External environment is classified into economic, sociological, political or professional and technological factors. Economic factors are further subdivided into funding sources, non-cash revenues, clients or consumers and competitors with each category having its subsidiary group. Funding resources encompass sources of all cash revenues with non-cashes capital in an organization, falling in the non-cash revenue category. An increase in the clients and customers list of an organization is paramount to the sustenance of an organization, with the pool of suppliers, offering price flexibility for a profit making organization. Competition as an economic aspects implication is also a concern of business organization with little or no concern in the non-profit organization.
Sociological environmental factors in organizational management focus on the community demography and societal structure as a client, human resource pool or problem to an organization. Analysis of the differential societal needs, from an ethnic and gender background is crucial in a successful production commensurate with the market. Political factors, relates to the legislation that govern the running of an organization and the attitude of the general public to an organization. Good public relation between an organization and the public is crucial, for its optimal operations. Professionalism relates to the public ethos that defines inter organizational relationship (Kettner, 2002).
Technological factors in an organization refer to the machinery; hardware and software used, in the organizational management and production. The success of a company, is fostered by its innovative advances, and technologically inspired reduction in unit production cost. Internal environmental factors that determine the optimal functionality of an institution are categorized from a number of postulates. These include; organizational goals, planning and operations, human, technological and financial resources. Organizational goals, defines the policies of an organization, upon which an organization is structured, managed and steered. Planning involves, designing in advance what to do, when to do and who is to undertake an organizational operation. The resources of a company encompass all the capital liabilities required in execution of organizational functions (Kettner, 2002).
A summative approach to the crucial external environmental factors includes the production capital and sales revenues in terms of funding sources and its customers or clients. The cardinal internal environmental factors for an organizational existence relates to its management structure in terms of its goals and planning. This defines the human resource and capital resource layout within an organization.