Environment in which Managers Operate.

The general environment of an organization is the set of board dimensions and forces are not necessarily associated with other specific organizations. The general environment of most organizations has economic, technological, socio-cultural, political-legal and international dimensions.

The economic:

The economic dimension of an organization's general environment is the overall health and vitality of the economic system in which the organization operates. Particularly important economic factors for business are general economic growth, inflation, interest rates, and unemployment.

The economic dimension is also important to non-business organizations. Like hospitals are affected by the availability of government grants and the number of low-income patients they must treat free of charge.

The technological:

The technological dimension of the general environment refers to the methods available for converting resources into products or services. Although technology is applied within the organization, the forms and availability of that technology come from the general environment. Computer-assisted manufacturing and design-techniques, for example, allow Boeing to simulate the more than three miles of hydraulic tubing that run through a 777 aircraft. The results include decreased warehouse needs, higher-quality tube fittings, fewer employees and major time savings. Although some people associate technology with manufacturing firms, it is also relevant in the service sector.

The Social:

The socio-cultural dimension of the general environment includes the customs, mores, values and demographic characteristics of the society in which the organizations functions. Socio-culture processes are important because they determine the products, services and standards of conduct that the society is likely to value.

For example, consumers are willing to pay premium prices of designer clothes whereas the same clothes have virtually no market in other countries. Consumer taste also changes overtime.

The political-legal:

The political-legal dimension of the general environment refers to government regulation of business and the relationship between business and government. This dimension is important for three basic reasons.

First, the legal system partially defines what an organization can and cannot do.

Second, pro or anti-business sentiment in government influences business activity.  

Finally, political stability has ramifications for planning. No business wants to set up shops in another country unless trade relationships with that country are relatively well defined and stable.

The international:

The extent to which an organization is involved in or affected by business in other countries. The international dimension also has implications for non-profit organization.