Principle of Management and its Impact on Business Environment

This essay provides a comprehensive overview of the role of strategic planning in modern business environments, emphasizing its importance for organizational success. It explores the internal factors such as mission, management structure, human resources, and communication, and external factors including political, economic, social, technological, legal, and environmental aspects, using PESTLE analysis. The essay further discusses the significance of ethical considerations in business management, outlining theories such as utilitarianism, Kantian deontology, and rights theory, which guide companies in establishing codes of conduct. By understanding these factors, businesses can make informed decisions, optimize resource utilization, establish clear goals, mitigate risks, and create a competitive advantage, ultimately contributing to their long-term sustainability and success in the market.

Running Head: Principle of Management
Impact on Internal and External Factors on Business Environment

Principle of Management 1
Introduction
Now a day with the changing era the organizations management process has also been modified
and developed according to choice and preference of the customers and prospective clients of the
company. To incorporate sound management system within an organization, initially a company
needs to strategically plan the management of the company with the use of efficient tools and
techniques. Further the internal and external environments of the company are also being
considered to view the activities conducted by the business. Along with fulfillment organization
objective by using efficient management techniques the company not ignore the code of ethics
defined and the legal obligation of the company (Steiner, 2010). “The following essay provides
an overview of role of strategic planning in a modern business environment. Further the internal
and external factor affecting the business and with the legal ethics are also discussed.”
Strategic Planning aspects in modern business
Strategic planning is considered as a critical aspect of business success. Differentiating from the
traditional planning process, the strategies help the company in thinking innovative and act
malleably in flexible market environment. The planning process helps the company to create a
roadmap which shall lead them in fulfillment of their organization objective. Further in this case
strategic planning helps the company in deciding which target market to attract and with means
the company can gain competitive edge. With a proper sense of direction and outline, it becomes
easy for the company to lead the market. Also this process helps the company in executing day to
day business activities of the company (Moser, 2012). Summing up the above statements it shall
be concluded that strategic planning assist the company in carefully analyzing the market
conditions and work accordingly to fulfill the objective optimizing the resource provide to them.

Principle of Management 2
From the initial stage the planning helps the company in setting mission for the management for
the organization. Many companies have lost their value in the market even after using effective
techniques of management also; the reason is due to incorrect mission statement defined for the
company. A qualified mission statement provides between links between idea and practices
implemented by the organization. Also a mission statement defines the code of ethics which a
company shall follow in order to curb the penalties. After analyzing the mission of the company
the role of strategic planning is to set goals to apply procedures in the management. Substantially
goals lead to program and program leads to quantitative change in profits of the company. The
effects of a strategic planning are identified by evaluating the progress of the company and
comparing them with the planned objectives. So it is the role of strategic planning process to
initiate missions in the organization and implement them to achieve competence in the market
(Allison, & Kaye, 2011).
By conducting the strategic planning process in an organization, the company gains several
benefits in qualitative as well as quantitative terms, thus this planning has become important for
the organization to survive in the competitive market. The process of strategic planning helps in
efficient and optimum use of resource in the organization. Harassing the resources will lead to
depletion of natural resource and also this practice is unethical whereas optimizing minimum
resources will incur loss for the company. Thus strategic planning helps the company in
generation of product and services by using resources optimally. Further planning helps the
company in establishing definite goal which is achievable by the company. Setting standard
whose completion is next to impossible for a company will lead to demotivation within
organization. Apart from that this process also reduces the risk of uncertainty in a company by
evaluating the outcomes and market conditions on a prior basis (Rothwell, 2010). The process of

