6 The organisational environment
Organisations exist in an environment – everything that surrounds the organisation physically and socially. The constituents of the organisation’s environment are likely to have an important impact on the management of the organisation. An organisation’s management must systematically analyse its environment in formulating plans to achieve organisational objectives.
The major environmental factors impacting on an organisation can be grouped under four headings: political/legal, economic, social/demographic and technological (reflected in the acronym: PEST analysis).