Question

Because of a financial crisis, Isaavne, an automobile manufacturer, terminated 200 factory employees without prior notice. As a result, the labor union filed a suit against the company on the grounds of wrongful termination, and it had to pay a large amount as fine. In the context of the general environment, this scenario best illustrates the effect of the _____ on organizations.

Answer 1

Answer:

Legal Component (Environment)

Explanation:

Business Environment

The environment of an organisation refers to several internal and external factors or components that affect the smooth running of a business. Most times a company's internal environment like its management, suppliers, employees among others can be significantly influenced by the business.

However, the external environment exert so much influence on the organisation whereas, the organisation is limited in the influence it can exert back on the external environment.

The Economic, political, social, legal and technological environments are the external components that affect the business.

Looking at the question, while the business had the influence on its employee by deciding to terminate 200 factory employees, the legal external component could not be influenced. The company had to pay a fine therefore for wrongful termination of those jobs.

The legal environment is made up of legislations and laws governing the way businesses carry out their transactions and where they over step the boundary of the law, they feel the effect of their wrongdoing.