NGO ENVIRONMENT

Karishma Nair
Week 2
Session 2
Definition

-Organizational environments are composed of forces

or institutions surrounding an organization that affect
performance, operations, and resources

-It includes all of the elements that exist outside of the

organization's boundaries and have the potential to affect
a portion or all of the organization

-Examples include government regulatory agencies,

competitors, beneficiaries, suppliers, and pressure from
the public

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ENVIRONMENTAL THREATS AND
OPPORTUNITIES: DEFINITIONS
 Environmental Threat: An environmental threat is a
challenge posed by an unfavourable trend or development in
the environment that would lead, in the absence of
purposeful action, to the erosion of the organization's
position

 Environmental Opportunity: An organization's

environmental opportunity is an attractive arena for
organization’s action in which the particular organization
would enjoy a competitive advantage.

 A message which emerges from these definitions is that the

threats and the opportunities are to a large extent functions
of managerial viewpoint and action
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TWO SEGMENTS
 Micro Environment

 Macro Environment

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TWO SEGMENTS

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The Micro Environment
 Micro environment refers to those individuals, groups
and agencies with which the organisations comes into
direct and frequent contact.

 Micro environmental factors directly influences the

organization and its performance

 The constituents of the micro environment are staff,

competition, donors, beneficiaries, related institutions,
and general public etc.

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The Micro Environment
 This environment has a substantial impact on an
organization's current activity

 Developments in micro environment become the

dominant preoccupation of the management for strategic
decisions

 Micro environment is basically internal environment –

different fiunctional areas, human resource, finance,
operations, marketing, competitors around, funding etc.

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The Macro Environment
 Macro environment refers to the general environment or
remote environment within which an organization and
forces in its micro environment operate.

 Forces in the macro environment, however, create

opportunities for and pose threats to the organization.

 The macro environment forces are less controllable than

the micro forces. Therefore, success of an organization
depends on its ability to adapt to the macro environment.

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The Macro Environment
 The major constituents of Macro environment are
political, economical, social, technological, legal and
environmental.

 These environments can further be classified into

international, regional, national, etc.

 Thus, depending upon the situation, an analyst may

refer to the global economic environment, the regional
political environment or the national social environment.

 The trends in mega environment, from the viewpoint of

a organization have long-term implications.
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POLITICAL
Political environment comprises the elements relating to
Government affairs. It serves as the monitoring framework of
business.

Political organisation-organisation and philosophy of political parties,

ideology of the Government, nature and extent of bureaucracy,
influence of primary groups, business donations to political parties,
political consciousness, etc.

Political stability-structure of military and police force, election

system, law and order situation

Foreign policy-alignment or non-alignment, relations with

neighbouring countries

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ECONOMIC

 The economic environment comprises all those economic forces

which influence the functioning of the organization.

 e.g., the nature and structure of the economy, the stage of

economic development, economic resources, the level of
income, economic policies, distribution of income.

 The economic environment can impact both the organisation’s

work and the donors’ decision-making process.

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SOCIAL
 Changes in social area occur gradually and and it is not easy to
predict when changes in the social environment would have
substantial impact on the strategy

 Some areas where social changes may have strategic

implications: Population on Demographic characteristics,
Spread of literacy, Health and its impact on average life
Income distribution, Ethical standards

 Social values play a prominent role in strategy and policy

formulation of any organization. Since they exist in society,
they must modify or change their goals as society demand

 Increased concern for health is opening up newer opportunities

for service organizations like health centers, 'yoga centres‘.

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TECHNOLOGY
 Technological developments not only unfold the fastest but they
are the most far-reaching in expanding or contracting
opportunities for an organization

 Increased transportation capability, Increase mastery over

energy, Growing mechanization etc.

 Technology can heighten impacts in projects like: Providing

drinking water, Promoting literacy, Stepping up child
immunization, Linking remote rural areas with the country's
telecommunication network

 Organization needs more risk taking and entrepreneurial abilities

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LEGAL/REGULATORY
 Legal factors are those that emerge from changes to the
regulatory environment, which may affect the broader
economy, certain industries, or even individual businesses
within a specific sector.

 Examples include: Employment and consumer protection

laws, Protection of IP (Intellectual Property)

 Regulation can either help boost the sector or create

barriers for successful projects within the industry

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ENVIROMENTAL
 The ecological environment in the macro environment are
significant since they are about the natural assets that are
required as inputs by donor or which are impacted by their
promoting and project activities.

 For example, world, air, and water contamination are

features each related organization ought to know about. All
in all, one should monitor the patterns in the biological
environment.

 Examples include: Climate change impacts, risks of

transmission, environment degradation.

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PESTLE ANALYSIS
 Combined, the above six factors can have a profound
impact on risks and opportunities for organizations.

 A PESTLE analysis studies the key external factors

(Political, Economic, Sociological, Technological, Legal and
Environmental) that influence an organisation. It can be
used in a range of different scenarios, and can guide
people professionals and senior managers in strategic
decision-making.

 It’s imperative that the analyst community recognize these

and attempt to quantify them in their financial models and
risk assessment tools.
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PESTLE ANALYSIS

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