Internal Business Structure – Hierarchy
The internal Environment – In the internal/macro environment, the entrepreneur has the capacity to control the extent the environment exerts influence on his activities. In the process of his entrepreneurial activities he comes in contact with the owners (himself most probably), board of directors (in the case of incorporated business), employees, suppliers and competitors. As he directly relates with these people, he exerts a considerable influence on them.
Here are some of the departments, units, hierarchy which a business could be structured into;
An internal business structure should include the business owners, since they are the one with the capital. Business owners are those who are able to claim property rights on the assets of business organisations. It is any person, group of persons, a partner or institution that has contributed money, knowledge and/or any other assets/resources used in the establishment or running of a business firm with the sole interest of benefiting from the activities of the business. Owners also include those who brought existing business firms, inherited one or have a business firm bequeathed to them.
Depending on the type of business firms, owner may or may not be devoid of management of the business. However, in most entrepreneurial activities, the management is not usually devoid from the owners. In the light, the values, attitude, culture, belief system, orientation and indeed, behaviour of the entrepreneur is that of the business firm. Therefore, the entrepreneur exerts great influence on the activities of the firm as his thought, ideas and dispositions determine the nature and degree of involvement of the business firm.
Board Of Directors
In the internal business structure, the board o directors is charged with the duty of managing the entire corporation on behalf of the shareholders, who are usually too numerous and variously engaged to take part in policy determination. Boards, however, function to establish organisation goals and articulate policies and strategies through which the goals of the business firm could be achieved.
They manage the assets of the organisation for the long term benefits of the shareholders, decided whether earnings should be distributed as dividends, retained in the business for expansion or used to settle outstanding indebtedness. The board select the chief executives of the organisation; give final budget approval and secure long range business stability in a dynamic business environment.
The existence and functions of the board of directors have impacts on the operations of the organisation. Most boards have been seen to both directly and indirectly influence government policies in their industry. The inability of some boards to be proactive in their policy formulation has been responsible for the poor performance of their organisations.
Entrepreneurs are to be alert to understand the activities and mindset of the board members as the entrepreneurs have dealings with such organisations. Understanding the mindset of board members helps the entrepreneur to be better equipped as to influence their decisions.
Employees are those other than the shareholders who put in their efforts towards the achievement of the goals of the organisation and are rewarded for such monthly. They are under contract of service in the organisation. They have great influence on the performance of the organisation. The feelings and mindset of the employees concerning the activities of the organisation determine the extent of commitment of the employees towards achieving organisation goals.
The implication is that it pays the entrepreneur better to take into consideration the values and interest of his employees whenever policies are formulated. Employees, mostly unionized ones, have been seen to change the thinking of owners and managers. In the private sector where unions do not exist, the degree of labour turnover helps fashion the thinking of entrepreneurs. In essence, the employees are major internal element of business environment though the entrepreneur is able to influence their actions through good human relations.
Suppliers are part of the internal business structure. Suppliers are those who provide raw materials, financial resources or needed information to the organisation. The activities of the suppliers are useful to entrepreneurial activities in that without it the entrepreneur will find it difficult to transform his creative ideas into the form the market wants it. The entrepreneur needs to understand the capacity of the supplier in terms of quality, ability to grant credit, honesty, variability of stock and so on.
The knowledge of the actual standing of the supplier us necessary as it provides a leeway towards effectively dealing with the supplier. Suppliers usually have different customers and would want to take their wares to valued customers in terms of scarcity. Consequently, entrepreneurs must be prepared to keep faith with agreements made with suppliers, be honest and consistent in dealing with them as these will be a good means of influencing their actions.
Competition is about the struggle among firms in the same industry over who takes a higher advantage of the market. In other words, competition is a struggle of supremacy among firms that offer similar or substitute goods and/or services. In competition strategies are developed in order to be in leadership position. There is an assertion that competition creates a favourable environment upon which efficiency thrives.
Competition deals with relative position of a firm in the spectrum of return generating possibilities. Those who engage in competition are competitors. Entrepreneurs are competitors because they constantly engage in this struggle of supremacy over market leadership. To achieve this, entrepreneur are responsive the needs of the society through the innovation of the right products, availability and affordability of quality products, proper market segmentation, efficient means of distribution, adequate promotional strategy and the like.
Every competitor, therefore, plans to out-perform the other through the provision of better goods and services, development of better technologies as well as the provision of after sales services, accessories and premiums. Entrepreneurs, therefore, must ensure that their firms are the market leaders in their industry so as to firmly control the activities of the other firms in the industry. However, entrepreneur with sound knowledge of business environment and its consequences on entrepreneurial activities will be better able to identify and manoeuvre through business opportunities.
In every society you go to today, there is more one business opportunity available. That is why as entrepreneur move around they identify opportunities depending on their bias areas of business that exist but either poorly or never attended to. In terms of definition, a business opportunity is simply an unsatisfied demand for goods and services which one can conveniently serve for a profit.
It takes a dint of hard work coupled with conscious effort for a business opportunity to be identified. For an entrepreneur to identify an unsatisfied demand which he can serve profitably, it is necessary he surveys the entire business environment so as to identify which business sector offers the most rewarding investment opportunity consequently upon his bias area.
A business plan is conducted on the identified opportunity so as to ensure its feasibility and viability. The essence of survey and having a business plan is to ensure that the entrepreneur has the strength, is able to confront his weaknesses in the face of opportunities and threats associated with the identified opportunity. To the extent an entrepreneur consistently does this, he can rarely miss business opportunities?
Below are a few indicators of business opportunity;
- Government economic policies
- Natural disaster
- Crisis situations
- Infrastructural Development especially in remote area
- Poor performance by current providers
- Advertisement in the media
- Total void in areas of maximum strength
- Discussion with peers, colleagues, associates etc.
- Over demand in areas of competence.