UGANDA INSTITUTE OF INFORMATION AND

COMMUNICATIONS TECHNOLOGY

ASSIGNMENT 1
COURSE: TELECOMMUNICATIONS ENGINEERING
COURSE UNIT: INDUSTRIAL ORGANISATION
AND MANAGEMENT
LECTURER: MRS NABAGALA ROSEMARY
NAME: WAMEMA JOSHUA DICKSON
REG NO. 2019/TE/DAY/014
SEM 1 Year.2 2021
SESSION: DAY
DATE: FRIDAY 8TH JULY 2021

QUESTIONS
1. With relevant examples, explain the environmental factors that affect the operation of
business activities in the economy
2. Outline and explain the key stakeholders in a business environment
3. Explain the different market structures studied in industrial organisation

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Question 1
An environment is the composition of all things that include living and nonliving, natural and
artificial forces that surround man. Therefore, when we talk about environmental factors in relation
to business operation. Environmental factors can be defined as the sum of all things that surround
man which can provide a condition for development or destruction of his business.
Environmental factors can also be defined as any human or natural elements surrounding man that
have effect on growth, operation and survival of organisations
These factors are divided into two that is external factors that include technological and economic
factors and also internal factors constituting of value of systems, objectives or internal relationships
of a business
Some of the internal environmental factors are discussed below

Value of system
Value of systems can be defined as the ethical beliefs that guide the organisation in achieving its
mission and objectives and also determines the relationship of the organisation towards its
employees, customers and society. The choice of business depends much on a value of systems for
example an organisation that has a foundation body of Islam may not allow its business to operate in
selling of pork since this is religious wrong and termed as “Haram” in the Islamic faith

Mission and Objectives

a mission gives an overall view for the existence of a firm while an objective is projected towards
maximization of profits. Therefore, the mission and objectives of any business firm play a key role
on how the firm is operated because all the firm’s activities must run towards its mission and
objectives

Organization Structure
For anything to be called an organisation it must have more than two people working towards a
particular goal and for successful running there must be a defined organisation structure to help to
define who makes what decisions, how is answerable to who and this gives a clear direction of any
business firm since there is an established hierarchy and a business with a good organisation
structure has ease in making decisions and delays in decision making can cost a good deal to a
business firm. In any business firm, the board of directors is the top most body responsible for
making decisions.
Also, all the general policies regarding on what direction a firm has to take are made by the board of
directors and therefore if a firm had a board of directors that is not incapable, this would also have a
negative effect on a firm meeting its target girls that is to say the mission and objectives

Corporate Culture and Style of Functioning of Top Management:

when the top management takes a closed and threatening type of corporate culture, all decisions are
made by them while the middle level and work managers are left out. This makes the middle level
and work managers lack a sense of belonging and gives no room for the top managers to receive
technical advice as they may not be aware of what happens in the middle level and work
management departments since there the communication between these parties is limited and this
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may limit growth of the business firm. But however, if the company chose to use an open and
participatory culture there would be free communication between the bottom and the top this would
help bring in ideas from the bottom that would help the top to make better decisions thus growth of a
business firm

Quality of Human Resources:

when a firm employs quality human resource, there is smooth running of the firm since the
employees will work freely with minimum supervision from the top management making them more
efficient. Good human resource comes with good customer care services and many customers are
drawn to a firm in return. This will help the business to grow

Labour Unions:
The key purpose of labour unions is to see that all workers that subscribe to them are paid at least
well, this makes them to bargain with the top management to improve on the welfare of workers and
if the organisation is to run well there must be a good relationship between them and the labour
unions. Therefore, for a labour union like Uganda National Teachers Association can command all
the teachers to go on strike if the government does not meet the desired salary and mutual
understanding between UNATO and the government can cool down the teacher strike pressure

Physical Resources and Technological Capabilities:

the competitive strength of the firm depends on physical resources such as plant and equipment
technologies and if an organisation had good ones, then the production will be very high
however, there are also other factors from the external environment that determine the growth of a
business. The external factors are however subdivided into two that is directly interactive and
indirectly interactive
Directly interactive factors have an immediate and first-hand impact on the organisation and they
include owners, customers, suppliers, competitors, employees, and employee unions. Management
has a responsibility to each of these groups because if any of the groups is mishandled it may cost
the organisation
on the other hand, indirectly interactive factors are identifiable elements within the cultural,
demographic, economic, physical, technological, or political surroundings that impact growth,
operation and survival of an organisation

These include the following factors explained below:

