Why is it important to understand an organizations environment?

It is important to understand about the environments that organizations are facing? Yes, it is important to have sound understanding about the environments companies are facing as the external environment has an overwhelming impact on management uncertainly. As in this report writing, I will state important factors, elements and create why the study of the environment is important to us in this fast and changing world we ever live in.

The assessment of external factors analyze outside the physical confines of the enterprise. These factors are beyond the control of the enterprise, and could have significant impact on the planning function of management.

The external assessment is performed at a worldwide level and at general area level. At the international level, the assessment includes economic trends of national and local economies, social trends, government policies of national and local influence, and technological advancements of the world at large. This includes the impact of our global market and technology advancements throughout the world. At the general area level, the assessment includes industry trends, market trends, customer expectations, competitor performance, competitive alternatives, and supplier capabilities.

Early studies examined how organizations adapt to external environment characterized by rules, procedures, and clear hierarchy of control. Conversely, firms in rapidly changing environments had organic structures that were freer and more flexible, and decision making was decentralized. They conclude that an essential part of a top manager's Job is to interpret correctly the external uncertainties facing the firm, and so decide on the appropriate management structure.

The Environment Uncertainty

The diagram in the following page will state that, in the simple, stable environment, uncertainty is low. There are only a few external elements to contend with, and they tend to remain stable. The complex, stable environment represents somewhat

References: 8. Paul R. Lawrence and Jay W. Lorsch, Organization and Environment (Homewood, Ill, Irwin, 1969). 9. James Thompson, Organizations in Action (New York: McGraw-Hill, 1967). 10. Jeffery Pfeffer and Gerald R. Salancik, "Organizational and Context", (1978, 258). 11. Rosalie L. Tung, "Dimensions of Organizational Environments", Academy of Management Journal 22 (1979): 672-93.