Organisational Environment

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Organizational Environment
and Culture

Reesha Abdul Munnim
Maya Nasih

Organizational Environment

• Today organizations operate in a dynamic environment which changes rapidly.

• Organizational Environment is defined as a “set of conditions Social, Legal, Economical, Political or Institutional that are uncontrollable in nature and affects the functioning of organization”.

Business Environment has two components:

1. Internal Environment (Micro environment)
2. External Environment (Macro environment)

Internal Environment

Business Decision

External Environment

BUSINESS ENVIRONMENT
Macro Environment
Micro Environment

Financiers
Suppliers
Customers
Competitors
Public
Mktg
Intermediaries

Mission / Objectives
Management Structure
Internal Power Relationship
Physical Assets & facilities

Internal Environment

Business
Decision

Company image
Human resources
Financial Capabilities
Technological Capabilities
Marketing Capabilities

Economic
Technological
Global
Demographic
Socio-Cultural
Political

Micro Environment

•The Micro environment consists of different types of stakeholders customers, employees, suppliers, marketing intermediaries, competitors.

• It is also known as the Task Environment and Operating Environment and has a direct bearing on the operations of the firm. Changes in the micro environment will directly affect the firm's activities.

Internal Environment

•Internal environment is defined as the events and trends inside an organization that affect management, employees, and organizational culture.

Factors in the Internal Environment

Financial
Factors

Company
image and
brand
equity

Human
Resources

Vision

Mission

Organization
Structure
Objectives

Macro Environment

• The macro environment consists of factors which are beyond the control of the business.

The two kinds of external environments influence organizations are •


General environment
Specific environment

• General environment - Consists of the economy and the
technological, socio-cultural, political/legal trends that indirectly affect all organizations.

• Changes in any sector of the general environment eventually affect most organizations.

Political/Legal Environment

• Refers to the influence exerted by the three political institutions ie. legislature, executive and judiciary in shaping, directing, developing and controlling business activities.
• The constitution of a country

• Political Organization
• Political Stability

• Image of the country and its leaders
• Foreign Policy

• Laws governing business

• Flexibility and adaptability of laws

• The Judicial System

 Growth strategy

Economic environment
 Industry

 Agriculture

 Infrastructure

 Money and Capital Markets

 Per capita and national income
 Population

 New Economic Policy

Global Environment

The global environment refers to those factors which are relevant to business, such as the WTO principles and agreements; other

international conventions/ treaties / agreements / sentiments in other countries etc.

E.g. hike in crude oil prices has a global impact etc.
• World is becoming one market
• Improving quality

• Competition from MNCs

• Capital and technology transfers

• Deciding which markets to enter and what products to manufacture • Adjusting the management process

Socio-Cultural Environment

• Refers to the demographic characteristics, general behavior, attitudes, and beliefs of people in a particular society.

Socio-cultural changes and trends influence organizations in two important ways


Changes in demographic characteristics such as the number of

people with particular skills or the growth/decline in particular population segments (marital status, age, gender, ethnicity)



Changes in behavior, attitudes and beliefs also affect the demand for a business’s product and...
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