Question

b)Discuss how decision making may well be influenced by a number of internal or external environmental factors impacting a business.

Answer 1

Internal environmental factors are factors which are inside the organization that affect a business like organizational culture, organizational structure and management structure.

External environmental factors are customers, competitors, economy, and technology, social condition and availability of resources at that place.

An organization must have the ability to analyze these factors and take decisions according so that it can survive in current market condition. Decision making is crucial factor for strategic formation. If an organization properly examines both internal and external environmental factors then it can gain competitive advantage and can make more customers satisfied and loyal and can retain best employees as well. Earlier decision making only reserved for top level management but now it spread in an organization even employees can make suggestions and can make decisions on which they have authority, it encourages employees to play an important role in formation of strategy. Making decisions based on the environmental factors can make an organization to survive in long-term and gain more and more revenue by attracting large number of customers. It can also help in reduce operational cost. Without analyzing these factors company make wrong decisions which can negatively affect company in long term.