Chapter 2 - The business environment Flashcards
1) Appreciate factors outside the organisation, but which impact on it, using PEST analysis 2) Understand the necessity for legislation around areas such as data protection and health and safety procedures 3) Understand what the Value Chain is and appreciate how it enhances competitive advantage 4) Think through the impact of technology on organisations
The Business Environment
The environment can be described as everything which is beyond the organisational boundary.
Management cannot control the environment, however it influences all aspects of organisational activity and so must be viewed strategically.
The environment comprises a number of different elements:
The general environment covers all the political/legal, economic, social/cultural and technological influences in the countries in which an organisation operates.
Three models to assess the environment:
1) PESTLE Analysis
2) Competitive Forces
3) The Value Chain
Pestle Analysis: P - Political Factors
The political factors include:
1) Degree of government intervention
2) Policy direction
3) Political risk
The legal framework in which organisations operate derives from:
1) Parliamentary legislation
2) Government regulations
3) Treaty obligations
4) Official regulations
5) International bodies
Lobby groups put forward theur case to influence ministers and civil servants in government.
Key legislation for organisations may include:
- Employment law
- Health & safety
- Data protection
- Sale of goods act
Legal framework for employees: Employees are protected by a range of laws in the following areas:
Termination of employment - Wrongful dismissal & unfair dismissal
Health & safety - both employees & employers have a duty to maintain H&S standards
Data Protection & Security - There has been a growing fear that information bout individuals could be misused.
In particular it was felt that an individual could easily be harmed by the existence of computerise data about them which was inaccurate or misleading and which could be transferred to third parties at high speed with little cost.
The key risks affecting data are:
1) Human error
2) Technical malfunction
3) Deliberate/ malicious attack
4) Hacking
Using the internet can bring many dangers, such as:
1) Viruses
2) Deliberate damage caused by disaffected employees
3) Damage cause by outside people (hackers)
4) Downloading of inaccurate information and/or virus ridden software
5) Internal information may be intercepted. This can be avoided with encryption
6) Communications link could break down
Data stored electronically is at risk of a security breach. At particular risk is:
1) Information regarding the businesses standing & competitive advantage
2) Personal & private information
3) Information regarding the businesses security
4) Information integral to the outcome of deadlines (e.g. tenders)
When data is transmitted over a network or telecommunications link (especially the internet) there are numerous security dangers:
1) Corruption such as viruses on a single computer can spread through the network to all of the organisation’s computers.
2) Disaffected employees have much greater potential to do deliberate damage to valuable corporate data or systems because the network could give them access to part of system they are not authorised to use.
Data protection principles: some useful definitions
To illustrate some of the issues in data protection we can consider some of the details relating to UK legislation.
Personal data:
is information about a liing individual, including expressions or opinion about them. Data about other organisations is not personal data, unless it contains data about individuals who belong to those organisation.
Data users:
are organisations or individuals who control the contents of files or personal data and the use of personal data which is processed automatically - i.e. who use personal data which is covered by the terms of the Act.
