Introduction:
As we have seen when discussing open systems, organizations are dependent on the environment for their survival .If they are unable to import energy and resources from the environment, or if their products or services are not required by the environment then they cannot survive nonprofit organizations are created in response to demands from groups organizations or individuals from the general environment. They depend on the environment for the financial and human resources necessary to carry out their activities.
Environment and its Concept:
An organizations environment is defined as all the elements existing outside the boundary of the organization that have the potential to affect all or part of the organization. Every organization needs to be perceived as operating in an environment. Organizations are neither self-sufficient not self-contained. Rather they exchange resources with and dependent upon external environment. External environment can be defined as all the forces and conditions outside the organization that are relevant to its operation and influence the organization. Organizations take inputs raw materials, money, labor and energy) from the external environment, transform them into products or services, and send back as output to the external environment. The other environment is internal which can be defined as all the forces and conditions within the organization that influences its behavior. Thus, environment can be broadly classified into (1) Internal environment, and (2) External environment.
- Internal Environment:
An organization's internal environment consists of the entities, conditions, events, and factors within the organization that influence choices and activities. It exposes the strengths and weaknesses found within the organization. Factors that are frequently considered part of the internal environment include the employee behavior, the organization's culture, mission statement, and leadership styles.
Each business organization has an internal environment, which includes all the elements within the organization's boundaries. Strictly speaking they are part of the organization itself. The major components of the internal environment are:
a. Owner
b. Employees
c. Shareholders
d. Board of Director
e. Culture
- External Environment:
The external environment are those factors that occur outside of the company that cause change inside organizations and are, for the most part, beyond the control of the company. Customers, competition, the economy, technology, political and social conditions, and resources are common external factors that influence the organization. Even though the external environment occurs outside of an organization, it can have a significant influence on its current operations, growth, and long-term sustainability. Ignoring external forces can be a detrimental mistake for managers to make. As such, it is imperative that managers continually monitor and adapt to the external environment, working to make proactive changes earlier on rather than having to take a reactive approach, which can lead to a vastly different outcome.
According to James Stoner, External environment can be defined as all elements outside an organization that are relevant to its operation. This environmental context becomes more clear if the external environment is further divided into two distinct segments: (1) general environment and (2) task environment.
(a) General Environment:
General environment is composed of the nonspecific elements of the organization's surrounding the might affect its activities.
The general environment consists of interrelated forces that can be categorized into five dimension:
- The Economic Dimension
- The Socio-Culture Dimension
- Political Legal Dimension
- The Technological Dimension
- The International Dimension
(b) Task Environment:
The task environment puts indirect pressures on business management through the institutional processes of following elements:
- Customers
- Suppliers
- Competitors
- Financial Institution
- Government
- Media
- Strategic Partner
- Regulator
Environment that has direct and indirect impact on the firm:
The task environment supplies functional information more readily. The manager in this case can identify environmental factors of specific interest to the organization. The task environment consists of competitors, regulators, customers, suppliers, and strategic planners. These factors can vary on a day to day basis. The vitality and role they play on firms is what creates is immediate and direct impact on firms. Let’s take case of Taco Bell a few years back, when a foodborne illness arose from their infected meat. After several consumers grew sick from damaged products, the number of customers plummeted. Another example of its immediate impact is when suppliers, who are for the most part stable, are affected by some natural disaster and cannot supply raw materials in time. The firm must find an immediate resolution or else face serious consequences. General environments on the other hand offer a vague, diffused and delayed impact on firms. The main reason for this is because the general environmental factors offer long term results. These dimensions stay relatively constant from day to day. A shifting of demographics takes time, it doesn't occur overnight.
The environments has a more diffuse and delayed impact:
The three environments of a firm are: external, internal and task environments.
External environment is everything outside an organization’s boundaries that might affect it. Internal environment consists of conditions and forces within the organization. Finally, task environment are specific organizations or groups that influence an organization. Task environment includes competitors, customers, suppliers, strategic partners, and regulators. Although the task environment is quite complex, it has the most direct and immediate impact on the firm because it provides useful information more readily than does the general environment since the manager can identify environmental factors of specific interest to the organization, rather than having to deal with the more abstract dimensions of the general environment. The general environment has a more diffuse and delayed impact because it features dimensions that impacts the firm in the long run. The dimensions of the general environment are: economic dimension, technological dimension, sociocultural dimension, political-legal dimension, and the international dimension .As you can see, these are dense dimensions, that requires more time and work to impact the firm, contrary to the task environment, in which the impact is felt in a firm in a more readily manner.
Conclusion: Finally after all discussion we can say all environments and its components are important without this parts they cannot doing business very well but business should prepare a situation of the environment which is flexible.