How important is the external environment and its impact on an organization?

. 5 min read

The external environment was already considered a critical factor to understand for the success of an organization, but the global Covid-19 pandemic has brought that into even sharper relief. 

Mage Plaza’s website defines external factors thus: 

“…external elements are affecting factors outside and under no control of the company. Considering the outside environment allows businessmen to take suitable adjustments to their marketing plan to make it more adaptable to the external environment.

There are numerous criteria considered as external elements. Among them, some of the most outstanding and important factors that need to be listed are the current economic situation, laws, surrounding infrastructure, and customer demands.

Types

Micro factors:

- Customers

- Input or Suppliers

- Competitors

- Public

- Marketing & Media

- Talent

Macro factors:

_ Economic

- Political/legal

- Technology

- Social 

- Natural”

Basically, a company cannot control most external factors that could impact its success, but in order to succeed a company needs to be able to quickly adapt to any necessary changes. Think about last spring when restaurants were closed for sit-down service. Several places started offering carryout services to customers, even if they hadn’t offered them before the pandemic. Giving customers a chance to continue to use their products or services whether or not there’s a lockdown can help a company to survive. 

And think about Zoom – last year at this time, it was a known company but it was considered a smaller tech company. Since that time it has exploded in popularity and become one of the most popular virtual/conference call companies in the world. It offered users a way to keep in touch with friends, family, and loved ones while following the orders to remain socially distant. 

Ultimately, the companies that stand the best chance of surviving the pandemic are the ones that can adapt to changing economic/political/social mores. Those companies can’t control all of the external factors, but their success depends on how well they respond to those factors.