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Organizations and environments have a close relationship because they influence each other in a significant manner (Walker, 2008). An external environment can determine the success of an organization, and at the same time, an organization can benefit its external environment. For instance, an organization can serve as a market for the raw materials, which the external environment provides (Kloviene & Gimzauskiene, 2009). The external environment can also provide qualified personnel to guide various functions of an organization. Therefore, organizations and environments benefit from each other. This discussion will consider how environment shapes organizations and how organizations shape environment.

How Environment Shapes Organizations

The common entities that influence organizations include competition, resources, customers, laws and regulations, and technology. Competition comprises of other industries that have similar services or commodities, markets, and geographical location (Walker, 2008). It is necessary for an organization to be aware of its competitors, their marketing techniques, competitive advantages, offshore development, organizational size, skills pool. This will help an organization to make a number of improvements in various areas to retain and attract more customers. Because of globalization, it is necessary for an organization to know other organizations overseas, dynamic socio-political situations, home grown enterprisers, competitive services, and commodities launched abroad (Kloviene & Gimzauskiene, 2009).

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Another significant entity is customers, who serve as consumers of the produced services and commodities. Customers make up the most significant aspect of external environments. It is necessary for an organization to consider the preference changes of customers because the variation of their likes and dislikes is dynamic (Albright, 2004). Therefore, an organization should predict changes in the emerging technologies and clients’ product requirements that can determine how the end-users will use the products. An organization should also be aware of the demographic changes, which include the cultural, social, and economic changes, such as population age, economic class, educational level and ethnicity. Demographic changes have a significant influence on the market trends and preference of customers (Walker, 2008).

A resource is another environmental entity whose availability determines the success of an organization. An organization relies on the availability of various external resources that facilitate its operations, which will enhance productivity (Kloviene & Gimzauskiene, 2009). Such external resources may include finance, skilled workers, raw materials, and infrastructural facilities. Finance is a significant resource that provides an organization with operational support. Sources of finances include the available cash, money from investors, venture capitals, stock markets, and credit lines (Daewoo et al., 2011). Another resource is the skilled workers, including undergraduate students, labor market, training schools, and university courses. The availability of highly skilled personnel at various production levels in an organization may undergo a dramatic change. Scarcity of highly skilled personnel can adversely affect an organization, because the implementation of new changes will not be achievable. Organizations find raw materials to be among the most critical resources whose availability determines their productivity and profitability (Daewoo et al., 2011). Different organizations utilize various raw materials to produce commodities and services. Therefore, disruptions in the supply of raw materials can adversely affect the productivity of an organization. Infrastructural facilities such as transport infrastructure and telecommunication networks will be helpful to an organization through facilitating the movement of raw materials, workers, finished products, and customers (Daewoo et al., 2011). Customers can make orders over the telecommunication networks such as telephone and fax.

Another critical environmental entity is technology, which includes the scientific skills and technical machinery necessary for an organization’s production (Daewoo et al., 2011). The produced commodities, especially electronics may be of high technology. The Internet, communication technologies, and progress in semiconductors have revolutionized the manner in which organizations operate currently. It is necessary for an organization to ensure that the technological know-how of its personnel is up-to-date. Technology is necessary, especially during this era of globalization that will lead to increased productivity, as well as profitability of the organization (Daewoo et al., 2011). The Internet has become the cornerstone of globalization, because it facilitates communication between organizations and their markets. This also enables organizations to develop ideas regarding the customer preferences and how competitive are other organizations with similar line of production.

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Laws and regulations are among the critical environmental entities, which determine the line of production for an organization and the legitimacy of commodities and services that an organization produces (Daewoo et al., 2011).  An organization must abide by the laws and regulations that a country’s legal system imposes. The legal systems of various countries add new regulations and laws constantly because of social or political changes. Organizations must incur some costs to comply with the regulations and laws. Additional costs include taxes and development of new technology (Daewoo et al., 2011). For instance, the government may require an organization to implement technological know-how in its operations, which will reduce the emission of greenhouse gases like carbon dioxide.

