The organization needs to make decisions based on issues going on in the surrounding environment. The external environment provides the context in which the organization functions. Factors like the economy, political issues, sociocultural issues, and technology impact the organization and the training and development strategy. Given economic conditions, along with variables such as customer demand for the company’s products, organizations have to decide how to respond to the market.

They may decide to grow to take advantage of market opportunities, shrink and divest themselves of poorly performing divisions, or focus on how to maintain profitability. When a company is growing quickly, employees have tremendous advancement opportunities and must be kept up-to-date in the rapidly changing market. Alternatively, while a company is laying people off, this is actually the most important time for employees to broaden their skill set so they can learn how to “do more with less.”

The political–legal environment is an important consideration for organizations as well. The law can open or constrain opportunities for businesses. Technological advances also offer interesting challenges to businesses. Because technology changes so rapidly, employees must be kept up to date about how the company expects to use the technology now and into the future.

Sociocultural issues are also a consideration for organizations. Ethical trends in industry filter down into the organization, putting pressure on it to train employees on the latest in ethical compliance programs. As our workforce becomes more diverse, training employees to be adaptive, open to new experiences and manage conflict is imperative.