Environmental Factors sample essay
(A) Selection of an Organization – M/S GE Tractors
M/s GE Tractors produces tractors, and dairy machines. Tractors are allotted to the Michigan unit in view of its location in the natural market zone for tractors. To supplement GE tractor production, a second tractor assembly line for 45 HP and 59 HP tractors has been in operation since 1985 at Michigan to meet the requirements of tractors in that area. It diversified its product range to provide cushion for the cyclical variations in the market and position itself globally. Besides supplying its products all over USA it has made its position globally. It is exporting tractors and related dairy machines to Canada, Brazil, Mexico, Argentina, most of the European countries, Africa and Asian continent. A specific goal of 7,000 tractors worth $50 million in the coming 1-3 years is targeted so that there is a sustained growth in volume say 5% per annum.
(B)High-level domestic and global environmental factors that may impact the organization marketing decision
Business planning is basically concerned with the structuring of the relationship between a business and its environment. The environment in which business operates has a greater influence on their successes or failures. There is a strong linkage between the changing environment, the strategic response of the business to such changes and the performance. It is important to understand the forces of environment the way they influence this linkage. The environment which is dynamic and changing holds both opportunities and threats for the organizations. The organizations while attempting at strategic realignments, try to capture these opportunities and avoid the emerging threats. At the same time the changes in the environment affect the attractiveness or risk levels of various investments of the organizations or the investors.
The environment in which the business operates broadly consist of the Political, Ethical, Social, Cultural aspects, Technological and the Ecological related issues like pollution, sustainability etc. The Technological temper and its progress has been the key driver behind the major changes witnessed in the environment making it increasingly complex. These factors often overlap and the developments in one area may influence developments in other.
Careful analysis of the above factors helps in identifying major trends for different industries. Changes in these external forces affect the changes in consumer demand for both industrial and consumer products and services. These external forces affect the above company i.e. M/s GE Tractors regarding the types of products produced, the nature of positioning them and market segmentation strategies, the types of services offered and choice of business. Therefore, it becomes important for the organizations to identify and evaluate environmental opportunities and threats so as to develop a clear mission, designing strategies to achieve long-term objectives and develop policies to achieve short-term goals.
(C) Technology impacts the organizations marketing decisions
Technological factors represent major opportunities and threats which must be taken into account while formulating strategies. Technological breakthroughs can dramatically influence the organization’s products, services markets, suppliers, distributors, competitors, customers, manufacturing processes, marketing practices and competitive position. M/s GE Tractors is investing heavily in R& D projects to bring out new models hence Technological advancements can open up new markets, change the relative position of an industry and render existing products and services obsolete. Technological changes can reduce or eliminate cost barriers between businesses, create shorter production runs, create shortages in technical skills and result in changing values and expectations of customers and employees.
The impact of information technology (IT) which combines fruits of both telecommunications and computers has been revolutionary in every field. Not only has it opened up new vistas of business but also has changed the way the businesses are done. IT has specifically brought in another dimension Speed which organizations recognize as the additional source of competitive advantage beyond low cost and differentiation. Manufacturers, bankers and retailers have used IT to carry out their traditional tasks at lower costs and deliver higher value added products and services.
(D)Importance of social responsibility and ethics as related to organizations marketing
Social: Demographic characteristics such as population, age distribution, literacy levels, inter-state migration, rural-urban mobility, income distribution etc. are the key indicators for understanding the demographic impact on environment. The growing number of senior citizens and their livelihood needs have been highlighted and the government is being forced to pay more attention in the form of social security benefits etc.
Social attitudes, values, customs, beliefs, rituals and practices also influence business practices in a major way. Social values and beliefs are important as they affect the buying behavior.
The spread of consumerism, the rise of the middle class with high disposable income, the flashy lifestyles of people working in software, telecom, media and multinational companies seem to have changed the socio-cultural scenario and these needs to be understood deeply.
Values in society also determine the work culture, approach towards stakeholders and the various responsibilities the organization thinks of owing to its stockholders and the society.
Ethics: Considering Literacy and the composition of literates in the country creates opportunities for particular type of industries and type of jobs. For example on one hand , the presence of multimillionaires in middle east countries encouraged many software giants to set up shops and on the other , the availability of cheap labor ,those countries have become a destination of labor intensive projects. Large labor mobility across different occupations and regions has cut down wage differentials and this has an impact for business to take the proper course.
Understanding of the environment in which an organization operates is the foremost pre-requisite towards strategy formulation. The six broad dimensions which the framework provides of the environment are capable of giving a comprehensive overview of how things may be unfolding. The objective of the analysis should not only restrict to the present and past but the real focus should be on projecting the trends into future in order to get the real feel of the environment. This shall enable the firm to proactively strategize for future considering the environment it is going to face and the issues which will be of importance.
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