Principle of Management 3
team building is initiated through the strategic planning resulting in better communication within
the organization. Such benefits of strategic planning help the company in creation of competitive
advantage in the market.
There are many factors present in the market which affect the environment and working of the
organization. The factors are further classified into internal and external factors. Internal factors
refers to those factors which are related to the internal working of the organization whereas
external factors are those factors which are present in the external environment of the business
and affect the internal environment of the organization (Crane, & Matten, 2016).
Furthermore, the internal factors include mission and objectives of the organization, management
structure, human resource, communication within organization etc. The mission as discussed
earlier is the most important aspect of the organization on the basis of which activities in the
business are conducted. The mission statement drives the future of the organization and decides
the market in which the company shall and provide services to customers (Oliveira, & Martins,
2011). Another aspect of internal factor is management structure and nature of the organization;
it includes the composition of board of director in an organization and the organizational
structure of organization. The management structure also includes the approach of the company
to solve the problem and risk management. The communication of the business also affects the
activities of the business, as if there is communication within the organization structure then the
company won’t be able to achieve efficiency. Also many problems will also not resolves due to
difference in thinking of people. The most important internal factors which affect the activities of
the business is the personnel of h organization. If the employees of the company are highly
qualified and efficient then the organization will achieve its objective whereas if there is dispute
in the human resource then the company will not achieve competence. The porter’s five forces

Principle of Management 4
also efficiently define the internal factors affecting the environment which are, bargaining power
of buyer, bargaining power of supplier, threat of substitutes, threat of new entrants and industry
rivalry. The company uses this model to analyze the internal factors affecting the business
operating environment (Lewin, Massini, & Peeters, 2011).
Further considering the external factors of the organization, the company conducts PESTLE
analysis to analyze the external environment. The PESTLE analysis stands for political,
environmental, social, technological, legal and economic factors. The political factor includes
governmental laws and tariffs imposed in the market; it also includes subsidies grated to the
firms. The environmental factors include factors related to the climate which affects the business
activities. Weather and ecological change are also included in this factor (Lindner, & Wald,
2011).
Additionally social factors are the cultural aspects which create fluctuation in the business
environment. Population, growth rate, safety are some of the factors lying under this aspect.
Technological factors include the technological changes present in the external environment
which affects the internal environment of the organization. Quality of technology, speed of
internet, innovation techniques etc. are some of the factors occurring under this aspect. The legal
factors includes laws related to the organizations such as health laws, safety laws etc. economic
factor refers to the factor which includes the economic variable present in the environment. Such
factors include demand and supply of product and services (Naranjo-Valencia, Jiménez-Jiménez,
& Sanz-Valle, 2011).
It is an important aspect of strategic planning that companies have to determine set of rules and
guidelines to follow in the business management. It is difficult for the company agree on all

Principle of Management 5
terms related to humanities, so the company started defining themselves business ethics which
they shall comply in order to inculcate rightful activities in the management. Further there are
different theories used by the company which assist them in implementing the code of conduct
defined by them. The Utilitarianism insists the company to should perform action in the
organization concerning the rules or principles made by them. Also it is the belief of this
approach that the company shall never disobey or compromise the moral beliefs of the
organization, the activities shall always provide a view of the basic rules defined by them
(Michaelson, Pratt, Grant, & Dunn, 2014).
The Kantian deontology theory suggests that the activities of an organization are considered to
be ethical if it abide the universal laws worldwide and do not harm the interest of any individual.
The theory also believed that every individual shall be treated fairly with respect. The baseline of
the theory states that morality shall be followed in all organizations irrespective of the
regulations. In no exceptional case a company can waives the moral rule and guidelines
(Fairhurst, & Grant, 2010).
The rights theory of ethics states that, in order to fulfill the rules defined, the company
formulates set of standards and tool which shall be followed by all. Also the human rights shall
be independent from the influence of various factors. Further there are two types of rights
positive and negative rights. Positive rights are those which shall be obligated by the company to
inculcate goodness and positivity in their work whereas negative rights refers to those rights
which a company shall be obliged to fulfill in order to stop them from doing wrongful activities
(Heugens, & Scherer, 2010).
Conclusion

Principle of Management 6
Thus, in the limelight of above mentioned statements it shall be noted that the process of
initiation of strategic planning is essential for a company to gain the competitive edge. This
process helps the company to define set of rules and standards to follow and achieve the target.

Principle of Management 7
References
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Principle of Management 8
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