Post on 21-Feb-2023
‘THE EFFECTS OF ENVIRONMENTAL FACTORS ON THE PERFORMANCE OF A
COMPANY. A CASE STUDY OF PATENTS AND COMPANY REGISTRATION
AGENCY’- (PACRA)
BY
GIFT BANDA
STUDENT NUMBER NO: 013-178
SUPERVISOR: MRS JACQUELINE MWEWA
CUZ 2020
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DECLARATION
I Gift Banda hereby declare that the dissertation ‘The effects of environmental factors on the
performance of a company-A case study of PACRA- Kitwe’ has not previously been submitted by
me for the degree at this or any other university; that it is my own work in design and in execution, and
that all materials contained herein has been duly acknowledged.
Signed: ………………………………………………….
Date: ……………………………………………………….
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DEDICATION
I dedicate this work to God firstly, I wouldn’t have made it this far without him. To my late
parents Bishop Sky-Zibani Banda and Sophie-Kasangila Banda, for their love, support and all
they ever did in their life to ensure I got the best out of life and out of education, I know they
would have been so proud. To my brothers Zibani, Yamikani and Nzelu Banda, I would like to
thankyou for all your unfailing support through the years especially after the loss of our parents.
To my grandmother Annete, aunts Grace, Alice, Zicky, Victoria, Angela, Anette and everyone
else, thankyou for the constant support. To my circle, my close friends Siphiwe, Sibongile,
Lyapa, Stephen, Gideon, Bornface, Lyness, Theresa, Lisa, Chipo, Ireen, Patrick, I appreciate you
all and most of all I appreciate your prayers and your support throughout my years at Cavendish
University. Lastly, to everyone who has helped and pushed me through whose names are too
many to mention, thank you.
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ACKNOWLEDGEMENTS
First and foremost, I would like to thank my Heavenly Father who gave me the strength to start
and complete my study. I want to thank the following persons for their respective contributions
to this dissertation: Mrs. Jacqueline Mwewa my supervisor at Cavendish University Zambia, for
her unfailing support and guidance throughout this study. To all my lecturers I have had
throughout my years at Cavendish University, Thank you for the help.
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ABSTRACT
Nowadays, every company is in a very difficult position because the competition is tough and the
economy has become difficult. Still, every company tries to be successful by focusing on critical
success factors and adopting the concept of Business Excellence. Over the last few years, many
companies have collapsed, with others opting to sell their shares to avoid eventual loss. As such,
it is important for companies to study environmental factors in which the businesses operate
since they collectively affect performance dictating whether a system will thrive or collapse. The
purpose of the study was to investigate the effects of environmental factors affecting PACRA.
The study employed a qualitative design and used a sample size of 40, data was collected using
both primary and secondary data. Excel spreadsheet was used to analyze the data. Therefore, the
study revealed and concluded these main points below:
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i. The study revealed that the environmental factors (internal and external) are the types of
environmental factors that refer to anything within the company and under the control of
the company no matter whether they are tangible or intangible.
ii. The study indicated that internal factors can affect how a company meets its objectives.
Strengths have a favorable impact on a business while weaknesses have a harmful effect
on the firm.
iii. The study found that workers trust environmental scanning which is helping them in
monitoring of the organization's internal and external environments for early signs that a
change may be needed, to accommodate potential opportunities or threats, and to make
adjustments to allow the company's strengths to combat its weaknesses.
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TABLE OF CONTENTS
DECLARATION ii
DEDICATION iii
ACKNOWLEDGEMENTS iv
ABSTRACT v
CHAPTER ONE: 1
INTRODUCTION 1
1.1 Introduction 1
1.2 Background Information 1
1.3 Statement of Problem 3
1.4 General objective of the study 4
1.4.1 Specific Objective 4
1.4.1 Research questions 4
1.5 Significance of the Study 5
1.6 Organization of the Research Report 5
CHAPTER TWO: 6
LITERATURE REVIEW 6
2.1 Introduction 6
2.2 Definitions of Key Concepts 6
2.3 Conceptual framework 7
2.4 Environmental factors affecting the performance of company 8
2.4.1 Economic Factors 8
2.4.2 Technological Factors 9
2.4.3 Socio-cultural Factors 11
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2.4.4 Political Component and Legal Factors 11
2.5 Effects of Environmental Factors on Performance 13
2.5.1 The Competitive Environment 13
2.5.2 Customers 15
2.5.3 Suppliers 16
2.5.4 Substitute Products and Services 17
2.5.5 Marketing Intermediaries 18
2.5.6 Financiers 18
2.5.7 Public 18
2.5.8 Labor 19
2.6 Effects of Environmental Factors on Performance 19
CHAPTER THREE: RESEARCH METHODOLOGY 23
3.0 Introduction 23
3.1 Research Design 23
3.2 Area of the Study 23
3.3 Target Population 23
3.4 Sample Size 24
3.5 Sampling Techniques 24
3.6 Data Collection Methods 24
3.6.1 Secondary data 24
3.6.2 Primary Data 24
3.7 Research instrumentation 24
3.7.1 Interview guides 24
3.8 Data Analysis 25
3.9 Ethical considerations 25
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3.10 Limitations of the study 25
3.11 Chapter Summary 25
CHAPTER FIVE 30
DISCUSSION OF FINDINGS 31
5.1 Introduction 31
CHAPTER SIX: 35
CONCLUSION AND RECOMMENDATIONS 35
6.1 Introduction 35
REFERENCES. 36
APPENDIX I: INTERVIEW GUIDE FOR WORKERS 44
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CHAPTER ONE:
INTRODUCTION
1.1 Introduction This first chapter presented the introduction of the study on the effects of environmental factors
on the performance of a company/ business. The first part was a background of the study, the
statement of the problem, objectives of the study, research questions, and significance of the
study and organization of the research report. The last section dealt with the summary of the
chapter.
1.2 Background Information
Most companies in Zambia play an important role in the economic development of the country.
In general, companies considerably contribute to the formation of the Gross Domestic Product
(GDP) and foreign exchange earnings (Prendergast and Berthon, 2000). It is believed that the
company is part of the capable leading sectors in an economy that are geared towards progress.
Companies constantly have higher terms of trade and create greater added value than other
products. This is due to the fact that the companies have a wide variety of products and are
capable of providing the users with high benefits (Dumairy, 2000).
Despite companies having a very important role in the economy of Zambia, they still face
various environmental issues which can be external and internal. Internal environment consists of
conditions, factors and forces within the Business organization that affect its performance and
outcomes. Internal environment defines the scope of a business organization. It provides strength
and weakness of the organization (Demirbag, 2006). The inherent capacity which an
organization can use to gain strategic advantage over its competitor is known as the strength and
the inherent capacity which may create strategic disadvantage for the businesses’ weakness. So,
the internal environment consists of those factors which gives both strength and weakness to the
organization.
Mukherjee (2015) suggests that the factors have an important bearing even on the performance
of the organization. The factors that were brought out are the value system, the mission and
objectives, organizational structure, corporate culture and style of functioning of top
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management, quality of human resources, physical resources and technological capabilities of
the organization. External environmental factors that have a bearing on organizational
performance include political, economic which are macroeconomic and microeconomic in
nature, social and technological.
For any company that would wish to be ahead of competition, issues related to environmental
changes tend to evoke an image of concern. Yet, it is a given that the changes have serious
economic effects among the general population with the turbulent business setting in which they
have to operate as well (Wright, 2002). Wright asserts that, if ignored, the alterations in the
environment can eventually compromise a financial company’s profitability, and long-standing
viability. The success of the company depends on the company's capability to manage these two
factors through the analysis of environmental factors as well as the formation and
implementation of business strategy.
