The organisation and the environment in which it operates in are not closed systems because they influence each other. The organisation thus cannot be successful if it is not in step with its environment. The simple fact that the organisation interacts with the environment means that the organisation is is acting in an open system and will be both affected by the environment and also impact on the environment. This means that the organisation draws its inputs such as human, financial and informational resources but to mention a few from the environment and distributes its products and services back to environment. This therefore leads us to the conclusion that the external environment definately ifluences the conduct of the organisation's business.
The organisation is influenced by an number of factors in the external environment namely, economic,socio-cultural forces, political forces, ecologicalforces, labour unions, competitors and customers.
Firstly the socio-cultural environment is concerned with the society's attitudes and cultural values. When the organisation conducts its business it will need to do so in a way that respects and bears in mind the fact that the soci-cultural environment is characterised by different people and therefore it has to conduct it business in a way that respects and accomdates this environment. Failure to do so can result in bad publicity, losses and even the folding up of the business due to public pressure.
The organisation due to new trends in the socio-cultural environment are creating a different type of consumer and thus a need for different products, different services and consequently different strategies for its conduct. In a nutshell, the organisation has to conduct its business in a way that is adaptable to socio-cultural changes and environments.
The technological environment also has a bearing on the conduct of the organisation. Technological changes affects many aspects of society and the organisation. The effects primarily occur through new products, processes, and materials. All of these effectswill make the organisation conduct itself in a way such that it avoids obsolescence and promote innovation. Therefore the organisation's business conduct wll be influenced by this environment in such a way that it is kept on its toes all the time looking for constant change and to always try to be and edge ahead of its competitors in terms of technological advancement and trying to maintain a high market dominance. A good example can be that of Microsoft.
The ecological environment refers to the relationship between human beings and thus organisations, and the air , soil and water in the physical environment. It refers to the limited natural resources from which an organisation obtains its raw materials.
With regards to the above to conduct of the organisation's business. the organisation will conduct itself in a way that is concious of the ecology and will try to preserve it. For example if an organisation's core business is farming, with regards to the land it will treat it in such a way that it is preseverd and prudent farmoing practices are put in place to ensure maximum yields and preservation of the land.
An organisation wiil conduct itself also i such a way taht with regards to waste for example, these are disposed of in the proper way as stipulated by statute so as to avoid bad publicity an run ins with the legal authorities that may even laedto theorganisation either paying huge fines or even being forced to shut down due its failure to observe gazetted environmental statutes that may be in place.
Economic conditions are impacted by the prevailing interest rates, inflation rates, stock market indexes, the trend of the Gross National Product (GNP), and other related factors. Improved economic conditions naturally stimulate an increased demand for products and services, thus creating additional opportunities for organizational growth.Depending on the...
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