Environmental Uncertainty

Environmental uncertainty refers to the number of factors that undergo change in the course of organizations planning periods. An organization should be aware of how different factors influence daily operations and estimate the factors differently (Albright, 2004). Organizations may experience high levels of uncertainty because the organizational leaders encounter a complex environment, which tests their decision making abilities and visionary without clear data. Complexity of the environment depends on the number of environmental domain factors that affect the operation of an organization. For instance, an organization may have many competitors, experience scarcity of raw materials, shortage of adequately skilled personnel, and many other factors. Stability of the environment is the rate at which the environmental domain factors change and predictability of the changes (Albright, 2004). The environment will be stable when few factors undergo change in a manner that is predictable. Domain factors in unstable environments shift abruptly and are dynamic, which makes it difficult for an organization to predict the changes. Examples of unpredictable domain factors include price wars, marketing strategies of competitors, and sudden change in social and political climate (Albright, 2004). Many organizations may experience losses and collapse because of the unpredictable environmental factors.

Environmental Intelligence

Environmental intelligence refers to the process through which an organization scans environmental domains for changes. It is necessary for organizations to adopt environmental intelligence, which will enable them to recognize changes, collect vital information, do methodical analysis, and make presentations of its reports for the top executives to view and implement resolutions (Albright, 2004). Environmental intelligence will do away with various environmental uncertainties, because organizations can be able to predict environmental domain changes beforehand. Two channels that organizations follow in obtaining the changes in environmental domains include external linkage and external consultants (Albright, 2004).

External linkage shows that the functional units of an organization have a linkage with environmental elements, which helps the organization receive information regarding the environmental changes. For instance, the Human Resource can provide information regarding skilled resources, regulations, and laws; sales and marketing can be resourceful about the information on pricing, new product under competition, and road-map; the procurement department detects changes regarding supplies; the department of finance collects information concerning credit and economic outlook (Albright, 2004).

Another significant channel is the external consultants through which organizations make use of external services that utilize tools like surveys and questionnaires, systemic scanning of the web and public information, and statistical techniques to gather and analyze data. The external consultants obtain information from both the functional units of an organization and its external environment to obtain unbiased recommendations (Albright, 2004).

Adapting to the External Environment

It is necessary for an organization to adapt to the external environment for survival and prosperity. An organization should be able to determine the uncertainty in advance and take necessary measures for its wellbeing. Organizations adapt to the external environment through a number of ways, including predicting and planning, reorganization, and reduction of resource dependency (Albright, 2004). Organizations use environmental uncertainty to make predictions about the future environmental conditions and make appropriate plans reduce the possible adverse effects. Reorganization of an organization involves adjusting the structure of organizational units to withstand the instability of the environmental factors. An organization can achieve the reduction of resource dependence by keeping extra resources, such as extra raw materials and workers (Daewoo et al., 2011).

Controlling the Environmental Factors

An organization can control the environmental factors to favor its operations and productivity. For instance, an organization can shift core competencies to a new product and monopolize the market, which will keep its competitors out. An organization can achieve such a drastic step with the aid of a visionary leader under the assistance of investors, stakeholders, and board members. The use of advertisements is another way of controlling the environment by creating awareness of the availability of an organization’s new products (Albright, 2004). Political lobbying is another way of controlling the external environment to favor an organization. This involves influencing the governmental regulations and policies to enable an organization do better in its line of production in spite of the presence of competitors.

How Organizations Shape Environment

Organizations have different effects on the external environment, which can be positive or negative. Positive effects of organizations include establishment or development of transport and communication infrastructure, advancement of computer technology, provision of commodities and services, creation of jobs, serving as a market for agricultural products, and improved security. Negative influences of organizations on the environment include ecological pollution, and deforestation (Daewoo et al., 2011).

