What external information and the sources from which they  obtain it do top level managers rely on during decision making in an organization?

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shuhuan1's profile pic

shuhuan1 | eNotes Newbie

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Could you answer me this question, please:

How an organisation might collect and analyse information on its external environment with examples. thank you

krishna-agrawala's profile pic

krishna-agrawala | College Teacher | (Level 3) Valedictorian

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Mangers in organization need information on what is happening within the organization as well as about the external environment within which the organization operates. People at lower level of organization need more of the internal information an less of external information. But with increasing level level of management hierarchy the proportion of external information increases and the quantity of internal information decreases. The managers at the top management level thus need a large amount of external information on the environment within which they operate.

The external information needed by the top management is often divided in two broad types - information on immediate environment of the company, and that on the wider environment. The immediate environment of the company include its customers, suppliers, competitors and the industry within which the organization operates.

The wider environment includes the everything else outside the company. The information in the wider environment is often classified according to PESTEL framework, which divides the total external environmental factore in following six groups.

  • Political
  • Economical
  • Social
  • Technological
  • Environmental (Physical)
  • Legal

The various sources of information through which top level managers collect external information include.

  • Their own observation and personal study of what is happening in the environment.
  • Information collected and fed to them by their subordinates and colleagues in the organization.
  • Information collected from customers, suppliers and other persons such as bankers - with whom the company deals.This information may be obtained by top managers directly or through their subordinates and colleagues.
  • Information collected as a part of normal business activities. For example, when a company sell its products through the process of open tendering, it is able to get valuable information about competitors.
  • Through publications. These include statistical data, articles, and advertisements.
  • From organizations that collect, compile and analyse and sell business information.
  • Through market research,and other similar field surveys.
  • Through experts such as layers and economists.