Effect Of Economic And Political Changes On The Environment Of An Organization

on the environment of an organization

Muhammad Azeem Roll # AD-514025 1

Organization An organization is a separate and distinct

group of people and resources put together for a common objective. Example:  Pakistan Air Force.  Distinct and separate entity.  Military Organization  Hiring pilots  Purchasing planes, Guns, Warships  Crew  Fighters  One Common Objective. To protect the people of its country. 2

Environment of an Organization Organizations are Distinct but not isolate. They must interact with their environment. Environment has following sectors.  Economic Sector  Consists of economic elements of the environment.  Cultural Sector 

Consists of Cultural elements of the environment.

 Political Sector  Consists of political elements of the environment.  Competitive Sector 

Emergence of new competitors is contained in this sector.

 Technological Sector  Introduction and implementation of new technologies. 3

Effect of Economic Changes Economic changes in the environment

affect the organization in one way or the other. Example  Car Manufacturers in America  Slump in American economy due to Iraq and Afghan wars.  Less buying power of the people.  Low demand for the luxury cars  Response by Managers 

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Manufacturing small cars which are within the purchasing power of people.

Effect of Political Changes Child Labor Policy enforced in Pakistan. Effects  Caused a slump in the football industry.

Response by Managers  Internal Child labor control policies designed and

implemented

Results  Restored contracts with major football buyers.  Increased business  Increased profits  Increased employment opportunities.

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COLARO SPORTS

STUDY OF RESPONSE OF MANAGERS TO MINIMIZE THE EFFECT OF ECONOMIC AND POLITICAL CHANGES 6

Introduction of Organization Name:

Colaro Sports C.E.O.: Sh. Imran Majeed M.D.: Sh. Usman Majeed Prod. Dir.: Sh. Abdur Rehman Capital: 1000 Million PKR. Exports: 500 Million PKR. Anually Products Sportswear, Leisurewear, Knitwear, Hosiery

Products Sublimation printed Garments. 7

Effect of economic changes on the environment of Colaro Sports Inflation: Inflation is general rise in prices of goods & services Colaro is affected by both national & international inflation level Recent slump in sportswear industry causing high inflation rate all around the globe Costly Raw Materials for Colaro Sports.

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Response by a Manager: Colaro has hired purchase managers Finding alternative raw material sources Better prices of raw materials Imports managers for raw materials that are

not locally available Negotiations with existing suppliers Study of the behavior of competitors in such situations. 9

Effect of Political changes on the environment of Colaro Sports: Example of political change (Minimum Pay

scale Law) Minimum monthly salary for unskilled worker is fixed to 6000 PKR. Adverse effect on HR department Decrease manpower available for performing the tasks because the payments to unskilled workers were not affordable Increased salaries add to production costs and hence finally affect the profits 10

Response by a Manager: Colaro has to abide by the laws of Govt. of

Pakistan Managers search for better alternatives Workers who can handle multiple jobs

simultaneously and effectively

Worst case scenario Downsizing

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SWOT Analysis Strengths: Colaro doesn’t usually resort to downsizing Increments and bonuses for motivations Complies with all the laws and regulations of

Pakistan Govt., so less legal problems Strictly disallows child labor Less intervention of Govt. Satisfaction of customers

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SWOT Analysis Weaknesses: Avoiding downsizing can causes the

organization to suffer economically Yearly bonuses and increments add to the production costs constantly Can not increase the export prices for the foreign customers annually

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SWOT Analysis Opportunities: No internal labor unions No HR problems due to worker friendly

environment It is an advantage in long run

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SWOT Analysis Threats: Ever increasing competitors in sportswear

manufacturing industry Study of competitors intelligence is necessary May face problems in competition

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Recommendations: Proper data security policy Must study competitor intelligence and make

decisions accordingly Strong social and logical policies be made to filter out the malicious elements

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Thanks to: Allah the almighty. For giving me enough zeal and exuberance to perform this task My Respected teacher For providing me guidance on how to accomplish this task Finally, all of you For being here and providing me your support

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