Organizational and natural environment itm ch03

Organizational and Natural Environment

Chapter 3

External Environment

All elements outside an organization that are relevant to its operation; includes direct-action and indirect-action element.

Input Output

Organization Is Divided into Following

The Direct Action Environment (stakeholders): elements of the environment that directly influence an organization’s activity.

The Indirect Action Environment : elements of the external environment that affect the climate in which an organization’s activity take place, but do not affect the organization directly.

StakeholdersThose groups or individuals who are

directly or indirectly affected by an organization’s pursuit of its goals.

The Direct Action Environment

The Direct Action Environment is divided into the following

Internal Stake holdersExternal Stakeholders

Internal Stake Holders

Groups or individuals, that are not strictly part of organization’s environment but for whom an individual manager remains responsible.

Employees ShareholdersBoard of Directors

External Stakeholders

Groups or individual in an organization’s external environment that affect the activities of the organization.

Customers Suppliers Government Special-interest Group Financial institution Competitor The media Labor union

The Indirect Action Environment

The Indirect Action Environment is divides following

Economic Variables Political Variables Social Variables Technological Variables

Contd…

CUSTOMERS

A customers may be an institution such as a school, hospital or government agency or another firm, such as a contractor, distributor or manufacturer or an individual

niche marketing

• Concentrating all marketing efforts on a small but specific and well defined segment of the population.

• Niches do not 'exist' but are 'created' by identifying needs, wants, and requirements that are being addressed poorly or not at all by other firms, and developing and delivering goods or services to satisfy them.

• As a strategy, niche marketing is aimed at being a big fish in a small pond instead of being a small fish in a big pond. Also called micromarketing.

Contd..

SUPPLIERS

Every organization buys inputs raw materials, services energy, equipment and labour from the environment and uses them to produce output comes in this category

Contd…

GOVERNMENT

State and local governments, too, have assumed the role of watchdog and passed laws concerning the operation of businesses within their boundaries

Contd…SPECIAL INTEREST GROUP (SIGs) Groups of people who organize to use the

political process to advance their position on particular issues.

A group of persons working on behalf of or strongly supporting a particular cause, such as an item of legislation, an industry, or a special segment of society.

A group of people drawn or acting together because of a common interest, concern, or purpose.

Contd…

• MEDIA

The mass communications allowed increasingly extensive and sophisticated coverage, ranging from general news reports to feature articles to in-depth investigative exposes.

Contd…

• Labor Union Lu’s normally engage in some from of ‘collective bargaining' to negotiate wages, working condition, hours and so onCollective bargaining is the processes of negotiation and administering agreement between labor and management concerning wages, working conditions, and other aspects of the work environment

Contd…

• FINANCIAL INSTITUTIONS

Organization depends on a variety of financial institution, including commercial banks, investment banks, and insurance companies to supply funds for maintain and expanding their activities

Contd…

• COMPETITORS

It must gain additional customers, either by a greater market share or by finding ways to increase the size of the market itself

It must beat its competitors in entering and winning in an expanding market

Indirect Action Environment

Social variable

Is factors such as demographics lifestyles and social values that may influence an organization form its external environment

• Demographic

• Lifestyles

• Social Values

Contd…

Economic variables

General economic conditions and trends that may be factors in an organization's activities

Contd…

Political variable

The factors that may influence an organization activities as that of political process climate

Contd…

Technological Variables

New development in products or processes as well as advances in science, that may affect an organization's

Managing the indirect action environment

• Early warning sign of changes (sale of car)

• Information comes from many sources

• Within industry, govt. reports, statistical data, trade journals, on-line, financial publications.

• Hints, predication, gossips.

Natural Environment

Current Environmental concerns

• Pollutions

• Climate changes

• Ozone depletion

• Other Global issues

Frameworks for Thinking about the natural environment

• Cost Benefit Framework

• Sustainable development

• Movement to clean up

• The Greening of organization

Cost Benefit Framework

“A traditional approach to thinking about environment solution that says a proposed environmental regulations should be implemented if the potential benefit outweigh the potential costs”

Sustainable development

• “A more modern approach to thinking about environmental issues that says that organization should engage in activities that can be sustained for a long period of time or which renew themselves automatically”

Movement to clean up

The Greening of organization

• The legal posture

• The Market Posture

• The Stakeholders Posture

• The Dark Green Posture

Managing Organization and Natural Environment

Managing Multiple Stakeholders Relations

• Networks and coalitions

• Multiples Roles

• The special role of Management