Impact of Business Culture and Natural Environments on Organizational Behavior
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This report analyzes how business culture and natural environments shape the behavior of an organization. It explores the impact of economic and non-economic factors on the operations of Glaxosmithkline (GSK), a UK-based pharmaceutical company. The report also includes a PESTLE analysis and SWOT analysis of GSK.
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INTRODUCTION Business can easily be established with some motive and but to sustain it successfully the business need to analyse various factors that can influence their operations. The businesses need to consider various resources with the help of which they can provide offerings to the customers. They are dependent upon various such as for social norms they have to consider various aspects of the society, for market conditions they are dependent upon market in which they are operating etc. In addition to this there are various natural resources, legal factors and many more that affects the sustainability of the businessesdetermined(Kurtz and Berston, 2019). The changing needs and preference of the customers are crucial factors that forces organisations to introduce innovation. All such factors are part of the business environment which is dynamic and changing. Also the businesses are influenced by the technological advancement as they have to cope up with this for taking the competitive advantage. For ensuring survival of the business it is important for them to analyse various internal capabilities and competencies of the organisation. This is because with the help of internal capabilities and resources, opportunities that are present in the market can be availed and the impact of the threat can be minimised. In this report the organisation that is taken into consideration is Glaxosmithkline, commonly known as GSK. It is UK based pharmaceutical company that has been operating in worldwide with a turnover of around£27.9 billion. The company has been operating in three different industries which include pharmaceuticals, biotechnology and consumer goods. Due to this they have to face various factors that can be both economical and non-economical. They manufacture medicine for various diseases such as infections, cancer, diabetes, asthma, mental health etc. Various consumer goods that are offered by them include Aquafresh and Sensodyne toothpaste, Horlicks, Boost etc. This report includes analysis of various factors that has impact on the organisation such as environmental factors like weather and climatic condition, topographical factors; economical factors like policies, conditions and systems prevailing in many countries; various non-economic factors that includes legal, political, social, technological etc. Apart from this the analysis of various internal factors are also done as with this the capabilities and strengths of the company can be analysed that can facilitate in identification of various opportunities that they can garb. Also it will facilitate the organisation in determining the strategies with which they can reduce the impact of various threats prevailing in the market.
Explainhowthebusinesscultureandnaturalenvironmentsshapethe behaviour of an organisation The culture of business and environment has impact on their operations due to which the businesses need to consider the impact of various such factors. The environment of the business can be of two kinds such as economic environment and non-economic environment. Detailed analysis of these environments is to be taken into consideration so that the extent to which it can affect the operations can be(Malik, 2015). Impact of economic environment on the businesses: Economic environment includes all those factors that are related with the economy as a whole and has impact on the sustainability and operations of the organisation. Such factors includes economic conditions of the country, economic system and various economic policies. It also includes various other factors that are prevailing in the environment and that has influence on the functions of the organisation(Hamilton and Webster, 2018). With the help of this the organisation can actively react upon the implication of such factors and in accepting various changes that are taking place. In the year 2016, Britain announced their exit from the European Union. Majority of the people were in favour of the referendum due to which the economy was severely affected. The impact of such economic moves on the organisation are severe that can easily be analysed. The GSK also get affected by this because they procure various materials for the manufacturing from differentnations.Brexitwillhavedirectimpactontheirprocurementprocessofthe organisations and many more.The impact of various such factors on GSK is given below: Economic systems:Economic system includes system in which allocation of resources and their distribution is considered. For this various organisation that are operating in the economy take part in executing the system effectively. For this they formulate various policies that influence various functions of the organisations. Taxes, interest rates, exchange rates are part of the economic system of the country that regulates the behaviour of the organisations that are operating there(Namvar and et. al., 2018). With the increasing health concerns the general public prefers to have better products due to which the GSK need to focus upon manufacturing of such products. This has positive impact on GSK as they are already into this segment so they can easily focus upon this trend.In the economic system the inflation and taxes also plays crucial role. Due to unfavourable economic condition of UK the MNC's has impact as due to this their
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supply becomes costly, availability of the human resources on lower wages becomes difficult. All these factors directly affect the behaviour of the company. Economic policies: Various economic policies need to be taken into consideration by the organisation as they have direct impact of the manufacturer of the drugs this is one the highly regulatedindustry.Forthisvariousfiscalandmonetarypoliciesneedtobetakeninto consideration by the organisation as they help them in determining the future of the business. Apart from these various other policies are formulated by the government of UK that facilitate the GSK in regulating their operations and their organisational policies. As per the policies it is identified that the government promotes the infrastructure in the country due to which they have opportunity to expand theirbusinessby establishingmanufacturingplants(Phadermrod, Crowder and Wills, 2019). With this per unit cost of the products can be reduced. Also with the help of various economic policies the strategies