Topic 6 - Internal Factors
Higher Business Management
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Learning Intentions / Success
Criteria
Learning
Intentions
Internal
factors
Success Criteria
Learners should be aware of the impact that
internal factors might have on organisation’s
ability to meet its objectives and the ways the
organisation might be able to overcome any
constraints in term of:
•
•
•
•
staffing
finance
technology
corporate culture.
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Human resources
• Human resources are the staff in an
organisation.
• ‘Staff’ means both managers and employees.
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Staffing (employees)
• Employees might not have the correct skills or motivation
required to carry out a task.
• If they don’t have the correct skills, the quality of their work
might be poor, which results in a product of poor quality.
• Customers are likely to be put off if a product is of poor
quality.
• If the motivation of employees is low (i.e. they don’t want to
work as hard as they could), their productivity will be low and
deadlines might be missed.
• Low motivation could also result in a higher absence rate.
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Staffing (management)
• Managers might not have enough experience
or skill in decision-making.
• This could result in poor decisions being made
that impact upon the whole organisation, e.g.
fewer sales.
• Some managers take less risks which don’t
maximise profits, but others take too much risk
and, when things go wrong, put an
organisation into financial difficulties.
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Financial
• There might not be enough finance to make new
purchases.
• This might mean that raw materials cannot be
purchased and production stops.
• If production stops, orders might be delayed and
customers become unhappy.
• A lack of finance might also mean that objectives,
e.g. growth cannot be met, can’t develop new
products or offer wage rises to motivate staff.
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Technology
• The technology that a business has might not be the best
available or suitable to carry out certain tasks.
• If technology is out of date, the production process might
not be as effective as it could be and machinery could break
down.
• If machinery breaks down, production will stop.
• A lack of technology might also mean that a business cannot
keep up with what their competitors are doing, e.g. if they
are unable to use social media to sell products but their
competitors are, then they might lose customers.
• Selling products via social media is known as social
commerce or s-commerce.
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Corporate culture
• Corporate culture is sometimes referred to as organisational
culture.
• It consists of everything to do with the organisation including
its values, emotions, beliefs and the language used.
• It is also to do with the attitude and behaviours that members
of the organisation adopt because of the culture within the
organisation.
• It is established from the beginning of the organisation’s life
and reflects the different activities (formal and informal),
policies and procedures that the organisation has.
• The different management styles adopted by senior managers
may also influence the culture of an organisation.
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Benefits of having a strong
corporate culture
• Employees feel they are part of, and belong to, the organisation; this can
provide them with a sense of security and can improve motivation.
• It can motivate staff, which in turn will lead to improved efficiency and
higher productivity.
• It can create positive relationships within the organisation that will enable
better communication and decision-making.
• Employee loyalty can be increased, which will decrease staff turnover and
staff absence rates.
• The image and identity of the organisation can be improved, which will be
visible to all stakeholders.
• Customer loyalty might be higher because they associate themselves with
the identity (e.g. logos, uniform and store design) of the organisation. It may
also be recognisable across the globe if it is a multinational organisation.
• There will be consistency across the organisation which will allow
employees to work in different locations or branches if necessary.
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Factors that need to be considered when trying to
establish a positive corporate culture :
• The vision and aims of the organisation; these normally come from
the original owners and/or shareholders.
• The opinions and views of employees; consulting employees on
matters will help to encourage good working relationships and
improve motivation.
• The design of stores, logos and uniforms. This is because these are
visible and promote the identity of the organisation, though can be
expensive to design and then to implement.
• How people (e.g. employees and other stakeholders) are made aware
of the culture. This might involve holding events, which could be
costly.
• The policies and procedures that the organisation has. These lay
down the expectation and behaviour expected and will have an
impact on corporate culture.
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