How the business environment affects the effectiveness and functioning of an organization

Hand in hand with the internal environment, the other half of the “business environment” is its external environment.  the factors found here don’t so much affect the day to day or operations of the firms, but they do affect the long term strategies and policies that a firm will adapt to survive in the future.  The first factor in the external environment is the: Physical environment, this is important to firms specially those entering foreign lands aside from their own.  The physical environment includes such considerations as geographical size, location of a country, weather, availability of raw materials, and the readiness of infrastructure; Which it might need for operations in and around the country and region (ex. Airports, docks, highways, etc.).  In collaboration with this, a company must also take into consideration the technological environment.  The rapid growth of technology use is a consideration which assures the company better products at a faster production pace, and at a cheaper price.  It makes it easy for firms to invent new products or improve existing ones.  Two factors of the external environment which exist together are the Politico-Legal environment and the Economic environment.  the politico-legal considerations include the attitudes of government which will later have a direct impact on operations, and the legal framework with which the firm is to exist.  In the economic stand point government also plays a large role, with differing economic policies which regulate different state economies.  The state of this factor plays a large part in the level of sales and profits of a firm.  For both these factors a stable government is a critical factor and must be sought out by the firms.  The last and probably the most sensitive factor in the external environment is the socio-cultural environment.  These are the attitudes of people towards certain things, be it because of culture, custom, or experience these attitudes will differ and must be dealt with by the firm.  Also these attitudes do change with time so firms must monitor and adjust to the changes.  

         One type of business which clearly illustrates the differences the business environment can bring to certain organizations is the case for example of the hospitals.  There are hospitals the world over and each and every one of them is different because of its business environment.  Even hospitals in the same city are different depending on this environment.  

Take for example hospitals in the US, finding themselves in seemingly perfect external environments; it’s given that at present the United States can boast of a very positive setting, factors like a very stable political government; that can boast of probably the most stable economic standing in the world.  Couple that with the socio-cultural attitude of the American people as a whole: that medical care is essential to their lives.  Also found with all that is the availability of the most technologically advanced medical equipment and knowledge in the world.  All factors which provide the backdrop for very successful hospitals and medical health organizations. With that positive external setting goes an internal business environment filled with well educated doctors, who are dedicated to their work.  And a host of competition in the form of other hospitals equal in quality of staff, technology and supplies.  Being in this perfect situation these organizations find ways and means to provide their patients with sufficient if not excellent health care and services.  Through the constant break-troughs and miracles of modern medicine, medical care is fast affordable and efficient, and in the process many lives are saved.  To this organization in the 1st world country things are as good as they get.  All the different factors of their business environment meld together perfectly, and all the firm has to worry about is keeping up with technological changes and procedures.  The end product of all the above: is a hospital dedicated to saving lives, efficiently and professionally.  The success rate for this hospital is very high, even for the really bad cases.  

On the opposite side of the spectrum, take a third world hospital for example: in its external environment: the government is poor so nothing is subsidized; people are so poor no one has health insurance, some are even so uneducated that they put their lives in the hands of witch doctors and the such.  The hospitals are usually poor and have no money to buy new equipment many times doing with what is left over from era’s gone by, or donations from other countries.  In such a case the interior environment usually consists of ill educated medical staff and doctors; supplies which are extremely old and in some cases expired even; the patients who come in have no money whatsoever and the general attitude is if you can’t pay you die.  The resulting effect of the given third world situation is that hospitals become ineffective because of lack of knowledge, lack of money and, lack of technology.  Many patients are untreated, and many die because of the deficiencies in the hospitals.  Also many get infections which could have been avoided had better precautions been taken.  In some worst case scenarios people are not even diagnosed because the doctors were ill educated, and these people die without a fighting chance.

Given the case of my example it is really hard if not almost impossible for a hospital like this to make changes and adjustments, mostly because of its lack of capital and no where to get it.  It just continues to exist, not achieving its mission and definitely not making a profit.

All in all the business environment affects organizations adversely, in my example although two extremes it is clear that the environment can literally facilitate an organization’s effectiveness or take it to its failure.  In view of this: it is important to note that a firm’s success relies heavily on the notion that it studies its business environment in depth, and makes the necessary plans, changes and adjustments needed for it to continue in its given situation.  The success or failure of an organization rests mainly on its ability to adapt to its environment and make the best out of its situation.  Firms which fail to adapt to the changes brought about by the differences in the business environments, will fail at achieving their goals and in worst case scenarios go bankrupt.