Organizational Environment

1529 Words Oct 24th, 2008 7 Pages
b. Organizational Environment
Organizational Environment: those forces outside its boundaries that can impact it. Forces can change over time and are made up of Opportunities and Threats. (7) The Organizational environment refers to the forces that can make an impact. Forces made up opportunities and threats. Organizations do not exist in isolation. It works with the overall environment. Scholars have divided these environmental factors into two main parts as. Internal Environment External Environment (8)
c. Internal Environment The internal environment consists of the inherent competencies of the firm and the structure of its internal systems and processes. It is imperative for the organization to conduct an internal analysis
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Managers must stay abreast of and deal constantly with external developments. (14) Factors that happen in the external environment are known as external factors or influences. These will affect the main internal functions of the business and possibly the objectives of the business and its strategies. The main factor that affects most business is the degree of competition - how fiercely other businesses compete with the products that another business makes. The other factors that can affect the business are: Social - how communities behave and their beliefs. Legal - the way in which legislation in society affects the business. Economic - how the economy affects a business Political - how changes in government policy might affect the business Technological - how the rapid pace of change in production processes and product innovation affect a business. Ethical - what is regarded as morally right or wrong for a business (15) An organization is an open system; therefore it interacts with its environment. To manage the relationship with the environment, a large part of strategic planning is concerned. The environmental factors can be divided to 2 main categories, which is MACRO and MICRO .Macro environmental factors seriously affect an organization business practice, profitability and future progress. It can