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Tuesday, 11 September 2018

The External Environment Influencing the Decision of An Organisation


(1) the social cultural environment
(2) the economic environment
(3) the technological environment
(4) the political legal environment
(5) the ecological environment
(6) the competitive environment

(1)  the socio-cultural environment : This is made up of institutions, people, their values and norms that are culturally bombed. the environment is very important in marketing management as they are at the centre of consumer buying behaviour. it is the people who they are, where they are, how they live,what they think and what they values they hold they make up the socio-cultural lining of the society. values that defined as the likes, dislikes, believes and prejudice that determine a person view of the world. The social cultural environment affects marketing decisions because what is acceptable and equitable is established by it. The following dimensions of the environment that is the (sociocultural) environment have had tremendous effects on the marketing of goods and services. The increased number of working mothers at one time most mothers stayed home. Now over 80% are at work this has had a significant effect on firms which sell door to door. the emphasis had shifted to office to office. the effect is only seen in the number of daycare centres that had in the past few year been on the increase. the proliferation of fast food setups and restaurants to cater for the day meals as most families only eat together in the house at night. the high wage bill on house helps and the increasing harm on the home and children's physical spiritual and moral development.
The change in population trend ;  for years it was the norm to have large families. women kept having children until they will no longer fertile. Now a lot of consideration is given to the family size as most would go for the federal government directives on four children per woman. career, education, and economic situation have helped trim down the family size of many. all this notwithstanding, some do in the minority still believe in the large families. this changing view has a significant effect on the firm which are primarily into baby food, milk and toy production. the emphasis on campaign for breast milk as the best for babies has also affected the baby milk industry and subsequently its marketing.

(2)  economic environment ;  commercialization and privatization of government establishments, the deregulation of the economy and liberalization of trade are all policies of government that make marketing operations more complex. As this commercialized and privatized establishments changed the economic rate for their product and general price level in the economy increases, to accentuating tge inflatuinary trend. Marketing management must recognise these changes and follow their trend. Trade liberalization and the regulation of the key sectors of the economy are rapidly opening up the economy and intensifying competition in the domestic market. Because of the intense competitive market economy, businesses are being forced to be innovative and challenged to increase the quantity and quality of product brands in the market. Changing in the economy poses problems and opportunities in marketing management. When an economy expands, its has a direct effect on the demand for products and services of relevance. This expansion facilitates the establishment of new companies. A growth in the economy shift demand from the basic food and shelter to consumer durable and luxuries such as computer game, colour tv set, a summer holiday in America or London, marrying more wives, buying additional expensive cars, buying choice perfumes, and jewelries, etc. In a growth economy, increased spending for reaction activities and those goods that offer eagles satisfaction become more common. when the economy slows down, many businesses are affected. the effects could be negative or positive. Many businesses fail while these offering low priced goods can do better.
The six most persistent economic problem have been inflation, productivity problem, energy crisis, interest rate, employment and exchange rate.


Inflation :  inflation problem is such that everyone is affected in one way or the other, inflation being a general rise in the prices of goods and services that people must buy since the general depression of the past, average prices all over the world have moved up steadily. At times the rate is moderate, and at other times it is at a faster rate. The cost of most goods and services today is about 100 to 200 times more than it was during 1970s. Accepted that the income earned by workers have been on the increase too, but a problem arises when the rate of such increases are not the same. The purchasing power of such raised income has equally been on the decrease even at the greater rate than the salary increase. This has made disposable income or much less that what than it was. The disposable income per capita is a gauge of the economy and marketing managers and more concerned with this disposable personal income. This is so because that is the consumers after-tax income to be used for spending and savings. the disposable income available to individuals and family provides a marketing person with information on the general health and potential of the market. He uses such information to determine how income is divided among families, the income distribution of a market. Determining how people spend their "inflated" wages in an area, or inflation is important information for a marketer.

Productivity :  economists are of the stance that inflation is made worse by decreasing productivity. The best economic inflation is achieved when the economy grows rapidly, with low employment and low inflation the situation with nigerian economy since the 80s has been less rapid growth with high unemployment and high inflation rate. lagging productivity is the likely major reason. People are just not interested in their work and their best is not put in. A lot of factors can be aduced as contributors to this this includes ; lack of motivation, lack of sense of commitment to duty, laxity, absence of nationalism and greed. Productivity is an estimate of output per labour hour worked. However over the long term, productivity measures can clearly show trends the implication of strength and lagging productivity are causes concern for marketers. When each worker produces more, then total output will grow and employers can increase wages without raising prices the rise in revenue from increased output will offset the higher costs. if productivity is flat almost every naira of weight gain is translated into price boast. Goods and services that cost more will not be purchased because consumers do not have the naira to do so.


Energy Crisis : since the time when organisations of petroleum exporting countries OPEC grab control of the world market and began to extract the wages of monopoly, marketing managers attention became focused on energy crisis. Actually, we are not running out of energy. We are only running out of the money needed to pay for doubling the supply of needed energy and to purchase higher prices products and services that are so related to energy. The situation is here with us, as we are no longer having cheap means of transportation. As the prices of fuel so also has the cost of moving this product from one point to the other added marketing cost and the cost of energy used in production. This has increased the cost of production and marketing. This is given marketing managers cause for concern. Concern in the sense that the purchasing power for most consumers has reduced. It has been suggested that marketing managers will have to make a contribution to save "energy" movement. This may mean such untraditional steps as cut backs in the number of brands marketed, marketing products in simple less costly packages and improving efficiency in physical distribution of goods and services. This has a direct bearing on firms, marketing operation. High borrowing rates increase business operating costs and the cost of consumer borrowing. In the circumstance therefore product price will be high and borrowing money for personal consumption will be difficult, all forcing effective demand for products to be low.