As a source of uncertainty and constraints, environmental effects create problems for companies.
While some companies are affected by a large number of environmental factors, others are
directly affected by only a few (Dumairy, 2000). Companies that have to relate with a large
number of environmental influences, over which they have little or no control, face turbulence
and complexity (Prendergast and Berthon, 2000). Economic conditions change; unemployment
levels change; interest rates fluctuate; government regulations are modified; consumer
preferences change; and new technologies are presented in many businesses. All of these
changes create turbulence. Companies dealing with turbulent environments must try to forecast
and predict future conditions and develop strategies to cope in addition to constantly monitoring
changing environmental conditions.
Based on the problems stated above, companies should be ready and prepared in capturing every
opportunity as well as develop it optimally. If viewed from the existing perspective, the business
opportunities must certainly be supported with a good performance by companies. Glencey
(1998) defined that a performance refers to the level of achievement or attainment of a company
within a certain period. The performance of a company is highly crucial to the development of
the company. The company’s goal is to maximize the value of the company reflected in various
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performance measures. The performance of a company can be seen from the profitability and
growth of the level of sales.
According to Jauch and Glueck (1998), they explained that performance is the level of
achievement or attainment of a company within a certain period. A company’s performance is
very influential on the development of the company. The company objectives, including: to
remain standing or exist (survive), to gain profit (benefit), and to be able to develop or grow
(growth), can be achieved if the company has a good performance. The performance of a
company can be seen from the level of sales, profit levels, payback (return on capital), turnover
rates, and market share achieved. One of the factors that must be implemented before
formulating the goals and strategies applied in a company is environmental analysis and
diagnosis. It is difficult for corporate leaders to know the problems faced until it can eventually
lead to ineffective strategy formulation.
Patents and Companies Registration Agency (PACRA)
PACRA a semi-autonomous executive agency of the Zambian Ministry of Commerce, Trade and
Industry. Its principal functions are to operate a legal system for registration and protection of
commercial and industrial property and to serve as a legal depository of the information tendered
for registration. It comprises two core departments, Industrial Property and Commercial. The
mission for the organization is to provide efficient and effective registration and protection
systems for commercial and intellectual property rights in order to protect innovation and orderly
trade for the benefit of the nation. The company ensures Zambia’s continued adherence to the
various conventions and treaties on the protection of intellectual property, namely, trademarks,
patents and industrial designs and promote establishment and maintenance of a computerized
information centers for the publicity of company transactions, financial positions and the
dissemination of technical information contained in patent documents to potential and actual
users.
1.3 Statement of Problem
In the phase of changing economic times and systems fueled by diverse factors, any company
needs to update their systems to survive and thrive in the market. Over the last few years, many
companies have collapsed, with others opting to sell their shares or businesses as a whole to
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avoid eventual loss. As such, it is important for companies to study environmental factors in
which the businesses operate since they aggregately affect performance dictating whether a
system will thrive or collapse.
Roman and Scott, (2009) suggest that companies operate in increasingly complex, sophisticated
and competitive environments fueled by technological advances, economic growth and
fluctuations, and the realization that resources are limited. The external operating environment
considerably influences the performance of companies through changes in technology, the
market, competition and customer demand rapidly changing. Electronic technology has changed
how customers interact with their financial institutions (Krishnan et al., 2003). Just over a fairly
short period of time, companies in Zambia have changed significantly with a very competitive
marketplace (PACRA, 2008). Companies should always be ready to do a thorough analysis of
the environmental effects and to know the responsiveness. This is because a company’s success
can be influenced by the company’s environmental factors. Therefore, the study sought to
investigate the effects of environmental factors on performance while concentrating specifically
on PACRA-Kitwe.
1.4 General objective of the study
The general objective of the study was to investigate the environmental factors affecting the
performance of a company. The case study being: Patents and Company Registration Agency
(PACRA-Kitwe).
1.4.1 Specific Objective
1. To investigate the environmental factors affecting the performance of PACRA as a
company.
2. To evaluate how the environmental factors, affect PACRA’s performance.
3. To assess how PACRA manages the environmental factors in order to increase
performance.
1.4.1 Research questions
1. What are the types of environmental factors affecting performance of PACRA as a
company?
2. How are the environmental factors affecting PACRA’s performance?
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3. What measures have PACRA put in place to manage the environmental factors in order
to increase performance?
1.5 Significance of the Study
This research was imperative as it showed the significance of the various business environmental
factors and how they affect company operations at PACRA-Kitwe in particular. A business
entity like PACRA depends on both internal and external factors to function smoothly. While an
organization may try its level best to continuously improve its internal factors, it cannot possibly
alter the course of events occurring outside its horizon. The study sought to show how businesses
should be sensitive to unpredictable and ever changing environmental factors in the business
environment. This can affect their performance and how they can effectively manage these
factors and find opportunities using the SWOT analysis to enhance their productivity as well as
their profitability. Therefore, this study will add to the already prevailing studies in the area of
performance in turbulent environments. Additionally, this will provide a reference point for other
intellectuals studying similar disciplines in the future.
1.6 Organization of the Research Report
The dissertation will be arranged in six chapters. The first chapter gives the historical setting of
the study, statement of the problem, research goals, study questions, significance of the research,
scope of the research, organization of the study and summary of the chapter. Chapter two
provides theoretical definitions of key terms, literature review and it also adds the research gap
and abstract framework.
Chapter three handles research methodology, research design, study area, population as well as
the size of the sample and its techniques, types of data, techniques of data collection, data
processing and analysis, variables to be measured, and ethical issues. Chapter four shall discuss
the result findings. Chapter five will relate the discussions to the objectives of study, research
questions, and literature review. Lastly, Chapter six shall present the summary of the findings
and their policy implications on the effect of environmental factors affecting the performance of
a company, conclusion, recommendations, limitations of the study and suggested areas for
further studies and chapter summary.
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CHAPTER TWO:
LITERATURE REVIEW
2.1 Introduction
The chapter endeavored to review the literature that has been conducted on the subject under
study. The previous chapter provided a brief explanation of the research area and the effect of
environmental factors on the performance of a company. The researcher further elaborated, with
the help of decent literature, examining the topic under study. This chapter attempts to identify
the environmental factors affecting the performance of a company, the effects of environmental
factors on performance and how to manage the effects of environmental factors in order to
increase performance.
2.2 Definitions of Key Concepts
Patents and Company Registration Agency: is a Statutory Body under the Ministry of
Commerce, Trade and Industry.
Environmental factors: This refers to all the identifiable elements in the economic, political,
regulatory, technological and demographic environment that affect how a company operates,
grows as well as survives.
SWOT Analysis: (Strengths, Weaknesses, Opportunities, Threats)
Turbulence: Environmental turbulence is a dynamism in the environment, involving rapid and
unexpected alteration in the environmental sub-dimensions. Turbulence results from fluctuations
in and interactions between environmental factors mostly because of technological advances
(Lumley, 1972).
Economy: Economy refers to the resources of a country in terms of production and consumption
of goods and services that determine her wealth (Manfred, 2015).
Performance: This refers to the accomplishment of a given task measured against preset goals,
completeness, speed, costs and standards of accuracy (Paul, 2003).
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Management: This is the leadership of an organization or firm tasked with controlling the
activities thereof to ensure successful running (Porter, 2004)
2.3 Conceptual framework
To understand the long-term forces on the market is very important, it is also vital to know how
they change. By recognizing and understanding the relevance of these changes faster than the
competitors, the company can gain an advantage (Cheverton, 2004). Political factors, economic
factors, technological factors and legal factors all combine to form the macro-environmental
factors that play a big role in influencing the performance of PACRA. At the same time,
competitors, suppliers, customers, marketing intermediaries, financiers, the public, labor and
regulatory agencies combine to form the micro environment that also affects the performance of
PACRA. The overall performance of the institution is affected by a combination of the
environmental factors.
