The Firm and Its Environment

BUSINESS General business External

environment Business
ENVIRONMENT
Environment
Specific business
World and environment Economic
ecological situations
situations
Internal Business
Employees Environment Customers

Structure
General Business Environment
Sociocultural
Technological Culture situations
situations Investors/ Resources
Suppliers
Owners

Pressure
Groups
Source: Cabrera, HM. F., Demographic Politicolegal
Altajeros, A. DC., Benjamin, R.
situations situations
(2016). Organization and
management. Vibal Group, Inc.
 Economic situations
• Inflation
• Interest rates
• Stock market fluctuations
• Exchange rates
• People’s spending habits

Source: Cabrera, HM. F., Altajeros, A. DC., Benjamin, R. (2016). Organization and management. Vibal Group, Inc.
[Different clip arts] [Photograph]. Source. http://clipart-library.com/economy-cliparts.html
 Sociocultural situations
• customer’s changing
values and
preferences
• customs

Source: Cabrera, HM. F., Altajeros, A. DC., Benjamin, R. (2016). Organization and management. Vibal Group, Inc.
[Sociocultural clip art] [Photograph]. Source. http://clipart-library.com/economy-cliparts.html
 Politicolegal situations
• Form of government
• National/local laws
• International laws
• Rules and regulations

Source: Cabrera, HM. F., Altajeros, A. DC., Benjamin, R. (2016). Organization and management. Vibal Group, Inc.
[Politicolegal clip art] [Photograph]. Source. https://sites.google.com/site/proyectoempresajiai/analisis-situacion/macroentorno/legal
 Demographic situations
• Age
• Gender
• Educational level
• Income
• No. of family members
• Geographic origin
Source: Cabrera, HM. F., Altajeros, A. DC., Benjamin, R. (2016). Organization and management. Vibal Group, Inc.
[Demographic clip art] [Photograph]. Source. https://corporatefinanceinstitute.com/resources/knowledge/economics/demographics/
 Technological situations
• E-commerce
• Teleconferencing
• Information systems

Source: Cabrera, HM. F., Altajeros, A. DC., Benjamin, R. (2016). Organization and management. Vibal Group, Inc.
[Picture of technological advances] [Photograph]. Source. https://www.urban-hub.com/technology/ten-technological-advances-transforming-our-lives/
 World and ecological situations
• Increasing number of
competitors and markets
• Nature and conditions of
the changing natural
environment.

Source: Cabrera, HM. F., Altajeros, A. DC., Benjamin, R. (2016). Organization and management. Vibal Group, Inc.
[Picture of environment ] [Photograph]. Source. https://edexec.co.uk/technologies-that-will-help-reduce-the-environmental-impact-of-your-workplace/
 SPECIFIC
BUSINESS
ENVIRONMENT
 Customers
⮚Individuals or
entities who
buy goods and
services
produced by the
organization.

Source: Tibon, MV. P. (2016). Learning to succeed in business with management. Phoenix Publishing House.
[Customers clip art] [Photograph]. Source. https://ecommerceinsiders.com/5-ways-convert-potential-customer-3461/
 Suppliers
⮚Individuals or
entities who
provide goods
and services
needed by the
organization in
the production
of its outputs.
Source: Tibon, MV. P. (2016). Learning to succeed in business with management. Phoenix Publishing House.
[Supplier clip art] [Photograph]. Source. https://fashion-book.com/2019/06/10/5-reasons-why-your-supplier-is-your-hidden-growth-asset/
 Pressure groups
⮚ Special-interest
groups which
persist in
influencing the
actions of
organizations
through their
[DENR Logo] [Photograph]. Source. https://www.denr.gov.ph/
campaign and
[FDA Logo] [Photograph]. Source. https://www.fda.gov.ph/ programs
[DepEd Logo] [Photograph]. Source. https://1000logos.net/deped-logo/

Source: Tibon, MV. P. (2016). Learning to succeed in business with management. Phoenix Publishing House.
Investors/Owners
⮚ Provide the
company with the
financial support
that it needs.

Source: Cabrera, HM. F., Altajeros, A. DC., Benjamin, R.

(2016). Organization and management. Vibal Group, Inc.

[Picture of investor/owner] [Photograph]. Source.

https://news.badabusiness.com/startup/best-5-ways-for-
entrepreneurs-to-raise-funds-for-their-startup-business-
7241.html
Employees
⮚ People who work
for another or for
an employer in
exchange of
salaries/wages or
other
considerations.
Source: Cabrera, HM. F., Altajeros, A. DC., Benjamin, R.
(2016). Organization and management. Vibal Group, Inc.
[Picture of employees] [Photograph]. Source.
https://www.bravowell.com/resources/benefits-packages-to-
engage-the-workforce
 INTERNAL ENVIRONMENT
Organizational structure Organizational culture
• system that outlines how • set of behavioral and
certain activities are procedural norms observed
directed in order to achieve within a company
the goals of an organization
• includes policies,
• include rules, roles, and procedures, ethics, values,
responsibilities. employee behaviors and
attitudes, goals, and code of
conduct
Organizational Structure. (2021, March 1). Investopedia. Retrieved July Organizational Culture. (2021, February 8) SurveyLegend. Retrieved July 17,
17, 2021, from https://www.investopedia.com/terms/o/organizational- 2021, from https://www.surveylegend.com/research/types-of-
structure.asp organizational-culture/
 INTERNAL ENVIRONMENT
Resources
• include production
technology and
physical facilities

Source: Tibon, MV. P. (2016). Learning to succeed in business with management. Phoenix Publishing House.
 Environmental Scanning
⮚ seeking for and sorting through data
about the environment

Source: Cabrera, HM. F., Altajeros, A. DC., Benjamin, R. (2016). Organization and management. Vibal Group, Inc.
 Ways to scan
the business
environment:

[PEST Analysis] [Photograph]. Venture Founders

LLC. Source. https://venturefounders.com/pest-
analysis/
 When to do a PEST analysis
● When you’re starting a new business
● When you uncover a major problem
● When/if your business is pivoting
● When you recognize impending changes in one
area (e.g., politics) and want to re-evaluate the
market
 How to do a PEST analysis
Step 1. Consider PEST factors that could impact your
business.

P - Political
E - Economic
S - Social
T - Technological
 Political factors
● Upcoming local, state, or national elections
● Main political candidates and their views on different policies
● Government regulation of industry or competition
● Trade policies (e.g., tariffs, current or prospective trade deals,
etc.)
● Level of corruption or organized crime in your region or country
● Import restrictions
● E-commerce policies
● Consumer and employee protections
Economic factors
● Current economic stability
● Projected growth and inflation rates
● Interest rates
● Fiscal policies
● Consumer habits and financial stability
● Unemployment rate and competition for jobs
● Access to credit (personal and business)
Socio-cultural factors
● Population growth and demographics
● Generational shifts
● Consumer habits and values (e.g., focus on product
quality or eco-friendliness)
● Family size and structure
● Consumer lifestyles
● Immigration rates
● Attitudes toward work
Technological factors

● The organization’s access to new technology

● The competition’s access to technology
● Rate of technological change
● Evolution of infrastructure
● Government or institutional research
●Step 2. Identify opportunities
●Step 3. Identify threats
●Step 4. Act on your findings
Ways to scan
the business
environment:

[SWOT Analysis] [Photograph].

Wordstream. Source:
https://www.wordstream.com/blog/ws/2017/1
2/20/swot-analysis
[SWOT Analysis] [Photograph]. Differencebetween.com. https://www.differencebetween.com/difference-between-swot-and-vs-pestel-analysis/
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