Y
Y


 



‡ From the viewpoint of top management, the
environment in which the firm operates consists
of a rich kaleidoscope of cultural, political, and
economic factors. These serve as a combination
of constraints and opportunities within which
the internal make up of the firm impinges on it
as either constraints or strengths, weaknesses, or
capabilities.
‡ For purposes of establishing the company¶s
policies and goals, top management must fully
understand and take into account all these
external and internal environmental
considerations.
‡ Once top management has set the company¶s
goals, it must establish its strategic plan toward
achieving these goals.
 ‡ ³´The only things which are certain are death
and taxes.´

‡ Today, we are certain that there is another thing

that is certain, namely, change. Changes that
affect the firm usually lie outside the firm¶s
sphere of influence, the most effective and best-
laid plan is that which anticipates and works
toward change.
‡ Change also takes place within the firm itself, in
those areas where top management has control
over; its financial structure, the physical plant or
factory, the capabilities of its management and
its workers, and so on. These changes must be
considered hand-in-hand with the external
environment in accordance with the goals and
the overall targeted plan established by top
management.


‡ The first category, the educational factors, is
clearly an integral part of the environment and
may be viewed from a number of perspectives.






 




 



‡ The literacy level and the percentages of the
population that belong to the different educational
strata for one, bear upon the marketing approach for
the products which the firm is to produce.
‡ The types- even qualities of goods of that will be in
demand vary according to individual tastes, which in
turn are shaped by the educational backgrounds of
the prospective consumers.
‡ Even the media and techniques used in advertising
these products are also largely dictated upon by
these very same factors.
‡ Percentages of literacy and educational levels
also affect the type of workers and managers the
firm will be able to hire in the course of working
towards its goals. Foremen will necessarily
spend more time supervising workers who are
poorly educated and who are slow to learn.
‡ If some supervisors are illiterate, managers will
have to take pains in conveying instructions
orally.
‡ When this is experienced by management,
planning any significant growth becomes much
more difficult.
‡ In the case of a large firm, decentralization
becomes a must, requiring a substantial amount
of written communications ± up and down and
among departments.
‡ There is little the individual firm can do to affect
the external educational environment. But, since
the environment will keep on changing, the firm
must be able to anticipate the extent and
direction of such changes in order to develop
sound strategic plans.
‡ On the other hand, there is much the firm can do
about the educational levels of its workers and
managers. Literacy and technical training can be
given to workers and foremen.

‡ Personnel development must thus be an

important part of any long-range plan if the firm
wishes to strengthen its ability to achieve its set
goals.
ð

‡ Socio-cultural factors that are present in the
country should be given critical consideration by
top management because these influence both
the firm¶s external environment as well as its
internal system. Firms are constantly interacting
with the cultural environment. They affect
eachother.
‡ In the United States, the large corporations
shape the attitudes and the value system of the
communities these attitudes and values, inturn
play upon the motivation, behavior, and
performance of both the people dealing with the
firms and those working the firms.
‡ When a firm¶s top management institutes its
own elaborate training program and creates an
atmosphere for the exercise of authority,
responsibility, imitative, risk etc., the culture±
the value system± of the people working for the
company undergoes a change.
‡ The company itself becomes a cultural
subsystem. In fact, it can even become much
more efficient than the surrounding firms and
the surrounding society.
‡ There are limits of course, to the extent of
cultural change that can take place within a firm.
After all, employess must continue to interact
with the more dominant (national) cultural
system once they step out of their work premises
and shed off their working roles.
‡ But change can be achieved, and the effect can
be significant.


‡ The size of the market is inevitably a critical
factor. This relates to present products, as well
as to other products and/or services into which
the firm might diversify.
‡ Competition is multi-faceted. The existence and
potential growth of competitors are economic
factors which are of primary importance in
developing a firm¶s strategy.







‡ It is important for the manager to remember
that the political climate is only a part of the
total environment acting upon his firm. Political
factors operating in the environment should not,
therefore, overwhelm management. It should
not prevent the utilization of scientific
management. It merely means that the goals and
strategy of the firm must take this aspect of the
environment into proper perspective in order to
be realistic and effective as possible.
`


‡ International environmental factors are those
which affect a firm¶s ability to most efficiently
import equipment and goods, to export part or
all of its production, and to enter into
agreements with foreign companies so as to gain
access to technology, patent rights, management
know-how, financing and markets.






K. Literacy level
2. Specialized vocational and technical training
and general secondary education
3. Higher education
4. Special management programs
5. Attitude toward education
6. Education match with requirements
ð
 
K. View toward industrial managers and
management
2. View of authority and subordinate
3. Inter-organizational cooperation
4. View toward achievement and work
5. Class structure and individual mobility
6. View toward specific method
7. View toward risk-taking
8. View toward change


K. Market size
2. Central banking system and monetary policy
3. Fiscal policy
4. Economic stability
5. Organization of capital markets
6. Factor endowment
7. Social ahead capital
8. Competition







K. Relevant legal rules of the game
2. Defense policy
3. Foreign policy
4. Political organization
5. Government attitudes toward private
enterprise
6. Political stability
`


K. View toward foreigners
2. Nature and extent of nationalism
3. General balance of payments position
4. International trade patterns
5. Membership and obligations in international financial
organizations
6. International organization and treaty obligations
7. Power or economic blog grouping
8. Relevant legal rules for foreign business
9. Import-export restrictions
K . International investment restrictions
KK. Profit remission restrictions
K2. Exchange control restrictions