Internal environment of business

Category: Environment
Last Updated: 10 Aug 2020
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An organization's internal environment is composed of the elements within the organization, including current employees, management, and especially corporate culture, which defines employee behavior. Although some elements affect the organization as a whole, others affect only the manager. A manager's philosophical or leadership style directly impacts employees. Traditional managers give explicit instructions to employees, while progressive managers empower employees to make many of their own decisions. Changes in philosophy or leadership style are under the control of the manager.

The structure and politics of an organization affects the manner in which the organization responds to environmental change. Furthermore, it can be difficult to change cultural attitudes when the nature of an organization’s business environment has changed. Along with the external environment, internal environment of an organization also keep on changing. The five elements of the internal environment which are physical, technological, social, political, and economic, influence how the manager functions will be performed.

The physical element of the internal environment includes such factors as air quality, temperature, noise, dust, radiation, and other conditions affecting employee health and safety. Managers revealed a high percentage of dissatisfaction with aspects of the physical environment of the workplace. The technological element of the internal environment relates closely to the physical element. It consists of the layout of the workplace; the process by which the work is performed; and the tools, equipment, and machinery used to perform the work.

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These factors in turn determine both the way work is processed and the requirements of the jobs performed by managers. The way in which work is organized affects interpersonal relations and interaction among the manager and employees within a work area. It influences the formation of informal work groups and the degree of cooperation or conflict among manager and employees. The social element reflects the attitudes and behaviors of managers. Because of their influential place in the organizational hierarchy, top managers play an extremely important role in determining the quality of the social element. Also, you can read which event most likely explains renewed demand in a recovery period?

The rules and regulations they devise, the concern they have for employees, the rewards and support they provide, and the tolerance they have for varying opinions are major factors in determining the organizational climate. Politics is an important social process found in all organizations. Organizational politics, of course, has the potential for being helpful or harmful to organizations and individuals. The economic element of a firm's internal environment reflects the organization's financial condition.

The more favorable this condition, the more financial resources the organization will have to support its human resources, including employee compensation and benefits. An organization's culture is particularly relevant to managers. These constraints are rarely explicit. It's unlikely that they'll even be spoken. But they're there, and all managers quickly learn what to do and not to do in their organization. The link between values such as these and managerial behavior is fairly straightforward.

If an organization's culture supports the belief that profits can be increased by cost cutting and that the company's best interests are served by achieving slow but steady increases in quarterly earnings, managers throughout the organization are unlikely to pursue programs that are innovative, risky, long term, or expansionary. For organizations that value and encourage workforce diversity, the and, thus, managers' decisions and actions should be supportive of diversity efforts.

In an organization whose culture conveys a basic distrust of employees, managers are more likely to use an authoritarian leadership style than a democratic one. The culture establishes for managers what appropriate behavior is. For instance, at St. Luke's advertising agency in London, a culture shaped by the value placed on freedom of expression, a lack of coercion and fear, and a determination to make work fun influences the way employees work and the way that managers plan, organize, lead, and control.

The organization's culture is also reinforced by the office environment, which is open, versatile, and creative. An organization's culture, especially a strong one, constrains a manager's decision-making options in all management functions. Managers shape their culture by having an organizational "stories" typically contain a narrative of significant events or people including such things as the organization's founders, rule breaking, reactions to past mistakes, and so forth. For instance, managers at Nike feel that stories told about the company's past help shape the future. Also Describe sources of internal and external finance for a selected business

Whenever possible, corporate "storytellers" (senior executives) explain the company's heritage and tell stories that celebrate people getting things done. These stories provide prime examples that people can learn from. To help manager learn the culture, organizational stories anchor the present in the past, provide explanations and legitimacy for current practices, and exemplify what is important to the organization. Corporate rituals are repetitive sequences of activities that express and reinforce the values of the organization, what goals are most important, and which people are important and which ones are expendable.

One of the best-known corporate rituals is Mary Kay Cosmetics' annual meeting for its sales representatives. Looking like a cross between a circus and a Miss America pageant, the awards ceremony takes place in a large auditorium, on a stage in front of a large, cheering audience, with all the participants dressed in glamorous evening clothes. Salespeople are rewarded for their success in achieving sales goals with an array of flashy gifts including gold and diamond pins, furs, and pink Cadillacs. This "show" acts as a motivator by publicly acknowledging outstanding sales performance.

In addition, the ritual aspect reinforces founder Mary Kay's determination and optimism, which enabled her to overcome personal hardships, found her own company, and achieve material success. It conveys to her salespeople that reaching their sales goals is important and that, through hard work and encouragement, they too can achieve success. Your second author had the experience of being on a flight out of Dallas one year with a planeload of Mary Kay sales representatives headed home from the annual awards meeting.

Their contagious enthusiasm and excitement made it obvious that this annual "ritual" played a significant role in establishing desired levels of motivation and behavioral expectations, which, after all, is what an organization's culture should do. Many organizations and units within organizations use language as a way to identify members of a culture. By learning this language, members attest to their acceptance of the culture and their willingness to help to preserve it.

For instance, Microsoft, the software company, has its own unique vocabulary: work judo (the art of deflecting a work assignment to someone else without making it appear that you're avoiding it; eating your own dog food (a strategy of using your own software programs or products in the early stages as a way of testing them even if the process is disagreeable); flat food (goodies from the vending machine that can be slipped under the door to a colleague who's working feverishly on deadline); facemail (actually talking to someone face-to-face; considered by Microsoft employees a technologically backward means of communicating); death march (the countdown to shipping a new product); and so on.

Over time, organizations often develop unique terms to describe equipment, key personnel, suppliers, customers, or products that are related to their business. Managers are frequently overwhelmed with acronyms and jargon that, after a short period of time, become a natural part of their language. Once learned, this language acts as a common denominator that unites members of a given culture.

When the financial health of a firm is strong, there is a tendency to expand manager’s activities such as training and development, employee assistance programs, and recreational activities. If the organization is growing, there is the possibility of expansion leading to manager recruitment, selection, and orientation. Conversely, when financial resources are low, an organization tends to reduce its manager budget and to cut back the managers services it offers to its employees. Read about The Effects of Technology on the Accounting Profession

The way in which work is organized affects interpersonal relations and interaction among employees within a work area. It influences the formation of informal work groups and the degree of cooperation or conflict among managers. More and more, technological systems are being integrated with the social systems of an organization, creating what is referred to as a sociotechnical system. Job design is based on human as well as technological considerations.

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Internal environment of business. (2018, May 17). Retrieved from

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