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External and Internal Forces in the Organization


The external environment is a key input in any organization. Several external forces impact the organization’s behavior. There are two categories of environments that affect an organization’s behavior; these are the general environment and the task environment (Cummings & Worley, 2008).

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The general environment consists of external forces such as social, cultural, technological, economic, ecological, political, and administrative/legal forces which directly or indirectly affect an organization’s performance (Cummings & Worley, 2008). For example, an organization can have a problem in obtaining raw materials because a government regulator is bringing a lawsuit, consumers are boycotting an organization’s product or a national union is grieving the management policy (Cummings & Worley, 2008).


The task environment is described by “the supplier power, buyer power, threats of substitutes, threats of entry and rivalry among competitors (Cummings & Worley, 2008, p.95)”. The suppliers can influence the increase in prices thus forcing an organization to concentrate on the supplier’s needs than their own. Powerful buyers can force an organization to lower its prices or influence change in product delivery. When new firms enter into a competition, there are low profits because of the ease of starting a new business (Cummings & Worley, 2008).

The introduction of new products or services to the market threatens to replace the existing products and services. Rivalry among competitors calls for change in product offering, cost, and organizational structures (Cummings & Worley, 2008).

The administrative/legal environment in a country gives the guidelines on how organizations run. Some administrative/legal environments are very restrictive thus has a significant impact on organizational management (Carman, 2003).

The economic environment includes factors such as inflation, labor laws, and opportunity cost which directly impact organizations’ behavior. “Social and cultural forces at local, national and regional levels have a great impact on organizational operations and on what they value in terms of outcomes and effects (Carman, 2003, Chap.3)”. Organizations are dependent on stakeholders for their survival for these are the people who are directly concerned with the organization’s performance (Carman, 2003).

If an organization realizes losses for three quarters, then something needs to be fixed through either layoffs or cost-cutting. Other organizations will view it as a symptom of some underlying problem that has to be sought out and get resolved (Nelson & Quick, 2007). Some of the internal forces are strikes and high levels of absenteeism that also show dissatisfaction within the workforce. Internal forces can also be shown through tasks not being done in time, workers who seem not to understand their role, messages not being received or returned, and meetings that always end without any resolution.

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All the above are indicators that there needs to be an overhaul in an organization’s management habits (Stroh, Northcraft & Neale, 2002). Other internal forces are a reflection of external forces such as social-cultural values shift whereby workers may demand a change in their working conditions. When an organization’s strategy is revised, there are high expectations for organizational change (Griffin, 2007).

Leadership and the vision for the future of an organization give the direction, defines the agenda and the desired performance outcomes for an organization. The workforce is directed to work towards this outcome (Russell, 2006). Performance challenges affect an organization’s behavior hindering it from achieving its goals. Some of the performance challenges are failure to develop new products, failure to retain customers or even acquire new customers, poor market penetration, low or no profitability, and failure in market growth (Russell, 2006).


Workforce demographics are another internal force that is affecting employees’ attitudes towards the new diverse workforce. The growing diversity in organizations’ workforce will change the organization’s behavior in years to come. Some employees in an organization can have new ideas to improve the organization’s performance for instance a compelling vision for customer service, new product innovations, and some improvement suggestions (Russell, 2006). Therefore internal and external forces impact organizations’ behavior either positively or negatively. Managers need to take appropriate measures for the good of any organization.


Carman, B. (2003). Key Forces in the External Environment: International Development Research Center Chapter 3. Web.

Cummings, T. & Worley, C. (2008). Organization Development & Change (9th ed.). Florence, KY: Cengage Learning.

Griffin, R. (2007). Fundamentals of Management (5th ed.). Florence, KY: Cengage Learning.

Nelson, D. & Quick, J. (2007). Understanding Organizational Behavior (3rd ed.). Florence, KY: Cengage Learning.

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Russell, L. & Russell, J. (2006). Change Basics. Alexandria, VA: American Society for Training and Development.

Stroh, L., Northcraft, G. & Neale, M. (2002). Organizational Behavior: A Management Challenge (3rd ed.). Binghamton, NY: Routledge.

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