of the organisation can be improved and the finance and marketing can efficiently be managed. This has positive impact on the productivity and the profitability of the organisation. Impact of non-economic environment on the businesses: Along with economic factors some of the non economic factors also have impact on the operations of the organisation. These factors are those which cannot be controlled by the organisation but has significant impact on the organisation(Gruber and et. al., 2015). Some of the non-economic factors that have impact on the behaviour of GSK are given below: Natural: The natural factors are associated with various natural and environmental factors that includes the weather and climatic conditions, various geographical factors etc. The lifestyle of the people has direct impact on the environment such as due to excessive use various technologies the global warming is increasing. It gives birth to various problems that can be related to health, utilisation of the resources and many more(Raziq and Maulabakhsh, 2015). Due to depletion of the environment the availability of various natural resources such as various medicinal plants, fossil fuels etc. are also reducing. For dealing with such diseases and for improving the living standards various new products i.e., medicines are to be launched by the GSK. The impact of this factor is positive on them from operations point of view as they need to launch more and more products so that they can satisfy the needs of the customers. But for this they need adopt various sustainable practices which can contribute to the behaviours of the
company such as use of solar energy in their manufacturing plants, better disposal and recycling techniques of the waste. Demographics: Thedemographicfactorsare relatedwith the age,income,lifestyle, perceptions, taste and preference of the customers. With the decreasing rate of unemployment in UK the standards of living of people in UK is also declining and this has direct impact on the demands of the products so offered by the company. Also the inflation rate in UK is high due to which the customers started preferring cheaper goods instead of luxurious goods. This has both favourable and unfavourable impact on the organisation. Due to higher unemployment rate the people do not have money in their hands to expand which affects their purchasing power. This has impact on various goods of the company such as drinks, healthcare products, nutrition products etc. But the other products are their medicines on which the impact will be lesser as they fall into the category of emergency goods(Ferreiraand et. al.,2017). Cultural factors:Cultural factors have various major impacts on the behaviour of the organisation. It includes the beliefs, values, norms of the employees that are working in the organisation. They need to be managed by the leaders of the organisation in such a manner that they perform as per the requirement of the business. In UK people who are working belongs to different cultures due to which they have different values and beliefs. This brings positive impact on the GSK as with this they get a variety of people who can work for them. As every individual have their style of working they can working according to them. With this efficiency can be achieved in the businesses. Difference in the values and beliefs of the employees will enable them to contribute to the products and services efficiently as they can provide various ideas and suggestions with which creativity can be introduced(Roy and Singh, 2017). The behaviour of the employees can be made positive by the leaders of GSK as they can provide ample opportunities to the employees that they can garb as per their capabilities and skills. Positive behaviour of the employees make the organisation behave positive. Thus, it enables them to accept any change that is taking place in the environment and has influence on their business. PESTLE analysis PESTLE analysis is an analytical framework that helps to understand the impact of various external factors on the organisation. This PESTLE analysis of GSK is given below: Political factors: These factors includes various implications that are imposed by the government in the economy. GSK has been preparing various contingency plan with the help of
which they effectively meet up with the issues that can arise after UK leaves EU. Due to Brexit the manufacturing cost of the company will increase and for dealing with that they are trying to negotiate politically so that government can provide guarantee minimal disruption. This will have positive impact on the company in the long run. Various regulatory policies that are imposed by the government on the prices of the drug has adverse impact on the company processes(Schaltegger and Burritt, 2017). Also the impact of Trump administration policies can affect the operations adversely as he reduces prices of the medical services due to which GSK to be move competitive with their drug prices. Economic factors: The economic factors include various aspects such as interest rates, taxes, inflation rate etc. Due to Brexit the exchanges rates has increased and this has direct impact on GSK as they are operating in various countries and increase in exchange rates affected their exports. This has adverse impact on their profitability of the organisation. Due to this the supply chain of the company is also becoming costlier and it is a threat for GSK. The increasing pressure on the healthcare cost also has adverse impact on GSK as due to this their requirement of funds increases. Social factors:The social factor has various impact on the organisation as they are related with various demographic factors, taste and preferences of the customers etc. The increasing resentment of the customers towards the increasing profitability has adverse impact on the organisation as due to this their image is sliding. But GSK has the advantage of social media marketing as they promote all their products through various such channels. This enables them to attract more and more customers and create awareness about their offerings. It has positive impact on the organisation. Technological factors: Technological factors are those that gives competitive advantage to the companies. The GSK has been partnering with other companies that can provide them with service of data handling. This will enable them in reducing the cost that they have to bear in context of managing the data. Also they have invested in automation with the help of which their request time of manufacturing can be reduced. But all this will increase the overall requirement of funds of the company because such technology keeps of changing and which requires continuous updates. As they are into medical business so they need to undertake various researches so that they can adopt changes in the products and(Sukrat and Papasratorn, 2018).
