There are both market and nonmarket forces that interplay in a business environment and largely influence the activities of any business organization that is in operation. Under normal circumstances, the success or failure of any corporate organization depends on its ability to adjust accordingly when changes occur in both its internal and external business environment (Morgan, 2008).
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This paper explores a study on Servus Credit Union limited. It brings out how this corporate organization is influenced by the government’s regulatory activity of securities mainly in the stock market. The paper illustrates how Servus Union responds ta o this nonmarket environmental force and gives strategic plans and directions on how the organization can adjust accordingly to comply with the government’s regulatory policies.
Nonmarket environment forces
To begin with, it is imperative to menti on that the nonmarket environmental forces refer to market forces which act on the organization from the outside rather than from within. They include all factors that need to be corrected to ensure that there is order in terms of how an organization operates on a day-to-day basis (Viardot, 2011).
These forces are indeed instrumental towards strengthening business organizations bearing in mind that they create the viable ground for growth and organizational development. This has been the experience at Servus Credit Union Ltd.
In addition, the nonmarket environmental forces are indeed crucial in determining the needs of a business. They assist in offering suggestions for possible and necessary ways of managing a business. Furthermore, the nonmarket forces are commonly associated with legal requirements and regulations (Ashford, 2005).
Morgan points out that nonmarket forces includes legal arrangements, political and social interactions that happen in business system. The Servus Credit Union Ltd had to comply with the legal requirements before its establishment. Some of the forces that have affected this union include involvements between the business and the public, government entities, interest groups, individuals and other firms.
Activities in a market are either voluntary or involuntary. They are involuntary when they are issues emanating from the government and are indeed necessary to be adhered to for the sole purpose of smooth and successful running of a business. For instance, the Servus Credit Union Ltd has found it necessary to follow the rules and regulations especially those governing security of business (Morgan, 2008). Government impact on the activities of Servus Credit Union limited
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The Servus Credit Union Ltd has been a legal entity and operates under the requirement of the government. It has a genuine permit and certificate of business registration and is therefore a validated entity that exists according to the provisions of the law (Shaikh, 2010). Several instances of the interaction between this union and the government have been noted as expected.
The management of the union has been keen to observe all the necessary rules and regulations that have been put in place by the government. Taxes have always been remitted in time as stipulated and therefore the organization has enjoyed a calm and healthy state for a long period of time.
Research reveals that this organization has been through several quality assurance tests and managed to convince the necessary authorities that it operates according to the standards laid down by the government. In every market arena, there should be periodical assessments and certifications done to ensure that all the organizations are standardized to operate under desirable code of ethics. This is done at the end of every trading period as observed by Shaikh (2010).
It was at the end of the last trading year when the government decided to audit the operating standards and question the financial integrity exercised in Servos Credit Union limited. The National social securities union launched a six month monitoring program to follow and validate the movement of all securities that are entitled to Servus Credit Union.
An investigation by the National Securities Commission
Top government financial auditors from the national securities commission came and created a temporary terminal annex to operate from inside the business premises of Servus Credit Union. This is the condition and procedure stipulated by the chamber of commerce and trade in our government (Shaikh, 2010). All the stakeholders in Servus Credit Union were made aware that the corporation was under legal financial surveillance and that business was still in progress.
At the end of this critical exercise in business, the chief executive officer, the credit controller and the auditor general have too many issues to explain and account for. The most pronounced hidden malpractice which this management team needs to explain to the government officers is the finding that fifteen percent of the shares in Servus Credit Union are invalid. In other words, they cannot be liquidated even under shareholders request.
According to Morgan this is an historical landmark in our nation’s corporate world since this nation economy is well established in business professionalism. This is an unacceptable instance to have taken place in this economy which calls for good expertise if this business organization has to smoothly recover with minimal losses and to retain its good public image (Morgan, 2008)
Four I’s model analysis of the issue
The most influential nonmarket force is the inevitable and unavoidable activities of the government. Non financial players in a market made key in business by the freedom they are granted by the legal setting put in place by the government (Shaikh, 2005). It is clear that the government has to be obeyed in this case. The Four I’s analysis model can be used to understand in detail how poor management has affected Servus Credit Union.
