INTERNAL AND EXTERNAL ENVIRONMENTAL FACTORS THAT INFLUENCE ORGANIZATIONAL DECISION MAKING
The organizational environment denotes internal and external environmental factors influencing organizational activities and decision-making. Every organization, whether business or non-business, has its environment.
The organizational environment is always dynamic and ever-changing. Changes today are so frequent and every change brings so many challenges that managers and leaders of the organization need to be vigilant about the environmental changes. The environment of an organization consists of its surroundings – anything that affects its operations, favorably or unfavorably.
Environment embraces such abstract things as an organization’s image and such remote visible issues as economic conditions of the country and political situations. The environmental forces abstracts and visible need careful analysis. The systematic and adequate analysis produces the information necessary for making judgments about what strategy to pursue.
Managers cannot make appropriate and sound strategies simply based on their guesses and instincts. They must use relevant information that directly flows from the analysis of their organization’s environment.
Types of Organizational Environment:
The types of organizational environments are the main topic of this discussion. However, we can classify the organizational environment into two broad categories. External and internal are the types of organizational environments. These are:-
- External Environment, and
- Internal Environment
These types of organizational environments are discussed below with relevant information to understand better.
External Environment:
The first one is an external environment of the types of organizational development. An organization’s operations are affected by both types of organizational environments. Therefore, the managers need to clear analyzing of the features of the environments. As a result, they can enrich themselves with a consideration of the internal situation and external situations. Based on their understanding, they will be better able to set the required objectives for their organizations. Additionally, they formulate appropriate strategies to achieve those objectives.
An organization’s external factors consists of the external environment that affects its businesses indirectly. The external environmental factors reside outside the organization, which can lead to threats or opportunities. For the available analysis of the organizational environment types, the external environmental factors are also divided into two types. Such as:-
- General Environment or remote environment and also
- Industry Environment or Immediate operating environment
In the types of organizational environment, the strategy-creators must recognize the complexities and challenges of both the fundamental environmental aspects and the instant driving environmental factors. They should appreciate that the unknown environmental factors are widely overpowering due to their distantly located external environment.
Nevertheless, they can assume appropriate strategies to deal with these factors, usually collectively with other industry actors, to reduce the intensity of their impact on the businesses. Alternatively, the operating environmental factors are the immediate competitive circumstances of a company. These are often regarded as ‘specific environment’ or ‘task environment.’
These factors make the competitive environment of a company. When strategists consider both the remote and operating environments, they can become more proactive in the following discussions. You will find a full description of the global environment, staying the types of the organizational environment.
Internal Environment:
The internal environment is the second type of organizational environment. The internal environment of an organization consists of the conditions and forces that exist within the organization. The internal environment portrays an organization’s ‘in-house’ situations. An organization has full control over these situations.
Dissimilar to the external environment, the internal environment is much more straight and manageable. For the available analysis of the organizational environment types, the internal environmental factors are also divided into several types. It comprises many internal factors of the organization. Such as:-
- Resources of the Organization
- Owners of Shareholders or Stockholders
- Board of Directors
- The culture of the Organization, and
- Image or Goodwill of Organization and so on.
These are the types of organizational environments. And these are mentioned here shortly. In another article, it will be more elaboration on the types of the organizational environment.