Need response in 50 to 75 words for below discussion
External threats are characteristics of the external environment that may prevent the organization from achieving its strategic goals. Koks (2008) points out that external environmental assessment is more complicated for multinationals, compared to domestic firms because multinationals must evaluate several environments simultaneously. These companies struggle in environments that are characterized by intense global competition, economic difficulties, labor unrest, uncertainties about government policies and other factors that threaten their survival.
ICRC (International Committee of the Red Cross) is an impartial, neutral and independent organization whose exclusively humanitarian mission is to protect the lives and dignity of victims of war and internal violence and to provide them with assistance. The ICRC administers various special funds and awards for national societies, to help their work, or to Red Cross workers, either in recognition of their service or to provide practical assistance in case of hardship (International Committee of the Red Cross, 2010).
ICRC External Challenges:
Political-legal Challenges:
The political instability in Kenya after the post-election violence in 2007-2008 posed a high challenge for ICRC in Nairobi operations. It was challenging transporting food and supplies to the affected regions in the country due to insecurity. Challenge of delays in dealing with government offices due to the bureaucratic work processes. ICRC does not pay VAT, hence when applying for VAT exemption for different purchases there is often delay in receiving the VAT exemption certificate from the relevant government office which frustrates both the suppliers and the finance department.
Economic Challenges:
An increase in inflation in Kenya, Tanzania or Djibouti consequently results in an increase in the cost of goods and services, salaries and wages, office and residential premises rent, and utility bills. Generally, these changes increase the expenditure budget of ICRC in Nairobi especially when these changes are not anticipated during budget preparation. Changes in bank interest rates also increase the bank charges charged to ICRC in Nairobi. Infrastructural challenges mainly because of poorly maintained roads, this causes challenges for ICRC operations due to traffic jams, high maintenance costs for vehicles and trucks and road accidents.
Information Technology Challenges:
Fiber cuts in 2012 in the region heavily impact ICRC Nairobi operations as pointed out in the study. The lack of adequate redundancy resulted in heavy outages in the provision of connectivity. The risk factor associated with telecom infrastructure, therefore, remains at a medium level in Nairobi in comparison to other countries in the region.
Actions are taken by ICRC:
ICRC has been continued to monitor its environment and swiftly modify its strategy in response to changes in market conditions, advancing technology, the fresh moves of competitors, shifting buyer needs and preferences, emerging market opportunities. The organization has incorporated flexibility in adapting to a new situation and continuously reviewing its operational strategy. It holds meetings with partners (government, suppliers and Red Cross partners) to help enhance work relations and processes. ICRC in Nairobi has also made a structural change by creating a position to deal with the bureaucratic challenges encountered in dealing with government offices. ICRC has also formed a strategic alliance with Orange Business Systems as a global partner to enable the provision of reliable Internet services in all sites.
Recommendations:
ICRC should respond to political-legal challenges by adapting to the changes proposed by the government. These changes include tax laws, foreign trade regulations and environmental protection laws and also the organization needs to understand the culture of the communities where it operates. Outsourcing of non-core services was also pointed out as a strategic response to economic challenges.
References:
Koks, S. (2008). Strategic responses by the Barclays Bank of Kenya limited to changes in the environment. Unpublished MBA research project, University of Nairobi.
International Committee of the Red Cross (2010). The ICRC: Its mission and work. Retrieved from http://www.icrc.org/eng/who-we-are/overview-who-weare.htm
