Describe the elements of an organization's external environment. Why is it important to understand the external environment?
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A. The external environment of an organization refers to the factors that are external and have a direct and indirect impact on the functioning of the organization. The five elements that comprise the external environment of an organization are customers, government, economy, competitors and public opinion (Root, n.d.). Customers are an important component of the environment and can be heavily influenced by marketing strategies (Root, n.d.). The regulations imposed by government on the organization, its products, and services affect the organization both in positive and negative ways to focus on making the business socially responsible. Organizations should monitor the economy efficiently by marketing its products effectively, spending money for growth of the business and focusing on the target market (Root, n.d.). Competitors are also important because they influence the way business is conducted to gain a competitive advantage. Public opinion can be positive and negative for the organization. It depends on the way business is conducted, quality of products and maintaining a positive image. It is important to understand the external environment because it is essential in shaping the future of your industry, it can affect your organization positively or negatively, it helps your organization make or change its strategies to be competitive and it helps to balance the internal environment.
RESPONSE TO ABOVE QUESTION, WHAT ARE YOUT THOUGHTS TO MY RESPONSE. MIN 250 WORDS REQUIRED.
B. All Organizations work with an open system for example by interacting with its external environment for their functions. An external environment of an organization consists of its political, social, legal, demographic, tech elements and economic element. The political aspect influences on the company’s forms, regulations, restrictions in the trade of goods. Economic is concerned with the overall features of the economy by the inflation growth. Social environments comprise of the society at large, the demographic consists of the different possible characteristics of people at a company as well as the age income level and educational background. The legal aspect consists of the law and order of the company’s organization. Lastly the technology environment is to ensure the company has the latest innovation to function properly. So with all of these different external environments it is important to be knowledgeable and understand the external environment as one company networks with another. Also having an understanding with the threats and other business opportunities a company may have.
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