Chapter 3 - The Organization and Corporate Culture
External Environment
The External Organizational Environment includes all elements existing outside the
boundary of the organization that has the potential to affect the organization. The
environment includes competitors, resources, technology and economic conditions that will
influence the organization.
General Environment
The General Environment mostly affects organizations indirectly, including social, economic,
legal/political, international, natural and technological factors that can influence all
organizations with differing impacts. Changes in national and regional regulations, or
economic shocks, are events within the organization’s general environment. Such events
may not directly change day-to-day operations, but they do affect organizations, eventually.
Task Environment
The Task Environment is closer to the organization itself and includes the sectors that
conduct day-to-day transactions with the organization and directly influence its basic
operations and performance. The task environment is generally considered to include
competitors, suppliers, customers, and the labor market.
Organization-Environment Relationship
Organizations care about the external environment because it often creates great
uncertainty for organization managers, and they must be willing and able to respond by
designing the organization to be adaptable to the environment.
Environmental Uncertainty
Uncertainty means that managers do not have sufficient information about environmental
factors to understand and predict environmental needs and changes. When an organization
deals with only a few external factors and these factors are relatively stable, managers
experience low uncertainty and can devote less attention to external issues. (Visa-Versa)
Adapting To The Environment
Environmental changes may evolve unexpectedly such as shifting customer tastes for social
media sites, or they may occur violently, such as the devastating earthquake and tsunami in
Japan. The level of turbulence created by an environmental shift will determine the type of
response that managers must make in order for the organization to survive. Managers
should continuously scan the business horizon for both subtle and dramatic environmental
changes, also called strategic issues, and identify those that require strategic responses.
Strategic Issues are events or forces either inside or outside an organization that is likely to
alter its ability to achieve its objectives. As environmental turbulence increases, strategic
issues emerge more frequently. Managers use several strategies to adapt to these strategic
issues, including boundary-spanning roles, inter-organizational partnerships, and mergers or
joint ventures.
External Environment
The External Organizational Environment includes all elements existing outside the
boundary of the organization that has the potential to affect the organization. The
environment includes competitors, resources, technology and economic conditions that will
influence the organization.
General Environment
The General Environment mostly affects organizations indirectly, including social, economic,
legal/political, international, natural and technological factors that can influence all
organizations with differing impacts. Changes in national and regional regulations, or
economic shocks, are events within the organization’s general environment. Such events
may not directly change day-to-day operations, but they do affect organizations, eventually.
Task Environment
The Task Environment is closer to the organization itself and includes the sectors that
conduct day-to-day transactions with the organization and directly influence its basic
operations and performance. The task environment is generally considered to include
competitors, suppliers, customers, and the labor market.
Organization-Environment Relationship
Organizations care about the external environment because it often creates great
uncertainty for organization managers, and they must be willing and able to respond by
designing the organization to be adaptable to the environment.
Environmental Uncertainty
Uncertainty means that managers do not have sufficient information about environmental
factors to understand and predict environmental needs and changes. When an organization
deals with only a few external factors and these factors are relatively stable, managers
experience low uncertainty and can devote less attention to external issues. (Visa-Versa)
Adapting To The Environment
Environmental changes may evolve unexpectedly such as shifting customer tastes for social
media sites, or they may occur violently, such as the devastating earthquake and tsunami in
Japan. The level of turbulence created by an environmental shift will determine the type of
response that managers must make in order for the organization to survive. Managers
should continuously scan the business horizon for both subtle and dramatic environmental
changes, also called strategic issues, and identify those that require strategic responses.
Strategic Issues are events or forces either inside or outside an organization that is likely to
alter its ability to achieve its objectives. As environmental turbulence increases, strategic
issues emerge more frequently. Managers use several strategies to adapt to these strategic
issues, including boundary-spanning roles, inter-organizational partnerships, and mergers or
joint ventures.