The sociocultural dimension. This factor plays a key role in determining the nature of goods an
organisation can deal. Therefore, due to respect of culture and society a firm may not deal in some
products because of the taboos for example if one thought of operating a business in an Islamic
cultured society, then anything concerning piggery would not be advised because of the Islamic
attribute towards the pigs

Demographic factor. This is the measures of the various characteristics of the people and social
groups who make up a society. Age, gender, and income are examples of commonly used
demographic characteristics. Therefore, demographic factor plays a key role in business growth or

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failure. You must understand that the goods produced can be consumed by the society before you
think of any external market because society is your immediate market. Therefore one has to llok at
the society incomes, their tests and preferences and cultural consideration or else society may work
against the organisation

Values refer to certain beliefs that people have about different forms of behavior or products.
Changes in how a society values an item or a behavior can greatly affect a business. There as an
entrepreneur you must consider society values so much if you need your business to grow, if society
values are not considered society will work against you to keep its values

The political and legal dimensions. This factor affects business so much the political environment
with no wars makes businesses to grow. However, the legal dimension comes with rules and
regulations. Therefore, an organisation must abide by the law such as tax policies, trade regulations
and also minimum wage payment for its employees. There can also be legal limitations on products
to be traded for example rules on firearms, and drugs like tobacco come with a lot of high operation
license

The technological dimension. The rate of technological advancement is another factor as an

organisation must move at the same rate with the new technologies such as digital advertisements,
or else the technological advancements may affect it

The economic dimension reflects the world-wide market and things like inflation, price fluctuations
among others affect the operation of a business

The global dimension this refers to the business environment in other countries that determine the
world market. Therefore, the global market may seriously affect business operation for example if
an organisation in Uganda like Kyangalanyi Coffee limited finds coffee prices at the world market
low, its operation will be changed as it tries to also lower its coffee buying prices from the local
farmers and here a business affected.

Therefore, irrespective of the size of the business whether big or small they are always affected by
both internal and external factors. But the organisation can limit on internal factors but cannot really
do a lot on naturally factors other than accepting them and trying their best to see that the
organisation can thrive in such environments. Therefore, any business person developing a
marketing strategy must also take key considerations and put in mind uncertainties of external
environmental factors so as when this uncertain come the business is not badly affected since they
have prior planning for them

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 Question 2
Key stakeholders in business are sometimes referred to as primary stakeholders.
They can be defined as individuals or entities that benefit from or are directly impacted by the
operations and activities of the business
Companies irrespective of who owns that that is to say private or government and also irrespective
of size that is to say big or small must have key stakeholders.
For small business, the owner must recognize sometimes competing or conflicting needs of each
of his stakeholders and operate his business in a manner that will deliver the benefits expected by
each one of them and minimize negative impacts.
In a business environment we have the following key stake holders namely
• Shareholders
• Managers and employers
• Customers
• Suppliers
• Creditors
• The community
Shareholders
Define a share holder
any organisation be it public or private have shareholders with a main objective of having a great
rate of return on all their investments in the company as possible
shareholders are negatively affected by the company if it experiences severe financial difficulty and
the value of their shares decline.
Managers and Employees
The benefits managers and employees receive include monetary compensation, job satisfaction,
the opportunity to learn and acquire new skills, job advancement and promotions. They may also
receive benefits such as health insurance and retirement plans. Meeting the needs of employees
can result in the small-business owner not having sufficient cash to pay himself the compensation
he desires. In public companies, stockholders sometimes complain that executive compensation is
too high, reducing the cash available for dividends or investments in expanding the company’s
operations.
Customers
a customer in simple terms is a buyer of the products that the company have. They seek to buy the
highest quality products and services for the lowest price possible.
In most cases the business owner will desire to maintain pricing that leads to the highest possible
margin profits with also a consideration that he should not lose customers to competitors that
charge less. Business enterprises operate with a purpose of providing products and services that
solve their customers problems or able to satisfy their needs. Customers can negatively be affected
by companies that sell substandard products, provide power customer services and also
overcharge.

