Environmental factors affecting an organisation

1. ENVIRONMENTAL FACTORS
AFFECTING AN ORGANISATION
Team Members-Yash,
Aditya,Arnab,Muazzam,Ru
dra
Sparsh and Tanmaya

2. WHAT IS AN ORGANISATION?
•A social unit of people that is structured and managed to
meet a need or to pursue collective goals.
•All organizations have a management structure that
determines relationships between the different activities
and the members, and subdivides and assigns roles,
responsibilities, and authority to carry out different tasks.
•Organizations are open systems--they affect and are
affected by their environment.

3. WHAT IS AN ORGANISATIONAL ENVIRONMENT?
• The organization works within the framework provided
by various
elements of society.
• All such elements which lie outside the organization
are called external environment or simply as environment.
Also, the
organization may create an environment internal to it
which affects the
various subsystems of the organization
• The organization needs to properly understand the
environment for

4. ELEMENTS OF AN ORGANISATION’S
ENVIRONMENT

5. ORGANISATION’S GENERAL ENVIRONMENT

6. INTERNAL ENVIRONMENT FACTORS
• The internal environment is composed of the
elements within the
organization, including current employees,
management - and especially
corporate culture, which defines employee behavior.
• Trade unions, management, current employees,
share holders, etc. control the
internal environment.

7. INTERNAL FACTORS: MISSION
 Why does an organization exist? What is its
purpose? Answering these fundamental
questions describes an organization's
mission.
 A successful organization has a clear sense
of its ultimate purpose and knows how it
intends to fulfill that purpose.

8. INTERNAL FACTORS: LEADERSHIP
Great leaders inspire and direct. Often the way they do that most
persuasively is by example.
After 30 years of brutal and isolating imprisonment, Nelson
Mandela returned to South Africa to lead the country.
 It would have been understandable if upon gaining power
Mandela had retaliated for the brutality of South Africa's
Apartheid regime.
Instead, he advocated communication, understanding and
forgiveness.
 Consequently, South Africa achieved independence with a
minimum of violence and retained and utilized the skills of the

9. INTERNAL FACTORS: COMMUNICATION
Successful organizations thrive on robust
communication practices, where teams and team
leaders communicate freely and often to improve
results.
This two-way communication up and down the
hierarchical structure extends from top to bottom.
Organizations with communication deficiencies
often have rigid leadership structures that destroy
trust.

10. INTERNAL FACTORS: ORGANIZATIONAL STRUCTURE
At one time, most organizations had highly hierarchical structures,
with many layers of leadership and management defining the
organization from top to bottom.
More recently, there is a growing understanding that organizations
with flat structures – few hierarchical layers from top to bottom –
outperform organizations with hierarchical structures.
W. L. Gore, a highly successful global materials science company
that is focused on discovery and product innovation, has more
than 10,000 employees, but only three hierarchical levels: a
democratically elected CEO, a few group heads and everyone else.

11. EXTERNAL ENVIRONMENT FACTORS
• The external environment of an
organization refers to the forces and
institutions outside the organization
that potentially affect its
performance.
• External environment has two
layers –
 general environment
 task environment

12. EXTERNAL FACTORS: POLITICAL
• These are all about how and to what degree a government
intervenes in the economy. This can include – government
policy, political stability or instability in overseas markets,
foreign trade policy, tax policy, labor law, environmental law,
trade restrictions and so on.
• It is clear from the list above that political factors often have an
impact on organizations and how they do business.
Organizations need to be able to respond to the current and
anticipated future legislation, and adjust their marketing policy
accordingly.

13. EXTERNAL FACTORS: ECONOMIC
• Economy is one of the most determining factors to the success of the
company even though it is an external element.
• Within the economy, some contributing factors such as the fluctuation of
interest rate, economic crisis, and so on directly and strongly affects the
consumption of buyers, and consequently, the profits of businesses.
There are 7 factors that have direct impacts on business firm.
•Tax rate
•Exchange rate
•Inflation
•Labor
•Demand/supply
•Wages
•Recession

14. EXTERNAL FACTORS: SOCIAL
• There are some important socio-cultural factors that organizations
must analyze. These factors play an important role because they
determine the kind of goods, services and standards that society
values. The socio-cultural force includes the demographics and values
of the particular customer base.
• The demographics and values considered
are:
• Age
• Population density
• Education levels
• Geographical distribution
• Culture
• Lifestyle

15. EXTERNAL FACTORS: TECHNOLOGY
• Artificial intelligence, smart internet searches, and other high
tech functions- all kind of technology has been at the
forefront of many business for ages.
• Today it is so decisive to entrepreneurs that technology can be
their best friend or worst friend depending on how it is used
in the competitive digital business market.
• Because it can help you generate profits and produce the
results as your customers’ needs. In particular, the culture,
efficiency and relationships of a business are obviously
affected by technology infrastructure. Furthermore, it also
exerts impacts on the security of confidential information and

16. EXTERNAL FACTORS: ENVIRONMENT
• These factors have only really come to the forefront in the last
fifteen years or so. They have become important due to the
increasing scarcity of raw materials, pollution targets, doing
business as an ethical and sustainable company, carbon
footprint targets set by governments (this is a good example
were one factor could be classes as political and
environmental at the same time).
• These are just some of the issues marketers are facing within
this factor. More and more consumers are demanding that the
products they buy are sourced ethically, and if possible from a
sustainable source.

17. EXTERNAL FACTORS: LEGAL
• Legal factors include - health and safety, equal
opportunities, advertising standards, consumer rights
and laws, product labelling and product safety. It is
clear that companies need to know what is and what is
not legal in order to trade successfully. If an
organization trades globally this becomes a very tricky
area to get right as each country has its own set of
rules and regulations.

18. PESTEL ANALYSIS

19. WHAT IS PESTEL ANALYSIS?
PEST analysis (political, economic, socio-cultural and
technological) describes a framework of macro-environmental
factors used in the environmental scanning component
of strategic management.
It is part of an external analysis when conducting a strategic
analysis or doing market research, and gives an overview of the
different macro-environmental factors to be taken into
consideration.
It is a strategic tool for understanding market growth or
decline, business position, potential and direction for
operations.

20. EXAMPLE: GOOGLE

21. EXAMPLE: AMAZON

22. EXAMPLE: PEPSICO

23. EXAMPLE: AMUL

24. EXAMPLE:TECH MAHINDRA

25. EXAMPLE:TATA MOTORS

26. EXAMPLE:AIRTEL

27. EXAMPLE:UBER