Includes all the outside elements that affect the organisation
Types of external environment
General environment
Task environment
Organisational ecosystem
General environment
Affects organisations indirectly
Task environment
Sectors that conduct transactions with the organisation
Organisational ecosystem
Formed by the interaction among a community of organisations in the environment
Internal environment
Elements within the organization boundaries
Dimensions of the general environment
Technological
Natural
Socio-Cultural
Economic
Legal Political
International
Elements of the task environment
Customers
Competitors
Suppliers
Labour market
Technological dimension
Includes IT systems infrastructure, broadband Internet
Socio-Cultural dimension
Includes population demographics, education system, health/nutrition values
Economic dimension
Includes overall health of economy, income levels, unemployment rate
Legal-Political dimension
Includes laws, regulations, business forms, political trends
Natural dimension
Includes plants, animals, rocks, resources like air, water, climate
International dimension
Includes events originating in foreign countries, competitors, customers, suppliers from other countries
Customers
Those people and organisations that acquire goods or services from the organisation
Competitors
Organizations in the same industry that provide goods and services to the same type of customers
Suppliers
Provide raw materials that the organisation uses to produce its output
Labour market
Represents people in the environment who can be hired to work for the organisation
Environmental uncertainty
Managers do not have sufficient information about environmental factors to understand and predict environmental needs and changes
Strategic issues
Events or forces either inside or outside an organisation that are likely to alter its ability to achieve its objectives
Strategic issue strategies
1. Boundary spanning
2. Interorganizational roles
3. Mergers and joint ventures
Boundary spanning roles
Link to and co-ordinate the organisation with key elements in the external environment, detect and process information about changes in the environment, represent the organisation's interests to the environment
Interorganizational partnerships
Reduce boundaries and increase collaboration with other organisations
Mergers
When two or more organizations combine to become one
Joint ventures
A strategic alliance or programme creating a legal business entity by two or more organisations
Internal environment
Includes corporate culture, production technology, organisational structure, physical facilities