Organisations do not exist in isolation. They exist within a wider environment that includes a network of customers, suppliers, competitors, and regulators. Organisations are also subject to changes in the social, technological, economic, environmental, and political settings they operate in.

There are essentially three environments:

• The internal environment – the organisation itself, including staff, resources, and facilities.
• The near external environment – or the customers, clients, suppliers, competitors, etc.
• The far external environment – the social, technological, economic, environmental, and political (STEEP) factors.

Organisational boundaries are not clearly defined or fixed, but adjust in response to changes in the far external environment (STEEP factors).