ORGANIZATION AND MANAGEMENT

1. THE FIRM AND ITS
ENVIRONMENT

3. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
Environmental scanning is a process of
gathering, analyzing, and dispensing
information for tactical or strategic
purposes. The environmental scanning
process entails obtaining both factual and
subjective information on the business
environments in which a company is
operating or considering entering.

4. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
According to Stephen P. Robbins & Mary Coulter,
“Environment refers to institutions and forces that
affect organizational performance.

5. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT

6. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
External Business environment may be defined
as all those conditions and forces which are
external to the business and are beyond the
individual business unit, but it operates within
it.
External environment refers to the
environment that has an indirect influence on
the business. The factors are uncontrollable by
the business.

7. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT

8. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
CustomersCUSTOMERS SUPPLIERS
MEDIA
EMPLOYEES
COMPETITOR SHAREHOLDERS

9. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
The major task of a
business is to create
and sustain customers.
A business exists only
because of its
customers.
CUSTOMERS

10. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
Employing staff with relevant
skills and experience is
essential. This process begins
at recruitment stage and
continues throughout an
employee's employment via
ongoing training and promotion
opportunities.
EMPLOYEES

11. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
An important force in the
micro environment of a
company is the suppliers,
i.e., those who supply the
inputs like raw materials
and components to the
company.
SUPPLIERS

12. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
As organizations require
investment to grow, they
may decide to raise money
by floating on the stock
market i.e. move from
private to public
ownership.
STOCKHOLDERS

13. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
Positive media attention can “make” an
organization (or its products) and
negative media attention can “break”
an organization. Organizationsneed to
mange the media so that the media
help promote the positive things about
the organization and reduce the
impact of a negative event on their
reputation.
MEDIA

14. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
Competition is a basic
feature of an open market
economy. No business
organization can ignore its
competitors and their
business strategy.
COMPETITORS

15. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT

16. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
CustomersPOLITICAL ECONOMIC
TECHNOLOGICAL
SOCIAL
ENVIRONMENTAL LEGAL

17. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
How changes in government
policy might affect the
business e.g. a decision to
subsidies building new
houses in an area could be
good for a local brick works.
POLITICAL

18. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
How the economy affects a
business in terms of
taxation, government
spending, general demand,
interest rates, exchange
rates and global economic
factors.
ECONOMIC

19. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
How consumers, households
and communities behave and
their beliefs. For instance,
changes in attitude towards
health, or a greater number of
pensioners in a population.
SOCIAL

20. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
How the rapid pace of
change in production
processes and product
innovation affect a business.
TECHNOLOGICAL

21. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
The way in which legislation
in society affects the
business. E.g. changes in
employment laws on
working hours.
LEGAL

22. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
Growing awareness of the potential
impacts of climate change is
affecting how companies operate
and the products they offer, both
creating new markets and
diminishing or destroying existing
ones.
ENVIRONMENTAL

23. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
EXTERNAL
BUSINESSENVIRONMENT
INTERNAL
MACROMICRO
CUSTOMERS
EMPLOYEES
SUPPLIERS
SHAREHOLDERS
MEDIA
COMPETITORS
POLITICAL
ECONOMIC
SOCIAL
TECHNOLOGICAL
LEGAL
ENVIRONMENTAL

24. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT

25. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
An organization's internal
environment is composed of
the elements within the
organization, including current
employees, management, and
especially corporate culture,
which defines employee
behavior.

26. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
An organization's mission statement
describes what the organization stands
for and why it exists. It explains the
overall purpose of the organization and
includes the attributes that distinguish
it from other organizations of its type.
“What do we stand for?”
MISSION STATEMENT

27. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
A product is the item offered for
sale. A product can be a service
or an goods.
PRODUCTS

28. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
Machinery refers to
specific machines or machines
in general that business uses to
produce products or in making
business operations.
MACHINERY

29. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
The formal structure of an organization is
the hierarchical arrangement of tasks
and people. This structure determines
how information flows within the
organization, which departments are
responsible for which activities, and
where the decision‐making power rests.
ORGANIZATIONS’ STRUCTURE

30. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
The organizational culture is an
organization's personality. Just as each
person has a distinct personality, so
does each organization. The culture of
an organization distinguishes it from
others and shapes the actions of its
members.
ORGANIZATIONAL CULTURE

31. ORGANIZATIONAND MANAGEMENT CHAPTER 2: THE FIRM AND ITS ENVIRONMENT
EXTERNAL
BUSINESSENVIRONMENT
INTERNAL
MACROMICRO
CUSTOMERS
EMPLOYEES
SUPPLIERS
SHAREHOLDERS
MEDIA
COMPETITORS
POLITICAL
ECONOMIC
SOCIAL
TECHNOLOGICAL
LEGAL
ENVIRONMENTAL
MISSIONSTATEMENT
PRODUCTS
MACHINERY
ORGANIZATIONS’ STRUCTURE
ORGANIZATIONALCULTURE