Environmental Changes

Environmental Changes

 Introduction

Changes in the external environment may force companies to make changes in the way in which they function. Similarly changes in the internal environment can also trigger off a trend in the external environment. In this text, I will give an example of each trend using a real life scenario and suggest ways in which these companies could have anticipated the changes and prepared for them.

Changes in the external environment

During the Great Depression of 1929, many companies especially those offering luxury goods found their profits declining as a result of decreasing demand. One such company was Frontier airlines. As a result of the hard economic times, people had to cut on their travel expenditure as they now had less disposable income. Frontier airlines found itself hard placed to reduce its air fairs in the prevailing economic downturn and as Hancock (2003) notes, this company nearly collapsed.

In my opinion, the company should have foreseen these hard economic times and adjusted accordingly. For example, it should have made arrangements to ensure that it reduced its costs by retrenching some employees etc. However, its costs remained the same as before and this lead to inadequate revenue generation to cover the costs

Changes in the internal environment

In the year 2001, Dole foods started experiencing an unprecedented decline in profitability in what was much later attributed to poor management. The declining profits saw investors in the company flee amid speculations that the company was collapsing hence pushing the value of the company’s shares at an all time low. These developments were picked up by the competitors of Dole Foods products who took this opportunity to increase their market share to great success hence causing Dole foods to loose its market (Marcouse et al. 2003).

If only steps had been taken when this deficiency in management was noted i.e. by replacing the managerial cast, the problem would have been solved amicably long before competitors capitalized on the same. 

References

Hancock, M Business (2003). Case Studies Longman

Marcouse, I., & Lines, D. (2003). Business Case Studies: Answer Guide. Longman

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