The environment is the source of resources necessary for the survival of an organization. Organizational Environment: Set of external conditions that can potentially affect an organization.
- There is no organization that can ignore its environment. The environment presents both opportunities and threats, and the threats of one organization may be the opportunities of another. Managers must pay attention to the environment and have mechanisms to manage and influence it.
Areas of the Global Administrative Environment
- Sectoral Scope Cultural Scope Legal and Political Scope Economic Scope Technological Scope Human Resources Scope Physical Resources Scope Consumers and Clients Scope Sectoral Scope:
Organizations must be aware of the existing conditions in the sector they operate, with competition being the most important area.
Relevant elements:
- Threats of new additions. Threats of Substitution Capacity. Competitive Rivalry.
Cultural Scope
Culture is the foundation that guides most of what happens in a social system.
- Culture: Set of values, norms and beliefs of the society in which an organization operates.
Legal and Political Scope
It is the source of laws and regulations that govern the exercise of companies.
All organizations are affected by the different political and legal systems in their environment.
Economic Scope
The most relevant aspects of the economic field are:
- Nature of the economic system General State of the Economy: Inflation Rate Unemployment rate Monetary stability Monetary exchange rate Availability of capital Interest rate Cost of labor Demographics: Age, sex and cultural level of the population.
Technological scope
All organizations use technology to do their jobs.
- Technology: The specific skills, knowledge, tools, and abilities necessary to perform a job. The Environment is a significant source of technology that must be constantly monitored in order to compete successfully.
Human Resources Area
The specificity of organizations largely determines the type and amount of skills required.
Factors to consider:
- Availability of labor Levels of experience and education Wages Local social benefits Presence of unions Local culture
Scope of Physical Resources
The most important characteristics of this area are:
- Raw materials Climate Geography
Scope of Consumers and Clients
It is imperative that managers identify the characteristics of the consumer market they serve.
They also need to know the potential power of buyers and their changing preferences.
Complexity, Change and Munificence of the Environment
The environment creates problems for the organization because it is a source of uncertainty and restrictions
Uncertainty
It arises due to the difficulties that organizations have to face in the search for information and because conditions are changing. Contributing factors are:
- Complexity of the Environment Change of the Environment
Restrictions
The environment has a limited capacity of resources with which to sustain organizations.
- Munificence: Availability of resources in an environment.
Strategic Groups
They are groups of organizations within the same sector that follow the same basic strategy, but different from the strategies of other groups in the same sector.
Implications of the Strategic Groups
- A company's immediate competitors are those in its same strategic group. Because companies' strategies are similar, consumers tend to think that products are substitutable for each other. High barriers to entry. High degree of rivalry. High bargaining power from consumers and suppliers.
It's a small world after all
The Globalization of production and markets has made the environment of organizations grow rapidly, bringing new challenges, opportunities and threats.
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