Session 1 - The_organizational_environment (2) (1) (1).pptx

The Organizational Environment Common Programme School of Business NSBM Green University Town Topics to be covered….  What is Business Environment?  Why is it important?  Business Environment - Internal environment - Task environment - General environme...

The Organizational Environment Common Programme School of Business NSBM Green University Town Topics to be covered….  What is Business Environment?  Why is it important?  Business Environment - Internal environment - Task environment - General environment (PESTEL Analysis & SWOT analysis) Business environment  What is Business Environment?  The combination of internal and external factors that influence a company's operating situation  The business environment can include factors such as: - clients and suppliers - competition and owners - improvements in technology - laws and government activities - market, social and economic trends  Why is it important?  Organization’s long term performances  To face market competition  To face risks and uncertainties  Understand organization’s strengths and weaknesses Organizational Environment Internal environm ent Task environm ent General environm ent The Organization’s Environment  External Environment  Everything outside an organization’s boundaries-economic, legal, political, socio- cultural, international, and technical forces.  General environment is a set of broad dimensions and forces in an organization’s surroundings that determine its overall context  Task environment is composed of specific groups and organizations that affect the firm.  Internal Environment  Conditions and forces within an organization.  The Organization and Its Environments 2–8 International Technological dimension dimension Competitors Regulators Owners Customers Employees Physical environment Board of directors Culture Political- Economic legal dimension dimension Strategic Suppliers partners Internal environment Sociocultural dimension Copyright © 2005 by Houghton Mifflin Company. All rights Task environment External General environment environment reserved.  Internal Environment  Internal Environment- Employees  An individual who works part-time or full- time under a contract of employment, whether oral or written, and has recognized rights and duties  Internal Environment- Culture  The behavior of humans who are part of an organization and the meanings that the people attach to their actions. It includes the organization values, visions, norms, working language, systems, symbols, beliefs and habits  The Organization and Culture ( Cont’d) VISIBLE Artifacts, such as dress codes, office layout, symbols, slogans, ceremonies INVISIBLE Deeper values and shared understandings held by organization members Internal Environment- Management  The process of planning, organizing, leading and controlling the work of organizational members and of using all available resources to achieve  Task Environment The Task Environment (cont’d)  The Task Environment  Specific groups affecting the organization Competitors seeking the same resources as the organization. Customers who acquire an organization’s products or resources. Suppliers that provide resources for the organization. Regulators (agencies and interest groups) that control, legislate, or influence the organization’s policies and practices. Strategic partners (allies) who are in a joint venture or partnership with the organization. 2– 16 McDonald’s Task Environment Copyright © 2005 by Houghton Mifflin Company. All rights reserved. Activity  Select a multinational company of your choice.  Illustrate its factors and forces of Task environment. General Environment  General Environment (Cont’d)  It affects organizations indirectly  It includes political, economical, socio cultural, technological, ecological and legal environments  These events do not directly change day- to-day operations, but they do affect all organizations eventually  PESTEL Analysis Environm Technolog Political ental ical Economic Ethical al Social Legal  Political environment Political Environment Political Factors  The stability of  political stability the  Trade restrictions political environm  Government ent and the intervention attitudes of political parties or  Goods and services movements government want to provide Economical Environment Economical Environment Economical Factors  It represent the  Economic growth wider economy rate  It impacts on how  Gross Domestic businesses Production operate and make  Unemployment decisions rate  May vary from  Inflation Rate country to  Foreign exchange  Socio- cultural environment Social environment Socio- cultural factors  Attitudes and  It represents the preferences of a culture of the society society that an  Level of organization education/ operates within literacy levels  Religion  Living conditions  lifestyle  Technological Environment Technological Technological Factors Environment  Scientific and  Information technological technology advancement in a  Mobile technology specific industry  Changes in as well as in internet and e- society at large commerce  Automation  R & D activity  Ecological Environment Ecological Environment Ecological Factors  It includes  Limited natural environmental resources aspects which  Weather and affect towards the climate changes organizational  Environmental success pollution  Legal Environment Legal Environment Legal Factors  The basic legal  Employment law environment of  Consumer protection business is  International trade regulations and governed by restrictions state, country and  Rules and regulations international laws. which influence competition and the labour market  Ethical Environment Ethical Environment Ethical Factors  Set of moral  CSR principles and  Fairtrade values that serve  Affiliations as guidelines on between how to act rightly corporations and and justly when charities individuals are faced with moral  Social dilemmas. entrepreneurship  SWOT Analysis Internal factors Strengths Weaknesses External factors Opportunities Threats Positive Negative  Strengths  Features of the business which allow you to operate more effectively then rivals Eg- Specialist technical knowledge Powerful Management Customer Loyalty  Measure it from the company point of view and from that of customers’ and clients’  Weaknesses  Areas which you need to improve Eg- Low customer retention Poor brand image Absence of important skills  Always internal focus of an organization  Opportunities  New opportunities for the business which you can find from outside market Eg- Changes in technology and markets Use of marketing techniques Changes in government policies Changing customer tastes  Always focus on external market  Threats  Anything which can adversely affect the business performances Eg- Inflation Entrance of new competitors for the market High tax rates Price wars  Always focus on external market