The Importance of Understanding the Organization's Environment

As for external factors one of the external factors would be perhaps a new law that is given and affects directly or indirectly the business and that business needs to make some changes.

Hillman (2009) indicated that “Resource Dependence Theory” refers to a business entity as an open mechanism that is reliant on contingencies in the external environment (p.2). That is, the theory views a business in relation to its resource dependences with other businesses in the environment (Salazar, 2012). Pfeffer and Salancik (as cited in Sheppard, 1995, p.28), stated that the essence of a company’s survival concerns its ability to get and maintain resources. The hypothesis helps explain why businesses should enter into exchanges with related parties and the manner in which the entity can maintain its survival. Pfeffer and Salancik (as cited in Sheppard, 1995, p. 28 - 29) conveyed that this survival occurs via demand management, namely the demands of interest associates upon which the entities rely on for resources

Discussion Question 3.1: Why is it important for an organization to study and understand its external environment?

The assessment of internal factors analyze inside the physical confines of the organization. These factors are within the control of the organization. The internal assessment considers plan implementation, structure, culture, innovation, diversity, ethics, processes and technology. All of the factors can have a grave impact on the success of an organization. This is why the planning function of management is so important. Technology is rapidly changing, and for a business to succeed it must change with the time to adapt to

environmental analysis, it is important to understand that they are simply frameworks to orient the user toward a more precise understanding of the business environment (O’Farrell, 2015). It is important to understand the business environment, the universal processes used in analysis and how analysis is converted into strategy.

A business organization cannot survive in its industry if it does not keep an eye on what is happening in its internal and external business environment. The analysis of business sector or environment acquaints an organization with the issues, challenges, and external factors that have a direct or indirect impact on its business operations and profitability. On the basis of this analysis, the organization can formulate its future strategies and compete in the industry in a more effective and vigilant manner (Cadle, Paul & Turner 2010).

Describe what actions you would take to survive and succeed. It is necessary for an organization to reduce the dependence on other organizations regarding supplying materials and other resources. Managers should succeed and survive without being dependent on other organization. Actions that can be followed to reduce dependence on a large organization are to maintain a long-term contract with labors would help to reduce the dependency of finding other labors to get the work done. It is important to maintain good relationships with labor and take care of all their job needs so that they would not feel a need to find another job, and the organization should also maintain a good relationship with the large organization.

I think it is important to assess the environment opportunities associating them to the strengths and weaknesses of the organisation resources.

Fourth, the organization is represented as being in close inter-relationship with its environment; both influencing it and being influenced by it. The organization does not simply react to its environment but can proactively attempt to change the environment in ways which will benefit the organization.

Organizational environments: Reciprocal relationships exist between an organization and environments; information systems provide organizations a way to identify external changes that might require an organizational response.

Both the Contingency and the Resource Dependence Paradigms play a vital role in business. Though they have similarities, the also have differences. The following essay will describe these components.

There will be 2 parts to external analysis; it will be done based on general environment and competitive environment. External analysis is basically analyzing the factors that are not within the control of an organization for the general environment part. As for the competitive environment part, the strength of an organization’s current competitive position, and the strength of a position it is considering moving into will be identified to help prepare itself for every possible happenings in the near future.

An analysis of the external environment includes the factors in a business’s external environment about a business's industry, competition, and political and social environments, and affects the firm’s strategy (Aaker, 2001).

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)

At least two different organizational structures are identified, described, and compared in terms of their design principles.