GRAND COLLEGE

DEPARTMENT OF BUSINESS ADMINISTRATION

ORGANIZATIONAL BEHVIOUR INDIVISUAL ASSIGINMENT

BY
MOHAMMED SALIYE

JANUARY, 2022
HAWASSA, ETHIOPIA
In management, the word “Environment” does not necessarily mean physical surroundings, but
is used to describe all those influences that bear upon the individual organization. Business
environment is used to mean anything, which surrounds the business organization. It affects the
decisions, strategies, process and performance of the business. The environment is consisting of
factors which are beyond the control of business (STEP) Social, technological, economical, legal
and political. It provides opportunities or poses threats to the organization. Every organization
has its own culture. Almost everything that affects an organization's ability to compete and
respond successfully to changes in the external environment – ultimately, the organization's
success or failure – is an aspect of that culture.

Internal environment of an organization refers to events, factors, people, systems, structures, and
conditions inside the organization that are generally under the control of the company. Internal
environment that will influence organizational activities, decisions, and employee behavior and
attitudes. External factors that affect an organization may be political, economic, social or
technological. The same internal factors that lead to an organization's success inevitably
characterize that organization's relationship to the external environment in these broad areas.

The environment of a business may be defined as the total surroundings, having a direct or
indirect bearing on the functioning of business. It may also be defined as the set of external
factors, such as economic factors, social factors, political and legal factors, and demographic
factors, technical factors, among others, which are uncontrollable in nature and affect the
business decisions of a firm. Different institutions are affected by different numbers and kinds of
environmental factors. External environmental factors change speedily, are uncertain, and
complex, and may create problems for organizations if not closely monitored.

Business environment, performance of companies is predicated on factors such as low sales, high
cost of production, low capital utilization, lack of foreign exchange to source needed input and
materials, poor power supply, and low quality of goods and services among others. These
environmental forces have being impeding activities in the economy.

The environment in which business organizations operate is a complex, multi-focus dynamic and
has a far reaching effect on such organization. The environment tends, shape the outlook, and
goal of the organization by placing constraints on them. These constraints in the environment of
organizations goal could be in the form of competition, this sets a limit on the goals specify by
the organization. External environmental factors change speedily, are uncertain, and complex,
and may create problems for organizations if not closely monitored. Any organization ignoring
or being unresponsive to environmental factors is creating trouble or inviting trouble.
Environment factors affect the relationship between strategic planning and performance.

Environmental factors significantly influence business strategies in the banking industry. Cheng-
Environmental variables can moderate the effect of management strategies, therefore,
significantly affecting performance. Environmental uncertainty arises from organizational ability
to make environmental forecasts. As a result, organizational decision making is influenced by the
complexity and volatility of the environmental (May et, al., 2000). Organizations attempting to
ignore environmental factors or that refuse to respond to such factors create trouble for
themselves and place themselves at a competitive disadvantage. On the contrary, understanding
and responsiveness can contribute to firms’ effectiveness and benefits.

Environmental changes are continuously exerting new pressures on firms’ performance and in
order to adapt with these changes, businesses often formulate and implement strategies to
reorganize and reform the way products are manufactured and distributed to final customers.
Thus, the influence of environmental factors on business performance towards profit objective is
found to have increasingly stronger interrelationships which need more sophisticated business
strategies

Environmental forces have been found to be capable of either impeding or facilitating

entrepreneurial activities in any economy. The World Bank is of the opinion that improvement in
the enabling environment leads to greater levels of investment by the private sector, more wealth,
job creation and poverty alleviation. The relationship between business and its environment is
one of mutuality; that is, the environment exerts pressure on the business while the business, in
turn, influences some aspects of its environment
 References
Adebayo, I. O., Ogunyomi, P. O. and Ojodu, H.O. (2005). Introduction to Business
Management, 2nd ed., Lagos, Abilejo Printing Press.
Fermando, A. C (2011) Business Environment. Darling Kindersley publications India
Maduki V.N and Aosa E (2011) The influence of external environment on the performance of
publicity quoted companies in Kenya, Business Administration and Management
Journal 1(7), 205 -218.
Murgor, P.K (2014) External Environment, firm capabilities strategies responses of large scale
manufacturing firms in Kenya, University of Nairobi, unpublished PhD. Thesis
Ogundele, O. J. K. and Opeifa, A. Z. (2004). The Influence of External Political Environment on
the Processes of Entrepreneurship. The Nigerian Academic Forum: A
Multidisciplinary Journal, 7 (5)