An organization is a system that interacts with and depends upon its specific environment and remains vigilant about the potential influences of its general environment. The specific environment includes suppliers, customers, competitors, government agencies, and special-interest groups. Suppliers include firms that provide materials and equipment as well as providers of financial and labor inputs. Management seeks to ensure a steady flow of these needed materials, equipment, financial, and labor inputs at the lowest possible price. Customers are the reasons that organizations exist.
Customers absorb the organization's outputs.
They obviously represent potential uncertainty particularly if their tastes and desires change. Competitors cannot be ignored by management. They are an important environmental force to monitor and respond to. Government agencies at the federal, state, and local levels influence what organizations can and cannot do. Certain organizations by virtue of what they do are more closely scrutinized by governmental agencies.