ENVIRONMENTAL ANALYSIS AND MANAGEMENT DECISION (A CASE STUDY OF SELECTED FIRM IN PORT HARCOURT)

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY:

Business organization does not operate in isolation, to ensure the achievement of set goals, business organizations obviously interact with their environment. The activities of business are consequently affected and influenced by this process of interaction with the environment.

Today, managers of business organizations are faced with continuously change within the environment of business. Managements are under increasing pressure to respond to some external forces that continuously impinge on business operations. The impact and or effect of these external variables have made the management’s task a difficult one.

According to Kootze, et al (1980-89), all managers whether they operate in a business, a government agency, church, charitable foundation or universities must consider the elements and forces of their external environment. The above ascertain imply that environment is made up of internal and external, internal environment consist of those factors that the organization has direct control over. They may include; corporate resources, objectives, policies and strategies.

External environment include those factors which the organization does not have direct control over, they include political, socio-cultural, economic, legal and host communities.

In summary, due to the dynamism in the business world today, organizations need to put into consideration their internal and external environment before taking decision because to a large extent it determines the level of success of the organization.

1.2     STATEMENT OF THE PROBLEM:

For maximum illustration system approach can be used as a locus for viewing the organization and its environment. An organization could be seen as a sub- system operating within a large system. The society which represents the larger system provides an enabling environment for the existence and survival of the business organizations, while accepting the outputs of the organization in return for the input, Clarke (1991).

A business organization and its environment are mutually dependent, if and only when the business live up to its social responsibility. According to Lawrence and Weber (1999), corporate social responsibility means that a corporation should be held accountable for any of its actions that affect people, their communities and their environment.

This implies that any harm done to the environment should be acknowledged and corrected if possible. Osaze (1987:20) opines that external environment which comprise legal, political, economic, socio-cultural is not only a recipient of organization output, but also a provider of its input raw materials, skilled and unskilled workers, production capacity and security. It is obvious that if the business organization accepts its social responsibility, and the environment provide security, then the environment will be conducive for operation. One thing is clear though; the environment (external) and the organization need each other.

The influence of the environment on the business is more palpable than that exacted by the organization on the environment. It is on this basis that the need for environmental analysis is necessary.

Furthermore, the changing business environment has moved from simplicity and stability to complexity and dynamism

A lot of business today has fail because they have refused to put into consideration or analyze properly their external environment.

This lack of knowledge would kill a lot of business which ordinarily would have been productive and profitable. In present Nigeria is very constant that today corporate planning and environmental analysis can proffer solution to forestall unwanted failure to businesses. Some of the changes could be political, for example the June 12th 1993 election annulment put some businesses out of operation because of the threat which emanate from the political unrest or annulment of the election.

Although the external environment is largely uncontrollable, it is still manageable with the organization’s resources”.

Therefore, there is a need for environmental analysis to be used to reach very firm and sound managerial decisions.

1.3     OBJECTIVES OF THE STUDY:

In Nigeria today, some business organization have as their head managers that cannot differentiate between the internal and external environment of their organizations. In some cases, some of these businesses survive. The purpose of this study is to ascertain the followings:

a)       Whether analysis of environmental factors has any bearing on the success or failure of a business.

b)      Whether the businesses that have actually faced stagnation are where they are today due to the effects the environmental factors have brought to bear on them.

c)       Whether the possibility exists for business to achieve success with environmental analysis.

d)      Whether decision made using the bye products of analysis of environmental factors, prove to be better decisions.

e)       Whether there is actually the need for environmental analysis.

f)       Whether environmental analysis has actually been effective for management decision making.

1.4     RESEARCH QUESTIONS:

1.       Is the analysis of environmental factors necessary in the manufacturing industry?

2.       Does the analysis of environmental factors have a direct influence on the success or failure of manufacturing concerns?

3.       How well has the analysis of environmental factors served management as a decision tool?

4.       Should management decision be tied to the outcome of environmental analysis?

1.5     SIGNIFICANCE OF THE STUDY:

The Nigerian today, business organization embraces manufacturing but many of these manufacturers are no longer in existence, this is caused by their lack of knowledge on what to be done, when to do it, and how it should be done. They also are uncertain about the decisions to take because they did not put into consideration or carry out an analysis on their environment.

To some extent, some of these organizations have thrived while using the trial and error method, but this would have been better if they had taken part in environmental analysis. This study is significant in the sense that it will elaborate on the importance of environmental analysis and at the same time expose the gains. This will as well improve on, and increase the already existing body of literature dealing with the analysis of environmental factors.

 1.6 SCOPE OF THE STUDY

However, the scope of this study is limited to selected firms in Port Harcourt. So that they will be guided by it and know the measures to take before undertaken any business of manufacturing.

1.7     LIMITATIONS OF THE STUDY

The restraints encountered in the course of embarking on this research work are the availability of correct and up to date data is not easy, even when available one still encounters wholly unnecessary bottlenecks due to our socio-cultural background vise visa disclosure of information. So this constituted an impediment to this research work.

Another restraints encountered is financial and time constraint.

1.8     DEFINITION OF TERMS:

A.      Analysis: An examination of data and facts uncover and understand cause effect relationships,thus providing basis for problem solving and decision making.

B.      Environment: It is the physical or abstract condition or surrounding within which an organization dwells or operates. The physical include building and the condition of the work place. Abstract (external) environment include; government, economic, legal market, competitors and technology etc.

Factors: Are environmental variables that are in one way or the other affect, influence and militate against the smooth take-off of business within the environment.

D.      Management: These are expertise who head departments whose objectives are goal oriented. Their functions are planning, organizing, directing and co-coordinating the activities of others.

E.      Decision making: Is defined as the selection of one alternative from two or more possible alternatives, based upon some criteria.