Professional Documents
Culture Documents
DEFINITION
Environment is made up of the administrative, technological, political, economic, socio-
cultural, and stakeholder factors. (Lusthaus, Anderson and Murphy, 1995)
ORGANIZATIONAL ENVIRONMENT
External environment refers to force and institutions outside organization that potentially affect an
organizations performance General and Specific Environment
ORGANIZATIONAL ENVIRONMENT
• Specific Environment
Suppliers: Any party that provides input for the business. E.g. financial institutions
are provider of money; colleges are suppliers of human resources. Managers need to have steady and
reliable flow of inputs to meet the goals
Pressure groups: Managers must recognize the special interest groups that
attempt to influence organization
• General Environment
Economic conditions: It includes the impact of economic factors like Interest rates,
inflation, changes in disposable income and the stage of general business cycle e.g when consumer’s
incomes fall their confidence about job security declines, they will postpone purchasing any thing that is not
necessary
General Environment
Political/legal conditions: Federal, state and local government influence what org can
and cannot do
Socio-cultural conditions: Managers must adapt their practices to the changing
expectations of the society and their life style
Technological: It is changing the ways the org are operating, so businesses must
address this issue and its impact on performance of org.
• ENVIRONMENTAL UNCERTAINTY
The degree of change and complexity in an org’s environment. Degree of change: If the
components of in an org’s environment changes frequently we call it dynamic environment. If the change is
minimal we call it stable
ENVIRONMENTAL UNCERTAINTY
Environmental complexity:
Fewer competitors, customers, suppliers governmental institutes, less complex environment and thus
less uncertainty
Stakeholder
Any party that is affected by org’s decisions and policies and that can influence
organization