Specific Objectives

By the end of this sub-module unit, the trainee should be able to:

  1. describe the organization and its environment
  2. explain the social responsibility of an organization
  3. highlight management ethics



An environment is the sum total of the factors or variables that may influence the existence of a business organisation. It’s sometimes seen as all factors both outside and inside an organisation that can affect the organisation in attaining its goals.


  • It’s the aggregate social, cultural, economic and physical conditions that influence the life of an individual organisation
  • They are those forces from within and without the organisation that impart the organisational ability to accomplish its objectives
  • Environmental factors affect the practises and type of decisions made pertaining managerial issues
  • All environment can be macro or micro i.e. external & internal factors


External Factors/Environment

This is the macro environment. An environment that is beyond management reach. It exists outside the organisation thus managers cannot manipulate it. External factors can be summarised as:-

  1. Economic Factors

Important aspects of the economy that affects decision making include:-

  1. Inflation – price levels (firms pay more for raw materials)
  2. Economic growth – influence demand for products
  3. Interest rates (determines how much it will cost an organisation to borrow money)
  4. Unemployment – influence the supply of labour


  1. Fiscal and tax policy – affects the control & availability of credits which affect business operations
  2. Constraints imposed by customers – (attitudes & desires) i.e. when a substitute appears in the market it causes confusion
  3. Constraints imposed by competitors


  1. Sociology Factors

Sociological factors are concerned with humans and their interaction with one another. These include customs & values of the society within which the firm operates

  • Such forces influence consumer tastes & preferences employees expectations and attitudes and the accepted role of business in that society (Muslim religion)


  1. Government Factors

These forces associated with the government and legal systems within which a firm operates.

These includes:-

  • Change in character of government e.g. change in parliament or president
  • Shift in government politics
  • Export & import restriction
  • Change in government personnel e.g. government reshuffle, parastatal appointment etc


  1. Locational Factors

Where an organisation is located has a bearing on the kind of practices an organisation has. These may include:-

  1. Availability of both skilled & unskilled labour
  2. Means of transport & communication
  3. Housing facilities
  4. Water supply
  5. Raw material supply


  1. Government polity on industries
  2. Local laws and regulations



  1. Technological Factors

The rate of technological changes greatly affects the mode and style of doing business or running organisations e.g.

  • Organisations that have not embraced technological changes have been thrown out of business or are incurring higher costs
  • Technological advancements calls for training and development of personnel (more allocation of resources)
  • Automation of work and the resultant effect on labour reduction affects workers satisfaction


Internal Factors & Environment


This is that part of organisations environment that exists inside the organisation and has immediate implications for managing the organisation. It’s the environment which

managers can manipulate and control in order to achieve their organisational goals. They include: –


  1. Managerial Factors

Changes in management of an organisation may affect policy and implementation. Managerial factors include: –

  1. Changes in managerial patterns
  2. Changes in personnel policies
  3. Changes in organisational chart


  1. Operational Factors

Operational factors that affect management include: –

  1. Factory layout and modification of factory
  2. Licensing policy


  1. Tax rates


  1. Growth and Development Factors

Changes in this area which may affect management can be analysed as:-

  • Finance available
  • Investment decisions
  • Market stability
  • Mergers


  1. Method/Process Factors
    1. New discoveries in production process
    2. New technologies
    3. Use of alternative raw materials
  1. Design Factors

Those are factors concerned with the designing and packaging of new products

  • Designing of new products
  • Appeal to the market
  • Competitors

Social responsibility of an organization

Social responsibility refers to the business obligation to refrain from harmful practices and deliberately engage in activities that benefits the society.


Arguments for social responsibilities

  • it discourages additional government intervention
  • social involvement creates a favourable image
  • It’s better to prevent social problem than to cure
  • Give the business an opportunity to solve problems that the government has failed to solve
  • Give the business an opportunity to solve problems that it has
  • The society has powers to deny the operation of a


Arguments against social responsibilities

  • It cuts on the profits of the
  • The society pays for the social responsibility through increased


  • There is lack of accountability by the business to the
  • Business people lack the social skills to deal with the problems of
  • Business has enough power and additional social involvement would further increase its power and
  • There is no complete support for involvement in social


Management ethics

Ethics is defined as the discipline dealing with what is good and bad and with moral duty and obligation.

Business ethics is concerned with truth and justice and has a variety of aspects such as expectations of the society, fair competition, advertising, public relations, social responsibilities, consumer autonomy and corporate behaviour in the home county as well as abroad


Ways of enhancing business ethics

  • Establishing a code of conduct
  • Discussing ethical issues in management meetings
  • Rewarding those who behave ethically and punishing those who do
  • Managers should behave themselves ethically and be role models to other organizational


Question: Explain the reasons why managers behave unethically.



  1. describe the external factors that affect the
  2. Outline the main social responsibilities of an
  • Explain the social responsibilities of an organization towards the following public.
    • Employees
    • Local community
    • Government
    • publics
  1. Outline ways in which managers may enhance ethic in their business organizations.


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