Discuss influence external environment conduct organisatio

how external environment affect the organisation

Financial resources include capital used for financing the operations of the organization including working capital. Other age groups, such as Generation X—people born between and —and the baby boomers—born between and —have their own spending patterns.

External environment factors

If jobs are plentiful and the economy is booming, employees are happier overall and their behavior and performance mirror that. But ill-management of the workforce could lead to a catastrophic situation for the company. Managers can take preparation to deal with a predicted crisis in any of the factors in the environment. Reputation of Company in Community Employees' perceptions of how their company is viewed by the local community can impact behavior. In a stable industry where attracting new customers is not an issue, employees are not motivated to lay their internal ethics aside to chase money. It is a case of living up to expectations. Owners of an organization may be an individual in the case of sole proprietorship business, partners in a partnership firm, shareholders or stockholders in a limited company or members in a cooperative society. But some businesses traditionally benefit in poor economic conditions. Competition in Industry The degree of competitiveness in an industry can impact the ethics of both management and employees, especially in situations where compensation is based on revenues. Laws and Regulations: All organizations have to abide by the legal system, new laws and regulations are constantly added due to the political or social changes. For example, a company that relies heavily on technology will be more affected by software updates than a company that uses just one computer. The amount of government activity, the types of laws it passes, and the general political stability of a government are three components of political climate. The alcoholic beverage industry, for example, traditionally fares well during times of economic downturn.

We discuss the legal environment in greater detail in a separate appendix. When the economy is growing, for example, unemployment rates are low, and income levels rise. Normally, you would not go for a walk in the rain without an umbrella, because you understand the environment and you know when it rains you can get wet.

Indirectly interactive: This environment has a secondary and more distant effect upon the organization. It is particularly noteworthy in the organizations that operate on thin margins or new startups since they have little support to raise capitals.

external environment of an organization pdf

Thus, managers are primarily adapters to, rather than agents of, change. The external environment is divided into two parts: Directly interactive: This environment has an immediate and firsthand impact upon the organization.

Laws and Regulations: All organizations have to abide by the legal system, new laws and regulations are constantly added due to the political or social changes.

The economic dimension reflects worldwide financial conditions.

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Understanding the Business Environment