affect the growth, development and existence of a living being or a business organization. Enudu (1999: 98),
citing Onuoha (1991:121) defined an environment as a set of conditions and forces which surround and have
direct or indirect influence on the organization. Generally speaking, environmental variables that affect
business organizations may be classified into internal and external environmental variables.An organization’s
survival is dependent upon a series of exchange and the continual interaction with the environment which
gives rise to a number of broader responsibilities to society in general.
To understand the business organizational environments, we must borrow some concepts from
Systems Theory. One of the basic assumptions of systems theory is that business organizations are neither
self-Sufficient nor self-constrained. Rather, they exchange resources with and are dependent on the
external.Thus, business organizations take inputs such as raw materials, money, machine, labour, method and
energy from the external environment, transform them into products or services and then send them back as
outputs to the external environment. Koontz et al (1980:89) maintained that the relationship between a
business organization and its environment can be examined in three main ways:
First, a business organization can be viewed as importing various kinds of inputs such as man,
materials, money and machine.
These inputs are then transformed to produce outputs such as products and
services.
Secondly, in the study of the relationships between business organization and its environment is to
focus on those publics which the business organization must service. These publics are, Employees,
consumers, suppliers, stakeholders, government and the community where the business organization is
located.
A
third approach is to view the business organization as operating in an external environment of
opportunities and constraints which some authorities classified
as economic, political, legal, technology etc.
Thus, all managers whether they operate in a small or medium or large business organization, take into
consideration the elements and force of their external environment. It is necessary for us to discuss the various
environment of a business.
9
ELEMENTS
OF
DIRECT
AND
INDIRECT
ACTION
ENVIRONMENT
OF
AN
ORGANIZATION
Fig. 1
Social
Variables
Techonolgical
Variables
Economic
Variables
Political
Variables
The Media
Special Interest
Groups
Shareholders and the Board of Directors
THE ORGANIZATION
Competitors
Customers
Suppliers
Government
Financial
Institution
Labour
Union
Employees
Source:
Onuoha: Management (1999:121)
ELEMENTS OF DIRECT-ACTION ENVIRONMENT
Direct-action elements are elements of the environment that directly influence a business
organiza
tion’s activities. Some people prefer to refer to “direct
-
action” as the task environment. The direct
-
action environment is made up of stakeholder. The stakeholders fall into two categories: External and Internal
stakeholders. Stakeholders are defined as individual or groups that are directly or indirectly affected by
business organization’s pursuit of its objectives.
