Please assist with the following: Explain how internal and external factors impact the four functions of management planning, organizing, leading, and controlling. Explain how the following factors impact the four functions of management. Be sure to include specific examples for each.
But they accurately describe an important business reality. This is the idea that, as a company grows, it makes more of a product.
The average cost of making each item then falls, so profits rise.
Similarly, if a store buys more of an item, it can negotiate a discount from the wholesaler, and it can sell the item cheaper than its rivals. Economists call this "economies of scale. We'll also explore what happens when organizations get too big, and are hit by "diseconomies of scale. Economies of scale are cost savings that occur as a result of making more of a product.
The Economist defines them as, "Factors that cause the average cost of producing something to fall as the volume of its output increases. Here is an example of how economies of scale work: This is because the main element of the cost of making the brochure is labor for design and editing the material, and setting up the printing press.
These are fixed costs that remain the same no matter how many brochures you produce. In short, you get more for your money when your organization achieves economies of scale. So, while you may incur initial extra costs by investing in new machinery, additional labor or more raw materials, you save money on the average cost of each unit you produce see figure 1, below.
This basic principle has been the driving force behind many major economic developments, such as the industrial revolution and mass production. And it is why bigger companies are often more efficient and can deliver goods and services at a low price, yet still make a healthy profit. Think of how Ford's assembly line changed the face of car manufacturing, for instance.
And consider how Walmart's "everything under one roof" style and immense purchasing power allows it to beat its competitors on price. Now, let's look at internal and external economies of scale. Internal Economies of Scale Internal economies of scale are cost-saving factors that are specific to organizations, regardless of the industry or environment that they operate in.
There are five types of internal economies of scale: Technical You can achieve technical economies of scale through improving the efficiency and the size of your production process.
Here are some examples: Dividing your production process into separate tasks can increase productivity, and your workers will likely become more specialized and efficient. Also, you can slash unit costs by using mass production techniques, such as specialist machinery, despite the initial capital investment that's needed.
Building on the experience of what you do. Processes become more efficient through greater knowledge and research and, as a result, your average costs of production fall.
Taking advantage of the law of increased dimensions, or "cubic law.
If you double a container's length and height, for instance, its capacity increases percent. Think of supertankers or Amazon's huge warehouses.
Purchasing Bulk buying can cut costs dramatically, as in the brochure example, above. If you're a large manufacturer, for example, you have more bargaining power than your smaller competitors have to negotiate lower prices with your suppliers.
Bigger firms can also get better delivery rates, because they require more products to be moved. Efficient inventory or stock management is another way to reduce average unit costs, by not paying for, or unnecessarily holding on to, component parts in store.
Managerial You can achieve managerial economies of scale by investing in expertise as your organization grows. Specialist managers who oversee and improve production systems can streamline processes and increase productivity, resulting in lower average unit costs and economies of scale.
Financial Larger organizations often have better credit ratings than smaller ones, because they have more assets to use as collateral. This means that they can borrow more cheaply in order to finance investment and realize greater economies of scale.
They then reap further rewards from their investment because the lower interest rates they are offered mean that it costs them less to borrow.
Companies that are quoted on the stock market have further access to new finance, and thus to even greater economies of scale through the sale of equities or shares. Finding This Article Useful?Gmail is email that's intuitive, efficient, and useful.
15 GB of storage, less spam, and mobile access. explanation of how each function relates to an organization and explain how internal and external factors impact the four functions of management far as planning organizing le ading controlling. Download-Theses Mercredi 10 juin The workforce is changing as businesses become global and technology erodes geographical and physical srmvision.com organizations are critical to enabling this transition and can utilize next-generation tools and strategies to provide world-class support regardless of location, platform or device.
Search and browse our historical collection to find news, notices of births, marriages and deaths, sports, comics, and much more. Organizational environment denotes internal and external environmental factors influencing organizational activates and decision making.
Organizations have an external and internal environment; External Environment. Internal Environment. Process, Objectives, Importance 4 Functions of Management Process: Planning, Organizing.