Exam (elaborations)
BUS 5117 Unit 3 Discussion Assignment
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A guide to assignment on effect of external environment on an organisation
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In this question, you will consider how the external environment applies to an organizationof your choosing. Using examples in the text or from your own research, define the external
environment as it applies to an organization of your choosing. What are the unique aspects
of the external environment for this organization?
Every organization operates in a defined environment and continuously interacts with its
environment. An environment may be defined as the collection of external conditions that affect
or influence an organization (Kennedy, 2020). There is a two-way influence between an
organization and its environment, where the environment affects the organization and the
organization's actions affect the environment.
The Commercial Bank of Ethiopia (CBE) was first established in 1942 as a State Bank and then
legally re-established as a Share Company in 1963 (Commercial Bank of Ethiopia, 2022). It is
the largest commercial bank with more than 22 million account holders and over 1500 branches.
Its vision is to become a world-class bank by the year 2025 (Commercial Bank of Ethiopia,
2022).
The organization needs to analyze its environment for three important reasons (Kennedy, 2020).
The first is to understand the supply and limitation of resources. The second is to identify the
possible opportunities and threats and lastly to develop their strategic plans. The above reasons
highlight the importance of understanding the external environment.
The external environment is composed of several factors or forces that exist outside of the
organization but affect the organization in one way or another (Indeed Editorial Team, 2022).
For CBE, the main factors that exist in the external environment include technological factors,
economic factors, political and legal factors, demographic factors, competitive factors, and
global factors. These factors could be seen as opportunities or threats (Indeed Editorial Team,
2022).
The technological advancement seen in recent years has pushed the bank to invest in R&D and
introduce new products like CBE Birr, Card Banking, and Mobile Banking (Commercial Bank of
Ethiopia, 2022). This is tied to the rapid implementation of innovative products and services by
competitive private banks. The downward economic trend of the country has pushed the bank to
push harder to maintain its profit margin.
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