Environmental Forces

and
Environmental Scanning

Organization and Management

Janis A. Jose
 Business Environment
• The aggregate of all conditions, events
and influences that surround and affect
it.
• individual and organisation that exists
outside the business and have influence
direct and indirect to the business.
Features of Business Environment
• Business environment is the sum of all
factors external to the business firm and
that greatly influence their functioning.
• It covers factors and forces like
customers, competitors, suppliers,
government and the social, cultural,
political, technological and legal
conditions.
Features of Business Environment
• The business environment is dynamic
in nature and it keeps on changing.
• The changes of business
environment are unpredictable.
• Business environment differs from
place to place, country to country.
Importance of Business Environment
• Firm to identify Opportunities and getting the first mover
advantage.

• Firms to identify threats and early warning signals.

• Continuous learning

• Image Building

• Meeting competition

• Identifying firms strengths and weaknesses.

 3.2

The General Environment and Environmental Forces

Affecting Organizations
The General Environment

Cultural Forces
Political - Legal Forces
Technological Forces
Competitive Forces

Organization

Adapted from Figure 3.1

 Components of the
External Business Environment
1. Sociocultural Situations
2. Politicolegal Situation
3. Demographic Situations
4. Technological Situations
5. World and Ecological Situations
Specific Business Environment
1. Stakeholders
2. Suppliers
3. Pressure Groups
4.Investors / Owners
5. Clients
6. Competitors
7. Media
INTERNAL BUSINESS
ENVIRONMENT
1. Vision-Mission-Values
2. Employees
3. Organization Climate
Local and International
Business Environment
of the Firm
Five Cultural Dimensions (Geert Hofstede)

1. Power Distance: Society accepts or

rejects the unequal distribution of
power among people in organizations
and institution of the society.
2. Uncertainty Avoidance: Society is
uncomfortable with risk, change and
situational uncertainty.
Five Cultural Dimensions (Geert Hofstede)

3. Individualism-Collectivism: Degree
which the society emphasizes individual
accomplishments versus collective
accomplishments.
4. Masculinity-Femininity: A society values
assertiveness and feelings of material
success versus concern for relationship.
Five Cultural Dimensions (Geert Hofstede)

5. Time Orientation: Society emphasizes

short term thinking versus greater concern
for the future or long term thinking.