ORGANISATIONAL STUDIES IN THE PUBLIC SECTOR (PUB3704)

(PUB3704)_ORGANISATIONAL STUDIES IN THE PUBLIC SECTOR QUESTION 1 This section of this paper will be focussing on the external environment and the specific environment in which organisations operate in. 2.1. External environment The external environment refers to the environment in which institutions and operations operate it. It consists of different dimensions and factors that influence the organisation’s activities, decision making and policy formulation. These factors will be briefly discussed below: 2.1.1. Economic dimension The economic dimension of an organisation is the overall status of the economic system in which the organisation operates. The important economic factors for business are inflation, interest rates and unemployment. These factors of the economy always affect the demand for products, when interest rates are high, customers are less willing to borrow money and the company itself must more when it borrows (iEduNote, 2019). For instance, 2019 was a particularly challenging year for business and the government in South Africa. Deepening recession impacting negatively on the economy and already financially stressed consumers, and businesses, consumers increasingly became credit dependent. The potential downgrade in South Africa’s sovereign credit ratings to junk status by MOODY’S and other Ratings agencies resulted in the depression of consumers and investors in the country (National Consumer Tribunal, 2020;31). These events had a devastating impact on the economy, which in turn directly impacts on the institutions and government agencies and their financial performance. 2.1.2. Political-instability dimension The political factors of the general environment refer to the business-government relationship and the overall political situation of the country. The government of a country intervenes in the national economy through setting policies for business in our country; these include policies such as import policy, export policy, taxation policy, competition policy and consumer protection policy (iEduNote, 2019). Uncertainties about the political decisions that that political bearers will take and about the availability of funds make it difficult to create positive impressions on the future of government institutions (University of South Africa, 2019:129). Political instabilities in 2019 had a devastating impact on organisations and the business environment. State capture, perceptions created about public sector corruption, 2 | P a g e mobilizing against state capture and a rise in population with a more militant approach to social change, all had a negative impact on the economy and its performance, which in turn impacted organisations and their profitability (National Consumer Tribunal, 2020:31). 2.1.3. Socio-Cultural dimension Socio-cultural factors refer to customs, morals, values and demographic characteristics of the society in which the organisation operates (iEduNote, 2019). The socio-cultural dimension must be well analysed by managers, as it indicates the products, services, and standards of conduct that society is likely to value and appreciate, the standard of business conduct varies from culture to culture and so does taste and necessity of products and services. Sociocultural forces include culture, lifestyle changes, social mobility, attitudes towards technology, people’s values, opinions and beliefs (iEduNote, 2019). For example raising the old Apartheid flag for public display is very much offensive to most South African citizens. Business firms must offer products and services in the society that correspond to their values and attitudes. 2.1.4. The Judicial System dimension Well-functioning legal and judicial institutions are critical to economic growth in modern economies, they define the rules by which the markets function, and they provide means to resolve disputes, protect economic and social rights and hold governments accountable for their actions. The role of institutions goes beyond the legal framework. Government’s attitude towards markets, and freedoms and the efficiency of its operations are also very important: excessive bureaucracy, red tape, overregulation, corruption, dishonesty in dealing with public contracts, lack of transparency and trustworthiness, inability to provide appropriate services to the business sector and political dependence of the judicial system imposes significant economic costs to businesses and slow the process of economic development (Kosenkov, 2018) 2.1.5. Ecological circumstances dimension Ecological environment is concerned with issues as to how the organisation interacts with and affects the natural environment or the ecology. Ecological forces in the general environment are important since they impact the natural resources which are necessary as inputs for business or for an economy at large. Also, environmental concerns have grown strongly in recent years, which make the ecological force a crucial factor to consider. For instance land, air and water pollution are realities every manager should be aware of. Businesses now more than ever before, need to consider and implement environmentally conscious practices in response to consumer demands for environmentally friendly and responsible products. For example, Woolworths Holdings Limited has a establishes a “Good Business Journey” policy that aims to make a difference to the environment through responsible sourcing, reduction in the consumption of energy and their waste footprint, ethical sourcing and reducing water wastage (Venter and Botha: 111). 3 | P a g e 2.2. Specific Environment The specific environment refers to that environment which relates directly to an institution and affects the achievement of objectives (University of South Africa, 2018:120). The specific environment factors include the institution’s clients, input suppliers, competitors, government institutions, trade unions and pressure groups. The factors of the specific environment are to be discussed below. 2.2.1. Clients Satisfaction of the customers is the primary objective of every organisation, for they are the people who pay for the organisation’s products or services. They are the people who provide the profit that the companies are targeting. For this sole reason, managers should pay close attention to the customers’ dimension of the specific environment because its customer’s purchase that keeps a company alive and sound (iEduNote, 2019) 2.2.2. Input Suppliers Suppliers are the providers of products or service materials necessary to the organisation’s operations. Dealing with suppliers is an important task of management. A good relationship between the organisation and suppliers is important for an organisation to keep a steady flow of information and quality input products. To ensure the long-term survival and growth of a company, it is essential to develop a long-term and dependable relationship between the business and its suppliers (iEduNote, 2019). 2.2.3. Competitors Competitors are organisations that offer the same services and products as an organisation, and most likely equal in size and strategic capabilities (Venter and Botha: 126). Policies of the organisation are often influenced by the competition in the environment. Competitive market place companies are always trying to stay and go further than their competitors. In the current world economy, competition and competitors have grown tremendously (iEduNote, 2019). For this reason firms need to analyse the competitive intensity in the industry, it needs to understand the competitive position in the industry to improve its chance of designing winning strategies. 2.2.4. Regulators Regulators are units in the task environment that have the authority to control, regulate or influence an organisation’s policies and practices. Government agencies are the main players in the environment and interest groups are created by its members to attempt to influence organisations as well as the government (iEduNote, 2019). For instance the Competition Commission South Africa is a statutory body constituted in terms of the competition Act, No 87 of 1998 by the South African government empowered to investigate, control and evaluate restrictive business practices, abuse of dominant positions and mergers in order to achieve equity and efficiency in the South African economy ().