Internal and external influences
Managers are affected in their work by internal and external influences. How do these influences affect them?
Internal influences
The most obvious internal influences on how an organisation is run are the product or service, and how this is made or provided.
Other key influences include the organisational culture and informal and formal structures.
Culture
The personalities of the staff and the attitudes of managers affect an organisation’s internal environment. Together they create a culture or atmosphere in the organisation. The culture affects what managers can do and have to do. A good manager will be able to identify a bad culture and will try to change it.
Formal and informal structures
Organisations usually include both formal (official) and informal (unofficial) structures.
The formal structure includes:
- reporting relationships (the management structure)
- policies
- rules.
The informal structure includes:
- the culture
- unofficial procedures (for example, ‘the way we’ve always done things’)
- unofficial relationships between people.
The external environment
The external environment influences include those from the:
- task environment
- competitive environment
- general environment.
Influences in the task environment
The task environment is outside the organisation. It includes all those people who interact with the organisation, including customers, suppliers, other businesses or organisations in the same area, trade unions, and the government. People from this external environment have a daily impact on the organisation. Changes to any of these will have a direct impact on the success of the organisation. Diagram 1, below, shows the task environment for a factory.
Diagram 1: Task environment - [D] Text equivalent
Influences in the competitive environment
The competitive environment includes competitors, what they sell, and whether more competitors are likely. Managers need to be aware of changes in this environment and be prepared to take action if necessary.
Diagram 2: Competitive environment - [D] Text equivalent
Influences in the general environment
The general environment includes everything beyond the competitive environment. It is often broken into Social, Technological, Economic, Environmental, and Political influences (STEEP). These influences cannot be changed by the organisation, but they can strongly affect it.
Diagram 3: General environment - [D] Text equivalent
examples
Changes in society can create pressures to stock certain items or, perhaps to protect the natural environment, not to stock them.
How does the size of the business affect management?
Managers of small businesses, such as petrol stations, can be much less formal than managers of, say, Shell Oil. There can be a closer working relationship between managers and their staff because there are fewer employees. They can be less formal because their job functions are much wider but less specialised. Also, they are much closer to the production of services or goods, and to their customers.
So, is smaller better?
Not really. Having fewer staff can sometimes make the manager’s role harder:
- There are fewer people to delegate work to.
- Managers in small businesses have to be more versatile than those in large organisations.
- The closer relationships can make rewarding or penalising staff more public and more difficult.
- It may not be as easy for managers to delegate unpleasant tasks.
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