Chapter 2: The External Environment
The Environmental DomainOrganizational environment is defined as all elements that exist outside the boundary of the organization that have the potential to affect all or part of the organization.
An organization’s domain is the chosen field of action. It is the territory an organization stakes out for itself for its products, services, and markets served.
The environment comprises several sectors or subdivisions of the external environment that contains similar elements.
Task EnvironmentThe task environment includes sectors with which the organization interacts directly and that have a direct impact on the organization’s ability to achieve its goals. The task environment typically includes the industry, raw materials, and market sectors, and perhaps the human resources and internal sectors. Industry sector Competitors, industry size and competitiveness, related industries Raw materials sector Suppliers, manufactures, real estate, services Human resources sector Labor market, employment agencies, universities, training schools, employees in other companies, unionization Financial resources sector Stock market, banks, credit unions, private investors Market sector Customers, clients, potential users of products and services Technology sector Techniques of production, science, computers, information technology, e-commerce Economic conditions sector Recession, unemployment rate, inflation rate, rate of investment, economics, growth Government sector City, provincial, federal laws and regulations, taxes, services, court system, political processes Sociocultural sector Age, values, beliefs, education, religion, work ethic, consumer and green movements International sector Competition from and acquisition by foreign firms, entry into overseas markets, foreign customs, regulations, exchange rate.
General EnvironmentThe