As stated in the previous article it is very important for students to solve the complex business problems. In that case, it is important that the students understand that an organization is surrounded by internal factors and external Factors, and it is very important that the Organization puts up equal emphasis on both the factors.
Chapter 5: Stakeholders in Business Organizations
Firstly, we must be able to understand who are the Stakeholders for an organization. Stakeholders are the individuals or group who are interested into an organization activity. All the interested parties are the stakeholders for an organization. They include Employees, Directors, Managers, Shareholders, Bankers, Trade Unions, Government, Taxation Authorities etc. Furthermore, in this chapter the types of Stakeholders have been explained. There are three types of Stakeholders i.e.
- Internal Stakeholders: They are the stakeholders which are present within the Organization. Internal Stakeholders include Employees, Managers and Directors.
- External Stakeholders: These stakeholders are not within the organization but are influenced by the activities of the Organization. They don’t not have any contractual relationship with the Organization. They include Community at large, Environmental pressure Groups, Government, Trade Unions.
- Connected Stakeholders: Connected Stakeholders are the ones who does not exist within the Organization, but they are closely linked with the Organization and have a Contractual Relationship with the Organization. They include Shareholders, Banks, Financial Institutions, Customers, Suppliers.
So, after understanding the concept of Stakeholders the students are expected to be well versed with the different types of Stakeholders and their importance within the Organization.
Chapter 6: External Analysis- Political and Legal Factors
An organization is surrounded by the internal and external factors. As known to everybody that internal matters can be dealt easily whereas it is hard to manage External matters. So, for that case Managers of the organization should put an emphasis onto the External factors and the ways to manage the situation. In this regard External factors have been put into PESTLE Analysis.
PESTLE Analysis include the following factors:
- Political Factors
- Environmental Factors
- Social Factors
- Technological Factors
- Legal Factors
- Economic Factors
Talking about these factors in detail they are very crucial for an Organization as we do not have any control over these Factors.
Political Factor is dependent upon Political System i.e. a set of institution which forms the rules for the Society and then governs it. There are three types of Political Factors i.e. Global, National and Local. But it is of most important to understand that how it may affect the Organization. The first factor is Government Policy and the second one is Direct Legislation.
Then further Explaining the factors this chapter further takes you onto the several legislations that has been passed by the National Governments in order to protect the interest of the Employees. There are 2 issues that have been discussed in this chapter
- Dismissal: In this topic it has been expressed that the Employees can only be dismissed if it is legal. Else it would not be legal, and the Employers may be punished with the heavy fines. Examples of Unfair Dismissal are
- Terminating the Employee for taking a Pregnancy or Parental leave
- Terminating the Employee for joining the Trade Union
- Terminating the Employee over discrimination i.e. based on caste, creed, religion, gender.
2. Redundancy: Redundancy is a form of dismissal which occurs when an employer needs to reduce the size of their workforce. The employees can only be removed in such a case can be removed only when they were given fair notice period.
Then after protecting the interest of Employees this chapter further focuses on Data Protection.
Data Protection: As the world is getting complex so the same goes for Business. As an Organization is holding a large amount to data so it becomes very important to protect the data. There ahs been a several legislations that have been passed under UK DATA PROTECTION ACT 1998 which is explained in detail.
It is very important that the data is protected from the Human Intervention i.e. can be committed either via Physical Access Or logical Access. So, an Organization should pre-hand understand the risks that can be faced by an Organization, significance and its Impact on the Organization. If risk is high, then an Organization should use several Counter measures to protect the integrity of the data.
After this chapter, students who would be the Managers of the various Multi-National Companies should be able to understand that it is very important to understand the External Factors of an Organization as they play a very crucial role into the success of the Entity.
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