Employment : The level of employment is another economic variable that affects marketing operations. Under full employment, business cards confidence and marketing activities are highly as the ability of the economy to consume more output is assured. But as unemployment set in aggregate purchasing power fails and most unemployed credits consumers default in meeting their payment schedules. In consequence, business activities slow down as aggregate consumption falls.


Exchange rate : The exchange rate of a national currencies is an economic variable that shifts the balance of both domestic and international marketing operations. The depreciated value of a national currency will make importation into the economy unattractive, while importation will become highly rewarding as the price of domestic goods in international markets because very low and highly competitive. Shortage of critical resources, like materials and energy, will not only push prices or more important, it will force firms to operate below instant installed capacity accentuating demand supply gap, just like the scarcity hoarding and profiteering the in the 1980s in Nigeria. Changes in this economy variables effect marketing operations team tremendously and so should be monitored and appropriate adaptation made in companies often so as to take advantage of the opportunities related and mitigate the threats posed.

The technological environment : Technology is the nation's accumulated competence to provide goods and services for people. technology follows no cause 6 no ends, holds to no value. it is a part of nature given meaning substance and function by people. so, it is hardly valid to think of technology itself has been a problem or a reason for problems occurring. People provide the impetus for technology to evolve. the technology available has permitted organisations to meet the needs of consumers. in the words of bush houson 1985 technology is the knowledge and procedure that go into getting something done. it is the knowledge and procedure used in the conversation of resources to finish products. technology helps societies in simplifying task and ensuring that they become effective and efficient and all the do. technology affects how a company produces output distribution of the output promotion marketing research and indeed pricing are all the maid all made easier and cheaper by technology. the technological base of an any society no doubt defines its productivity and competitiveness. In Nigeria technology poses a peculiar challenge to marketing management. most of the existing technology in nigeria is not only imported but has become obsolete. the fact that we depend on other nations for our technology and these nations cannot be trusted to transfer the latest technological innovations to us means that we cannot achieve the same level of efficiency as these nations. in the absence of adequate technological base and the inability to develop new technology that are peculiar needs and marketing practices can not rise to the level of advantage of advanced nations and offerings will be long will long remain uncompetitive in the international market and unfortunately to even in the domestic market.


Political / legal environment : This consists of the government rules and regulations that applies to both organisations and individuals. Rules and regulation often make marketing executives and other executives usually and resentful. This is executives would have preferred the government of practice "hands off" type of administration whereby they do not interfere in any way with business activity. This is just wishful thinking because we know that the business system cannot work without some government rules and regulations to organise and monitor the market place. Udeagha (1995) sums up the total idea thus :
The political environment is interwoven with the legal environment. This is because it is the political institution that create or ratify the legal institutions that guide and regulate the activities of individuals government as a political institution and organisations, including business organisations. Apart from regulating business activities, also regulates the activities of private citizens among themselves and between them and government. Failure of any government in this direction heads to political instability, social upheaval and economic problems which they may include inflation, unemployment depression and so on.


 All these consequences of non regulation is the counter productive and a dog in the wheel of economic progress. Udeagha (1995)  goes further to conclude that since these problems are facts of life in many developing countries today, business organisations in these areas or their interact with these countries should watch out not only for the laws and regulations that provide opportunities as well as set limits to their operations. But they should also take measures to provide for such vicissitudes of business that may result from such political tumors they should endeavour to plan their operations statistically to avoid being taken unawares.


The ecological environment : The natural surroundings of any business is called it's a ecological environment. It emphasizes the relationship between living things and their environment.  commoner (1977)  has established for insight for informal laws of ecology that are meaningful to marketing managers. These are as follows :  (1) Everything is connected to everything else. (2) Everything must go somewhere.
(3) Nature knows best.

(4) There is no such thing as a free lunch. Every thing of any importance has a cost.
When one looks at this laws from marketing perspective they suggest that every company has pollution problems which must be assessed and controlled. The negative impact of business operations on the natural environment ( water air plants wildlife) must be minimized by marketing managers and other executives. Wastes, shortages and other abuses to the natural environment are generated as a by-product of producing goods and services. The ozone layer depletion problem is very much with us due to shortages. Other agents have been found to interfere with life processes, which if not controlled, holds for the future soil water, and human health problems that might prove impossible to control.


Environmentalism is a reality and challenge of our time. Man's bid to enhance his material well-being by this continued exploitation of natural resources and other production and consumption practices are progressively destroying our environment.  Okeke and Ejionueme(1993) emphasis that this advertisers has generated the fear that production plan for tomorrow. Remember thats in marketing, continually is emphasized). The fear is becoming increasingly real as unwanted  degradation and pollution of environment are undermining the ability of the environment to sustain future production and guarantee human safety and health. Marketing manager should be aware of regulations and public concerns relating to the natural environment and think in terms of producing goods and services, packaging and goods and promoting them in such a way that will not permanently damage the natural environment, realising that the survival of the firm must be matched with the survival of the natural environment.


The competitive environment : This is the last but not the least of the environmental factors. Individuals and other organisations that offer products and services that are either similar or can substitute for those of a given organisation are referred to as competitors. This competitors try to win and retain the customers of their competitors for their own advantage. Competitive environment for purposes of categorization can be grouped in grouped as absolute monopoly or oligopoly, monopolistic competition and pure competition.

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