Organization Theory - 30 (General Organizational Environment and Sectors involved)

In the last blog, we looked at the most significant factors that affect the organizational environment in the inter-organizational network view of the environment. In today's blog let’s look at the general environment view and the factors involved in it. 

The general environment could be looked at as - social, cultural, legal, political, economic, technological and physical. These could be depicted in the following diagram:

Sectors in General Organizational Environment

• Social Sector- This involve the class structure, demographics, mobility patterns life styles, and traditional social institutions like educational system, religious practices etc.
• Cultural Sector- This includes the issues of history, traditions, expectations for behavior, and the values of the society or the society in which the organization operates.
• Legal Sector- This include the constitution and laws of the nations in which the organization conducts his business, as well as legal practices in each of these domains.
• Political Sector- This describes the distribution and concentration of power and the nature of the political systems in those areas of the world in which the organization operates.
• Economic Sector - This includes numerous markets like the labor, financial, market for goods and services. This tends to have a very powerful influence on conditions in the other sectors that we discuss here
• Technology Sector - This provides the knowledge and information in the form of scientific developments that the organization can acquire and use to produce output (goods and services).
• Physical Sector - This covers the nature and natural resources of a nation.

Though for the case of understanding the environment we have divided the various sectors, in reality these are interrelated. This classification assist us reduce the complexity into a manageable unit of analysis. A manager would have to take calls on which of these sectors would be the most significant and which of these would be better classified differently. It is again a call that the manager trying to analyze the industry has to take.

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