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Independent variables Dependent variable
Source page (Cheverton, 2004)
2.4 Environmental factors affecting the performance of company
According to Beatham et al. (2004), institutions measure their performance in financial terms;
turnover and profit. Various research findings on performance management, however, advocate
for an emphasis on both financial and non-financial dimensions of organizational performance
such as service quality, competitiveness, organizational flexibility, customer satisfaction,
resource utilization and technology (Harris and Monticello, 2001; Atkinson and Brander-Brown,
2001). Cadogan et.al (2002) explains that the macro environment of a company has significant
influence on the performance; factors that influence firms include technology, market changes,
competition and customer demands. According to Birgonul (2010), managing the negative and
positive effects of exogenous factors has the power to reform corporate-wide characteristics.
Macro environmental factors
Politic
al factors
Econo
mic factors
Social
factors
Legal
factors
Techn
ological factors
Performance. The
extent to which set
goals/ objectives
are achieved in a
particular period
of time
Micro environmental factors
Custo
mers
Suppli
ers
Financ
iers
Labor
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2.4.1 Economic Factors
According to Barkauskas (2014) economic factors have the biggest effect on the development of
any given organization. Botezat (2003) states that the development and performance of
organizations strongly depend on the growth of revenue. Ramanauskien (2010) noted that a rise
in wages enables people to spend more money. This factor greatly affects institutions that collect
revenue (Barkauskas, 2015).
National taxation, interest rate fluctuations, currency and raw material prices are forces that
strongly impact on the global market (Yadin, 2002). Other economic forces are business cycles,
stock market values, GDP (gross domestic product per capita) figures and inflation (Johnson,
2005; O'Connor, 2000). When considering any business in a country, the size of these forces is
very important for instance, the GDP size.
Entry modes having low break-even sales volumes such as indirect exporting are favored by a
small market (Root, 1998). This becomes more applicable when the industry is concentrating on
a specific smaller segment of a large market (Johnson, 2005). An agreement with the local
distribution channels is vital to gain access to each national market. Shipping arrangements,
documentation, and other issues over and over again make it hard and expensive for small
companies to export (Leonidou, 2004). Need for local sales services and groups, transportation
time and complicated adjustments of price and performance are the factors that should be
considered carefully. Cost can be hiked when it comes to a product that is of great value or needs
to be delivered fast (Porter, 1998). Economic factors’ analysis has shown that in the overall
economic growth case, the performance of organizations attracts and increases good will from
other sectors in a state (Barkauskas, 2015).
Dess et al. (2008) assert that the economy in which institutions operate in has a significant
influence on all industries including manufacturers, suppliers, service providers, wholesale,
retail, government and non-governmental institutions. There are various fundamental economic
indicators used by companies in assessing the economic environment that include unemployment
rates, interest rates, the consumer price index, the gross domestic product, and the net disposable
income. Pearce and Robinson (2011) agree with this by asserting that consumption patterns are
influenced by the effect of various market segments making it imperative for each company to
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consider the economic trends that touch its industry and this must be done at both the
international levels and be narrowed down to the national levels.
Tang, Thomas, Thomas and Bozetto (2006), concluded in their research on modeling financial
product purchases that economic factors play a vital role along with individual precise
characteristics in determining the customers’ purchasing behaviors. They additionally suggest
that if an economy is unfavorable, then the organizations’ marketing departments will need to be
selective in targeting their products as only certain specific groups will probably purchase there.
On the overall Tang et al. believe that the interaction between economic variables and socio-
demographic variables are most significant in improving the segmentation or targeting of
customers by providing predictive purchase rankings and providing accurate predictions of
future purchases.
2.4.2 Technological Factors
The technological environment includes research, knowledge and technology (Snieskiene 2009).
Technological factors increase the country’s competitiveness through the provision of timely and
effective information, the modernization of servicing systems, the assurance of the appropriate
level of quality and other measures based on innovations and adapted technology (Barkauskas,
2015). Barkauskas asserts that when using modern technology and information systems, it is
necessary to achieve that institutional information would be available for residents of a given
country and people from foreign countries as well.
The increased use of computer programs, technological trends and innovations, increasing
speeds in producing units, smart systems, improvements in artificial intelligence and
diversification are examples of technological forces (O'Connor, 2000). Electricity,
telecommunications, railroads, water supply and natural gas are some of the factors that attract
potential investors in a given place (Johnson, 2005). According to Root (2008), high
transportation cost makes it hard for external parties to compete with local products, especially
when there is a large distance between the two countries. In developed countries like the United
States, Germany and Sweden the infrastructure is generally better compared to that in developing
countries (Kessides, 2004).
According to Hjalager (2002), institutional performance is inevitably associated with new
technologies, the organizational and structural innovations. As Maksimenko. (2008) notes, it is
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necessary to provide management and marketing knowledge to rural residents as well as to
develop the information for all stakeholders when reorganizing and improving the information
system of any organization and the marking system of revenue collection (Barkauskas, 2015).
Dess et al. (2008), explain that technological developments result in new services and products
and improve on the process through which products are designed/ made and delivered to
intended users. Victorino et al. (2005) assert that customers have different IT expectations and
requirements, each customer segment may need and, therefore, request different types of IT
applications. Burca et al. (2005) assert that in order for a firm to become technologically
sophisticated it needs to possess a robust scientific-technological base, novel technology has to
quickly make existing ones outdated and new applications in IT should create new demand or
revolutionize demands and markets. In their study on the relationship between businesses
performances, service practices and performance, and IT sophistication. Burca et al. (2006)
concluded that sophistication in IT moderates the relationship of service practice against service
performance.
Additionally, the relationship between Strategic Orientation, Organization Structure, Information
Technology and Firm Performance also has been the point of focus for many researchers
(Croteau et al., 2001; Bergeron et al., 2004). In response to anticipated alterations in the
environment, companies deploy Information Technology at an increasing rate; hence, making
investments in Information Technology a major concern for executives in organizations
(Bergeron et al., 2004). Further, Sriram and Krishman (2003) find that investments in IT are
considered as a significant and value increasing activity for the average firm by the stock market.
Bergeron concludes by suggesting that Information Technology needs to fit an organization’s
environment, structure and strategy.
2.4.3 Socio-cultural Factors
Dess et al. (2008), suggest that beliefs, values, and lifestyles of a society are influenced by socio-
cultural forces. They further expound that socio-cultural forces influence sales of services and
products through the enhancement of sale of services and products of an industry while
suppressing those of others.
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Consumer purchases are strongly influenced by cultural, social, personal and psychological
characteristics; generally, marketers can’t control these factors but instead take them into account
(Armstrong and Kotter, 2000). Keegan et al. (1992) suggest that there are internal and external
factors that influence consumer behavior; external factors include economic, demographic,
situational, social and technological factors while internal factors include attitudes and beliefs,
learning needs and motives, perception and values, and personality.
Armstrong and Kotler (2000) reinforce this by explaining the buying behavior and choices of
persons are influenced by four major psychological factors: perception, motivation, beliefs and
attitudes/learning. Attitudes describe a person’s consistent feelings, evaluations, and inclinations
towards an idea or object, thus they place people into a mind frame for disliking or liking things,
for moving toward or away from them (Armstrong and Kotler, 2000). The creation of target
market strategies is, therefore, widely viewed as integral to formulating a business strategy that is
effective (Doyle, 2006; Grant, 2004) bringing the market segmentation concept which is often
cited as essential to establishing a target market strategy (Kotler and Keller, 2005).
