Federal Mogul business environments: domestic and international analysis

¶ … company Federal Mogul business environments (domestic & international) business theories applied environments. Make environments included. Include a summary environment. Then analyze environment collectively incorporating business theories

Federal Mogul Company

The company's activity is influenced by the internal and external environments. The external environment is represented by the economic, social, technological, political, legal, and environmental factors, customers, employees, managers, suppliers, owners, the government, the community, and others. The internal environment is represented by financial, technical, and human resources.

The External Environment

The Economic Environment

Federal Mogul's activity is significantly influenced by the economic situation on the domestic and international markets. The importance of this environment is reflected in the opportunities and constraints it determines (Business Dictionary, 2011). The economic environment is characterized by the structure of economic activity, the level of development, unemployment rate, and others. These factors are directly or indirectly reflected in the market situation. They determine the volume and structure of the products and services offer, the level of incomes, the demand, the level of prices, and the intensity of competition. The analysis of this environment ensures the necessary elements for a correct evaluation of market potential that the company can rely on. The external influences theory explains the relationship between these environments and the company (Kew & Stredwick, 2005).

In this context, the economic environment research in a certain region must be based on emphasizing the factors that determine the size and dynamics of consumption expenses. These factors are represented by the distribution of income, savings, and public debt. The economic environment also includes a series of groups of interest that influence the economic situation of the company. Their actions are reflected in the economic and market conditions that the company must take into consideration.

The technological environment is based on the elements that explain how the company's products are obtained. Federal Mogul; influences the technological environment because of the advantages it benefits from, but also as a supplier. This is because technological developments determine modifications in the volume, dynamics, and structure of demand, supply, and prices. Another fact that must be taken into consideration is that the technological environment is one of the most important components of Federal Mogul, with great implications on its activity and on society. The evolution of the technological environment is expressed through inventions, innovations, the size of research and development funds, and others.

The political environment reflects the society's structure, social classes and their role within the society, political forces and the relationships between them, the state's level of involvement in the economy, and the stability of the political climate. These factors can be stimulating or restrictive on the market activity. Their role is increased in psituations characterized by instability that are caused by the modifications in the political situation.

Suppliers

These are represented by companies or individuals that provide Federal Mogul the necessary resources of materials, machinery, and equipment. The importance of suppliers is represented by the fact that Federal Mogul's success on the market relies on the quality of its products. Therefore, it is important to develop strong relationships with suppliers, based on the satisfaction of both the customer and the supplier. It is also important to develop a large supplier base. Companies that only have few larger suppliers are more likely to experience problems caused by defective supply chain management. It is recommended to rely on a larger number of smaller suppliers that can provide the company its necessary resources.

Customers

The company's customers represent the central point of Federal Mogul's strategy. In other words, the company develops and implements its strategy in order to satisfy its customers' needs. However, this can be achieved by thoroughly analyzing customers and their requirements. This requires investments in market study. The nature of Federal Mogul's products and services determines the company to orient towards companies as customers. This situation presents a series of advantages and disadvantages. The advantage is represented by the fact that such customers represent important relationships that the company can benefit from. The disadvantage is that it is more difficult to attract such customers.

Competition

This is one of the most important factors that influence the company's activity. In order to create competitive advantage, Federal Mogul focuses on providing high quality products and services. However, it is difficult to compete with companies that outsource their production process and other activities to cheaper destinations, like China, India, and certain countries in Africa. This allows them to reduce their production costs and to introduce products of lower prices on the market.

In this industry, it is important to analyze the strategy and activity of competitors. This is because the strategy of certain companies in this business determines the strategy of other companies. In other words, larger companies determine the prices and the product supply of smaller companies also.

The Internal Environment

Human Resources

The company's activity relies on the performance of its employees. Federal Mogul's activity is significantly influenced by innovation, making it important that employees have the necessary conditions to develop innovative products that help the company increase its market share. In order to achieve this objective, the company must develop motivating strategies for its human resources. The satisfaction of employees directly influences the company's performance.

Financial Resources

The company's activity must be supported by its financial resources. Regarding this type of resources, their strategy of allocation is more important than their volume. This is because even if these resources are characterized with a large volume, if they are improperly allocated the company does not benefit from this situation. Therefore, it is important to establish the necessary of financial resources of each activity.

Technical Resources

The company products require significant investments in technological developments. This is because its innovation oriented strategy requires important technical resources. Therefore, it is important to ensure the technical resources necessary.

Relationships between Environments

It is obvious that these environments influence each other, but they also influence the company's activity. The economic environment has a significant influence on the country's social situation, on the technical environment, and on the company's activity. The economic situation determines the purchasing power of customers. This factor has a direct impact on Federal Mogul's sales. The level of income that is established by economic factors determines customers' orientation towards certain types of products and services, certain brands, and certain price levels.

The technical environment has a great influence on the company's activity and on the products and services that Federal Mogul introduces on the market. Therefore, it is important to analyze the technical environment when deciding to invest in certain countries. The technical environment determines the level of quality of the products and services on the market.

The political environment influences economic factors and the activity of companies. In other words, the state's level of involvement in the country's economy determines investors' appetite. In countries with high level of involvement from the state, certain companies cannot properly develop their activity. They must subject to a series of rules and regulations that are less strict in democratic countries. The high levels of corruption in certain countries make it difficult for companies to focus on their business. This is one of the environments that determine important limitations for companies. The disadvantage is that there is little that these companies can do in order to improve the situation (Goldman, 2006).