‘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.

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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

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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”.

32

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

35