Five external elements in the organizational environment

(1) (A) Briefly explain five external elements in the organisational environment currently impacting on L’Oreal’s management of the Body shop brand.

Five external elements are:

• Customers
• Competitors
• Economic forces
• Technological forces
• Social forces

Customers: Customers plays essential part in every business. Managing the customer experience has become a serious organisational aim. It’s a means to protect and develop brand loyalty and therefore that individual’s economic and advocacy value to the organisation.

Body shop is a well established organisation around the world, which produces pure natural cosmetics for everyone. Because of high prices only few customers can purchase their products, rest prefer other brands, which are available in low prices than Body shop. That will impact the company by lower profits.

Competitors: Competitors are organisations that produce goods and services that are similar to a particular organisation’s goods and services.

Nowadays, cosmetics are essential part of the life, many competitors are entered into the market by introducing their products with low prices to compete with others. Then, everyone could prefer those products, which are available in market with low price and same natural products. That can be show difference in sales of brand of L’oreal.

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Economic forces:  Economic factors have a tremendous impact on business firms. The general state of the economy, interest rate, stage of the economic cycle, balance of payments, are key variables in corporate investment, employment, and pricing decisions. The impact of growth or decline in gross national product and increases or decreases in interest rates, inflation are considered as prime examples of significant impact on business operations. To asses the local situation, an organization might seek information concerning the economic base and future of the region and the effects of this outlook on wage rates, disposable income, unemployment, and the transportation and commercial base. The state of world economy is most critical for organizations operating in such areas.

For example, during recession time, woman don’t go to buy expensive products, then, prefer to buy low prices products.

Technological Forces: Technological forces influence organizations in several ways. A technological innovation can have a sudden and dramatic effect on the environment of a firm. First, technological developments can significantly alter the demand for an organization’s or industry’s products or services. Changing technology can offer major opportunities for improving goal achievements or threaten the existence of the firm. Technological forecasting can help protect and improve the profitability of firms in growing industries.

Social forces: Social forces include traditions, values, societal trends, consumer psychology, and a society’s expectations of business. Determining the exact impact of social forces on an organization is difficult at best. However, assessing the changing values, attitudes, and demographic characteristics of an organization’s customers is an essential element in establishing organizational objectives.

(B) Briefly explain in detail one unpredictable dynamic external factor which adversely impacted in L’Oreal sales of body shop brand products in 2008

One of the major unpredictable dynamic external factor is recession.

Recession is a decrease in the economy of the country. People stop buying cosmetics.  That decreases the sales and cash outlay of Body shop.

Women are regular customers for cosmetics, woman don’t go to buy expensive products, then, prefer to buy low price products. That adversely decreased the sales of body shop in 2008.

(C) Briefly explain the difference between a dynamic vs stable element in the  organisational environment  impacting on L’Oreal. Give an example of each type of element.

Dynamic elements:

• Suppliers
• Customers: Customers are very important for any business. L’Oreal cusmotics are quite expensive than other brands, only wealthy people prefer L’Oreal brands. Because of those cusmotics are made by nature elements, so they never go back to spend money, whatever it is low price or high price.
• Competitors: Example of L’oreal competitors are Revlon , Shiseido
• Economic forces
• Technological forces
• Demographic forces
• Political forces

Stable elements:

• Distributors
• Barriers to entry
• Social cultural factors

2. (a) Briefly explain what company culture is, it’s major dimensions and how a company can encourage a positive culture.

Every workplace has a culture Basically, organizational culture is the personality of the organization. Culture is comprised of the assumptions, values, norms and tangible signs of organization members and their behaviours. the corporate culture is the operating work environment that is set and shaped by the executive:

• The way people dress
• The way people conduct their work
• The way people interact with public.

Company cultures develop and they change over time. As employee leave the company and replacements are hired the company culture will change. If it is a strong culture, it may not change much. However, since each new employee brings their own values and practices to the group the culture will change, at least a little. As the company matures from a start up to a more established company, the company culture will change. As the environment in which the company operates changes, the company culture will also change. The company culture will change and it is important to be aware of the changes.

Major dimensions of company culture is

• Innovation and risk taking
• Attention to detail
• Outcomes orientation
• People orientation
• Team orientation
• Aggressiveness
• Stability

Those characteristics can make company culture strong.

By offering promotions, bonuses and increasing wages can motivate employers into positive culture. That will help company grow strongly and  keep culture alive.

(b) Brief explain what a learning company culture is, and  how company can create a learning culture.

An organization’s “learning culture” as its ability and willingness to embrace individual and organizational learning as a strategic part of its business strategy. Learning company culture describes company policies, environment, code of dress, company profile. If we want to be successful at a company, and enjoy where we work, we need to adapt to the company’s culture. Companies look for the people for job who

• know and respect the company’s culture
• pay attention to expected norms of behaviour
• build and maintain positive working relationships with

  supervisors, co-workers and customers

• value constructive criticism as a means to improve and

  enhance personal performance

• display interest in the company
• maintain a positive attitude

company can create learning organisation by following characteristics:

• Personal mastery
• Mental models
• Team learning
• Build a shared vision
• Systems thinking

Personal mastery: company allow managers to empower employees and allow them create and explore something different to learn company culture in order to develop company.

Mental models: this model can create employee to do task better without find harder.

Team learning: This method is more important than individual learning. All the decisions are mostly made by team. Team learning can improve employee thinking power by learning new ideas.

Systems thinking: This is a conceptual framework that allows people to study businesses as bounded objects. Learning organizations use this method of thinking when assessing their company and have information systems that measure the performance of the organization as a whole and of its various components.

Build a shared vision: This is very important in motivating the staff to learn, that provides concentration energy for learning. Individual vision of employees are most important in organisation. The shared vision is often to succeed against a competitor.