2.4.4 Political Component and Legal Factors
The political-legal environment includes such factors as political stability, strategic development
objectives, small and medium business promoting, the government executed institutional
promotion and regulatory policy, the government’s support and the business of an institution’s
regulating legislation. Legal and bureaucratic restrictions are one of the main obstacles to the
development of revenue collection business. Usually legal documents promote the revenue
collection activity and therefore its performance but there are cases when due to specific
conditions, the activity may be legally restricted (Barkauskas, 2015).
According to O'Connor (2000), political forces influencing performance in the business world
include: wars and diplomatic relations, trade agreements, sanctions and embargoes, political
trends and events, legislation protecting consumers and safety and health of the employees.
Political inputs are most likely to happen in branches that affect certain political goals, such as
native access to national resources, defense and employment (Porter, 1998). If the market’s
economy is a centrally planned socialist economy, political factors tend to have an impact on the
entry mode and performance of the business (Root, 2008). According to Cheverton (2004),
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government actions are together with suppliers and customers part of the business process. Some
kind of legislation can also belong to either political or legal forces depending on its nature and
local circumstances. The legislation is used to restrict for example marketing activities,
particularly in industrialized countries (Yadin, 2002). According to Barkauskas (2015), ideal
conditions for the development of revenue collection institutions are political stability, security,
well-defined and functioning legal system, public goods provided by the state – infrastructure,
environment, information.
Dess et al. (2008) state that legislation and political processes both have an influence on the
environmental settings that an industry or firm must conform to. Moreover, they suggest that
legislation formulated and passed by governments has a significant impact on the firms’
governance. Political constraints may be put on companies through antitrust laws, fair trade
regulations, minimum wage regulations, tax programs, pollution and pricing policies and this
may be perceived as protecting employees, consumers, and the environment and would restrict
the profitability and performance of an organization. Through patent laws, product research
grants, government subsidiaries, legislation and political actions may, on the other hand, protect
firms or even boost their profitability (Pearce & Robinson, 2005).
Muhammad (2012), further suggest that it is important for an organization to establish a political
connection with a government. The political connection that a firm has with the government
influences its strategic choice only to further influence strategy implementation and on the
overall, corporate performance. The environment that organizations operate in includes market
and non-market dimensions, the better portion of non-market dimensions is the political
environment and this plays a key role in the growth of enterprises. Therefore, the corporate
strategy of an organization should consist of both market and political strategies (Tian et al.,
2003; Zhang and Zhang, 2005).
One of the main barriers to global competition, which suffers when national markets require
different products, are the regulations concerning the cost of changing the products so they meet
national market needs (Porter, 1998). According to Leonidou (2004), the legal forces are policies
and legislative regulations which are barriers for foreign business to enter the local market.
Barriers like these protect a country’s own production from foreign investors who would
otherwise completely take over the economy (Root, 2008). The higher the barriers, the more
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attractive the local production (Porter, 1998; Leonidou, 2004). Porter (1998) asserts that other
legal barriers are world laws concerning bribes and taxes if they are set to negatively influence
the global trade. Customs documentation and shipping arrangements are other issues that make it
often hard and costly for firms to export (Leonidou, 2004). Technical norms, different legal
restrictions and building regulations bring out different variants of products on the national
market.
2.5 Effects of Environmental Factors on Performance
The micro environment entails the factors having a direct bearing on an enterprise’s
performance. Unlike the macro factors, these factors are more closely linked with the business.
The micro environment factors are as discussed below:
2.5.1 The Competitive Environment
The success of an entity depends upon its ability to gratify the wants and needs of clients better
than those of its competitors. The most common competition which a product of a company now
faces is from differentiated products of other businesses. Neelamegam is of the view that the best
way for a firm to grasp its competition’s full range is to take the buyers’ viewpoint
(Neelamegam, 2008).
Dess et al. (2008), submit that in addition to the remote environment, managers need to take into
consideration the industry environment, commonly known as the competitive environment.
Competitiveness refers to positioning a business according to the firm’s weaknesses and
strengths such as its intangible and tangible assets and its managerial competencies (Isik, Arditi,
Dilmen and Birgonul, 2010).
Kale and Arditi (2003) suggest that a business’s environment hosts competitive forces and a
firm’s strategic performance is strongly correlated with its ability to handle the effects of
competition. Dess et al. (2008), also assert that the nature of competition in an industry and an
organization’s profitability are directly linked to the competitive environment. The competitive
environment comprises competitors (potential and existing), suppliers and customers.
The marketplace that organizations function in is confronted by intensified competition (Sivadas
and Baker-Prewitt, 2000). Casu and Girardone (2009) suggest that competition is generally
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considered to have a positive influence on the international competitiveness, innovation and
efficiency of an industry.
According to Porter (2008), rivalry’s degree depends on the basis and intensity of competition.
Intense rivalry is a consequence of several interacting factors which include; slow industry
growth, numerous or equally powerful competitors, lack of differentiation, high fixed or storage
costs, and high exit barriers. Hopkins (2008) explains that the more the rivals there are in an
industry, the higher the competitive pressure coming from them. Hopkins asserts that a slow
growth rate increases the competitive rivalry since businesses have a greater tendency to
compete with their rivals and always try to steal market share.
Industries need to develop their strategies efficiently after scrutinizing the environment of the
business they operate in (Singh et al., 2010). Researchers have discovered that the strategy of an
institution is established by its competitive environment and that matching appropriate strategy
and the environment enhances its performance (Baines and Langfield-Smith, 2003; Chenhall and
Langfield-Smith, 2003; Singh et al., 2010).
Dess et al. (2008) describe the threat of new entrants as the possibility that the profits of
established firms in the trade may be eroded by the entry of new competitors. Pearce and
Robinson (2011) explain that new entrants to an industry bring new capability, the desire to often
gain substantial resources and market share; often, organizations diversifying through acquisition
into an industry often leverage resources to cause a shake- up.
According to Pearce and Robinson (2011), the seriousness of the threat of entry depends on the
barriers to entry and the existing competitors’ reaction that the entrant can expect, if barriers to
entry are high and a new entrant expects sharp retaliation from existing competitors then they
don’t pose a serious threat of entering the market or industry. The six barriers to entry include
economies of scale, differentiation, capital requirements, switching costs, access to distribution
channels and cost disadvantages (Dess et al. 2008). Thompson et al. (2008) add to the factors
that increase the threat of new entries a large pool of entry candidates with sufficient resources,
the possibility of market proliferation by the existing firms, high expectations of new entrants to
make high profits, an increase in buyers demand and finally the failure of existing firms to
robustly contest new comer’s entry.
16
Existing firms defend their markets by retaliating once new competition enters their market
(Chen and Miller, 1994). In some situations, existing firms wait for others to react and then
follow or do nothing on the other hand they are unable to compete with the new market entrants
and choose to exit the market (Nargundkar et al., 1996). Failure to consider competitor reaction
may result in the drawing of the wrong conclusion by a firm of its actions (Porter, 1980; Putsis
and Dhar, 1998); therefore successful firms look onward by taking a dynamic view of
competition as a series of moves and counter moves. However, despite its importance, various
firms pay little attention to the reaction of competitors in their decision making and usually think,
at best, in terms of only one move instead of multiple moves (Reibstein and Chussil, 1997).
2.5.2 Customers
Creation of a customer is the drive of any business entity. An enterprise exists only because of its
customer. A firm may have different categories of clienteles like industries and other commercial
establishments, household, individuals, and government institutions. Depending on one customer
is often too risky since it may place the company in a poor bargaining position. With the growing
Globalization, the consumer environment is increasingly becoming universal (Cherunilam et al.,
2007).
