2.1 Organizational environment

Includes all elements existing outside the organization's boundaries that have the potential to affect the organization.

External environments

	External environment consists of a wide variety of forces outside the organization that can influence its performance.
	The external environment include competitors, resources, technology and economic condition that influence the organization, it does not include those events so for removed from the organization that their impact is not perceived.
	The organization's external environment can be further conceptualized as having two layers general and task environments.

The general environment:

			General environment is the outer layer that widely dispersed and affects the organizations indirectly. It includes social, demographic and economic factors that influence all organizations about equally.
			Increases in the inflation rate or the percentage of dual-career couples in the workforce are part of the organization's general environment.
			These events do not directly change day-to-day operations but they do affect all organization eventually.

2.1 Organizational environment

The task environment:

			Task environment is closer to organization and includes the sectors that conduct day-to-day transactions with the organization and directly influence its basic operations and performance.
			It is including competitors, suppliers and customers. The organization also has an internal environment which includes the element within the organization's boundaries.

The internal environment

	The internal environment is composed of current employees, management, and especially corporate culture which define employee behavior in the internal environment and how the organization will adapt to the external environment.
	Figure 2.1 illustrates the relationship among the general, task, and internal environment as an open system.

2.1 Organizational environment

Figure 2.1: General, Task, and Internal Environment

2.1 Organizational environment

General environment: The dimensions of general environment include international, technological, sociocultural, economic and legal-political.

International:

			The international dimension of the external environment represents events originating in foreign countries as well as opportunities for American companies in the other countries.
			International dimension influences all other aspects of the external environment. International environment provides new competitors, customers and supplies and shapes social, technological, and economic trends as well.
			Today every company has to compete on a global basis.

Technological:

			The technological dimension includes scientific and technological advancements in a specific industry as well as in society at large. Technological has created massive and far–reaching changes for the organizations in all industries.
			Fifteen years ago, many organizations did not even use desktop computers. Today computer networks, internet access, videoconferencing capabilities, cell phones, fax machines, pagers, and laptops are practically taken for granted as the minimum tools for doing business.

2.1 Organizational environment

Technological advancements that make the internet accessible to nearly everyone have changed the nature of competition and of organizations relationships to customer.

Sociocultural:

			The sociocultural dimension of the general environment represents the demographic characteristics as well as the norms, customs and values of the general population.
			Important sociocultural characteristics are geographical distribution and population density, age and education level. Today's demographic profiles are the foundation of tomorrow's workforce and consumers.
			Forecasters see increased globalizations of both consumer markets and the labor supply, with increasing diversity both within organizations and consumer markets.

Economic:

			The economic dimension represents the general economic health of the country or region in which the organization operates.
			Consumer purchasing power, the unemployment rate and interest rates are part of an organizations economic environment.
			Because organization today is operating in a global environment, the economic dimension has become exceedingly complex and creates even more uncertainty for managers.

2.1 Organizational environment

The economies of countries are more closely tied together now.

Legal-political:

			The legal–political dimension includes government regulations at the local, state, and federal levels as well as political activities designed to influence company behavior.
			The U.S political system encourages capitalism, and the government tries not to overregulate business. Government laws do specify rules of the game.
			The federal government influences organizations through the Occupational Safety and Health Administration (OSHA), Environment Protection Agency (EPA), fair trade practices, libel statutes allowing lawsuits against business consumer protection legislation, product safety requirements, import and export restrictions and information and labeling requirements.
			Litigation and regulation can create big problems for companies.

Pressure groups:

			An interest group that works within the legal-political framework to influence companies to behave in society responsible ways.
			Managers must recognize a varity of pressure groups that work within the legal-political framework to influence companies to behave in socially responsible ways.

2.1 Organizational environment

			Automobile manufacturers, toy makers and airlines have been targeted by Ralph Nader's center for responsive law.
			Environmental and human rights protesters have disrupted world trade organization meetings and meetings of the world bank and the international monetary fund to protest a system of worldwide integration that has food, goods, people ,and capital freely moving across borders.

Task environment: Task environment includes those sectors that have a direct working relationship with the organization among them customers, competitors, suppliers, and labor market.

Customers:

			People and organizations in the environment who acquire goods or services from the organization are customers. Customers are important because they determine the organizations success.
			Patients are the customers of hospitals, students the customers of schools, and travelers the customers of airlines. One concern for managers today is that the internet has given increased power to customers and enabled them to directly impact the organization.

2.1 Organizational environment

Competitors:

			Other organizations in the same industry or type of business that provide goods or services to the same set of customers are referred to as competitors.
			Each industry is a characterized by specific competitive issues. The recording industry differs from the steel industry and the pharmaceutical industry. Coke and Pepsi continue to battle it out for the soft drink market.

Suppliers:

			People and organization that provide the raw materials the organization uses to produce its output are provided by suppliers.
			A small private university may utilize hundreds of suppliers for paper, pencils, cafeteria food, computers, Trucks, fuel, electricity and textbooks.
			Large companies such as General Motors Westinghouse and Exxon depend on as many as 5000 suppliers.
			Many companies are now using fewer suppliers and trying to build good relationships with them so that they will receive high quality parts at low prices.

2.1 Organizational environment

Labor market:

			The people available for hire by the organization. Or represents people in the environment who can be hired to work for the organization.
			Every organization needs a supply of Trained, qualified personnel. Unions, employee associations, and the availability of certain classes of employees can influence the organization's labor market.
			Labor market forces affecting organization right now include:

			1.	The growing need for computer literate information technology workers.
			2.	The necessity for continuous investment in human resources through recruitment, education, and training to meet the competitive demands of the borderless world.
			3.	The effects of international trading blocs, automation and shifting plant location upon labor dislocations creating unused labor Pools in some areas and labor shortages in others. Changes in these various sectors of the environment can create tremendous challenges. Especially for organizations operating in complex, rapidly changing industries.