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External environment and its influence on organizations

Table of contents:

Anonim

INTRODUCTION

The current organizations in their desire to consolidate in the markets try to have an increasingly effective control over the different factors that may influence their development, always in pursuit of achieving their objectives.

The fact that a company can have some control in the environment in which it develops can define its response capacity, taking advantage of opportunities in emerging markets and, above all, the adequate collection of resources.

That is why every organization requires having a general breakdown of the relationships it has with other companies, in order to propose an effective contingency plan.

The external environment of a company is an integral part of the development of an organization, since strategic plans must be made in different areas, which will broaden the vision of the current panorama, identifying the drawbacks to which it may be exposed.

ORGANIZATIONS AND THEIR EXTERNAL ENVIRONMENT

Due to the interaction they have with other entities, organizations are considered open systems, the purpose of which is to obtain certain goals, so it is indisputable that there is an elementary relationship between each company and the environment that surrounds it.

In a habitual way all the organizations will have to contend for some resources, which are limited, the high management has the responsibility to identify the elements that could affect in benefit or damage the operation of the organization.

In an entity, you can find the general external environment, which is all that derives from socio-economic activities (social, political, technological and cultural factors). In this case, the organization has limited interference, however, it can carry out data projections that help it make some decision.

The specific environment are the areas in which it is most closely linked and can be controlled more easily. According to J. Cabanelas (1997) there are five levels to define the framework in which an organization operates:

  • First level constituted by the organization itself as the core of the framework: It begins with the company as the central base, with the capacity for negotiation increasing, progressing through different frameworks, moving its barriers.
  • Second level It is defined by a concept called as sector: The sector emphasizes the competition to which it will be exposed, directly linked to the objectives of the company and the negotiation capacity it possesses.
  • Third level chain of business activities: It is a concept very similar to what is known as an industrial district, which are different companies that produce a certain product, such as raw materials, this concept is divided into a chain of main activities, support activities, additional supply and equipment functions.
  • Fourth level area, geographical place: It can be defined as a certain place where business chains carry out their activities, as well as being a region, or an economic sector, in order to identify what Porter calls the competitive advantage of nations, the called "diamond" which is made up of four elements o The conditions of the factors: Available resources to carry out the activity.
    • Demand conditions: Distinctions of the market to which the product will be directed Support services: Improvement of interaction with customers and suppliers, increasing the competitive environment between different organizations Strategy and rivalry of companies: Raise the degree of competitiveness of companies by implementing strategies and restructuring areas.
  • Fifth level: Global environment: Includes the analysis of the previous levels creating a broader criterion due to the expansion of economic activity, taking into account characteristics such as: conditions of the economy, technology, nature, fortuitous events and business activity.

EXTERNAL ENVIRONMENT HANDLING TECHNIQUES

Companies trying to be more competitive and functional try to manipulate the existing elements around them for which it relies on the use of two techniques

  • Establishment of inter-organizational links:
    • PROPERTY In some cases organizations acquire participation or shares of other similar companies, which will give them access to resources to which they would not have access in any other way. FORMAL STRATEGIC ALLIANCES: Exists when there is no direct acquisition of goods, however companies They come to complement each other through the skills and characteristics of each of them through signing contracts, these contracts, these contracts provide DIRECTORS INTERCONNECTION COOPTATION: It happens when a manager from a certain sector is part of the board of another company, becoming the connection between them which can make decisions. EXECUTIVE RECRUITMENT: Transfer of collaborators.
  • Domain control of the environment: Generally companies try to understand and address the elements with which they operate, for this they use four tactics.
  • Change of domain: The type of market to which the product or service offered will be directed depends on the company itself, which chooses which product to put on sale, so they can identify whether there is much competition, or if it is necessary to establish special relationships, If they do not favor you, they may choose to change their category.
  • Political activity: Sometimes political support usually exists in the event of having some influence on the decision-making of some legislators, as in the case of an incipient law or regulation to the detriment of the organization.
  • Trade associations: It is well known that synergy provides benefits to all participants, so in the commercial sphere it is not the exception, organizations tend to associate with companies of a similar category to obtain mutual benefits, such as regulations, public relations, etc..
  • Illegitimate activities: It is clear that any activity considered illegal is unethical and should not be carried out, it is a fact that in many organizations they are carried out to obtain a certain purpose, such as bribes to the government or economic contributions to political parties, including blackmail.

HOW DOES THE EXTERNAL ENVIRONMENT AFFECT ORGANIZATIONS?

All the characteristics that define the environment in which an organization operates, will affect it to a greater or lesser degree, depending on which it is, an environment can be defined as stable or unstable or by the amount of resources involved in it.

When an organization enters a market it will need to collect as much information as possible to make an action plan in case of any inconvenience, they also need to ensure that the elements necessary to carry out the activities are available.

When adequate information is not acquired, the probability of failure occurring increases significantly and the cost projection will be inaccurate.

