Internal and External Factors

Business is not simply production and sale of goods and services. Business is a complicated combination of thousands of factors and processes, which lead from realization of some particular business idea to getting profits from it. Among these business processes, the following ones may be pointed out: business planning, hiring of employees, establishment of production processes, distribution of products, cooperation with regulative bodies and society, etc. Respectively, the main goal of a business person is to unite all processes in order to build a mechanism that will bring financial or other benefits.

Management is a process of organization and coordination of all mentioned activities for the purpose of reaching some objectives. These objectives can be quite various and differ according to company, type of industry, conditions of a national economy, etc. Simply speaking, management is the process of running a business. Its role cannot be overestimated. That is why, it is not surprising that some experts consider management as a factor of production along with financial resources, human capital, and material resources.

Management has some appropriate functions as a process and business function. These functions are the following: planning, leading, organizing, and controlling. First of all, business is realized according to a particular strategy, business plans, etc. Such plans show the way from current positions of a company on a market to the desired ones, taking into account resources and possibilities of a company. The main role of planning is to build the most effective way to reach the desired place for a company. Second, all resources and business processes of the company should be organized properly in order to reach established business goals. This is the main objective of the next function of management, i.e. organizing. Third, management should unite people and lead them to common goals. It is vital for a manager not only to set tasks and give orders to employees, but also to lead them to these goals, showing one’s own professionalism and competence. Finally, all business processes must be controlled in the organization. This is the last function of management.

Since management is a process, it is affected by a whole range of internal and external factors. Internal factors may be the following: resources of a company, communication inside a company, innovation process, formal and informal relations between employees, etc. External factors may be the following: conditions of a national economy, degree of competition in the industry, customers’ behavior, regulative and social environment, etc.

All the above mentioned factors can affect management in a positive or negative way. Such influence is performed via affection of the company’s business performance. A company is forced to change managerial practices for the purpose of keeping this performance on a desired level. For example, a growing degree of competition forces a company to change not only marketing and production processes, but also managerial practices. A company must implement changes in the process of business planning and organizing, adjust these plans, and find new competitive advantages. Besides, a company must pay attention to the function of controlling for the purpose of reducing production and other business costs. This is the first step to meeting a new degree of competition.

The following factors and their influence on functions of management are going to be considered below: globalization, technology, innovation, diversity, and ethics. Influence of these factors is going to be considered on example of a specific organization – the Boeing Company.

The Boeing Company is a global leader in the aircraft and aerospace industry. It is an international company with headquarters in the United States of America. The company was founded in 1916 and has become one of the biggest international companies in the world since then. The company employs almost 170 thousands of employees. Its annual revenue was $86.6 billion in 2013. Generally, the company’s business is divided into the following divisions: production of commercial aircrafts, defense products, and aerospace vehicles. Additional information about the Boeing Company is provided below:

In May 2012, the Company acquired Inmedius, a provider of software applications and services for managing and sharing information and learning content. In February 2013, the Company acquired CPU Technology Inc.'s Acalis business. Effective May 27, 2014, Boeing Co acquired Aerdata Group BV. In June 2014, Boeing Co acquired Ventura Solutions Inc, an Annapolis Junction-based developer of custom software and hardware solutions. (Boeing Company Profile, n.d.)

Effective management is one of the keys to success of the company under consideration. However, all mentioned management functions have been affected by external and internal factors. Globalization has created a single world’s business environment. On the one hand, the company has managed to enter international markets and get access to additional customers. In the end, it has been realized in the growing profits. On the other hand, it has led to a growing degree of competition. A lot of companies have learned experience of the Boeing Company and used it against the company. For example, the greatest Boeing’s competitor Airbus has been created as a consortium of European manufacturers for the purpose of withstanding competition with the American company. The company has been forced to implement significant changes in the business planning and organization. Besides, controlling has to be improved since the company has opened branches abroad. Eventually, competition is a key to progress. That is why, influence of globalization on management functions can be considered as mainly positive.

Globalization is related with other external and sometimes internal factors like diversity. It has been mentioned that globalization has led to creation of the single world’s business environment. However, a high degree of diversity still remains in this world. Every country is characterized with unique mentality and cultural environment. Business strategy is usually affected by such diversity. For example, sales strategies and instruments can be affected by mentality and cultural factors. Companies should account for differences in mentality and cultural environments in the process of business planning and organization. When entering the Asian market, the Boeing Company has to take into account the local business environment in the process of planning negotiations and further sales.