The Importance of Understanding the Organization's Environment

1022 Words Mar 10th, 2006 5 Pages
It is important to understand about the environments that organizations are facing? Yes, it is important to have sound understanding about the environments companies are facing as the external environment has an overwhelming impact on management uncertainly. As in this report writing, I will state important factors, elements and create why the study of the environment is important to us in this fast and changing world we ever live in.

The assessment of external factors analyze outside the physical confines of the enterprise. These factors are beyond the control of the enterprise, and could have significant impact on the planning function of management.

The external assessment is performed at a worldwide level and at general area level.
…show more content…
At the same time, the more differentiated the structure, the more effort must be given to the integration of the various subunits.

The Responses to Uncertainty

Another perspective views the environment primarily as a source of resources upon which the organization depends. Three structural characteristics of the environment affect resource dependence: munificence or the abundance of resources; concentration, the extent to which power and authority in the environment is widely dispersed; and interconnectedness, the number and pattern of linkages among organizations in the environment.

The degree of dependence would be great when resources are scarce, and when entities in the environment are highly concentrated or interconnected: To survive, organizations require resources. Typically, acquiring resources means the organization must interact with others who control those resources. In that sense, organizations depend on their environments.

(Pfeffer and Salancik 1978, 258), argues that because the organization does not control the resources it needs, resource acquisition may be problematic and uncertain. Others who control resources may be undependable, particularly when resources are scarce. Organizations transact with others for necessary resources, and control over resources provides others with power
Open Document