How do environmental forces influence on firm strategies?
Today’s world is the world of globalization. With the globalization, most of the things have changed. Companies and firms have been trying many other techniques in management to survive in the global area. As a result, in these days, companies especially have to be cautious on environmental forces. There are many types of environmental forces, and these are the main reason of companies’ collapses and disorder ness. Environmental forces can affect firm strategies both directly and indirectly. Two types of environment that are covered in books, which are external environment and internal environment. In addition, general environment and task environment are the types of external environment. In my opinion, environmental forces influence on firm strategies either can be in a beneficial way or be in a harmful way. Before a decision can be made, it could be better to examine the two aspects of environmental forces.
I believe that there are favorable types of environmental forces. First of all, think about that you have company that is managed upon agricultural products. There are technological effects that could be accepted in general environment. With new technological advances in agriculture like new tools and new vehicles, agriculture would be done more efficient and effective way so that our agricultural company would be more profitable and more resistible to the other environmental effects. Since our company would have increase in assets and with the use of this technological devices and tools, there should be more agricultural crops. In addition, two decades ago, I am not sure that people could see a company with the extensive usage of computers. Nevertheless, today, the same thing is vice versa. This is again the effect of technological advances in general environment. Furthermore, it is better to look at economical environmental forces. Economical environmental forces could be effective as rewarding either only in one country or in several countries. According to the previous experiences in Turkey, companies had a successful period with a high profit and increasing importance in country when the economic indicators are powerful, but these economic indicators could be only valid in Turkey. In addition, if there is an economic development in the USA’s economy many countries having trade and economic proposals with the USA would generally be affected in a positive way such as they could have increase in national product and their companies could have higher profits. Moreover, these economic indicators would be conversely, which are the harmful and to be examined in the second paragraph. In addition, in the task environment, the benefits of customers are inevitable. Especially, the important thing is the demands of customers. For example, think that you are a teenage boy or girl, and there is a company that wants to take market coverage from the teenage clothing. If this company wants to have effected in a beneficial way, they had to come up with the demands of teenage class so that they could not be influenced in a negative way. If it comes with teenage demands, they could be successful and effected positively. Indeed, there are many benefits of environmental forces on firm strategies.
Finally, I believe that environmental forces influence firm strategies in a disadvantageous way. First, in task environment the effects of competitors are significant. For instance, some of the markets like food industry, automobile industry, etc there is a fatal competitions. In Turkey, it could be exampled with the competition of exported cars, and homemade cars. Last days, government has done some regulations, over the exported cars. They have increased the taxes over exported cars so that domestic competitors can sell more cars in the interior market. This is the negative environmental effect comes from Legal/ Political environment and Economic environment over the foreign investors. Second, socio cultural environment is to influence in a negative way on the strategy of firms. Socio cultural effects such as increasing population, immigration, and wars are generally effective to cause disorders in firms. For example, increasing population in China is a problem for governmental firms. Population may cause more work hours for the firms in government. As a result, they have to discard more funds for wages to manipulate new data for new population. Also, these companies have to open new services for new users and under age population. Immigration is both can be the negative effect of economic environment and socio cultural environment. Immigration may cause unemployment that may affect countries’ economy. Moreover, it is the reason of some disorder ness in companies. On the other hand, immigration is also could be effective negatively if the immigrants are the elite people of other countries. In this situation, immigration is beneficial for immigrated countries’ firms because of talented workforce like in the USA, and immigration is non beneficial and vice versa harmful for the firms of countries that are being left because they have lost skillful workforce like developing countries.
Overall, environmental forces are the important subject of management. It is hard to make decision since the two aspects have strong evidences and incidents. In my opinion, it is not important to discuss the environmental forces could be harmful or beneficial for the companies; the best thing they should do is to analyze these forces before they occur by using some methods like surveys, predictions, assumptions or any other techniques.
References
Dara Szyliowicz, Kevin H Kennedy, Teresa Nelson.” Shaping of Strategic Behaviour: How Macro-Environmental Effects Pattern the Country-Level Participation of Non-US Equity Markets”,
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Subhabrata Bobby Banerjee, Easwar S. Iyer, Rajiv K. Kashyap. “Corporate Environmentalism: Antecedents and Influence of Industry Type; [1]”, Journal of Marketing. Chicago: Apr 2003. Vol. 67, Iss. 2; p. 106