Positive Influences of Organizations on Environment 

Establishment or development of transport and communication infrastructure is one among the ways organizations shape the external environment. People or the governments establish factories and other organizations even remote areas to tap the unexploited resources. Some of the remote areas may lack meaningful transport infrastructure for the transportation of raw materials and laborers to the factory and finished products to the market (Daewoo et al., 2011). Therefore, the investors develop the transport infrastructure within the environment that surrounds the factory to facilitate the operations of the factory. Examples of such organizations include the mining factories, lumbering factories, educational institutions, milk processing factories. Communication infrastructure is also necessary because it allows an organization to know much regarding the conditions in the market (Walker, 2008). Once an organization establishes communication infrastructure, such as telecommunication, people can utilize it as means of conversation.

Expansion of organizations enhances the advancement of computer technology considering various needs, such as accuracy, efficiency, availability of an improved database, and need for globalization (Kloviene & Gimzauskiene, 2009). Therefore, the expansion of organizations will lead to the sophisticated technologies, which will cater for the increased needs. Availability of sophisticated computer technologies will also determine the line of study some students will follow in colleges and universities. Workers may also need to go back to school to gain understanding concerning working in a dynamic environment (Daewoo et al., 2011). This is evident that organizations will affect technology, labor, and sector of education.

Organizations benefit the external environment by providing people, especially the natives with commodities and services (Walker, 2008). Instance, the lumbering firms will provide people with timber for carpentry, saw dust and wooden chips for fuel. Other organizations such as educational institutions admit many students from the surrounding area. Therefore, organizations benefit people from the surrounding areas by promoting their wellbeing. Therefore, organizations will reduce poverty and promote literacy in the external environment (Kloviene & Gimzauskiene, 2009).

Another benefit of organizations includes the creation of jobs. Educational institutions will require employing the teaching staff and non-teaching staff for the organization to be functional (Walker, 2008). Other organizations, such as milk processing plants, sugar factories, and lumbering factories require both skilled, unskilled, and semi skilled laborers in different levels of production (Claudiu, Andrei, & Gabriela, 2011). This will reduce problems such as poverty, food shortage, and various crimes, such as robbery because many people will be earning their living from the monthly salaries or daily wages.

Organizations also serve as the market for agricultural products, such as milk, sugarcane, tea leaves, coffee berries, and flowers. Tea factories, coffee firms, milk processing plants, flower processing factories, and sugar factories are some of the agricultural organizations that have promoted agriculture in the surrounding environments (Kloviene & Gimzauskiene, 2009). Many people have benefited a lot from such organizations because they create a ready market for their agricultural products. Other organizations such as learning institutions like colleges and universities ask for tenders concerning the supply of food and various commodities, which will meet the needs of teaching staff, students, and non-teaching staff (Walker, 2008). Therefore, the external environment will develop positively, as people’s living standards improves due to the constant income they earn upon selling their commodities (Kloviene & Gimzauskiene, 2009).

Various organizations have also improved security in the external environments around them. Electrification of remote areas follows the establishment of factories in such areas (Daewoo et al., 2011). Areas that surround factories experience electricity lights throughout the nights. Lights discourage gangs from doing criminal offenses because people can identify them easily. Some organizations are busy even during the night, which will also discourage criminal activities in the surrounding areas. Security is among the most significant factors that enhance a high rate of economic development. Therefore, organizations can shape the economy of the external environments positively (Daewoo et al., 2011).

Negative Influences of Organizations on Environment  

Apart from the positive influences that organizations have on the external environment, research has shown that organizations can shape the external environment negatively (Daewoo et al., 2011). The potential negative influences of organizations on the external environment include the establishment of new Laws and regulations, ecological pollution, development of earth tremors, and deforestation, which may result in soil erosion, destroying a home of wild life, reduced environmental purification, and reduced precipitation (Daewoo et al., 2011).

The government may need to change laws and regulations under which organizations operate. Some of the laws that are the most changeable include the Employment Laws, which depend on workplace safety, pensions and retirements, employee benefits, fair wages (Daewoo et al., 2011). The government may pass a basic salary and other benefits that employers should be paying their employees depending on the current living standards. The laws and regulations consider the productivity as well as profitability of an organization. An organization may operate at a loss in order to abide by the government’s regulations and laws. Therefore, the change of some laws and regulations may disadvantage some organizations that do not make as much profit as others do (Daewoo et al., 2011).

