting and promotions, and maintaining client networks. Larger

businesses on the other hand have their own operational and functional

employees who develop software applications and work on several IT needs of the

businesses. They usually purchase ERP softwares to coordinate different processesand functions into a single application, which is actually more convenient.

Manufacturing businesses may make use of servers and databases to store their

vast data regarding inventory, B2B, B2C, FMCG (in the retail business sector), etc.

Automobile manufacturers use computers to guide manufacturing and designing

tools to function in a precise manner, ruling out the possibilities of any human

error. Businesses all around the globe have to take the aid of information

technology in some way or the other to keep themselves in sync with the market

and the world. There are several departments in business organizations such as HR

and recruitment, finance and payroll, administration, and security. All these

departments utilize IT to carry out their respective operations in a productive

manner and efficient manner.