Discuss the external resource approach to measuring organizational effectiveness

What will be an ideal response?

The external resource approach allows managers to evaluate how effectively an organization manages and controls its external environment. For example, the organization's ability to influence stakeholders' perceptions in its favor and to receive a positive evaluation by external stakeholders is very important to managers and the organization's survival. Similarly, an organization's ability to utilize its environment and to secure scarce and valuable resources is another indication of its control over the environment. To measure the effectiveness of their control over the environment, managers use indicators such as stock price, profitability, and return on investment, which compare the performance of their organization with the performance of other organizations.