Impact of External Environment on Organizational Performance

Organizations as Natural Systems - Organizations & External Environments
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Impact of External Environment on Organizational Performance
Introduction The evolution of organizations changes the system of management in regards to planning. This, therefore, requires new means of business orientation for normal operations, and attainment of the organization's goals (Voiculet, Belu, Parpandel, & Rizea, 2010). In addition, it demands the continuous adaptation to the environmental changes that are taking place within and outside the business environment (Voiculet, Belu, Parpandel, & Rizea, 2010). The external environment of an organization comprises of a set of factors, ‘actors' and interest groups that affect the operations of the organization in regards to performance directly or indirectly. Therefore, under such circumstances it is vital to ensure that there is harmony between the external and internal environment of the organization. (Voiculet, Belu, Parpandel, & Rizea, 2010).
The external environment is made up of several factors that include competitors, suppliers and regulations just to mention a few that greatly impact the organization's performance (Capon, 2009). The business manager in today's modern society operates in an increasingly dynamic environment where there is a rapid and unpredictable change in the external environment. The economic variables have become increasingly complex with both consumers and the clients showing complex behaviors with the most dramatic change being on the competitive pressures. The competitors have been applying multiple strategies to adapt to the unpredictable and dynamic business environment in order to improve the organizational performance (Olarewaju & Folarin, 2012).
Per Duncan (1972) & Grant (1999), the single most significant influence on organizational performance is the external environment of the organization. Organizations are established to attain certain goals (Olarewaju & Folarin, 2012). The organization's activities are influenced by the external environment, and these determi...