Placing organisations in context- part 1- internal environment, micro environment

The internal environment and micro environment have huge connection between them.
The former one is the core value and the later one is the outer element.

The internal environment consists of elements within the organisation,that means managers need to focus on the company inside for their running system and company style.They pay attention on the business resources  such as people ,finance, technology, power,culture, objectives,structure, business processes.

Apart from that, as for the micro-environment,it is the outer element of the internal environment.These factors include competitors , potential entrants ,substitutes suppliers, customers affecting the organization's immediate area of operations ,performance and decision making.

For example : Microsoft is the multinational company.It needs to have a strong inside structure and ability of communication. The vital management skills are required to establish an effective team work. The company must be run themselves smoothly without any serious issues.

So,the first step is to upgrade themselves,but the second step is adapt to the outer environment. Many important component should be realized more in the real situation .
For one thing,Suppliers and buyers will affect the market dramatically. A business organisation may know what the needs and what the wants .For other thing ,competition including potential entrants competitors substitutes would make the profit become low .
ATM ,IPHONE ,APPLE ,ANDROID are the competitors for Microsoft. Company should
realize their own position and to develop their talent and keep their ability as well as possible.

According to Porter,the ability of a firm to earn an acceptable return depends on five forces-
Bargaining power of buyers and suppliers ,threat of new entrants and substitutes.A change in any of the forces normally requires a business unit to reassess  ' the marketplace given the overall change in industry information.'   After the strong competitive rivalry has occurred, the profitability will be decreased.

Take transportation as an illustration, at the past, people may advice to go to Paris from London rather than by Airplane since it is more fast and more safe. There has a limited bargaining power of the airplane manufacturer of Bowing and Air bus of the air-company.But ,The Bargaining power of buyers is nearly zero ,because it is difficult to go to Paris by ship which is not safe and slow. At that time ,only few company supplied a airplane service cause of the government policy .

But now ,after the Train Infrastructure, It can be a substitute of aeroplane.The airline of the price  from London to   paris  and  other European cities  has decreased . Also, government allow other airline to enter the local market.So ,some economic airlines such as Ryanair
can prove a cheaper service.

So, a successful business firm should pay attention on the internal and micro environment,
Not only improve the inner elements ,but also keep in touch with the outer environment to
ensure a high relation with the society issues by scrutinizing the other competitions and the bargaining power of buyer and suppliers.These are the key point to gain a success.