Factors of Business Environment and Operational Management

The assignment discusses the importance of understanding the business environment in making operational management decisions. It highlights key internal factors such as value system, organisational structure, and human resources, as well as external factors like legal, technological, and economic changes. The document provides insights into how Google's leaders and managers take decisions based on these factors to ensure growth and profitability.

Factors of business environment affect
operational management and decision-making
by leaders and manager
Business environment is combination of internal
and external factors such as employees, customers,
management, suppliers, clients, technology,
economic changes etc. which influence the
functioning of organisation. This concept helps in
grabbing business opportunities, assist in planning,
improving overall performance, growth and
profitability of business. These factors affect the
decision-making of managers and leaders. Business
environment is further classified as internal and
external factors which are described below:
Internal Factors
Internal factors are those factors which
occur within the company and impact the operations
and success of the organisation. These factors are
within the control of the company. Some of the
internal factors are discussed below:
 Value system- The value system of
organisation comprises of ethical beliefs that
assist in accomplishment of its mission and
objectives. It also determines its behaviour

towards its employees, customers and
society at large. In context of Google, the
value system includes honesty, transparency,
fairness, harmonious relations and courtesy
towards its employees, customers and
society at large. Decision making of leaders
and managers should be based on ethical
considerations and objectives of company.
 Organisation structure- It refers to system
which is used to define hierarchy of jobs and
duties in organisation. Google's organisation
structure is cross- functional which is
technically a matrix structure with a high
degree of flatness. High degree of flatness
means that employees, teams of Google can
communicate directly with higher level
management. The head of department makes
sure that there are suitable rules and
regulations to ensure the benefits of business
and employees (Muller, 2014). Decisions
taken by managers and leaders are affected
with the change in structure of organisation

so, decisions making should be done after
proper knowledge about changes made.
 Human resource- Human resources are
important asset for an organisation which
helps in growth and profit maximisation for
the organisation. Human resource can either
be strength or weakness for the organisation
which depends on their skills, expertise,
knowledge and commitment to do work. In
Google, managers take active participation
in recruiting good and efficient talent in the
organisation. In Google selection is done on
the basis of talent not on experience.
Employees of Google are highly motivated
because managers provide effective
compensation packages and non-monetary
incentives which helps in increased
profitability and efficiency. Along with
these leaders take decisions in a manner in
which they efficiently encourage and
motivates employees to accomplish
organisational goals in best effective way.

External Factors
External factors are those factors which are
beyond the control of the organisation. These
factors impact the organisation either directly or
indirectly. The various external factors are
discussed below:
 Legal factors: Legal factors plays very
important role in identifying the success of
businesses around the globe. Any changes in
laws will have direct impact on business
because they are beyond the control of
manager or leader (Wilke, Majumdar and
Ochieng, 2014). Every country has their
own law, policies, rules which prevents the
development of company in specific
country. Within Google, the leaders and
managers take decisions in such a way that it
benefits the company. Leaders take
decisions according to the laws prevailing in
the country. The decision-making is done
after analysing all legal factors and only
those factors are considered which helps in
diversification of business.

 Technological factors: These are
technological advancements that affect the
business operations of company. Some
technological innovations help in increasing
productivity and increase profit margin
while some become threat for the business.
Strategic leaders are constantly looking for
development and updates within the
technological environment. For example,
Google is making huge investments in
adaption of latest technology for product
designing. As, this will help in reducing
production cost with increased effectiveness
in products. Managers and leaders of Google
take effective and efficient decisions
according to technological advancements
that are affecting its business operations