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2.2.3 Clarifying the relationship between the internal and external environments

We need to make a distinction between the internal and external environments of an organisation. As discussed, the external environment consists of the major elements outside the organisation that have the potential to significantly influence the operations within the organisation. By the internal environment we refer to the corporate culture and climate.

As a manager you should be aware of both the internal and external environments and the implications for the effective and efficient management of your department and organisation. Corporate culture is discussed in detail in a later chapter.

However, to put our discussions in this chapter into context, you should ensure that you comprehend the following important point. While the internal environment (corporate culture and climate) and the external environment are considered separately in this subject for the ease of organising the chapters, the environments are interrelated and interlinked; that is, the internal environment is affected, among other things, by the external environment.

An organisation's internal environment, or the conditions existing within the organisation, should be compatible with the external environment. Your textbook discusses the internal environment starting at page 81. We will come back to this later in the course but you may wish to skim read the remainder of this chapter at this point.

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