LECTURE 7
Organizational Environments
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.
Definition of Environment
An organization's 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.
Environmental Sectors
10 environmental sectors that may have an impact on particular organizations:
1) industry,
2) raw materials,
3) human resources,
4) financial resources,
5) markets,
6) technology,
7) general economy,
8) government/legal,
, 9) sociocultural,
10) international.
Each of these sectors may be divided into two basic components:
a) the general environment, common to all organizations in a particular society, and
b) the specific environment, which pertains to those organizations, groups or individuals with
which the organization interacts directly. This specific environment is often referred to as the
environmental domain of the organization. For example, technological change may be a common
environmental factor for all organizations, but specific technological advancements may be more
pertinent to some organizations which will be interacting with specific agents of that technology.
Not all sectors are equally important to an organization at any given time, so that an organization
will be attuned to different sectors at different times.
How does the environment influence an organization?
Environmental Uncertainty
As we have seen from our open systems model, organizations need resources from the
environment, their products or services have to be desired by the environment, and they need
information from the environment to monitor these other two needs. As long as an organization
can foresee its needs being fulfilled by the environment, and predict the demands from the
environment for its goods or services, it can continue to function in the way that it always has.
However, as any part of the environment becomes more uncertain, the organization will have to
adapt to the new demands or contingencies.
Environmental uncertainty, refers to "the degree to which future states of the world cannot be
anticipated and accurately predicted." Environmental uncertainty is problematic to an
organization only when it involves an element critical to the organization.
Environmental uncertainty increases or decreases as environments vary along five basic
dimensions:
Organizational Environments
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.
Definition of Environment
An organization's 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.
Environmental Sectors
10 environmental sectors that may have an impact on particular organizations:
1) industry,
2) raw materials,
3) human resources,
4) financial resources,
5) markets,
6) technology,
7) general economy,
8) government/legal,
, 9) sociocultural,
10) international.
Each of these sectors may be divided into two basic components:
a) the general environment, common to all organizations in a particular society, and
b) the specific environment, which pertains to those organizations, groups or individuals with
which the organization interacts directly. This specific environment is often referred to as the
environmental domain of the organization. For example, technological change may be a common
environmental factor for all organizations, but specific technological advancements may be more
pertinent to some organizations which will be interacting with specific agents of that technology.
Not all sectors are equally important to an organization at any given time, so that an organization
will be attuned to different sectors at different times.
How does the environment influence an organization?
Environmental Uncertainty
As we have seen from our open systems model, organizations need resources from the
environment, their products or services have to be desired by the environment, and they need
information from the environment to monitor these other two needs. As long as an organization
can foresee its needs being fulfilled by the environment, and predict the demands from the
environment for its goods or services, it can continue to function in the way that it always has.
However, as any part of the environment becomes more uncertain, the organization will have to
adapt to the new demands or contingencies.
Environmental uncertainty, refers to "the degree to which future states of the world cannot be
anticipated and accurately predicted." Environmental uncertainty is problematic to an
organization only when it involves an element critical to the organization.
Environmental uncertainty increases or decreases as environments vary along five basic
dimensions:
