ORGANIZATION AND THE

ENVIRONMENTAL FACTORS
Sayeed Hasan
MBA, University of Texas-Rio Grande Valley
Lecturer, CIU Business School
The Manager: Omnipotent or Symbolic?
• Omnipotent View of Management: The view that managers are directly
responsible for an organization's success or failure.

• Symbolic View of Management: The view that much of an organization's success

or failure is due to external forces outside managers’ control.

Constraints on Managerial Discretion:

• In reality, managers are neither helpless nor all-powerful.
• But their decisions and actions are restricted by both external and internal
constraints.
The Organization's Environment

• External Environment:
Everything outside an
organization’s boundaries
that might affect it. The
uncontrollable environment.

• Internal Environment:
The conditions and forces
within an organization. The
controllable environment.
Components of External Environment
• The Economic Component: Economic growth,
interest rates, exchange rate, recession, inflation,
changes in disposable income, unemployment rates,
stock market fluctuations, business cycle stages, etc.

• The Global Component: encompasses those issues

associated with globalization and a world economy.

• The Political/Legal Component: Political conditions

and stability, government and local laws, employee
and consumer protection laws, trade restrictions,
tariffs on import, environmental regulations, etc.
• The Sociocultural Component: Values, attitudes, trends, traditions, lifestyles, religion,
beliefs, tastes, patterns of behavior, population growth, etc.

• The Technological Component: Scientific or industrial innovations, computer-aided design &

manufacturing, Internet/intranet, technological advancement, etc.

• The Demographic Component: Concerned with trends in population characteristics such as

age, race, gender, education level, geographic location, income, family composition, etc.
Environmental Uncertainty & Complexity
• Environmental Uncertainty: The degree of change and complexity in an
organization’s environment.
• Environmental Complexity: The number of components in an organization’s
environment and the extent of the organization’s knowledge about those
components.
Components of Internal Environment

• The internal environment is composed of the elements within the

organization, which mainly includes current employees, management,
and culture. Another important component of is physical work
environment.
• Trade unions, management, current employees, shareholders, etc.
control the internal environment.
Culture / Corporate Culture
• Culture: The shared values, principles, traditions, and ways of doing things
that influence the way organizational members act and that distinguish the
organization from other organizations
• Culture can be analyzed at three levels: Visual Artifacts, Expressed Values,
and Underlying Assumptions.
Organizational Stakeholders
• Stakeholders are the persons, groups, and institutions who have an
interest in how the organization performs because it affects them in
some way.
References:
• Robbins, S. P. and Coulter, M. (2016) Management. 13th ed. Harlow:
Pearson Education Limited.
• Griffin, R. W. (2016) Fundamentals of Management. 8th ed. Boston:
Cengage Learning.
• Certo, S. C. and Certo, S. T. (2016) Modern Management: Concepts and
Skills. 14th ed. Harlow: Pearson Education.
• Gomez-Mejia, L. R. and Balkin, D. B. (2012) Management. New Jersey:
Prentice Hall)