Enterprise Environmental Factors

In project management during project process you can face many obstacles or problems. Some of them may be caused by lack of planning or by the other reasons that you can control, but besides that there will be some conditions which you cannot control. These are called Enterprise Environmental Factors. Before starting to discuss enterprise environmental factors, let’s firstly understand the word “environment”. The environment, can considered to be as anything that is related to the natural world and the impact of human activity, or the culture that an individual lives in. As we live in an environment, it has an influence on our behavior in a certain way. But every organization has to exist and work within the EEF.[i] Even if you cannot control Enterprise Environmental Factors, you should be aware of them and plan the project accordingly, because they will be affecting the project. So, if you don’t act in advance, they can slow down the project or affect the outcomes. The influence can have a positive or negative impacts on the project, but in general the impact is negative. But how the Enterprise Environmental Factors affect the project?[ii] For answering to this question let’s define the types of enterprise environmental factors.

Enterprise environment factors can be:

  • Internal
  • External

The internal environment of an organization includes events, factors, people, systems, structures and conditions inside an organization that can be controlled by the company. For example, corporate mission, corporate culture, and leadership style are factors that are typically connected with an organization’s internal environment. So the internal environment definately influences the organizational activities, decisions, behaviors and attitudes of employees.

Internal environmental factors are followings:

  • The staff – empolyees are an important part of the internal environment of an organization and managers must be able to manage lower-level empolyees, and at the same time, supervise the other factors of the internal environment.[iii] But even when every employee is capable and talanted, the internal conflicts can destroy a good organiztion.
  • The budget – In business, even the lack of money can decide the company will survive or not. For example, the limited cash resources can affect the number of hiring people, the quality of equipment, the amount of advertising and etc. The avaliability of money will give the company more flexibility to grow and expand the business or to overcome an economic downturn.
  • The corporate culture – The internal corporate culture includes the values, attitudes and priorities that employees live every day. In culture where every employee competes with his colleagues certainly creates a pressured atmosphere,  than the culture that  stimulate the collaboration and team

The external environment is always outside of the organization control and can cause internal changes. Though the external environment is outside the control of organization, it can have a essential influence on its current operations, and ignoring esxternal forces can be damageing. So, it is necessary to monitor and adapt to the external environment.

The external factors that influence the organization are followings:

  • The economy – Even if the organization is well managed, in a bad economy it may not be able to survive. For instanse, if customers loose their jobs, they will not be able to spend money on recreation or other luxury services. It is impossible to control the economy, but understanding it can help bring out threats and opportunities.
  • The competition – If the organization is not a monopoly you will always have to deal with the competition. And when you create a company you are starting to fight against established and more experienced organizations in the same field.
  • Political and social conditions – The government can have a huge impact on the organization activity by making changes in policy. For example in tobacco industry since the 1950s, all manufacturers have to put warning labels on their product, and because of that they lost their right to advertise on television. Nowdays the smokers have less and less places where they can smoke, so it is the reason for reducing the persentage of people who smoke and it effects on the sector revenue.

Customers and suppliers – Not only employees, but also customers and suppliers are the most important people with whom an organization has to deal. Suppliers have a huge influence on costs. The weight of a given supplier depends on the scarcity of his service or product and, consequently, on the possibility of negotiation with him.[i] The customers impact depends on the fact of choosing between a specific organization and its competition.

[i] https://twproject.com/blog/internal-external-corporate-environmental-factors-project-environment/

So, we can make a conclude, that in project management it is possible to influence those factors that are closer and more directly related to management, but it is more difficult to have the same influence on factors external to the organization. Inspite of that, in every situation  the project manager must be aware of these factors and be ready to act accordingly. It is therefore essential that every organization knows which of the internal factors represent limiting conditions and which are the drivers of the projects for their correct management.

[i] https://pmstudycircle.com/2012/01/enterprise-environmental-factors-organizational-process-assets/

[ii] https://masterofproject.com/blog/7423/enterprise-environmental-factors-in-project-management

[iii] https://twproject.com/blog/internal-external-corporate-environmental-factors-project-environment/

[iv] https://twproject.com/blog/internal-external-corporate-environmental-factors-project-environment/

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