Reesha Abdul Munnim
• 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)
Mission / Objectives
Internal Power Relationship
Physical Assets & facilities
•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 is defined as the events and trends inside an organization that affect management, employees, and organizational culture.
Factors in the Internal 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 - 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.
• 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
Money and Capital Markets
Per capita and national income
New Economic Policy
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
• 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...