Organizations will have to identify the need to collect data about their environment and the need they have regarding the resources they can provide in the environment itself, this will classify the environment in different dimensions.

  • Simple - complex dimension: It determines the relationship that the company has with other elements of its environment, the more factors involved in this process, the more complex it becomes.
  • Stable - unstable dimension: It refers to the state of the factors of an environment, that is to say if the environment is in the same way for a long period we will talk about a stable environment, on the contrary if its elements have to change drastically it will be unstable.

Every time an external environment becomes more complex, the organization must respond appropriately through the collaboration of its departments, in many cases the so-called buffering department is generated, whose purpose is to resolve the vicissitudes that may arise.

When the external environment tends to be volatile, organizations begin to delegate authority and responsibility to the lowest levels, for a greater amount of response, thus promoting the integration of collaborators.

TYPES AND CHARACTERISTICS OF THE EXTERNAL ENVIRONMENT

The external environment will have two important divisions:

MACROAMBIENT

They are made up of external elements that will have a great influence on the microenvironment. There are six elements that the company must place great emphasis on analyzing:

  • Economic elements: There are various economic factors that the organization must take into account to ensure success, such as the global economy of the country where the activities are carried out, the prices that impose direct competition, including the wages to be paid in the areas chosen to installing the factories and the supply of labor, all these factors will be crucial when carrying out the analysis, identifying the opportunities and threats to which it will be exposed.
  • Technological elements: Nowadays technology is framing or delimiting the growth of organizations, due to the birth of new technologies, burying the previous ones, this leads to the opening and closing of markets, an organization that requires to remain in circulation must promote development internal technological, to produce new products or services.
  • Political-legal elements: Although the political environment does not seem to be so, it turns out to be a crucial part of business development, because in certain occasions the government can have a rigid or flexible application of the laws, which derives in the adequate performance of activities by This means that every organization must have adequate information on legislative regulations and historical behavior regarding similar situations.
  • Natural elements: As its name says are those related to the natural environment, which may cause alterations in the usual way of carrying out the company's activities, for example the supply of raw materials, delivery logistics, receipt of materials, including seismic potential.
  • Demographic elements: The detailed analysis of the population to which the market will be directed, in what proportion it is distributed, if it will continue with the current growth trend, so that, when increasing the population, the possible demand increases, having to possibly modify the capacity of the company.
  • Socio-cultural elements: They are the elementary behaviors that a certain population sector performs on which the organization must base itself to launch a new product to the market. It is made up of six basic elements: Values, norms, technology, beliefs, symbols and language. These types of factors can directly affect customer behavior, which can cause a change in demand for the product or service.

Microenvironment

They are the elements that have the closest proximity to the organization, on which the correct performance of the same will depend, among the most representative they can be mentioned:

  • Competition: Analyze the characteristics of the closest competitors, look for deficiencies to try to solve them, the sector in which you compete must be identified, analyze the possibility of inclusion in new markets. Customers: The so-called consumer customers are all those people who buy a product for their final consumption, business customers, are those who buy a product to add it to their production chain so that they can obtain a final product, a projection of the possible customers that the organization will capture through the product offer. Suppliers: They are all those who provide a good or service to the organization in order to continue with the production process and be able to offer a finished product,The quality and quantity of suppliers that the organization can count on must be analyzed, thus determining a possible threat. Intermediaries: These are all entities that support the organization in reaching the client, this type of support can be financial, psychological or and physical, among the main intermediaries are banks, finance companies, advertising agencies, and wholesale and retail outlets. with the same function, undoubtedly these can represent a threat to the company, which must be fully identified to develop tactics that can neutralize it.

INFLUENCE OF THE ENVIRONMENT ON ORGANIZATIONAL STRUCTURES

H. Mintzberg proposed some hypotheses regarding the influence of the environment on organizations, among them we can find the following:

  • The more dynamic the environment of an organization, the more dynamic the structure will be. When an environment is extremely stable, the organization will be able to make adequate projections, carrying out standard procedures, however if the environment fluctuates considerably, a situation of instability will occur, making standardization obsolete, the organization must behave flexibly with an organic structure. The more complex the environment of an organization, the more decentralized its structure will be. The more complex and volatile an environment becomes, the organizational structure should be less centralized and bureaucratic, dividing people for decision-making, on the contrary, if it is a simple and stable environment, the best option will be bureaucratization.The more divisions that exist in the market to which the product is directed, the greater the probability that there will be a separation of units. A company that faces a divided market, either geographically or due to the type of products it handles, will find it necessary to diversify and this represents making divisions, so that each representative can understand the needs and risks it faces. its division. The hostility of the environment forces the company to temporarily centralize its structure. The aggressiveness of the environment encourages decentralization to understand the environment, but at the same time requires it to act quickly, so the company will have to supposedly centralize power in order to emerge from the crisis it faces,However, if the crisis continues, the company will be unable to survive.
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External environment and its influence on organizations