Dess et al. (2008), state that buyers pose a threat to an industry by forcing down prices,
bargaining for better quality and playing competitors against each other. The power of each
buyer group is dependent on the attributes of the prevailing market situation in the level of
importance of that group. A buyer group is powerful when it purchases large volumes of a
product or service relative to the seller’s sales, the products of the industry are undifferentiated,
the buyers face few switching costs and the buyers pose a threat of backward integration.
Singh and Sirdeshmukh (2000) asserts that besides buyer bargaining power, in the twenty-first
century customer retention is a customer loyalty is rapidly becoming the market place currency.
Anderson and Narus (2004), further suggest that better and more effective strategy than
continuously trying to acquire new customers in order to replace defecting customers therefore
making it evident that customers play a great role in organizational performance.
In addition to the above, Singh and Ranchhod (2004) state that customer orientation has a
positive impact on the performance of an organization. As popularly conceptualized, a
17
company’s market orientation incorporates customer orientation and competitive orientation.
While customer orientation focuses on the needs and wants of customers, competitive orientation
emphasizes on competitive threats (Kirca et al., 2005). On the overall, an organization is faced
with the threat of buyer bargaining power coupled together with the daunting task of constantly
satisfying the needs of their clients. Despite all this, through the collection and sharing of
information on customers ‟needs and competitors” actions, organizations can be more sensitive
to customers’ needs and more responsive to competitors' moves, therefore being able to respond
rapidly.
2.5.3 Suppliers
These are the individuals and firms that supply the input like raw materials and components to
the enterprise. It is fundamental to have a reliable source of supply. Uncertainty concerning the
supply or other supply challenges will compel the firms to maintain high costs. It is significantly
risky to depend on one supplier, hence, the business should have multiple sources of supply
(Cherunilam et al., 2007).
According to Pearce & Robinson (2011), suppliers can exert power participants in the industry
by reducing the quality of purchased services and goods or by raising prices, therefore, powerful
suppliers can squeeze profitability out of an industry. Supplier bargaining power is high when
the supplier group is dominated by few companies, the supplier is not threatened by substitute
products, the industry is not an important customer of the supplier group, the suppliers good is an
important input to the buyer’s business, the supplier groups products have established switching
costs for the purchaser and the supplier group poses a credible threat of forward integration
(Dess, Lumpkin & Esiner, 2008).
Burnham et al. (2003) describes switching costs as “the one-time costs that customers relate
with, in the process involved in switching from one provider to another”, according to Kim and
Son (2009) switching costs are clientele’s costs from switching and can be referred to as
switching barriers and switching costs can be considered as benefit from constraints. There are
different types of switching costs. Burnham et al. (2003) present them as financial switching
costs, relational switching costs and procedural switching costs.
18
On the other hand Haile ́n et al. (1991), explain that dependent suppliers are more likely to make
changes to their product processes, product specifications and inventory to meet the buyer’s
needs. Suppliers who are more dependent on a buyer also are more willing to cooperate with the
buyer by being involved in product development activities (Laamanen, 2005; Provan, 1993;
Takeishi, 2001).
2.5.4 Substitute Products and Services
According to Dess, Lumpkin and Esiner (2008), all firms within a given industry compete with
industries or firms producing substitute goods and services. Substitutes reduce potential returns
or profits by placing ceilings on the prices that a firm can profitably charge. Porter (2008)
explains that a substitute product performs the same or similar function as an industry’s product
through different means.
Pearce & Robinson (2011) explain that substitute products that deserve keen attention are those
that are subject to trends improving their price-performance tradeoff with the industry’s product
or are produced by industries earning high profits. Often, substitutes come rapidly into play if
some development leads to increased competition in their industries and causes price reduction
or performance improvement.
Pitta(2010), in a study on Product strategy in harsh economic times, highlights the three
components of the threat of substitutes which includes switching costs, buyer inclination to
substitute and the price performance trade-off of substitutes. Georgopoulos and Nikolopoulos
(2005) concur when they suggest that the threat of substitution is affected by switching costs,
they go ahead to explain that switching costs are associated with costs of retaining, retooling and
redesigning that are incurred when a customer switches to another product or service.
According to Karagiannopoulos (2005), the substitution process follows an S-shape curve, it
begins slowly as trendsetter’s risk experimenting with the substitute then picks up if other
customers follow suit and eventually levels off when almost all economical substitution
possibilities have been exhausted. Pitta (2010) suggests that the threat of substitutes exists when
a product’s demand is affected by changes in the price of substitute products, as more substitutes
become more available, demand becomes more elastic since customers have more alternatives.
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2.5.5 Marketing Intermediaries
These are the firms that help a firm to distribute, sell and promote its goods and services to the
final consumers. They include physical distribution firms, middlemen, financial intermediaries,
and marketing services agencies. Middlemen such as retailers and wholesalers buy merchandise
and resell. Physical distribution companies such as transportation firms and warehouses help the
company to stock and move products to their destination from their point of origin. Marketing
service agencies such as marketing consulting firms, marketing research firms and advertising
agencies help the business in targeting and promoting its products to the right markets. Financial
intermediaries such as insurance companies, banks and credit companies insure against the risks
associated with the buying and selling of goods or help in financial transactions. The firm has to
develop strong relationships with all these for the successful operation of its business
(Chidambaram et al., 2005).
2.5.6 Financiers
According to Joshi, Rosy, Kapoor and Sangam (2007), another important micro environmental
factor is the financiers of a business. Besides the financing capabilities, their attitudes, strategies
and policies (Including attitude towards risk), ability to provide non-financial support etc. are
very important.
2.5.7 Public
A firm has to protect a certain public’s interest within its environment. The consumer protection
groups, local people, environmentalists and media persons are some of the well-known examples
of public. Some businesses are seriously influenced by the media public. Some businesses are
affected by local publics. Environmental pollution is a matter often taken up by a number of
local publics. Protests have been raised by non-government organizations (NGOs) against
deindustrialization resulting from imports, cruelty to animals, child labour, environmental
problems and so on. It is very important to deliberate the public views to keep afloat as a
company (Cherunilam, 2007).
2.5.8 Labor
The firms, where many workers are employed, the labor force is organized in trade unions’
forms. The trade unions interact with the administration for bonus and higher wages, better
20
working conditions among other things. They pressurize the management for the gratification of
their demand and even resort to slow tactics such as gherao, strikes, etc. (Joshi et al., 2007).
2.6 Effects of Environmental Factors on Performance
The environment of a business may be defined as the total surroundings, having a direct or
indirect bearing on the functioning of business. It may also be defined as the set of external
factors, such as economic factors, social factors, political and legal factors, and demographic
factors, technical factors, among others, which are uncontrollable in nature and affect the
business decisions of a firm (Obasan, 2014). Different institutions are affected by different
numbers and kinds of environmental factors. External environmental factors change speedily, are
uncertain, and complex, and may create problems for organizations if not closely monitored. Any
organization ignoring or being unresponsive to environmental factors is creating trouble or
inviting trouble. Environment factors affect the relationship between strategic planning and
performance (Cheng-Hua et al., 2011). Several researchers have argued that the direction of
performance depends on the organizational environment. For example, the relationship between
market orientation and performance may be moderated by market and technological turbulence
and competitive intensity (Subramanian et al., 2009).
Business environment is complicated by dynamics of change and competition, producing a
degree of uncertainty such that the nature of the improvement of results after total quality
management implementation is unclear hence calling for close monitoring as a performance
check (Montes et al., 2003). Environmental factors significantly influence business strategies in
the banking industry (Oparanma et al., 2009). Cheng-Hua et al. (2011) also asserts that
environmental variables can moderate the effect of management strategies, therefore,
significantly affecting performance. Environmental uncertainty arises from organizational ability
to make environmental forecasts (Aziz et al., 2010). As a result, organizational decision making
is influenced by the complexity and volatility of the environmental (May et, al., 2000).
