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The environment is an important force in organizations because of political, economic, sociological and technological forces. Examples of political forces at work are government regulations. In the home appliance industry for example, the government imposes strict regulations on the usage of CFCs.
At the same time, the government requires energy efficient equipment.
Therefore companies in the industry have to invest considerably in research and development in order to conduct their operations profitably. Economic forces are also relevant in terms of determining future expansion strategies in companies. For example, the Western economies are maturing.
Therefore the level of demand is stagnant.
This is forcing companies to globalize their operations. However globalization of operations means that supply chain management also becomes an international process. In this respect, the process of information sharing becomes a critical success factor. Therefore technological sophistication has become a key strategy in complex organizations.
High level of competitive rivalry
The current business environment is characterized by a high level of competitive rivalry.
As a result businesses have to constantly reengineer their internal operations in order to build and maintain a competitive advantage. This illustrates the importance of maintaining environmental considerations. This is particularly so when it comes to managing strategic human resource management, a critical success factor in complex organizations. In complex organizations, the best fit model is adopted.
In this respect, human resource management planning is tailored to organizational culture, strategy and mission and these three elements in turn are derived from political, economic and cultural forces. Therefore when it comes to managing human resources, the management has to take environmental considerations into account. In complex organizations, these issues are taken care of through HR planning which ensures that the right people are available in the right places at the right time. The success of this process has to be a function of environmental change because this determines the relevance of strategic focus at the organization.
As mentioned before, the current business environment is characterized by a high level of competitive rivalry. As a result, the management in organizations is implementing information technology in order to enhance the efficiency and effectiveness in resource allocation. This is particularly relevant in the context of international businesses which have to manage logistics on a global basis. This means substantial investments in technological sophistication.
However the management does not have an alternative in this respect because the threat of competitive rivalry means that the company has to minimize its costs. Customers are also part of this environment and environmental change is primarily determined by changes in customer tastes and preferences.
Businesses have to respond accordingly.
The situation is further complicated by the increasing degree of environmental uncertainty.
As a result, the management in complex organizations has to develop forecasting methodologies in order to minimize this uncertainty. This illustrates how important the environment is in a complex organization.
Fischer, Frank, and Carment Sirianni. (1993). Critical Studies in Organization and Bureaucracy. Wiley.