Direct and Indirect Environment of the Firm

Advice / Strategy

Direct and Indirect Environment of the Firm
E Saruchera , Finance & Admin Manager, Malawi

What is needed to survive in dynamic environment.

The world is fast changing and as such if organisations are to survive there is need to adapt to the external environment. Organisational leaders have to closely monitor developments in the business environment in which they are operating. Key considerations when looking at the environment is to separate them into two being direct and the indirect environment:
- The direct environment relates to those elements of the external environment which impacts directly to the organisation. The direct environment includes the competition, buyers, suppliers and interest groups like employee unions and pressure groups. Managers of organisations must pay attention to developments in the direct environment and adjust accordingly. Failure to adapt to the environment threatens existence of the organisation.
- The indirect environment includes political, inflation, economic variables that may impact on the organisation, Managers of organisations need to also keep an eye on this environment, and implement strategies that allow the organisation to survive and benefit.

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