Organizations attempting to ignore environmental factors or that refuse to respond to such
factors create trouble for themselves and place themselves at a competitive disadvantage. On the
contrary, understanding and responsiveness can contribute to firms’ effectiveness and benefits.
21
Environmental factors that may influence business performance are many and varied; some are
internal to the business while others are external to the business (Salihu, 2015). Today it
becomes extremely essential for Commercial banks to examine their performance because their
survival in the dynamic economic environment will be dependent upon their good performance
(Okoth et al., 2013). The current business environment is marked by diverse dynamic features
such as information technology, global competition, corporate social responsibility and quality
service revolution which are compelling managers to rethink and reshape their approach to their
various operation responsibilities. Due to this paradigm shift, new firms are emerging that are
more responsive to both their internal and external environments (Obasan, 2014).
The internal factors occur within the operational base of a business and directly affect the
different aspects of business. These internal factors include firms Mission, resistance to change,
poor quality staff, lapses in internal control, bad resource/financial management, operational
weaknesses, high staff turnover and over-leveraging while the external factors include
government regulation, economic recession, political turmoil, low cost competitors, changes in
customer behavior, environmental or health issues, natural disasters, technological changes,
change in input supply, changes in macroeconomic variables and terrorist attacks. Hence, it is
important for a business to keep a pace with the various changes in the environment in order to
survive in the long run.
According to Adebayo et al. (2005) business environment can be broadly categorized into
internal and external environments with the former comprising variables or factors within the
control and manipulation of the firm to attain set objectives while the latter encompasses factors
that are outside the control and manipulation of the firm. Hence, a firm must develop a plan that
will help it to cope with the various environmental forces (Oluremi et al., 2011). The nature of
business environments are said to be classified as dynamic, stable and unstable which often help
a firm in the selection of appropriate strategies that enhance achievement of maximum
performance (Ibidun et al., 2013).
Adeoye (2012) opined that in order for firms to cope with the dynamic and swiftly changing
business environment, there is a need to develop and implement appropriate strategies that will
safeguard their operations and yield the desired results. Similarly, Ogundele (2005) added that a
22
business perception of the nature of the business environment is a function of its size and
industry. Business survival is the ability of a firm to continuously be in operation despite various
challenges, that is, the managerial process of directing the affairs of a firm regularly on a going
concern basis and meets the needs of all stakeholders (Akindele et al., 2012). Business failure is
a situation where a business goes into bankruptcy or ceases operations which results in losses
and failure to meet its various financial commitments to creditors. In order to survive, firms
always keep a close tab on the various activities that determine their continuity.
Adeoye (2012) submitted that the present form of complexities facing firms include leadership
style changes, market uncertainty, conflicts, culture, technology, structure, competitive market,
profitability and workplace motivation. Hence, firms must develop a strategic plan and tactical
procedure that is appropriate and adaptive to the present business environment that will aid its
optimum resources utilization and attainment of set goals.
Alexander (2000) observed that the dynamic and swiftly changing business environment in
which most businesses function has made the business environment have a significant impact on
organizational survival and performance. This implies that the external environment is complex
and constantly changing and its significant characteristic is competition. The recognition of the
presence of an intense competition often compel the need to seek more information about
clienteles for the purpose of evaluation and to use such information to their advantage
consequently enabling competition to drive business organizations to look for their customers in
order to understand better ways to meet their needs, wants, and thereby enhances organizational
performance (Azhar, 2008).
Porter (2004) developed the five forces of competitive position analysis as a simple framework
for assessing and evaluating the competitive strength and position of a business organization. His
theory is based on the concept that there are five forces which determine the competitive
intensity and attractiveness of a market and helps to identify where power lies in a business
situation. This is useful both in understanding the strength of an organization’s current
competitive position, and the strength of a position that an organization may look to move into.
The five forces include: supplier power, buyer power, threats of substitution, threats of new entry
and competitive rivalry. Ogundele et al. (2004) submit that external business environments and
23
their factors help visualize the analysis of business survival and growth in an attempt to enhance
understanding of how environmental factors work together with the variables of business
survival and growth to determine the future of business organization.
Ghazali et al. (2010), indicated that the internal source of firm’s strengths are related to their
financial resources while the weaknesses are associated to the firms’ management. On the other
hand, the external source of opportunities to the companies are support and encouragement from
the government while threats originate from the various bureaucratic procedures that firms have
to face in order to get plan approval and certificate of fitness.
Similarly, Norzalita et al. (2010) investigated the influence of the external environment in the
market orientation performance linkage among firms in Malaysia and reported that market-
technology turbulence and competitive intensity did not moderate the relationship between
market orientation and business performance. Adeoye (2012) reported that environmental
changes are continuously exerting new pressures on firms’ performance and in order to adapt
with these changes, businesses often formulate and implement strategies to reorganize and
reform the way products are manufactured and distributed to final customers. Thus, the influence
of environmental factors on business performance towards profit objective is found to have
increasingly stronger interrelationships which need more sophisticated business strategies.
To simplify the description of performance in the two environments (micro and macro
environments) the terms ‘antagonistic’ and ‘synergistic’ were used by Lichtenthaler (2009) in his
study on “Outbound open innovation and its effect on firm performance”. The same descriptions
will be employed in this study. Performance upwards in a bad environment or downwards in a
good environment is antagonistic, the performance and the environment acting in opposite
directions on the character. Synergistic description is the reverse, upwards in a good environment
or downwards in a bad, performance and environment acting in the same direction. In his study,
directional selection in a single macro-environment was synergistic with respect to the micro-
environmental differences, and increased environmental sensitivity and consequently to increase
environmental variance. Both the micro and macro environmental factors affected firm
performance in the same direction; whether negative or positive.
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CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Introduction
The previous chapter reviewed the literature relevant to the study, hence chapter three will
outline the research methods and procedures that will be used in the study
3.1 Research Design
This study was qualitative in nature this is because qualitative research has an advantage over
quantitative approach in studying human behavior because it allows the researcher to go beyond
the statistical results. Human behavior is best explained by observing qualities of behavior such
as attitudes and other emotions. Descriptive research design was employed so as to precisely
capture the respondents’ views and opinions.
3.2 Area of the Study
The study was carried out at PACRA-Kitwe branch
3.3 Target Population
The target population involved employees from PACRA. These groups of people were deemed
to be the information-rich cases for the study hence, they provided valuable and required
information on the subject matter. Therefore, the following formula by Yamane Taro (1970) was
used to come up with the members of staff.
The formula: n = N .
1 + N (e) 2
Whereas: N= Target population
n=Total sample size
e = Desired margin error
Members of staff sample size from PACRA (Kitwe)
N=50, desired margin error (0.05)
n = 50/1+50 (0.05) 2 = 40 respondents.
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3.4 Sample Size
Basically, a sample is a number of people or things taken from a large group and used in tests to
provide information about the group. The sample size comprised of 40 workers at PACRA
3.5 Sampling Techniques
The sampling technique is the part of the study that indicates how respondents were selected to
be part of the sample and were not selected haphazardly but chosen systematically. Purposive
sampling method was used in this study because it is a qualitative method. Purposive sampling
targets only the people believed to be reliable for the study and it is equally applicable in
qualitative. The power of the purposive sampling technique also lies in selecting information-
rich cases for in-depth analysis related to the central issue being studied.
3.6 Data Collection Methods
The study had the data collected into two broad categories namely; secondary and primary data.
3.6.1 Secondary data
Secondary data is data that has already been written and published by other researchers or
authors. The use of secondary data ensures that duplication of effort was avoided.
