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Forces Affecting Organization Environment Relationships – 5 Major Forces Explained | Principles of Management

Forces Affecting Organization Environment Relationships

Forces Affecting Organization Environment Relationships

While attempting to lead a business to success, executives make strategic decisions based on the environment. Environments often constrain an organization’s goals in important ways, for example. When an economy is in recession or if several new competitors enter the marketplace, a company setting a goal to increase sales by 50 percent may struggle to reach this goal.

As you decide whether to start doing business in a new country, acquire another company, or launch an innovative product, among others, environmental factors must also be considered.

An organization’s environment plays an important role in its operation. The conditions and influences that create the conditions and influences upon the competitiveness of a business firm. In order for an organization to survive, it must be able to change with the environment.

To become an effective organization, you must analyze the environmental forces.In business, the environment refers to everything that surrounds and affects how an organization functions and grows.

Business environment is defined as “The set of factors outside an organization that have the potential to affect its operation and access to scarce resources”, according to Gareth. To increase a firm’s competitive capability in the market, business managers should be aware of changes and complexity in the market environment.

Organizations in business are considered to be open systems. A business system is constantly in communication with its environment. The organization obtains resources from the environment and converts them into outputs that are again returned to the environment in the form of finished goods and services.

The major forces that affect organizational environment relationships are as follows:

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