The Environment of Organizations

External Environment refers to forces and institutions outside of the organization that potentially can affect the organizations performance1. The specific environment includes those external forces that have direct and immediate impact on managers decisions and actions and are directly relevant to the achievement of the organizations goals

Customers, suppliers competitors, and pressure groupsCustomers organizations exist to meet the needs of the customersCustomers absorb the organizations outputThey represent potential uncertainty to the organization (change in the taste or dissatisfaction with the organizations products or service)

Suppliers refer to organizations that provide materials and equipmentAlso refers to providers of financial and labor inputs (stockholders, banks, insurance companies, pension funds, labor unions, colleges and universities, local labor markets)

Competitors - managers cannot ignore the competitionPricing, new products development, services offered,

Pressure groups like environmental and human rights activist groups, boycotting or threatening some organizations in order to influence managements decisions

2. The General Environment includes the broad economic, political/legal, sociocultural, demographic, technological, natural environment that may affect the organization

1. Economic Conditions are those that influence customer spending, resource suppliers, and investment capital.- the overall health of the economy domestic and global, in terms of financial markets, inflation, income levels, and job outlook are important- these have effect on the spending patterns and lifestyles of consumers

Offshoring which involves outsourcing of work and jobs to lower cost foreign locations has resulted to loss of many domestic jobs and has been a source of political debate and social concernOnshoring or reshoring Is moving the jobs back homeBuy local themes activist citizens and government leaders are claiming that local economy benefits more in job gains when people shop in local businesses

Unbranding when stores owned by chains are advertised with local nonbranded namesAmplified focus on local relevance So that customers will feel an enhanced sense of community

2. Political/legal conditions - these are represented by existing and proposed laws and regulations, government policies, and the philosophy and objectives of political parties- vary from country to country- occupational safety and health- product safety act- EEO

Labor laws that protect the rights of employees Disability actMaternity and paternity leavesChild protection law

3. Sociocultural conditions refers to norms, customs, and demographic of a society or region, as well as social values like ethics, human rights, gender roles, and lifestyles- increasing fear of violence and crime, more acceptance of gambling and gaming activities, emphasis on religion and spiritual activities, pursuit of healthy lifestyle, increasing dependence on technology

-demographic conditions encompass the trends in the physical characteristics of the population such as gender, age, level of education, geographic location, income, family composition, etc.- generational cohorts people born within a few years of one another and who experience somewhat similar life events during their formative years

Depression Group (born 1912-1921)World War II (1922-1927)Post War (1928-1945)Baby Boomers (1946-1964)- digital immigrantsGeneration X (1965-1977)Generation Y (1978-1994)- digital natives

4. Technological conditions the role of technology (You Tube, Facebook, Google, and apps)- the issue of work-life balance

Natural environment conditions carbon neutral, green and sustainable

- sustainable business firms operate in ways that both meet the needs of customers and protect or advance the well being of the natural environment - less waste, less toxic materials, resource efficiency, energy efficiency, and renewable energy

Organization-Environment RelationshipCompetitive advantage, environmental uncertainty, and quest for organizational effectiveness

Competitive advantage something that an organization does extremely well, is difficult to copy, and gives it an advantage over competitors in the marketplaceCan be achieved through costs finding ways to operate with lower costs than ones competitors and thus earn profits with prices that ones competitors have difficulty matching

- can be achieved through quality finding ways to create product and services that are consistently higher quality for customers than what is offered by ones competitors- can be achieved through delivery finding ways to out perform competitors by delivering products and services to customers faster and on time, and by developing timely new product

- can be achieved through flexibility finding ways to adjust and tailor products and services to fit customer needs in ways that are difficult for ones competitor to match Uncertainty, Complexity and ChangeEnvironmental uncertainty a lack of complete information regarding what exists in the environment and what developments may occur

Organizational Effectiveness A measure of how well an organization performs while using resources to accomplish its mission and objectivesGoal approach looks at the output side and defines organizational effectiveness in terms of achievement of key operating objectives such as profits and market share

2. The systems resource approach looks at the input side and defines OE in terms of success in acquiring needed resources from the organizations environment3. The internal process approach looks at the transformation process and defines OE in terms of how efficiently resources are utilized to produce goods and services

4. The strategic management approach defines OE in terms of the organizations impact on key stakeholders and their interests