This model is very useful in problem solving especially in management of organizations. According to this model, the major Issue is mismanagement of the organization. The information available is that a total of 15% in terms of ownership in Servus have been misappropriated. Hence, the major interest is to amicably repair the damages the firm has suffered and make negotiations with the institutions they partner with in business activities.
A financial advisory body will indeed help the new management team to redeem the lost finances of the organization. Management transition needs to be done effectively and within a relatively short period of time in order to protect the image of the union. A committee needs to be setup to steer the activity of restoring this organization to its desirable state. The issue of misused finances and exploitation of shareholders of this firm can now be solved smoothly bearing in mind that that the interest of the government and the public are to be prioritized. There are several strategies that can be used. Some of these strategies are discussed below.
Integrated strategic plans
These are laid down activities which are to be carried out as a measure taken by the relevant parties in solving the issue in question. The strategies which can be successfully employed in this case of Servus Credit Union need to be internal rather than external. Problems which originate internally are best tackled when solutions are made from within the business (Ashford, 2005).
These plans have to put into consideration of the current state the credit union since the market cannot be ignored when solving problems. The strategies can be classified into market strategic plans and nonmarket strategic plans.
An appropriate market strategic plans
Morgan (2008) notes that market forces, namely the forces of demand and supply are the major factors that determine the nature of any market environment. He adds that although demand and supply are external forces, they have to be considered in promoting the stability of a business in any business environment.
Two major market strategies that will work for this organization are publicizing of the irregularity management system and expressing prospective long-term and short term solutions that will be used. These are very effective ways of keeping the members of the public and the government well informed.
A suitable nonmarket strategy
Actions geared towards complying with government policies and reconciliatory activities with all parties that have been affected by the actions of Servus union limited. Periodicals and publications are crucial in communicating the occurrence within and outside the organization. This will maximize chances of improvement.
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Performance evaluation in current environment state
Although it is not that much known to the public, it is so profound to note that the Servus Credit Union Limited is not performing well. The management mishap that happened destroyed the good flow of business transactions in the organization.
The business has suffered a poor public image. This has largely been occasioned by its shares saga that hit the headlines for some number of weeks. Customers and financiers are hesitant when doing business with Servus Credit Union. Such a public image is disastrous to long term operation and success of a business organization like the Servus Credit Union.
Is there a need for repositions?
There is a dire need for this corporation to make efforts of repositioning itself again in this competitive financial industry. It has to make a public admittance of what happened, rebrand its services, and devise more expletive channels of reaching its clients (Lamb, Hair & McDaniel, 2011).
From the above study, it is clear that nonmarket forces in the business environment largely influence the activities of any business establishment. For instance, government policies and regulations are crucial market forces that tend to narrow down the activities and choices made by management in businesses. The legal expectations in a market exert an important force on businesses. A case example is Servus Credit Union, which has been positively influenced by these forces.
It is highly recommended that the government should establish a national body to assume an active role of educating the business community the interplay of nonmarket forces in a corporate environment (Kuratko & Hodgetts, 2008). This step of action can indeed be productive towards creating professionalism in business. It is also worth noting that any government that does not assume a key role in safeguarding commercial business may significantly contribute to the failure of business organizations (Morgan, 2008).
Ashford, A. (2005). Crisis in the Workplace: Occupational Disease and Injury: A Report to the Ford Foundation. Instabul: MIT press.
Kuratko, D. F. & Hodgetts, R. M. (2008). Entrepreneurship: Theory, process, and practice. Masoa: South-Western Cengage Learning.
Lamb, C. W., Hair, F.J. & McDaniel, C. (2011). Essentials of Marketing. Belmont: CengageBrain Learning.
Morgan, R. (2008). Market Forces. Cambridge: Orion publishers.
Shaikh,S. (2010). Business Environment 2/E. New Jersey: Pearson Education.
Viardot, E. (2011). The timeless principles of successful business strategy. Berlin: Sage Publications.