Environment furnishes the macro-context; the business firm is the micro-unit. The environmental factors are essentially the “givens” within which firms and their managements must operate. The value system of society, the rules and regulations laid down by the Government, the monetary policies of the central bank, the institutional set-up of the country, ideological beliefs of the leaders, the attitude towards foreign capital and enterprise, etc. , all constitute the environment system within which a business firm operates.
These ‘totally static, some are relatively static and some are very dynamic — they are changing every now and then. Some of these factors can be conceptualized and quantified, while others can be only referred to in qualitative environmental. (Galbraith J. 1978) Culture, Strategy and Behavior – Singapore The environmental factors generally vary from country to country. The environment that is typical of Singapore may not be found in other countries like the USA Russia, UK, and Japan.
There may be some factors in common, but the order and intensity of the environmental factors do differ between nations. The environment differs not only over space but also over time, within a country sometimes the environment may be classified into market environment and non-market environment depending upon whether a business firm’s environment is influenced by market forces like demand, supply, number of other firms and the resulting price competition, or non-price competition, etc. , or by non-market forces like Government laws, social traditions, etc.
We may classify the environment into economic and non-economic. Non-economic environment refers to social, political, legal, educational and cultural factors that affect business operations. Economic environment, on the other hand, is given shape like the fiscal policy, the monetary policy, the industrial policy resolutions, physical limits on output, the price and income trends, the nature of the economic system at work, the tempo of economic development, the national economic plan, etc.
The non-economic environment has economic implications just as the economic environment may have non-economic implications. Since the environment is the sum total of the history, geography, culture, sociology, politics and economics of a nation, the interaction between economic and non-economic forces is hound to take place. (Hamel,G. 1989) Motivational Environment These different sectors, together, influence the trends and structure of the economy. The form and functioning of the economy varies from country to country.
The design and structure of an economic system is conditioned by socio-political arrangements. Such arrangements are relevant from the standpoint of macro-economic decision-making. Analyze the Singapore situation to understand its impact on business. The ultimate purpose is to train our business managers to face the macro-level environment of business. All modern economies, whether capitalist, socialist, have certain fundamental economic problems to deal with. In each and every economy, including the so-called “affluent society”, some or many resources are scarce.
Consequently, choices concerning the resource use have to be made together by individuals, by business corporations, and by society. It is the social choice and community preferences which give substance to the question of macro-economic decisions. From the standpoint of resources, the basic economic problem of every economy is that of just allocation of resources and subsequent optimum production. Thus, the economy in which a business firm operates today is not an exclusively free economy making an indiscriminate use of prices and, the markets.
Rather, it is -directed by a system of planning, control, regulation and coordination. (Hamblin, A. C, 1993) Researchers such as the late Harvard psychologist David McClelland have identified a characteristic of profile of high achievers. First, these people like situations in which they take personal responsibility for finding solutions to problems. They want to win because of their own efforts, not because of luck or chance. Second, they tend to be moderate risk takers rather than high or low-risk takers.
If a decision-making situation appears to be too risky, they will learn as much as they can about the environment and try to reduce the probability of failure. In this way, they turn a high-risk situation into a moderate-risk situation. If the situation is too-low risk, however, there usually is an accompanying low reward, and they tend to avoid situations with insufficient incentive. (Srivastava, R. M. 1999) Social Environment Business must have a social purpose; business concerns must discharge social responsibility and social obligations and have social commitment.
Otherwise, business cannot enjoy social sanction. There are a host of factors like social values, culture, beliefs, tradition and convention, social attitudes, social institutions, class structure, social group pressure and dynamics. The nature of social objectives and priorities, along with the set of social constraints, give form and content to several social movements. Successful business managers cannot afford to neglect these movements, and their underlying ethos. Business ethics are very much influenced by social movements, social systems and social preferences.
In a very broad sense, therefore, the social environment happens to be the culmination of forces operating from different platforms such as history, culture, polity, ethics and morality, values and institutions, . Society itself has to balance the achievements and aspirations of various individuals, groups, communities and institutions. No business can survive and grow without social harmony. Different countries, over different time periods, attain social harmony and order of different forms, through different ways and means. Thus the social environment differs over space, time and methods. (Hitt, 2001).