Les

Environment son
al Forces that
Affect Local 4
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and
 Learning Objectives:
At the end of this lesson, you are expected to:

Differentiate internal and

external environment;
Perform and appreciate the
importance of SWOT analysis in
a business success; and
Identify the different factors that
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may harm or help a business.

 Clustering of
Environmental
Factors
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 ● Mission & Objectives ● Competitors
● Social Factors ● Marketing
● Political Factors Intermediaries
● Demographic Factors ● Financial Factors
● Policies & Procedures ● Economic Factors
● Technological Factors ● Suppliers
● Staff/Employees ● Products & Services
● Internal Relationship
● Value System
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 Internal Factors External Factors
• Mission and Objectives • Suppliers
• Staff/Employees • Competitors
• Financial Factors • Marketing Intermediaries
• Internal Relationship • Economic Factors
• Value System • Social Factors
• Policies & Procedures • Political Factors
• Products & Services • Demographic Factors
• Technological Factors
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 The Internal and External Environment
of Business
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 Environment
al Forces
These are factors that affect the
operation of the business be it
internal (within the organization)
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or external factors (outside forces)

 International
Business
Business activities are
carried outside the country
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 Domestic/Local
ABusiness
business operating in their own
country and are affected by the
economic, legal and cultural factors
specific to that domestic environment,
or nation.
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 Environmental
Scanning
A method used to analyze strategic plan of
action and helps organizations to gain
knowledge of possible influences from the
outside environment that affect the
business.
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 Internal
Environment
Are factors that occur within the
premises of an organization and
directly affect the functional areas in
the organization.
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 External
Environment
Are those that exist outside the
firm and often regarded as
uncontrollable factors
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 SWOT Analysis
The oldest popular method
used for environmental
scanning
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 Macro
Environmental
Factors

External Factors

• Value Micro
System Environment
• Mission & al Factors
Objectives
• Financial
Factors
• Internal
Relationship Internal
Factors
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 INTERNAL FACTORS
●Value System
●Mission and Objectives
●Financial Factors
●Internal Relationship
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 Value System
● It denotes the culture and norms of the
business.
● This is the regulatory framework of a
business which every employee must abide
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and act within the context.

 Mission and Objectives
●Different priorities, policies and
philosophies of a business are guided
by the mission and vision of a
business.
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 Financial Factors
●These are the factors like financial
policies, financial position and capital
structure which also affect a business
performance and its strategies.
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 Internal Relationship
●Factors like the amount of support the
top management enjoys from its
shareholders, employees and the
board of directors also affects the
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smooth functioning of the business.

 External Factors
● This include those factors which exist
outside the firm and often regarded as
uncontrollable. These can be
characterized as micro and macro
environment.
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 Micro environment
● refers to the environment which is in direct contact with
company and affects the routine activities of business
straight away.
● It is a collection of forces or factors that are close to the
organization and can influence the performance as well as
the day to day activities of the firm.
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 Six components of Micro environment:
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 The Company
Various groups in an organization like the top
management, finance, operations, human resourcing,
research and development (R&D), accounting etc
needs to be taken into account by the marketing
management for designing the marketing plans.
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 Suppliers
Are those people who are responsible
for supplying necessary inputs to the
organization and ensure the smooth
flow of production.
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 Marketing Intermediaries

● Aid the company in promoting, selling, and

distributing goods and services to its
consumers.
● Therefore, marketing intermediaries are vital
link between business and consumers.
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 Competitors
● Are the close challengers of the business
● It also refers to the number of similar competitive
product brand, size, and market capitalizations.
● And in order to survive the competition, one has to
keep a close look in the market and formulate policies
and strategies to produce innovative output.
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 Competitors
● The marketers must not only try to simply adapt to the
needs and demands of target customers, but also try to
attain strategic advantage against the competitors by
positioning their products strongly in the market.
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 General Public
● The public refers to the group of people who have an
actual or potential interest in company’s product or who
can have an impact on the organizations ability to achieve
its objective..
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 General Public
● There are seven types of publics identified in a
company’s marketing environment which includes
financial publics, media publics, government publics,
citizen-action publics, internal publics, local publics and
general public.
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 Customers
● The most important actors in the company’s
microenvironment are its customers. The whole of value
delivery network aims to engage the target customers and
create strong relationships with them.
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 Macro Environmental factors
● Macro environment refers to the major external and
uncontrollable factors that influence the decision making of
an organization.
● A company does not operate alone in its business
environment, but operates in a larger context.
● It comprises of forces that provide opportunities, but at the
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same time also pose threats to company.

 Six components of Macro environment
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 Demographic Environment
● Refer to the study of people, such as their age, sex,
marital status, occupation, family size etc. Since
demography is uncontrollable because you cannot
control the sex, age, marital status in the environment,
this enabling you to predict the future trends and
consumptions of your product.
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 Economic Environment

● Include economic conditions such as

growth rate, inflation, restrictive trade
practices and other which have
considerable impact on the business.
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 Natural Environment

● It refers to the natural resources or

physical environment that are required as
inputs by marketers or which is affected
by the marketing activities.
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 Technological Environment
● Technology sets challenges to dealer.
● It affects the kind of product that a dealer is offering.
● You cannot stop the advancement of technology, buy
you can learn to adapt to its changes and maximize it
for the advancement of the organization.
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 Political Environment
● Include government policies, laws and legalities. This,
in a way affects the business operation.
● For instance, the government restricted the
importation of a particular substance and as a result
this action will delay the production of your products.
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 Cultural Environment

● The cultural environment links to factors

which affects the basic values, preference,
perceptions and behavior of the society.
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