Macro- economic changes
November 5, 2007
Liberalization
Liberalization is the opposite of restriction or control. When an economy is controlled the market forces cannot operate freely. A liberalized economy on the other hand is one which the market forces of supply and demand are left to interact freely to determine the prices of a commodity.
Liberalization of the economy has included the following changes:
- Removal of price controls.
- Deregulation of foreign exchange controls e.g. Access to foreign currency and the exchange rate.
- Deregulation of bank lending rates: so that banks are free to charge any interest rate on loans.
- Reduced administrative restriction on investments by the government.
When an economy is liberalized, investors find it easier to start new business or to move from one sector of the economy to another. This implies that a liberalized market is more competitive because a sector that is attractive will get new Entrants.
Globalisation:
The success of business firms today, and in the future depends on their ability to operate globally. By setting up camp in different countries and continents an enterprise increases its potential market, it also reduces risk for future survival because if operations are not going very well in one region other regions may be doing well.
Globalisation implies increased competition for local companies, whereas it means increased choice for consumers.
Globalisation of the worlds industrial economics greatly enhances the value of information to the firm and offers new opportunities to businesses. Today, information systems provide the communication and analytic power that firms needs for conducting and managing businesses on a global scale.
Controlling the far-flung Global Corporation in different National Environments is a major business challenge that requires powerful information systems resources.
The emergence of Globalisation heightens competition and forces firms to operate in open unprotected Global Markets. To become an effective and profitable participant in international markets, an enterprise needs powerful information and communication Systems.
Change from Industrial to Post-Industrial Operations
Today, many people no longer work in farms or factories, but instead are found in sales, Education, Health care, banks, insurance firms, law firms etc.
These jobs primarily involve working with, distributing or creating new knowledge and information. New kinds of knowledge and information based organizations have emerged that are devoted entirely to the production, processing and distribution of information.
In a knowledge and information economy, IT and related systems take on greater importance . knowledge based products and services of great economic value such as credit cards and world wide reservation systems are based on new information technology.
IT constitutes a large proportion of the invested capital in some industries like finance and insurance. Across all industries information and the technologies that delivers it have become critical assets for business firms and their managers. Information systems are needed to optimize the flow of the information and knowledge within the organization. Because the productivity of employees will depend on the quality of the systems serving them, management decisions about IT are critically important to the property and survival of the firm.
Structural Charges in the Enterprise:
There has been a transformation in the possibilities for organizing and managing an enterprise. The traditional business firm was and still is a hierarchical, centralized, structured arrangement of specialists that typically relies on standard operating procedures for mass production.
The new style of business firm is a flattened (less hierarchical), decentralized and flexible arrangement of generalists who rely on instant information to deliver customized products and services.
The traditional management group relied on formal plans, rigid division of labour, formal rules and appeals to loyalty to ensure the proper operation of a firm.
The New Manager relies on informal commitment and networks to establish goals, a flexible arrangement of teams and individuals working in task forces, a customer orientation to achieve coordination among employees and appeals to professionalism and knowledge to ensure proper operation of the firm.
These structural changes in the enterprise are usually greatly IT, so is this new system of management.
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