"Buiness are built on relationships".

What do you think this statement is true or

false. What are the implications for managing the external environment?

The above mentioned statement is absolutely true because organizations depend

on their environment and their stakeholders as a source of inputs and a recipient
of outputs. Good relationships can lead to organizational outcomes such as
improved predictability of environmental changes, more successful innovations,
greater degrees of trust among stakeholders, and greater flexibility in acting to
reduce the impact of change. In addition, relationship management and
maintaining good relationships have been proven by many researchers to have an
effect on organizational performance. High-performing companies tend to
consider the interests of all major stakeholder groups as they make decisions.

The statement also have several implications on managing of the external

environment because for a business to achieve the set goals it needs to interact
with elements in its environment. A business in its lifetime will interact with
customers, competitors ,technology, suppliers, policy makers among other
elements. These elements determine the ability of the business to continue its
operations.

A business will need to manage and build its relationship with customers because
they are the end-users of the product and services, the most critical aspect of the
environment.

Customers

Preference changes: Customers likes and dislikes changes rapidly, people live in
tight social system that create and encourage trends. It is important to anticipate
changes in user’s product requirements, emerging technologies that can change
how the products are used etc.

Demographical changes: These include the social, economical and cultural

changes like population age, ethnicity, education level and economic class. Such
changes affect the customer preference and the mass market trends.
Competition

It comprises of the related industries with similar products or services, their

geographic locations and markets.

Related Industries: It is important to know all the competitors, their

organizational size and skills pool, their competitive advantages, their marketing
strategies, offshore development etc.

Global context: Due to increasingly broad world economy, it is important to watch

the competition across the oceans, competitive products launched from abroad,
changing socio-political situations, and home grown entrepreneurs.

Technology

It includes the science and technology required for the production, the technical
tools that are used in the manufacturing or the technology of the product itself
incase of high-tech industry. Internet, social network, advances in semiconductors
and communication technologies have revolutionized how organizations operate
in current era.

Laws and Regulations

All organizations have to abide by the legal system, new laws and regulations are
constantly added due to the political or social changes. Compliance can result in
additional cost, developing new technology, additional taxes or legal fees; one
such example is lowered carbon emission requirements.

X_______X