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Running Head: ENVIRONMENTAL FACTORS IMPACTING AN ORGANIZATION
External and Internal Environments in Organisations
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ENVIRONMENTAL FACTORS IMPACTING AN ORGANIZATION
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Environmental Factors Impacting An Organization
Introduction and Thesis Statement
An organization refers to a social unit that comprises of people and systems that work
together in a managed manner to achieve set goals and targets. An organization is composed of
people that are managed and directed towards a similar goal and objective. These characteristics
are similar and are commonly used to define an organization. In the organisation as discussed by
Duncan, R. B. (2011), there may be factors that determine how an organization fairs, or rather
whether an organization succeeds in achieving its goals or not. An organization is composed of
two types of surrounding, the macro-environment, which is the external environment- outside of
the organization, and the micro-environment which refers to the internal surrounding of the
organization. Both the internal and the external environments affect the organisation differently,
and the manner in which the organization addresses and handles these environmental factors,
determines the outcome and the impact the factors have on the organization. For an organization
to achieve business and operational success, the management must be aware of the macro and
micro factors to which the organization is exposed, and device the best strategies and policies to
enhance the positive factors, and mitigate or eliminate the negative factors. This paper will focus
on, and discuss the major issues that make up an organization’s environment- both internal and
external, and how these factors impact the organizations; whether they result in benefits or
challenges. This paper will look into detail the external environmental factors such as political,
economic, socio-cultural, technological, environmental and legal, and the internal factors that
cause organization change. Such as unionization of organization staff, management change,
redesigning of jobs and many others.
ENVIRONMENTAL FACTORS IMPACTING AN ORGANIZATION
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External Factors That Cause Organization Change
PESTEL
According to PESTEL, an analysis framework that is used in the monitoring and analysis
of the macro-environmental factors and the impacts they pose in an organization, the external
environmental factors are categorized into Political, Economic, Socio-Cultural, Technological,
Environmental and Legal factors. These are factors outside the organization, and the
management has no power or influence over; these are factors that the organization as a whole
has no power over and cannot do anything about it.
Political Factors
These factors revolve around the government, and the extent to which the government
intervenes in the economy, and the impact that these interventions pose to the organization. The
role of the government may be to introduce new policies and rules that always affect the
business. According to Duncan, R. B. (2011), the introduction of new policies by the government
always brings in an effect on how the business is to be conducted in the country. The political
factors include government policies, tax laws and regulations, labour regulations and trade
policies and environmental laws. These factors are put in place by the government with the aim
of creating favourable political environment that facilitate adequate business growth and
development opportunities, due to state of political stability.
Political factors influence or rather impact organizations in numerous ways. Political
instability creates state of uncertainty that exposes organizations to risks which may result in
losses and decline in organization’...