The nature of an environment

> External environment: Outside the boundaries of the organization

> Internal environment: Within organization

> General environment: The broader conditions that an organization exists within

> Specific or task environment: The people and groups an organization interacts with on a day to day basis.

General environment

  • Economic conditions: The broader heath of the economy
  • Sociocultural: The customs, social values, educational trends and demographics of society
  • Legal-political: The state of government policies and philosophy
  • Technological: The development and availability of current technology
  • Natural environment: The state of the environment including public concern for it
  • International: International events and conditions

Specific environment

  • Customers
  • Suppliers
  • Competitors
  • Regulators

Example: Ford motor company

Managing the external environment


  • Boundary spanning
  • Forecasting and scenario planning
  • Flexible structure
  • Mergers and joint ventures


  • Advertising and PR
  • Political lobbying
  • Competitive strategy

internernal environment

  • Observable culture: The physical culture demonstrated in the company
  • Core culture: The “deep down” values and culture that underpins the observable culture

Managing culture

  • Leaders should establish and maintain core values
  • Symbolic leaders should be used to reinforce desired culture
  • Leaders can influence culture by

o Paying attention and noticing

o The way they react to problems

o Role modeling

o Criteria for reward, promotion & punishment
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