Each business organization is an open system consisting of numerous interdependent parts. But there are also situational factors that operate within the system.
The internal environment of the organization is the set of elements
The internal environment of the organization is the set of different interconnected elements that work together to achieve its goals. These components are managed, ie. plan, organize, coordinate, manage the head of the organization.
Because they are subject to change, it is common to call them internal variables. They are interconnected and interdependent so that the impact on one of them affects the others. One of the main responsibilities of managers is to achieve harmonious functional compliance between the individual components.
To what extent are organizations artificial systems, ie. created by humans, internal variables are a consequence or result of management decisions. The main variables in the internal environment of an organization are goals, organizational structure, tasks, technology, and human resources.
The goal of the business organization
The goal is the desired result or a specific end state to which the group working together aspires. Goal setting is at the heart of building any organization.
It carries out a coordinating activity, which informs the collaborators about what each of them should strive for. The goals of organizations are to meet societal and individual needs.
The variety of goals is different for different organizations and depends on their subject of activity and their size. Eg. – Business organizations focus mainly on creating certain goods or services.
Their goals are mainly productivity and profitability. In contrast, government agencies, schools, hospitals, and others. do not seek profit. The divisions in an organization also have their goals.
The same divisions in different organizations with similar activities have closer goals than different divisions in one organization. Eg. The goals of the Marketing Department in a company can differ only quantitatively in the goals of the same department in another company.
But the goals of the Marketing Department in a company are completely different from the goals of the Production Department of the same company. Read more: Product Life Cycle
Due to the differences in the goals of the individual units, the management of the organization must make continuous efforts to coordinate their activities. The goals of all divisions must have a concrete contribution to the goals of the organization as a whole and not contradict the goals of the other divisions.
There are different structures in an organization, but the most important of them is the organizational structure. It is a set of connections and relationships between the different levels of government and the individual functional areas. They are built in a form that allows for the most effective achievement of the goals of the organization.
They have a direct relation to the organizational structure – the specialized division of labor and the volume of managerial work. The specialized division of labor is performed by specialists in marketing, finance, production, etc. It is a horizontal division.
The volume of managerial work determines the vertical division of labor, ie. the separation of the coordination activities from the immediate implementation of tasks and works.
The consequence of the vertical division of labor is the hierarchical management structure of the organization. It also derives a norm of controllability, ie. the number of persons subordinate to one manager.
The norm of controllability is also called the sphere of control. It depends on the size of the organization and the nature of management work. If a leader has too many subordinates, he is not able to manage and control them effectively.
One of the main variables in the internal environment of an organization is – tasks. The task is a series of prescribed work or part of work that must be performed by prior prescription and for a predetermined period.
It is a consequence of the division of labor in an organization. It is prescribed for a specific position, not for the employee holding it. In this sense, each position includes many tasks that can be considered as a contribution to achieving the goals of the organization.
All tasks in an organization can be divided into three categories: working with people; work with things – machines, equipment, raw materials, details, etc .; work with information.
According to the three categories of tasks, all three categories of staff are distinguished – managers, workers, functional specialists.
All changes in the nature and content of tasks have always been closely linked to the evolution of specialization. It always leads to increased labor productivity, lower production costs, and higher profits.
Technology in the organizations
The fourth variable in the internal environment of the organization is technology. Technology is a way of influencing the object of work to obtain a specific result. Through the technology used, the organization transforms resources into goods that meet the needs of the population.
Through technology, the material is transformed at the input of the organization, and the output is a specific result – a product or service. Technology is always a real given in the organization. Is it highly productive, or is it good, or is it very old? There is the following classification of technologies:
The first category – single, small series, or individual production, Eg. the production of spacecraft, medical equipment, etc .;
The second category – mass or single-batch production, in the production of a large volume of products that are the same or similar, Eg. production of washing machines, refrigerators, TVs, etc .;
Continuous production using automated equipment
The third category – continuous production using automated equipment. It works continuously to produce a large volume of the same product, e.g. Oil refining, steel casting, power plant operation, etc.
Each of these technologies cannot be considered the best. Each has its advantages and is best for individual tasks. Making their consumer choices, buyers are the ones who evaluate the qualities of technology.
However, every task and technology cannot be useful without the cooperation between the people in the organization, the so-called human resource. Human potential is a central element in any model of governance. The factors influencing the individual behavior of each person are: abilities, needs, expectations, perceptions, attitudes, and personal views and values.
In terms of abilities, people differ the most. Abilities include intellectual and physical characteristics. Intellectuals are acquired through experience and education. The physical ones are primarily genetic, developed over time with practice.
Need is a psychological or physiological state that something is missing or insufficient. The needs are physiological – from food, clothing, housing, etc .; and psychologically – from achievements, belonging to a group, etc. Every organization must strive to create an atmosphere in which the satisfaction of staff needs would lead to the realization of its goals.
Expectations primarily affect a person’s behavior and productivity. Perceptions also influence a person’s expectations and behavior.
Perceptions represent awareness of stimuli. Perception of reality determines whether a person feels a need and what his expectations are. What happens, in reality, affects the behavior only to the extent that it is perceived by the person as reality.
Attitude and personal point of view are a need that is defined as something that a person likes or dislikes.
Values of the organization
Values are a common belief in good and evil, important and unimportant. Values are always individual. They are constantly evolving through – experience, learning, and change in the social environment.
- “Functional management structure in organizations”, https://wikipedia-lab.org/functional-management-structure-in-organizations/
- “A systematic approach in management”, https://securityinformationeventmanagement.com/systematic-approach-in-management/
- “Organizational and management structures”, https://pgov.org/organizational-and-management-structures/
- “Management and leadership theories and practices”, https://projectmanagement.wpdevcloud.com/management-and-leadership-theories-and-practices/
- “Manager vs leader: similarities and differences”, https://pm.mba/posts/manager-vs-leader/
- “Management approaches in the organizations for managers”, https://medfd.org/management-approaches-in-the-organizations-for-managers/
- “Knowledge and skills of the manager”, https://projectmanagement.news.blog/2021/07/09/knowledge-and-skills-of-the-manager/
- “The profession of the manager: How to become one”, https://scrumtime.org/profession-of-the-manager/
- “The Manager and the Leader as sources of motivation”, https://projectmanagement.freesite.host/the-manager-and-the-leader-as-sources-of-motivation/
- “Motivating the behavior of the manager”, https://agileprojectmanagement.home.blog/2021/07/10/motivating-the-behavior-of-the-manager/
- “Basic theories of leadership and management”, https://projectmanagement.jdevcloud.com/basic-theories-of-leadership-and-management/
- “Fundamentals of management and classification of management functions”, https://www.libraryofmu.org/fundamentals-of-management/
- “Typical management structures”, https://agileprojectmanagers.blogspot.com/2021/07/typical-management-structures.html
- “History of management science and basic management schools”, https://projectmanagers.edublogs.org/2021/07/13/management-science-and-basic-management-schools/
All considered internal variables of the organization should not be considered independent of each other.
Each of them reflects on the other or the other variables.
The concept of “internal environment” is not just a “theoretical” concept.
It has meaning and practical application. Thanks to the clarification of the content and the role of the internal environment of the organization, the method for analysis of the internal environment, better known as “SWOT analysis”, has been developed.
It analyzes sufficiently accurately and objectively the strengths and weaknesses of the organization, as well as the emerging threats and opportunities that the organization may consider in making operational and strategic decisions for its development.