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Module 4 Organizational Environments

The document discusses the organizational environment and its impact on organizations. It defines the general environment, task environment, and internal environment, as well as how each component affects organizations. Additionally, it examines how organizations respond to and interact with their various environments through information management, strategic responses, and directly influencing their environments.

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Nor Shailanie Nalam
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77 views

Module 4 Organizational Environments

The document discusses the organizational environment and its impact on organizations. It defines the general environment, task environment, and internal environment, as well as how each component affects organizations. Additionally, it examines how organizations respond to and interact with their various environments through information management, strategic responses, and directly influencing their environments.

Uploaded by

Nor Shailanie Nalam
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Module 4

Subject: ABM 083: Introduction to Agribusiness Management

Chapter Title: Environments of Agribusiness


Lesson Title: Organizational Environments

Lesson Objectives:

1. Discuss the nature of the organizational environment.


2. Identify and describe the components of the general environment.
3. Identify and describe the components of the task environment.
4. Discuss the internal environments of organizations.
5. Identify and describe how the environment affects organizations and how
organizations respond to their environments.

Overview/Introduction:

Every organization in the world today—large, small, local, or international—is


profoundly affected by its organizational environment. As Coca-Cola has successfully
demonstrated, suppliers, customers, and competitors must all be closely monitored and care
must be taken to learn what the market really wants and to stay abreast of changing tastes
and trends in every phase of the firm’s operation. Indeed, managers who fail to keep pace
with changes in their environments are doomed to fall behind their competitors and may
suffer irreparable damage to their organizations’ revenues and profit margins. This is the
first of four chapters devoted to the environmental context of management. We begin by
introducing the nature of organizational environments. Next we discuss the external
environment in two parts—the general environment of organizations and the task
environment. Then we provide an analysis of the internal organization and conclude with an
examination of organization environment relationships.

Activity:

1. Describe in your own words, how’s the environment where you are in affects
your personality?

Analysis:

1. What are the factors present in your environment that would affect yourself?
2. How do you deals those factors that may directly or indirectly affect yourself?
3. Does the environment where you belongs makes you a better version of
yourself?

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Abstraction:

The Nature of Organizational Environments

External environment - consists of everything outside an organization that might affect it.
Of course, the boundary that separates the organization from its
external environment is not always clear and precise.

The General Environment of Organizations


- It consists of the broad dimensions and forces in an organization’s surroundings that
provide opportunities and impose constraints on the organization. These elements
are not necessarily associated with other specific organizations.
1. Economic Environment - an organization’s economic environment is the overall health
of the economic system in which the organization operates. Particularly important
economic factors are inflation, interest rates, unemployment, and demand.
2. Technological environment - refers to the methods available for converting resources
into products or services. Although technology is applied within the organization, the
forms and availability of that technology come from the general environment.
3. Sociocultural environment - includes the customs, mores, values, and demographic
characteristics of the society in which the organization functions. Sociocultural
processes are important because they determine the products, services, and
standards of conduct that the society is likely to value.
4. Political-legal environment - includes government regulation of business and the
relationship between business and government. It is important for three basic
reasons. First, the legal system partially defines what an organization can and cannot
do.
5. International environment – is the final component of the general environment for
many organizations that extend beyond national boundaries.

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The Task Environment of Organizations
1. Competitors - an organization’s competitors are other organizations that compete
with it for resources.
2. Customers – a second dimension of the task environment consists of customers. The
customer is whoever pays money to acquire an organization’s product or service. In
many cases, however, the chain of customer transactions is deceivingly complex.
3. Suppliers - are organizations that provide resources for other organizations.
4. Labor - refers to people who work for the organization, especially when they are
organized into unions.
5. Regulators - are units in the task environment that have the potential to control,
regulate, or influence an organization’s policies and practices. There are two
important kinds of regulators: regulatory agencies and interest groups.
6. Owners — the people, organizations, and institutions that legally control an
organization—are also becoming a major concern of managers in many businesses.
7. Strategic Allies - final dimension of the task environment involves strategic allies—
two or more companies that work together in joint ventures.

The Internal Environment

Culture - is the set of values that helps its members understand what the organization
stands for, how it does things, and what it considers important. Culture is an
amorphous concept that defies objective measurement or observation.
Nevertheless, because it is the foundation of the organization’s internal
environment, it plays a major role in shaping managerial behavior.

How Environments Affect Organizations


1. Environmental Change and Complexity
- James D. Thompson was one of the first people to recognize the importance of
organizational environments. Thompson suggests that an organization’s
environment can be described along two dimensions: its degree of change and its
degree of homogeneity. The degree of change is the extent to which the environment
is relatively stable or relatively dynamic. The degree of homogeneity is the extent to
which the environment is relatively simple (few elements, little segmentation) or
relatively complex (many elements, much segmentation). These two dimensions
interact to determine the level of uncertainty faced by the organization. Uncertainty,
in turn, is a driving force that influences many organizational decisions.
2. Five Competitive Forces
- Although Thompson’s general classifications are useful and provide some basic
insights into organization-environment interactions, in many ways they lack the
precision and specificity needed by managers who must deal with their environments
on a day-to-day basis. Michael E. Porter, a Harvard professor and expert in strategic
management, proposes a more refined way to assess environments. In particular, he
suggests that organizations view their environments in terms of the following five
competitive force.

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3. Environmental Turbulence
- Although always subject to unexpected changes and upheavals, the five competitive
forces can be studied and assessed systematically, and a plan can be developed for
dealing with them

How Organizations React to Their Environment


1. Information Management
- One way organizations respond to the environment is through information
management. This is especially important in forming an initial understanding of the
environment and in monitoring the environment for signs of change.
2. Strategic Response
- Another way organizations respond to their environment is through a strategic
response. The response may involve doing nothing (e.g., if the company feels it is
doing well with its current approach), altering its strategy a bit or adopting an entirely
new strategy.
3. Mergers, Takeovers, Acquisitions, and Alliances
- A merger occurs when two or more firms combine to form a new firm.
4. Organization Design
- Another organizational response to environmental conditions is through structural
design.
5. Direct Influence of the Environment
- Organizations are not necessarily helpless in the face of their environments. Indeed,
many organizations are able to directly influence their environments in a number of
different ways.

Application:

1. Identify examples of organizations in each dimension of the task environment of your


college or university.
2. How are the general and task environments interrelated?

Assessment:

1. Make a personal reaction paper about this chapter in terms of content, your
experience, your reflection and your application of this topic in the future.
- Use the CERA format for your reaction paper and one paragraph each. Hence, you four
paragraphs for this reaction paper.
C – content
E – experience
R – reflection
A - application

Prepared by:
Keno Jay M. Balogbog, PhD

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