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Suppliers
Suppliers in simple terms can be defined as sellers of goods and services to the companies for
example if a stationary shop sells stationary to a certain school, it becomes its supplier or even
whole sellers that sell to retailers are also retail suppliers. Therefore, in most cases companies
benefit their suppliers through purchasing goods and services from them. Majorly a supplier can
depend on the company for the majority of its business and therefore if the company switched
another supplier this would seriously affect the previous supplier. Suppliers can be negatively
affected by doing business with companies that demand price concessions, other business terms
such as taking products on credit and making suppliers to wait for unreasonably long time to pay
Creditors
Many companies use some form of debt in their capital structure, including lines of credit and
loans secured by equipment. The company benefits the creditor by giving it a means to earn a
return on the financing it provides. Companies that go through financial difficulties can negatively
impact creditors through delaying interest or principal payments or in worst cases defaulting on
the loan.
The Community
Many corporations view society as a whole even those people who will never do business with the
company as primary stakeholders, because the actions of the enterprise can directly benefit or
harm members of the community. These businesses actively seek to benefit society through such
actions as good environmental stewardship, charitable contributions and encouraging employees
to get involved in activities that have a positive effect on individuals or groups in the community.
As part of the company’s planning process, management seeks to find ways for the business to be
a more positive contributor to the community, such as developing programs to improve
sustainability using less energy and creating less waste or pollution.

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 Question 3
In industrial organisation market structure are different industries classified and differentiated based
on characteristics that influence the behaviour and outcome of companies working in a specific
market. Market structures show a relation between the seller and a seller, the seller and a buyer
among others
Some of the factors that determine a market structure are; number of sellers, degree of
concentration, ability to negotiate, degree of product differentiation, how to enter to existing market.
In industrial organisation, the market structures can be well understood by closely examining an
array of factors or features shown by different players. Some of the features shown by the player
include; the industries buyer structure, the turn over of customers, the extent of product
differentiation, the nature of costs of inputs, number of plyers in the market, vertical integration
extent in the same industry and the largest player in the market
By closely examining the above features and establishing similar characteristics, one can therefore
come out with basically for types of market structures namely
1. Perfect competition
2. Monopolistic competition
3. Oligopoly market
4. Monopoly market
1. Perfect competition
This kind of market occurs where there are many small companies competing against each other.
These are homogenous companies meaning they sell similar products
They also do not have price influence on commodities that is to say the companies have no decision
on the price of commodities
The companies are free to enter and exit the market
Consumers in such a market have full knowledge of goods being sold, aware of their prices and the
product brands
In real world, a pure form of a perfect competition market rarely exists though it is useful when
comparing companies with similar features
Since this market is unrealistic, some of the critics it faces are;
• It gives no room to innovation since there is no competition and has a fixed profit margin.
Sellers cannot increase prices since increment results to customer loss
• Perfect competition market has few barriers to entry and this implies that any company can enter
the market and start selling products and therefore the incumbent must stay proactive to maintain
market share
2. Monopolistic competition
This is an imperfectly competitive market having characteristics of both monopoly and competitive
market where sellers compete among themselves and can differentiate their commodities in terms of
quality and brand making them to look differently
Here sellers consider prices charged by their competitors and ignore the effect of their own prices on
their competition

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 Comparing monopolistic competition in short term and long term, there are two distinct aspects that
are observed that is in short term, the monopolistic company maximizes its profits and enjoys all the
benefits as monopoly.
The company produces many products as the demand is high. Therefore, its marginal revenue
corresponds with the marginal cost. However marginal revenue diminishes over time as new
companies enter the market with differentiated products affecting demand thus resulting to less
profits
3. Oligopoly market
This is a market that consists of few large companies that deal in differentiated or identical
commodities. Therefore, having few players in this market makes their competitive strategies
dependent on each other that is to say if one player lowered the price, this would trigger other
companies to lower their prices too since if their prices remain high, they will lose customers to the
one with lowered prices. However, on the other hand if one of the players increased his prices this
would not affect the decision taken by other companies as they will be aware that they will have
more customers come to them since they still have low prices. This however calls for the players in
this market to have a strategic planning
In a s situation where companies mutually compete, they create agreements to share the market by
restricting production, leading to supernormal profits. This holds if either party honours the Nash
equilibrium state and neither is tempted to in the collusion
4. Monopoly market
This is where a company has no competitor in the market and it is the only seller of the products in
the entire market
In such a market the seller dictates prices of their commodities and the buyer has no choice but to
buy since the seller is the only player in this market
A monopoly market has characteristics like; sole claim to ownership of resources, patent and
copyrights, licenses issued by the government and high initial setup costs.
Therefore because of the above characteristics, other companies are restricted from entering the
market making the company a sole seller of products

In conclusion, industrial organisation market structure are different industries classified and
differentiated based on characteristics that influence the behaviour and outcome of companies
working in a specific market. They key in determining how one can enter a market, who dictates the
price and this calls for a seller to critically think on how to maximize profits in any market structure
he is in

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