The formation of this school is a reactive process to the environment surrounding the organization. Those who favor this view consider the organization as passive, meaning they spend most of their strategic formation reacting to an environment that sets the agenda. The premises of the environmental school is as follows:
- The environment is a set of general forces and is central to strategy-making process.
- The organization must respond to the forces.
- Leadership becomes a passive element for purposes of reading the environment and adapting to strategy of the organization.
- Organizations cluster into ecological-type niches or positions where they remain until their resources become so scarce that they die.
The environmental school emphasizes that different situations give rise to different behaviors. The environment can affect the stability,, complexity, market diversity, and hostility of the organization. The environmental school has contributed to the population of organizations, about the environments of organizations, and the many different forms they can take.