Analysis of External

Environment of the
Organization
John Phier King S. Bascos
What is
Organizational
Environment?
• Environment of any organization is “the
aggregate of all conditions, events and
influences that surround and affect it”.
• The combination of internal and
external factors that influence a
company or business operating
situation.
TREY
research
Types of Environment

Internal Environment External Environment

• Micro Environment
• Macro Environment

TREY
research
External
Environment

TREY
research
External Environment

• Factors outside the organization which provide opportunities or pose

threats to the organization
• Factors that can impact the ability of a business or investment to achieve
its strategic goals and objectives
• Uncontrollable factors
• Classified into two categories
• Micro
• Macro

TREY
research
Micro
Environment

TREY
research
Micro Environment
• Refers to the environment
which is in direct contact in
the business organization and
can effect the routine
activities of business straight
away
• Types of Factors
• Suppliers Micro
• Customers
• Marketing Intermediaries Environment
• Competitors
• Publics
• Financial Intermediaries TREY
research
Micro Environment
• Suppliers – are the persons
who supply raw material to
the company
• Customers – are the persons
who buy goods from the
company
Micro
Environment
TREY
research
Micro Environment
• Marketing Intermediaries –
are those person who helps
company to sell its products
• Competitors – are those who
also sell the same product as
the company or business
Micro
Environment
TREY
research
Micro Environment
• Public – group of people who
can buy or who can show
their interest to buy the
products of the company
• Financial Intermediaries – are
those institutions who
provide load, credit and Micro
advance to the company
Environment
TREY
research
Macro
Environment

TREY
research
Macro Environment
• Refers to the external factors
which affects company and its
business and there is no
control of company on these
factors
• Types of Factors
• Economic
• Non-Economic Macro
• Political
• Demographic Environment
• Socio-Cultural
• Technological
• Natural TREY
research
Macro Environment
• Economic
- the economic environment
constitutes of economic
conditions, economic policies,
and the economic system that
is important to external
factors of business
- Economic environment refers
Macro
to the nature and direction of Environment
the economy within which
business organization are to
operate TREY
research
Macro Environment
• Non-Economic
• Political and Legal Forces
- Refers to the political,
government and legal
environment. It has close
relationship with the
economic system and
economic policy
- This refers to set of laws,
Macro
regulations, which influence
the business organizations
Environment
and their operations
TREY
research
Macro Environment
• Non-Economic
• Demographic Forces
- Demography refers to study
of the population
- Demographic factors are as
below:
• Size of Population
• Growth Rate Macro
• Family Size
• Educational Level Environment
• Age Composition
• Sex Composition
TREY
research
Macro Environment
• Non-Economic
• Socio-Cultural Forces
- Socio-cultural environment is
an important factor that
should be analyzed while
formulating company
business strategies. These
includes people’s attitude to
work and wealth, ethical
Macro
issues, role of family,
marriage, religion and
Environment
education and the social
responsibilities of business
TREY
research
Macro Environment
• Non-Economic
• Technological Forces
- Technological forces or
factors could be said to be
the most pervasive in the
environment. Technology
refers to the application of
knowledge base which
science provides. It is a well
Macro
established fact that
information and
Environment
communication technology
has revolutionized business
operations TREY
research
Macro Environment
• Non-Economic
• Natural Forces
- The natural environment
includes geographical and
ecological factors that
influence the business
operations. These factors
include the availability of
natural resources, weather
Macro
and climatic condition,
location aspect,
Environment
topographical factors, etc.

TREY
research
Brief Comparison (Micro – Macro)
Basis for Micro Environment Macro Environment
Comparison
Macro environment refers to the general
Micro environment is defined as the nearby environment, under
Meaning environment, that can affect the working
which the firm operates
of all business enterprises
Population and Demographic, Economic,
Competitors, Organization itself, Suppliers, Market,
Elements Socio-Cultural, Technological, Legal and
Intermediaries, and Customers
Political, and Environmental

Nature of
Specific General
Elements

Are these factors

Yes No
controllable?

TREY
research
ThankYou

TREY
research