Environment and Managers Roles: Notes Explained

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The term environment refers to all elements beyond the control of a single business, including both internal and external factors. A business unit is a macro business, whereas environment is a broad concept. Within the context of an ecosystem, a company works within environmental constraints. External and internal environments may exist simultaneously.

The external and internal environments have been explained below:

External Environment

External environment greatly influences the working of every business.

External environment may have the following components:

  1. Economic
  2. Technological
  3. Social
  4. Political
  5. Ethical

Economic Environment

Capital, labour, suppliers, customers, and consumers are all aspects of an economic climate.

(a) Capital

Owners’ funds and borrowed money make up the balance. Investors and creditors provide borrowed funds. Purchaser of plant and machinery, land and construction, equipment, supplies, wages to labor, and other day-to-day expenses are all examples of business demands for cash. These requirements are met both internally and externally. To fulfill financial needs of the company at the time of need, a manager must stay in touch with investors and lenders.

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(b) Labour

The majority of the labour is obtained from the region. Labour unions strive to control labour availability. Managers must evaluate their labor demands, quality, and cost, among other things. He also has to stay in touch with trade unions and make sure that the unit isn’t harmed by labor availability.

(c) Suppliers

The suppliers are a significant component of the external environment. Raw materials, equipment, machinery, and other goods are supplied by the supplier. It is critical to maintain contact with suppliers in order to stay up to date on market quality and availability of supplies.

(d) Customers and Consumers

The foundation of a company is its customers and consumers. Market segmentation should be familiar with the demands and preferences of these people. Customers’ and consumers’ likings are taken into consideration as new items and services are developed. In order to maintain the marketing pace, new goods and services are introduced on a regular basis. The manager stays informed about rivals while maintaining good interpersonal relationships with clients.


The development of technology has a significant influence on an organization’s operations. It is concerned with discoveries and methods. The invention and advancement of technology may result in the creation of new goods as well as new industries. One must be aware of technological changes, particularly those relating to product improvement and innovative possibilities, in order to consider how they might be utilized. In order to remain informed about technological advancements, the manager must stay up to speed on developments in product improvement and fresh prospects.

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Social Environment

A company’s fortunes are directly affected by the social climate in which it operates. The labor force is supplied by society, as well as consumers for the goods and services offered. In a democratic country such as present-day India, managers come into contact with people from all walks of life, various social groups, educational institutions, et cetera on a daily basis. All of these interactions are beneficial since they provide input and output to the business. The continuing existence of a firm is contingent upon society.

Political Environment

In a democratic society, the political system has an impact on business choices. In a democratic country, the ruling party’s ideology influences economic and commercial policies. A company manager must deal with the government’s ideas when formulating economic policy. The laws, rules, and regulations of the nation have an influence on company operations. A firm must adhere to sales and excise rules, labor regulations, tax requirements, and other such rules. A manager should be up to date on the current political climate and take advantage of government programs and initiatives as much as possible.

Ethical Environment

When a company is ethical, the employees are more productive and enthusiastic. In an unethical environment, they will not have faith in the company’s core values or culture. When employees do not trust the organization’s primary ideas or customs, they aren’t as productive or enthused as they would be if they did. A business manager must keep in mind his unit’s ethical milieu while running it. Ethics are widely accepted and implemented norms that businesses should adhere to. These ethics are influenced by expectations from society, workers, government, and others regarding the company. It is critical for managers to attempt to conduct business with everyone whom their firm comes into contact with fairly. A clear sense of what is required and what isn’t should be established. A manager must not only be conscious of corporate ethics, but also ensure that they are followed. This will provide employees and the general public with faith in the company’s ethical conduct.

Internal Environment

The internal environment of an organization is concerned with its day-to-day operations. A manager plays a critical part in the company. He leads others, directs employee activities, delegates authority to subordinates, makes significant decisions, looks after human relations issues, and acts as a representative for the firm among other things. The following are some of the key responsibilities of a manager:

As a Leader

A company is a group of people who work in various departments. These workers require leadership and supervision to reach a common objective. The role of a leader is played by a manager while setting the activities and aims of other employees in the firm. He contributes to the development of an appropriate climate and uniformity among employees within his department. The quality of leadership has an impact on how individuals perform under his command.

As a Coordinator

The work of a coordinator is to combine various assets, both physical and human, in order to fulfill organizational objectives. He mobilizes numerous resources and engenders smart understanding and goodwill among businesses for completing business projects. With the aid of good communication, appropriate coordination will be feasible. A manager should establish a strong communication mechanism so that different tasks are coordinated properly.

Delegator of Authority

Delegation of authority implies delegating significant responsibilities to the people below you. A manager cannot do everything alone. He will be required to rely on others by assigning them tasks and delegating appropriate power. When individuals take charge and complete tasks independently, they acquire confidence and are better prepared for bigger roles. Managers play a significant part in inspiring their employees to pursue suitable employment based on their abilities and knowledge. He will be required to establish a good communication channel so that staff may receive regular direction and feedback for the tasks they have completed.

As a Decision-Maker

A manager is in charge of making judgments. He or she must make decisions for a variety of operations. The capacity to perceive broad vision, conceive ideas, gain experience, and understand things is required for decision-making. After analyzing the problem comprehensively, weighing different viewpoints, generating viable alternatives, and selecting the best one, a decision must be made. Timing is also an essential component of decision-making.

A good decision made at the proper time will result in success. A manager must have consistency, authority, and conviction in his decisions. A manager who changes his judgments frequently might cause his employees to be confused. The ability to make sound judgments under pressure and the capacity to do so at the right moment will become a standard for subordinates as they follow along.

Human Relations Practitioner

Managers are responsible for the personnel issues of their employees. Management strives to get the most out of its people and to improve factory productivity. Employees also have difficulties with their bosses or management, and they may even have complaints against them.

Managers should be able to identify and address employee concerns and issues in such a manner that they are pleased and motivated. Subordinates should be encouraged to participate in organizational decision-making. If the organization maintains a good communication system with all of its employees, human relations difficulties may also be addressed promptly.

As a Spokesman of Organization

A manager serves as the organization’s mouthpiece. He handles with people from outside the firm and delivers them with all they need to know about it. He also maintains cordial relations with all stakeholders, including shareholders, employers, consumers, suppliers, government officials, and so on.

For the job of a spokesperson, a manager should have an understanding of the fundamentals of public persuasion and the advantages of informing the general public. A spokesman not only has an effect on employers’ views about your company, but also on how others perceive it.

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