Environmental factors play a major role in determining an organization’s success or failure. It’s just like a swimmer who needs to understand the conditions in the water. The organization must understand the basic elements of its environment to properly maneuver them for success. The importance of an organizations environment is described in detail below:
Importance of organizations environment
All organizations have both external and internal environments. The external environment is composed of general and task environment layers.
The general environment includes nonspecific elements of the organization’s surroundings that might affect its activities in a broad and general sense. The task environment consists of specific dimensions of the organization’s surroundings that are very likely to influence the organization in a more direct and immediate sense.
The internal environment consists of conditions and forces within the organization. It includes the owner, employees, the board of directors, and culture each of which play an important role in the internal environment of the organization.
Organizations and their environments affect each other in several ways.
Uncertainty is a major force caused by change and complexity that affects man’s organizational activities. A simple and stable environment creates the least uncertainty, and a complex and dynamic environment creates the most uncertainty.
Competitive forces include the threat of new entrants, competitive rivalry, and the threat of substitute products. A simple and stable environment creates the least uncertainty and a complex and dynamic environment create the most uncertainty.
Environmental turbulence can cause major disruption for organizations. Environmental turbulence can often force an organization to respond to catastrophic events with little or no warning.
Although organizations could have developed contingency plans for some of these crises, many of them are events that would have been hard to anticipate.
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