Factors That Impact on and Influence the Organisation
Factors that impact on and influence the organisation
The business environment is often an uncertain one, where managers are faced with many factors that impact on and influence the organisation. The micro-environment includes suppliers, customers and stakeholders, all of which influence the organisation directly. The macro-environment, however, includes factors that influence the organisation but are out of its direct control.
The micro-environment is often determined by the industry the organisation operates within. Competition becomes a critical influencing factor. Johnson et al (2002) states that managers should understand the competitive forces that exist between organisations in the same industry because this will determine its attractiveness. De Swaan Arons, et al (1999) refer to Porter’s Five Forces framework as a tool to assess profit potential within an organisation. These forces include; supplier and buyer power; threat of substitutes; and barriers to entry. At the centre of the five forces is competitive rivalry between organisations in the same industry/sector. The level of competitive aggressiveness will be determined by factors such as the number of competitors, industry growth, high fixed costs, and amount of differentiation (De Swaan Arons, et al, 1999, pp 3). According to Harrison (2003), success in the hotel industry is often provided by being located near existing hotel properties. This may be as a result of a tested market-place and assurance that if hotels can profit in that area, then it becomes an attractive market to enter. Supplier and buyer power are closely linked due to the resulting relationship they have in influencing the organisation. Porter’s Five Forces Framework states that supplier power is high when there is a concentration of suppliers within the same industry. However; following the comments of Harrison (2003), several hotel properties within the same geographic area will be competing for customers, often basing their
The business environment is often an uncertain one, where managers are faced with many factors that impact on and influence the organisation. The micro-environment includes suppliers, customers and stakeholders, all of which influence the organisation directly. The macro-environment, however, includes factors that influence the organisation but are out of its direct control.
The micro-environment is often determined by the industry the organisation operates within. Competition becomes a critical influencing factor. Johnson et al (2002) states that managers should understand the competitive forces that exist between organisations in the same industry because this will determine its attractiveness. De Swaan Arons, et al (1999) refer to Porter’s Five Forces framework as a tool to assess profit potential within an organisation. These forces include; supplier and buyer power; threat of substitutes; and barriers to entry. At the centre of the five forces is competitive rivalry between organisations in the same industry/sector. The level of competitive aggressiveness will be determined by factors such as the number of competitors, industry growth, high fixed costs, and amount of differentiation (De Swaan Arons, et al, 1999, pp 3). According to Harrison (2003), success in the hotel industry is often provided by being located near existing hotel properties. This may be as a result of a tested market-place and assurance that if hotels can profit in that area, then it becomes an attractive market to enter. Supplier and buyer power are closely linked due to the resulting relationship they have in influencing the organisation. Porter’s Five Forces Framework states that supplier power is high when there is a concentration of suppliers within the same industry. However; following the comments of Harrison (2003), several hotel properties within the same geographic area will be competing for customers, often basing their