ORGANIZATIONAL ENVIRONMENT

Next is the Factors Controlling Organizational Environment

- The factors that control an organizational environment are classified into Internal and
External Factors.
- Internal Factors are composed of the employees, management and culture. External
Factors is composed of 2 types the General Environment and the Task Environment.
First, we will discuss the internal environment
1. Internal Environment

- The internal environment is composed of the elements within the organization,

including current employees, management and especially corporate culture which
defines employee behavior.

*Corporate Culture- also known as company culture, refers to a set of beliefs and
behaviors that guide how a company’s management and employees interact and
handle external business transactions.

- Internal Environment is composed of various elements present inside the

organization, that can affect or can be affected with, the choices, activities and
decisions of the organization.

- The management, current employees, shareholders and board of directors are some
of the people who controls the internal environment.

*Another type of External Factor is the Task Environment*

TASK ENVIRONMENT

- The task environment is inclusive of those outside sectors that have a direct working
relationship with an organization. The task environment is the apart of the external
environment. The task environment are things that are close to the organization and
effect it the most.
- The main variables in the task environment are:
o Customers
o Suppliers
o Labor
o Competition
o Pressure Groups

*First, is the customer*

a. Customers
- Customers are the final purchasers of a good or service or absorbs the
organizational output.
 - Customers are the life force of any company. The main objective of starting a
company is to generate profit. This profit is generated from product and service sales
to the customers. As such, customers are the primary source of revenue.
- It explains why organizations consider their customers as the most critical factor
when deciding on the type of products to sell, location, and marketing strategies to
adopt. Thus, customers are important because they influence a company’s ability to
achieve its revenue targets.

b. Suppliers
- Suppliers are the people or organizations who provide the raw material that a
particular organization use to produce their output.
- A supplier’s pricing strategy affects the revenue the organization earns. Suppliers
affect a company because they are the source of raw materials.
- For example, car manufacturers need material supplies in the form of tires,
electronics, and leather interiors to complete their vehicle designs. Behind every
brand, there are suppliers who provide the necessary raw materials (inputs).
- So, without suppliers, the business will not procure essential raw materials, which
means necessary inputs will be unavailable for the business to create its products.

c. Labor
- Labor market includes the people available for hire. Employees with excellent
customer relations will enhance the company's public image.
- Qualities, skills and knowledge possessed by the employees affect the performance
of an organization to a great extent. Every company needs highly skilled employees
to ensure top-quality products. In the absence of these attributes, a company may
suffer reduced market share, low sales volume, and decreased profitability.
d. Competition
- Competitors present challenges as they compete for customers in a marketplace
with similar products or services. The management of an organization should be
prepared to respond to the competitor policies.
- Markets are characterized by competition between businesses that offer identical or
substitute products and services. This competition affects business outcomes.
- For example, Coca-Cola's main competition is Pepsi, a key player in the beverage
industry offering a substitute product. If Pepsi offers a better product, customers will
prefer their drink, which will reduce Coca-Cola's market share and profitability.
Ultimately, competitors affect a company by reducing access to resources,
customers, suppliers, and market share. Competitors also decrease market prices.
This is why companies engage in extensive marketing strategies to maintain a
competitive advantage.

e. Pressure Groups
- It is also necessary for organization to identify special interest groups that attempt to
influence it
- Pressure groups are groups without political power, but which aim to influence the
political, or decision-making, process. They have specific interests and attempt to
influence businesses, people and government to help achieve their objectives.