Importance of Organization’s Environment

Environmental factors play a major role in determining an organization’s success or failure. It’s like a swimmer who needs to understand conditions in the water. The organization must understand the basic elements of its environment to properly maneuver them for success.

All organizations have both external and internal environments. The external environment is composed of general and task environment layers. The general environment includes nonspecific elements of the organization’s surrounding that might affect its activities in a broad and general sense. The task environment consists of specific dimensions of the organization’s surroundings that are very likely to influence the organization in more direct and immediate sense. The internal environment consists of conditions and forces within the organization. It includes owner, employees, board of directors and culture-each of which play an important role in the internal environment of the organizations.

Organizations and their environment affect each other in several ways. Environmental influences on the organization can occur through uncertainty, competitive forces, and turbulence.

Uncertainty is a major force caused by change and complexity that affects many organizational activities. A simple and stable environment creates the least uncertainty, and a compels and dynamic environment creates the most uncertainty.

Environmental turbulence can cause a major disruption for organizations. Environmental turbulence can often force an organization to respond to catastrophic events with little or no warning. Although organizations could have developed contingency plans for some of these crises, many of them are events that would have been hard to anticipate.