Environmental Factors Affecting the Organization and Its Function Essay

Environmental Factors Affecting the Organization and Its Function Activities - Essay Example Of necessity then, all organizations must be adjusted to the environment in which they exist. The external environment of an organization are those factors that are outside the control of the manager but which nevertheless affect managerial decision - making. They generally affect all organizations within that society and thus they are not specific to any one firm. These environmental forces include: - Political -legal forces, economic forces, social and cultural forces. The two most important environmental are the technological forces and the internal environment. 2 Political stability is another factor i.e. organizations will change their mode of trade depending on how stable the political climate is. Presidential decrees also affects business decision - making. Business managers face a multitude of loss that limits their powers with regard to legal- political constrains. In the final analysis an organization usually cannot control what a government does. Sometimes these laws also create new opportunities for the firm. An example is compulsory recycling laws which have led to the mushrooming of the recycling industry. However, it is important for the organization to understand that the main purpose of business legislation is to give companies protection against unfair competition, protect the society's interests from being infringed by unscrupulous firms and also give consumers protection against business malpractices. (Dale, 2001) b) Economic forces Important aspects of the economy that affect the organization and human resource activities include inflation, economic growth, interest rates and employment. During periods of inflation, firms must pay more for raw materials Economic growth rate influences the demand for products while interest rate determines how much it will cost the organization to borrow money. Unemployment will influence the supply labour. Other economic factors affecting the organization are prices, savings and the availability of credit c) Social/cultural forces This environment consists of the value systems, social demographic characteristics and other basic characteristics of persons comprising the society. Such characteristics include desires, attitude, expectations, aspirations, believes, traditions, levels of educations, religions and customs of people in a given society. Religion might for instance influence people's tastes and preferences to products. Education may also influence tastes and preferences. People may have a negative attitude towards the products / services that the organization offers. The level of education would also affect the human resource function of selection and training because the low the level of education of its work forces, the more the training. The converse is true. People's lifestyles will influence the