Impact of external environment on organizational performance: The case of Ferrochrome industry in Zimbabwe

Abstract

Performance in the ferrochrome industry has been subdued with most organisations in the industry running unprofitably and some closing shop due to economic challenges. The main objective of this study was to identify those economic factors that impact on organisational sales performance and to make management recommendations to address the challenges. A number of theories on the economic variables as discussed by a number of authors were reviewed. The research was quantitative and the survey study strategy was adopted with five out of nine companies in the industry targeted for the survey. Questionnaires were distributed to the participants whose response rate was just average mainly due to the problems in this industry, where only five out of nine companies are running and those which are running have their staff on short working hours as a cost cutting initiative. The study results showed that, out of the ten identified independent variables, only three were statistically significant and only one general factor (company size) was established to be statistically significant. The three variables were demand, recession and interest rate. The research findings revealed that demand had a positive correlation with performance whilst interest rate and recession had negative correlation with performance and this supported the hypothesis made on the two variables. It was recommended that a company should regularly scan its external economic environment and identify those variables that impact on sales performance so as to formulate strategies and policies appropriately in line with opportunities or threats identified.