3.6.2 Primary Data
Primary data is the raw and first-hand information that the researcher gathers from the field. This
research based its findings on primary data. The researcher collected primary data in order to
facilitate the answering of the objectives of this research.
3.7 Research instrumentation
The study used interview guides.
3.7.1 Interview guides
The study used interview guides to collect data because interviews were conducted to collect
qualitative data on assessing the environmental factors affecting PACRA’S performance. Using
the interview guide, one-on-one interviews were conducted as well as tape-recorders/ voice notes
via the students phone to collect data on. Open-ended questions were also used in the interviews
to collect in-depth information in order to have a detailed understanding of the subject matter.
Interview guides were used on the categories of research participants so that the researcher gains
more insights into the subject matter.
26
3.8 Data Analysis
Qualitative data from interview guides were transcribed and coded into themes with regards to
the research objectives. The study was done carefully by recording conversations in order to
interpret, reduce and code key responses to supplement quantitative data. Some responses were
also isolated and were used as original quotes for verbatim to highlight important findings of the
study.
3.9 Ethical considerations
During the course of data collection, the researcher obtained ethical clearance from the
Cavendish University Zambia. Moreover, ethical principles stipulated adhered to and these
included issues of informed consent, non-deception and confidentiality of participants, voluntary
participation, and right of withdrawal at any time. Participants were told about the importance of
participating in the study, and the names of participants were with-held in order to protect their
privacy. The information collected for the study was used purely for academic
purposes. However, ethical clearance was obtained from Cavendish University Zambia and the
information was collected thereafter.
3.10 Limitations of the study
This study only covered PACRA-Kitwe due to financial limitations as well as other notable
limitations to this study were that some information from respondents were not released to the
researcher promptly due to ethical issues since the respondents were demanding ethical clearance
before such information could be released. Also, due to the fact that the study was only done at
the Kitwe branch, the sample size was small and the results may not represent the views of all
the other branches in Zambia.
3.11 Chapter Summary
This chapter described the research methodology to be used in the study design and the target
population, sampling method, data collection and the instrument used in collecting the data.
27
CHAPTER FOUR
PRESENTATIONS OF THE FINDINGS
4.1 Introduction
The previous chapter presented the methodology of the study. This chapter presents the findings
of the study on the effects of environmental factors on the performance of a company. A case
study of PACRA. The study was guided by three (3) research questions as follows. However, the
demographic characteristics were presented first.
What are the types of the environmental factors affecting the performance of PACRA as
a company?
i. What are the effects of environmental factors on PACRA’s performance?
ii. What measures has PACRA put in place to manage the effects of environmental factors
in order to increase performance?
4.1 Section A: Background Characteristics
This section presented the demographic characteristics of employees from PACRA- Kitwe
branch as captured by data collection tools used in the study. These characteristics were essential
in analyzing the effects of environmental factors on the performance of a company.
4.1.1 Gender of Respondents
Gender is very critical and important in social science research because it helps in understanding
gender relations and dynamics in work places and in this case, its relationship with culture at the
workplace. It is for this reason that this part was dedicated to present findings from the reached
respondents based on gender.
Tablet 4.1.1: Gender of respondents
Gender Frequency Percentage
Male 15 37%
Female 25 63%
Total 40 100%
Source: Field Data 2020
28
In the above table, the study sought to indicate the gender of the respondents. As indicated the
roll data show that the majority (25) 63% were female. Whilst (15) 37% were male.
4.1.2 Education level of respondents
Table 4.1.2. Education of respondents
Gender Frequency Percentage
Certificate 8 20%
Diploma 22 55%
Degree 10 25%
Total 40 100%
Figure 4.1.3: Education level of respondents
The figure and table above revealed the educational background or environment present at
PACRA. Firstly, that out of the 40 respondents, 8 of the respondents had certificates which
represent 20%. Secondly, it was seen that 10 representing 25% had degrees. Thirdly, only 22
representing 55% had diplomas. This shows that most of the respondents had diplomas. The
education level of the respondents was ideal in carrying out the study since they were able to
respond to questionnaires considerably.
29
Table 4.1.4 Numbers of years working for PACRA
Ranks Frequency Percentage
1-5 years 18 45%
6-10 years 12 30%
11 years and above 10 25%
Total 40 100%
The above table showed the years that PACRA employees have worked. However, the majority
workers representing 45% are new in the company and have worked between 1 to 5 years. These
were seconded by 25% those who have worked for over 11 years while the other respondents
representing 30% have worked longer than 5 years but less than 10 years, i.e. 6 to 10 years.
4.1.5 Understanding of external and internal environmental factors affecting the company
One of the respondents T2 said that:
“The internal factors refer to anything within the company and under the control of the company
no matter whether they are tangible or intangible. These factors after being figured out are
grouped into the strengths and weaknesses of the company. If one element brings positive effects
to the company, it is considered as strength”.
Another respondent said that:
“External environmental factors are factors outside and under no control of the company.
Considering the outside environment allows businessmen to take suitable adjustments to their
marketing plan to make it more adaptable to the external environment.”
30
Graph 4.1.6 Awareness of external and internal environmental factors
The total number of respondents was 40 and out of this total, 35 said ‘Yes’ to being aware of the
environmental factors and how they affect the performance of the company and they represented
87% while the employees who said ‘No’ who were 5 representing 13%.
4.1.7 External and internal environmental factors that affect the performance of the
company
Internal
a) Employees and managers
b) Money and resources
c) Company culture
External
a) Economy
b) Competition
c) Politics and government policy
4.1.8 How these factors affect the performance of the company
Respondents T12 said that:
31
“The extent to which a government and politics may influence the economy and thereby impact
organizations within a certain industry. This includes government policy, political stability, and
trade and tax policy”.
Another respondent T9 said that:
“Internal factors can affect how a company meets its objectives. Strengths have a favorable
impact on a business and weaknesses have a harmful effect on the firm”.
4.1.9 Measures you have put in place to mitigate the challenges you are facing due to
environmental effects on the company
One of the respondents T7 said that:
“Managers have to be good at handling lower-level employees and overseeing other parts of the
internal environment. Even if everyone is capable and talented, internal politics and conflicts
can wreck a good company”.
Another respondent said that:
“We rely on environmental scanning which is helping us monitor the organization's internal and
external environments for early signs that a change may be needed, to accommodate potential
opportunities or threats, and to make adjustments to allow the company's strengths to combat its
weaknesses”.
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CHAPTER FIVE
DISCUSSION OF FINDINGS
5.1 Introduction
This chapter discusses the findings of the study based on the research questions namely;
i. What are the types of environmental factors affecting the performance of PACRA as a
company?
ii. What are the effects of environmental factors on PACRA’s performance?
iii. What measures has PACRA put in place to manage the effects of environmental factors
in order to increase performance?
The study showed that the majority (25) 63% were females while (15) 37% were the males. They
revealed that 8 of the respondents had certificates which represent 20%. Secondly, it was seen
that 9 representing 23% had degrees. Thirdly, only 21 representing 53% had diplomas. This
shows that most of the respondents had diplomas. The education level of the respondents was
ideal in carrying out the study since they were able to respond to questionnaires considerably.
The study indicated that the majority workers representing 45% have worked between 1-5 years.
These were seconded by 30%, these employees are employees who have worked for over 11
years while the last respondents representing 25% have worked for 6 to 10 years.
5.2 Understanding of environmental factors affecting the company
The study revealed that the internal factors and external are the types of environmental factors
that refer to anything within the company and under the control of the company no matter
whether they are tangible or intangible. These factors after being figured out are grouped into the
strengths and weaknesses of the company. If one element brings positive effects to the company,
it is considered as strength. According to Pearce and Robinson (2003) external environments can
be grouped into three interrelated categories: the operating environments, the industrial
environments and the remote environments.