Many organizations, such as factories, emit their wastes into the atmosphere and water bodies as chemicals or hot water (Kloviene & Gimzauskiene, 2009). Some components of the gaseous emissions include sulfur dioxide and carbon dioxide. These gaseous wastes lead to the formation of acid rainfall because sulfur dioxide forms sulfurous acid, and carbon dioxide forms a weak carbonic acid on mixing with rain water. Acid rainfall will have scorching effects on young plants, as well as corrosive effect on the buildings within the area that surrounds such factories.

Organizations, especially deep mining industries involve the use of force and explosions that may lead to earth tremors. Earth tremors cause fear in the neighboring grounds. The surrounding ground may experience other consequences like landslides, which may result in the loss of lives, properties, and destruction of transport and communication infrastructure.  Therefore, some organizations may be harmful to the external environment by resulting in losses (Kloviene & Gimzauskiene, 2009).

Establishment of organizations in remote areas may require deforestation as the second step after demarcation (Kloviene & Gimzauskiene, 2009). The bare ground will facilitate various activities, such as the establishment of roads and electrification. Deforestation or land clearance has many consequences including soil erosion, destroying a home of wild life, reduced environmental purification, and reduced precipitation, which may lead to the development of aridity conditions. Removal of vegetation cover leaves a piece of land bare and vulnerable to soil erosion due to the action of various agents, such as ground runoff, wind, human activities, and animals (Walker, 2008). Therefore, the farms surrounding factories suffer many consequences because of inadequate wind breakers. Such farms will experience reduced soil fertility because strong winds will carry away the top soil.

The home of wildlife in various regions has suffered from deforestation, following the establishment of firms (Walker, 2008). Wild animals play critical roles in the ecosystem, including physical weathering of rocks and decomposition of organic matter. Therefore, establishment of organizations may shape the external environment negatively by destroying the habitats of wild animals due to deforestation. Establishment of organizations disrupts the natural ecosystem altogether (Kloviene & Gimzauskiene, 2009). Deforestation will also result in reduced atmospheric purification because green plants release oxygen and consume carbon dioxide during the day. Removal of vegetation will disrupt the carbon cycle and lead to the accumulation of carbon dioxide in the atmosphere.

Deforestation may also lead to reduced precipitation, especially rainfall within the external environment that surrounds a group of organizations. Establishment of many factories in a wide piece of land results in extensive deforestation. Trees are extremely helpful in attracting rainfall and protection of the water catchment areas. Some individuals establish in an area with taking into consideration the significance of such areas (Walker, 2008). Therefore, people have destroyed significant forests and water catchment areas.


It has been evident that organizations and external environments influence each other significantly. External environment may favor or disfavor an organization depending on the conditions under which the organization operates (Walker, 2008). Some of the external environmental factors that determine the productivity and success of an organization include competition, resources, customers, laws and regulations, and technology. An organization should be aware of these factors for it to be successful in its line of production. Environmental factors may influence an organization negatively or positively. For instance, availability of resources, advanced technology, and ready markets for the finished products will lead to the success of an organization (Kloviene & Gimzauskiene, 2009). Many organizations consider some environmental factors, such as competition, laws and regulations as affecting their profitability in a negative manner. Research has shown that environmental intelligence is a significant strategy that can enable organizations to overcome environmental uncertainty (Albright, 2004). Organizations learn to adapt to their environments with time by controlling the factors that constitute external environment.

Organizations can also influence their external environment in a number of ways. These include the establishment or development of transport and communication infrastructure, advancement of computer technology, provision of commodities and services, creation of jobs, serving as a market for agricultural products, improved security, establishment of new laws and regulations, ecological pollution, and deforestation, which may be positive or negative. Therefore, organizations can have a significant influence on their external environments, including competition, resources, customers, laws and regulations, and technology (Kloviene & Gimzauskiene, 2009).

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