The bank of America is an institution that offers financial services. It is the largest bank in term of holding institution as far as assets is concerned in the nation. In terms of market capitalization, this bank is the second largest in United States. The four functions of management in this bank which include planning, organizing, controlling and leading in this bank are affected by both external and internal factors in the business environment.
The external factors that may be known to affect the management functions of the bank in its business environment include political, sociological, as well as economical factors (Thomas, 2007). The sociological factors include demographic trends and status, personal values and work ethics as well as the general cultures.
These factors affect the bank differently especially to the management in defining their ways of accomplishing their work. Since this bank has spread its wings in several countries and opened new branches, the central management of this bank has to understand the unique business environment in these countries to ensure they are competent and thus maximize their profitability (Thomas, 2007). Understanding of these factors helps the management in planning the future of the bank as well as designing services for certain group of the people.
Political and economic factors include all the factors necessary such as the competitors as well as the customers. The management of the bank must also study and understand about the political and economic environment in order to have a dynamic and continual relationship (Green, 2003). By studying the bank’s customers, competitors and even the political factors, the management is capable of making effective decisions which can result to high performance of the bank.
Internal factors that may affect the bank in its business environment consists organizational resources that are available for the bank to accomplish its objectives. These include the human, physical and financial resources. The role of the management is acquiring and using these resources in the bank effectively and efficiently (Green, 2003). The management in each branch has to compete with other branches or competitors continuously. Since organizational resources are scarce, success of the management depends on utilization of these resources.
Globalization is known to be a very important aspect for any business operating in the world market (Kershner, 1990). A company like the bank of America has to be globalized in order to have growth, survival and success in world market. Bank of America demands market in several other parts of the world such as in china, New Delhi, Bangalore among others. This has made this bank to have a big deal of profitability and success. For example, bank of America in the ending fiscal year of 2006 reported an increase in its net profit by 80 percent (Thomas, 2007). The global networking of the Bank of America allows it to have new ideas and plans in order to capture international market.
Technology has much dramatic effect and can affect the management of a bank at any time since the changes in business environment can be felt quickly in the firm. As technology can change suddenly, the management has to be in position that can make decisions which can put the bank in flexible position to enable it adapt to changes of technology as it occurs (Hull, Seelig, & Showinsky, 1996). Computerization has changed the banking system completely since many bank customers nowadays use credit cards as well as plastic money. Most customers of the bank of America can now deposit their money as well as withdraw in any part of the world.
They can even pay their bills as well as open accounts for the new customers through the internet. Accessing account transaction does not need one to physically go to the bank but can now be done through the internet. Technology advancement has contributed to all this which has simplified the whole process of banking.