33
It was discovered that external environmental factors are factors outside the business and under
no control of the company. Considering the outside environment allows businessmen to take
suitable adjustments to their marketing plan to make it more adaptable to the external
environment. According to Wheelen and Hunger (2012), internal factors are those strategic
factors that need to be analyzed and diagnosed by the management in determining the strengths
and weaknesses of the company.
5.3 Awareness of external and internal environmental factors
The study indicated that 35 respondents who said ‘Yes’ were aware of the environmental factors
representing 87% as compared to those who said ‘No’ who were 5 representing 13% do not
know external and internal environmental factors that affect the performance of the company.
The study indicated that there are internal environmental factors which were: Employees and
managers, money and resources and company culture while external environments were:
Economy, competition from other businesses and politics as well as government policy. Internal
Environment. Pearce and Robinson (2014) also support that the experiences of large and small
companies show that an in-depth environmental understanding and internal company assessment
are very crucial in developing a company’s success. Considering that the internal environment
encompasses various aspects within a company, the analysis of the internal environment should
consider the strengths that laid the foundations for corporate strategy.
Wheelen and Hunger (2012: page 87) argue that, in order to achieve optimal performance, a
strategy must be formulated with due regard to the environment. A company’s successful
competitive strategy leads to victory in the face of market competition and competitors in terms
of product innovation (Babatunde & Adebisi, 2012). Thus, the purpose of this study was to
examine and obtain empirical evidence of the effects of external and internal environmental
factors on the strategy and performance of manufacturing companies.
5.5 How environmental factors affect the performance of the company
The study showed how internal and external environmental factors affect the performance of the
company and it was revealed that the extent to which a government and politics may influence
the economy and thereby impact organizations within a certain industry. This includes
34
government policy, political stability, and trade and tax policy. The study also indicated that
internal factors can affect how a company meets its objectives. Strengths have a favorable impact
on a business and weaknesses have a harmful effect on the firm. According to Barkauskas (2014)
economic factors have the biggest effect on the development of any given organization. Botezat
(2003) states that the development and performance of organizations strongly depend on the
growth of revenue. Ramanauskien (2010) noted that a rise in wages enable people to spend more
money. This factor greatly affects institutions that collect revenue (Barkauskas, 2015).
These conditions and facts are in line with the results of the small empirical research conducted
by Appiah-Adu (1999). He stressed on the impact of environmental changes on organizational
performance; indeed “Basically, effects of environmental changes are incorporated in
organizational performance studies in an effort to determine the adaptability of a business to
transition in its micro or macro environment.”
This is in line with the views of Pearce and Robinson (2014) and David (2009), stating that
external environment is factors beyond the control of a company that may affect the success of
the company. Furthermore, the results of the research conducted by Alkali and Isa (2012)
indicated that external environmental factors consist of access to capital and government support,
which have a positive and significant influence on company performance.
5.6 Measures you have put in place to mitigate the challenges you are facing due to
environmental effects on the company
The study showed the measures put in place and one of them was that managers have to be good
at handling lower-level employees and overseeing other parts of the internal environment. Even
if everyone is capable and talented, internal politics and conflicts can wreck a good company.
The study found that workers trust environmental scanning which is helping them in monitoring
of the organization's internal and external environments for early signs that a change may be
needed, to accommodate potential opportunities or threats, and to make adjustments to allow the
company's strengths to combat its weaknesses.
Jauch and Glueck (1998) explained that performance is the level of achievement or attainment of
a company within a certain period. A company’s performance is very influential on the
development of the company. The company objectives, including: to remain standing or exist
(survive), to gain profit (benefit), and to be able to develop or grow (growth), can be achieved if
35
the company has a good performance. The performance of a company can be seen from the level
of sales, profit levels, payback (return on capital), turnover rates, and market share achieved. One
of the factors that must be implemented before formulating the goals and strategies applied in a
company is environmental analysis and diagnosis. It is difficult for corporate leaders to know the
problems faced until it can eventually lead to ineffective strategy formulation.
Industries need to develop their strategies efficiently after scrutinizing the environment of the
business they operate in (Singh et al., 2010). Researchers have discovered that the strategy of an
institution is established by its competitive environment and that matching appropriate strategy
and the environment enhances its performance (Baines and Langfield-Smith, 2003; Chenhall and
Langfield-Smith, 2003; Singh et al., 2010).
36
CHAPTER SIX:
CONCLUSION AND RECOMMENDATIONS
6.1 Introduction
This chapter presented conclusions and recommendations drawn from the findings of the study.
The study was conducted to investigate the effects of environmental factors on the performance
of a company.
6.2 Conclusion
iv. The study revealed that the environmental factors (internal and external) are the types of
environmental factors that refer to anything within the company and under the control of
the company no matter whether they are tangible or intangible.
v. The study also indicated that internal factors can affect how a company meets its
objectives. Strengths have a favorable impact on a business while weaknesses have a
harmful effect on the firm.
vi. The study found that workers trust environmental scanning which is helping them in
monitoring of the organization's internal and external environments for early signs that a
change may be needed, to accommodate potential opportunities or threats, and to make
adjustments to allow the company's strengths to combat its weaknesses.
6.3 Recommendations
It is recommended that:
i. Managers should be sensitive towards the external environment which is so dynamic, it
extremely influences decision making,
ii. Managers ought to be flexible and they should be able to change the way they make
decisions if they want their business to have sustainable competitive advantage.
iii. To gain and sustain competitive advantage into the future, firms need to pay attention to
the external and internal factors,
iv. Policy makers should conduct seminars regarding the effects of environmental factors on
performance so as to come up with sound and realistic policies and formulate laws geared
towards performance appraisal and improvement.
v. Finally, businesses should continuously scan the environment for any opportunities or
threats and be prepared to deal with such eventualities.
37
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APPENDICES
TOPIC: THE EFFECT OF ENVIRONMENTAL FACTORS ON THE PERFORMANCE OF
A COMPANY. A CASE STUDY OF PATENTS AND COMPANY REGISTRATION
AGENCY (PACRA)
Dear respondent, I am a student at Cavendish University Zambia in the School of Business
Administration. As a requirement of partial fulfilment of the Bachelor of Arts Degree, I am
obliged to carry out a research in Research Methods and Techniques. I am therefore cordially
and randomly selecting you to participate in this study by completing this interview guide. I
further request that you should endeavor to be as sincere and objective as possible as you will be
responding to the questions in the relevant sections of the interview. You are assured of the
highest degree of confidentiality over your responses and that the information you give will be
purely used for academic purposes.
45
APPENDIX I: INTERVIEW GUIDE FOR WORKERS
Interviewee’s Details
PERSONAL DATA
1. Gender
a) Male ( )
b) Female ( )
2. How far did you go in your education?
a) Certificate ( )
b) Diploma ( )
c) Degree ( )
3. For how long have you been working for PACRA?
a) 1-5 years ( )
b) 6-10 years ( )
c) 11years and above ( )
4. What do you understand by the term external and internal environmental effects on the
company.................................................................................................?
…………………………………………………………………………………………………….
5. Are you aware of the external and internal environmental factors that affect performance of
the company?
a) Yes ( )
b) No ( )
6. Mention the external and internal environmental factors that affect the performance of the
company?........................................................................................................................................
………………………………………………………………………………………………………
…………………………………………………………………………………………………........
46
7. Explain how these factors affect the performance of the company?...........................................
……………………………………………………………………………………………………..
……………………………………………………………………………………………………..
8. What measures have you put in place to mitigate the challenges you are facing due to
environmental effects on the company?..........................................................................................
THE END