Every organization has to work within a framework of certain environmental forces and there is a continuous interaction between the organization and its environment. The interaction suggests a relationship between the two. This relationship can be analyzed in three ways.
First, the organization can be
thought of as an input-output system. It takes various inputs-human, capital,
technical-from the environment. These inputs are transformed to produce
outputs-goods, services, profits-which are given back to the environment. Thus,
the organization merely performs the function of input-output mediator. In this
process, the environment in its interaction with the internal factors of the organization
will determine what kind of inputs should be taken or outputs given.
Second, the organization can be
taken as the central focus for realizing the contributions of many groups, both
within and outside the organization. When these groups contribute to the well
being of the organization, they must have a legitimate share in organizational
outputs. These groups may be employees, consumers, suppliers, shareholders,
movement, and the society in general. Thus, the organizational functioning will
be affected by the expectations of these groups and the organization has to
take these factors into account.
Third, the organization can be
treated as operating in environment presenting opportunities and threats to it.
Thus, how an organization can make the best use of the opportunities provided
or threats imposed is a matter of prime concern for it. Any single approach by
itself is insufficient to explain the complex relationship between the organizations
and its environment Moreover, these approaches are not inconsistent to each
other; they are complementary. Thus, an organization will be affected by the
environment in which it works.
1. The environmental forces may affect different
parts of the organization in different ways because different parts interact
with their relevant external environment. For example, the technological
environment may affect the organization’s R & D department. Further, these
forces of the environment may have direct effect on some parts but indirect
effect on others. For example, any change in the fiscal policy of
government may affect the finance department directly but it may affect
production and marketing indirectly because their program may be recasted in
the light of new situation, though not necessarily.
2. The environmental influence process is quite
complex because most things influence all other things. For example, many of
the environmental forces may be interacting among themselves and making the
impact on the organization quite complex. Moreover, the impact of these forces
on the organization may not be quite deterministic because of interaction of
several forces. For example, the organization structure will be determined on
the basis of management philosophy and employee attitudes. But the organization
structure becomes the source for determining the employee attitudes. Thus,
there cannot be direct and simple cause-effect relationship rather much
complexity is expected.
3. The organizational response to the environmental
forces may not be quite obvious and identical for different organizations but
these are subject to different internal forces. Thus, there is not only the
different perception of the environmental forces but also their impact on the organization.
Key factors determining responses to environmental impact may be managerial
philosophy, life cycle of the organization, profitability, etc.
4. The impact of environmental forces on the
organizations is not unilateral but the organizations may also affect the
environment. However, since the individual organizations may not be able to put
pressure on the environment, they often put the pressure collectively. Various
associations of the organizations are generally formed to protect the interest
of their members. The protection of interest certainly signifies the way to
overcome unilateral impact of the environment on the organizations. The nature
of organization-environment interaction is such that organizations, like human
species or animals, must either adjust to the environment or perish.