Environments of LSOs

1. Environments of LSOs

2. Environments of LSOs • Environments is the term used to describe the context in which business is carried out. • There are two main environments: • Internal: inside the organisation, areas that the organisation has most control and influence over. • External: outside the organisation, areas that the organisation has little or no influence. Made up of the Operating and Macro Environments.

3. Operating Environments • Operating Environment is that external environment which the organisation has some influence over but cannot control. • The organisation interacts directly with this environment in the course of conducting business.

4. Macro Environment • Made up of broad factors which affects the LSO. • The LSO has no control over these factors.

5. Environments of LSOs

6. Operating Environment: Customers • Customers are the reason the organisation exists. • Customer satisfaction is central to organisation success. • Customers want high quality products and value for money.

7. Operating Environment: Suppliers and Creditors • Suppliers are the people and businesses that supply resources to an organisation. • Creditors provide finance and include banks, finance companies and other businesses. • In order to operate LSOs need a reliable source of resources and funds. • Building positive relationships with suppliers is a key to success.

8. Operating Environment: Competitors • Competitors are other organisations that offer rival products. • Organisations need to monitor existing and new competitors in the market. • Organisations need to maintain a competitive edge over rivals. • Organisations may need to respond to moves from competitors.

9. Operating Environment: Interest Groups • Also known as Lobby groups. • These are groups who try and convince organisations to adopt particular policies. • These include - • Trade Unions: These represent employees and aim to improve working conditions for their members. • Consumer Groups: These aim to protect consumers in relation to product safety, price and advertising. • Specific Issue Groups: focus on one specific issue such as environmental protection, ant-gambling etc.

10. Macro Environment: Social Attitudes • This is concerned with what society views as right and wrong. This constantly changes. • This can include pressure to protect and preserve natural environment, treat people with respect, and being responsible corporate citizens.

11. Macro Environment: Economic Factors • Current state of the economy plays an important role for LSOs • Global financial crisis highlights the importance of economic factors. • Factors include: • levels of consumer spending • level of unemployment • rate of inflation • wage rates • Interest rates.

12. Macro Environment: Technological Developments • Technological innovation is constantly changing. • Businesses need to keep up with technology to maintain competitiveness. • Technology can lead to increased productivity and reduced costs. • Mobile communication and e-commerce examples of recent technological innovations which has transformed how we do business.

13. Macro: Political and Legal Influences • LSOs operate within a complex framework of laws and regulations made by governments. • Changes in legislation can heavily impact on LSOs. For example OH&S and Employee Relations Laws. • Changing governments also can introduce different policies which will affect the way organisations do business.

14. Macro Environment: Globalisation • Organisations now operate in a worldwide market. • Technology improvements have largely led to this through improved transportation and the Internet. • This is both an opportunity and a challenge as organisations have access to bigger markets but also more competition.

15. Macro Environment: Education and Training • Modern organisations need highly educated and skilled employees. • Most organisations provide internal training but rely on the country’s educational institutions to provide high quality education for students.