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CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Many approaches have been used in the past to explain how organizations operate the classical organic and quantitative schools focus on aspects of organization, which manager could influence directly. The approach has been criticized for being too restrictive and inadequate since these schools failed to account for the varying environmental factors that dictate the fortunes of organization. For instance, in the past organization focused mainly on profit maximization, however, recent challenges posed by external groups such as government unions and public have created the need for maintaining an equitable working balance among these interest groups. The system and the contingency approaches to management have offered a useful suggestion by emphasizing on the whole organization and the inter relationship of it is parts.
The major implication of these schools approach is that an organization must be examined as a whole, including its parts or sub-systems and as a part of the enviro.nment around it. In management, the word ‘environment’ does not necessarily mean physical surrounding, but it is used to describe all those influences that bear upon the individual organization. Since business makes demand on the business, managers in any organization must interact with and respond to environment factors internal and external to their organization.
The sum of these interrelationship within the business and between the business and the society is what management partitions called “THE BUSINESS ENVIRONMENT” Although, managers find it difficult to change most of these forces effectively however, the ability, to evaluate and react to these changes will have considerable impact on organization’s effectiveness. For example, the failure of some manufacturing concerns in Nigeria should not be attributed to government policies only. These companies should also be blamed for their inability to effectively identify, evaluate and react to the changes witnessed in the Nigeria economy since 1980. the need for studying business environment is important considering the fact that business organization do not operate in vacuum and effective management in complex and dynamic society requires the assessment of strengths and weakness of the organization and the opportunities and threats posed by the challenges of the eternal environment. For the survival and growth, orgnisation must adopt to these challenges. In addition, the changes have been classified into three ways namely; 1. Classification based on the rate of change 2. Effect of the environment 3. External of control
A. CLASSIFICATION BASED ON THE RATE OF CHANGE: Business environment can be classified by determining the extent to which the environmental factors changes. Environmental influence may be stable over the periods dynamic (i.e change at unpredictable rate). Or turbulent (i.e change at unpredictable rate. Forecasting environment factors in a static and a turbulent environment may be useless considering the fact that environmental factors do not change in the former, while forecasting in the late is unattainable. The manager, therefore, needs to concentrate on effective internal management to attain organization success where it operate within a static environment good planning and decision making in a turbulent environment requires a greater deal of the managers personal characteristics rather than ability to speculate the environmental factors.
B. EFFECT OF THE ENVIRONMENT: The environment factors may be opportunities that must be exploited or threats or problem that must be minimized by the organization. An opportunity can be simply referred to as business activities that can be profitable exploits by an organization. The opportunity may be visible or invisible. The environmental influence may open new investment opportunities for the organization i.e new uses and new products. Threats or problems can be regarded as “limiting factors” that is the factors that have negative impact on the success, growth and survival of the organization. An example of environmental impact on the business can be viewedfrom the structural adjust mental changes in the structure of Nigeria economy through these policies alone contributes to the success of some firms, bank in particular, emergence and growth of oil downstream industry and the failure of some organization.
C. EXTENT OF CONTROL: The environmental forces may be controllable i.e managers can use their managerial skills and experience to change these environmental forces on the other hand, the forces may be in controllable i.e they are beyond the ability of individual managers and managers must consider the environment given and adapt their manager practices to suit the environment. This business may be defined as a commercial or industrial concern which people have invested money for instance, an enterprisers reward for risking his capital in any business venture is profit. This however, depends on the ability to organize and combine various factors of production at his disposal in the best proportion to attain the best result. Besides, administration is the direction of affairs of others usually through decision making and implementation. It also includes the choice and ways of achieving goals. Hence business administration could he said to the study of manner in which complex and inter-related measure of business organization operates. It can also be regarded as an area of discipline, which has two approaches.
1. MANAGERIAL APPROACH: This has to do with knowing how people who operate business systems inter-relates with one another. The system relates to man. Thus, understanding his reactions to change in environment, what he wants done and the way he goes about it? That is knowing who is responded for the production of goods and services (Human elements) since the concept of business were in adequate in the early 19th century, buffer the industrial and technological innovating and the consequent emergency of large commercial and industrial revolution, the impacts of business went beyond the little existing economic resources. Business thus, became a social institution interacting with other elements of business environment.
2. FUNCTIONAL APPROACH: The functional approach forces on the consumer as starting point. It is assumes that the consumer makes a significant approach in the inter-play of interrelated network within the organization, which is cable “BUSINESS ADMINISTRATION”.
1.2 STATEMENT OF THE PROBLEM
In Nigeria today, a lot has been said and written about this concept of business environment. This is because what business did and equally fails to do thereby causing great concerns. In essence, usually the plan mapped out by many organization becomes in exercise in futility because of their failure to recognize these factors: - Lack of co-operation between bosses and subordinates - Lack of recognition of the competitors and competition - Government policy - Lack of recognition of customers attitudes - In adequate and lack of co-operation among shareholders in some organization. Therefore, the problem of this study is to determine the effect of these factors on the growth of a business in an organization.
1.3 PURPOSE OF THE STUDY
The following are the objectives of the purpose of the study:
1. To provide a basic understanding of the concept of the business environment
2. To determine the advantages of the environment on business organization
3. To highlight the problem of environment before establishing any business organization
4. To recommend solution to environment problem in a business venture
1.4 RESEARCH QUESTIONS
1. Does the general business environment have effect on the growth of an organization
2. Do profit maximization have impact on the growth of an organization
3. Does consumption play a role in the growth of an organization
4. Do increase in prices at product lead to organizational growth?
1.5 TESTABLE HYPOTHESES
The project shall on the stated hypothesis relationship or correlation. However, the study would seek to examine the correlation between business environment and organization growth. The variable of the study are: - Dependent variable organization growth - Independent variable business environment These variables shall be tested together. The test of the hypothesis is formulated as follows:
1. HO: The general business environment have no effect on the growth of an organization
HI : The general business environment have effect on the growth of an organization
2. HO: Profit maximization has no impact in the growth of an organization
HI : Profit maximization has impact in the growth of an organization
3. HO: Consumption play no role in the growth of an organization
HI : Consumption has a role to play in the growth of an organization
1.6 SIGNIFICANCE OF THE STUDY -
It will enable the company to defect the environmental hurdles that impede the growth of business, thus putting them in a position to make effective decision
- Once environment problem are defected organizational problem will be minimal since decision will be based on such factors
- To contribute to behavioural management
- To recommend solution the environment problem in a business venture.
1.7 SCOPE AND LIMITATIONS OF THE STUDY
The study is limited to capital oil and gas industries limited as an example of a down stream oil sector in Nigeria. The limitation of the study are:
1. High cost in carrying out the research activities
2. Lack of capital or fund limits the depth of the study
3. Limited also affects the depth of the study