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Legalfactors:Thelegalrequirementforthecompaniesthatareoperatingin pharmaceutical industry are high as such products are directly consumed by the individuals and has impact on their health. As they have been operating in various countries so they have to comply with various range of laws, regulations and compliances for making effective number of sales. For meeting such standard they have invested 100 million pounds so that the guidelines perimeters can be fulfilled. Environmental factors: These factors aims to manage the impact of the businesses on the environment by way of various legal implications that are related to the environment. GSK is focussing upon continuous manufacturing with the help of which they aims to develop cheaper products and ensures their availability to each and every individuals who need them. This will have positive impact on their organisation as with this their stakeholders can be satisfied. SWOT analysis Strengths:GSK has invested a lot of funds in their research and development with the help of which they can expand their portfolio easily due to which they made significant progress in HIV, respiratory medicines etc. They also have better sales and distribution network which ensuresthattheirproductsareavailabletothecustomersassoonaspossible. Weaknesses:The healthcare fraud allegations affected their brand image as they were unlawfully promoted for false pricing, charges for promoting antidepressants etc. Their unique products are now exposed to the markets due to which the competitors can copy their products and this will affect their product life stage of reaching maturity. Opportunities:They have the opportunity to expand their business by way of various strategic collaborationsby acquiring any organisation that has already been operating in the environment. Also they have opportunity to create awareness about their products and services so that the demand for their product can be increased(Barr, T.L., and et. al., 2018). Threats:The major threat that they have been facing is that of the pricing control of the prices of the drugs. The intensive competition has severe impact on their operation as due to this they need to keep on changing their policies and practices. CONCLUSION Thus it is concluded from the above report that business environment is important for the organisation as with the help of this various strategies can be identified that are to be adopted by the organisation. With the help of such strategies the impact of such factors can be reduced. It is
crucial for the organisation to consider the overall industry so that each and every factors can be analysed. Such analysis will enable the organisation in determining various opportunities that can be availed by the organisation and threats whose impact need to be minimised. Economic factors need to be evaluated by the organisation as with the help of this they can determine various economic factors and their impact. Such factors can be interest rates, exchange rates, taxes, growth rate in the economy etc. These factors gives insight of some external factors that cannot be controlled by the organisation. With the help of this the factors that can become threat for the company can be identified and policies for them can be formulated in advance. Moreover, the economic policies such as fiscal and monetary policies must be taken into consideration while analysing various economic conditions as these policies also has impact on the operations of theorganisation. The analysis of various non-economic environmental factors facilitates an organisation in determining various trends in social and technological environment of the business. These two factors are the one which impact the operations of the organisation the most as due to changes in the technology the organisation need to innovate their existing technology. This is important for them to take competition advantage. While the changes in taste and preference of the customers also influences the behaviours of the behaviours of the organisation. Various factors other than this includes the political, legal, environmental etc. that has to be managed with various planned actions with the aim of minimising the impact and taking the opportunities. Internal analysis of the competencies and the resources is important for the organisation as with the help of this they can determine the core strengths, weaknesses of the organisation. Along with this the inefficiencies of the business can be determined in terms of ineffectiveness in the operations, shortfall in meeting with the challenges and many more. Such analysis can effectively be done with the help of SWOT analysis. Further the analysis of various external factors need to be done with the help of PESTLE analysis as this will enable them to understand the impact of all such factors included in the analysis. The analysis of the internal and external factors will enable the organisation in linking the impact of various factors with that of the opportunities and threats present in the market. It will enable them in formulating various strategies that can give them competitive advantage over others.
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