Definition

As per ISO DIS 9000:2015, the definition of Context of the Organization is “business
environment“, “combination of internal and external factors and conditions that can have an
effect on an organization’s approach to its products, services and investments and interested
Parties“. The note states that this concept of Context of Organization is equally applicable to Not
for profit organization, public service organization and governmental organization.Also in
normal language this concept is also know as business environment, organizational environment
or ecosystem of an organization.

Introduction:
The implementation of QMS should be the strategic decision of the organization and
is influenced by the context of the organisation and the changes in that context. The changes in
the context can be with respect to its specific objectives, the risks associated with its context and
objectives, the needs and expectations of its customers and other relevant interested parties, the
interactions, the competence of persons within or working on behalf of the organization and its
size and organizational structure.The context of an organization will include internal factors
such as organizational culture, and external factors such as the socio-economic conditions under
which it operates.The scope of ISO DIS 9001:2015 states that organization needs to demonstrate
its ability to consistently provide products and services that meet customer and applicable
statutory and regulatory requirements and aims to enhance customer satisfaction.

Any interested party which is not relevant to the quality management system need not be
considered and similarly any requirement of the interested party need not be
considered.Determining what is relevant or not relevant is dependent on whether or not it has an
impact on the organization’s ability to consistently provide products and services that meet
customer and applicable statutory and regulatory requirements or the organization’s aim to
enhance customer satisfaction. The organization can decide to determine additional needs and
expectations that will meet its quality objectives. However, it is at the organization’s discretion
whether or not to accept additional requirements to satisfy interested parties beyond what is
required by this Standard.

There are a new clause relating to the context of the organization,

Clause 4 Context of the organization

This clauses require the organization to determine the issues and requirements that can impact on
the planning of the quality management system.Interested parties cannot go beyond the scope of
ISO 9001.There is no requirement to go beyond interested parties that are relevant to the quality
management system.Consider impact on the organization’s ability to consistently provide
products and services that meet customer and applicable statutory and regulatory requirements or
the organization’s aim to enhance customer satisfaction.Organizations can go beyond the
minimum requirements to determine additional needs and expectations for interested parties that
would not be “relevant” at the discretion of organization and should be clear in quality
management system.

Clause 4.1 Understanding the Organization and its context

The organization should determine external and internal issues for the organization relevant to its
purpose, strategic planning and which affect the organization’s ability to achieve its objectives .
The Organization should monitor and review the information about external and internal
issues.Management Review required the monitoring of external and internal issues. The
organization must consider issues related to values,
culture knowledge and performance of the organization for understanding of internal issues. The
organization must consider issues related to arising from legal, technological, competitive,
market, cultural, social, and economic environments, whether international, national, regional or
local for understanding of external context.

Clause 4.2 Understanding the needs and expectations of interested parties

The organization shall determine relevant interested parties and requirements of relevant
interested parties. Interested parties include Customers, Partners,Persons in the
organization, External providers. Relevant interested parties to be considered are those that
potentially could impact the organization’s ability to provide products and services that meet
requirements. Monitor and review information related to interested parties and relevant
requirements.Management Review requires the monitoring of relevant interested parties.

Clause 4.3 Determining the scope of the quality management system

The organization must establish scope of the quality management system by determining the the
boundaries and applicability of the quality management system. While determining the scope the
organization must consider the internal and external issues determined in 4.1.,the requirements of
relevant interested parties in 4.2. and the products and services of the organization. Requirements
that can be applied by the organization shall be applied. Requirements that cannot be applied
cannot affect the organization’s ability to provide product and services that meet requirements.
The organization must maintain scope as documented information. stating the Products and
services covered by the QMS and any Justification where a requirement cannot be applied.

Clause 4.4 Quality management system and its processes

The organization must establish,implement, maintain and continually improve its quality
management system as per the requirement of this standards by determining the process needed
and its application through out the organization . While determining the processes, the
organization must determine the inputs required and the outputs expected from these
processes, the sequence and interaction of these processes,The organization must control these
processes to ensure its effective operation. The organization must establish the criteria and
methods which may include measurements and other related performance indicators to control
these processes. The organization must ensure the availability of the resources needed for
effective operation of these processes.The personnel having authorities and responsibilities for
these processes must be identified. The organization must analysis these organization for risk and
analysis and must take appropriate action to address them.There must be methods for
monitoring, measuring, as appropriate, and evaluation of these processes. The organization must
make changes in its process if it fails to achieve result. The organization must look opportunities
for improve for these process and for Quality management system as a whole.The organization
shall maintain documented information to the extent necessary to support the operation of
processes and retain documented information to the extent necessary to have confidence that the
processes are being carried out as planned.

Understanding context
An organization’s context involves its “operating environment.” The context must be determined
both within the organization and external to the organization. It is important to understand the
unique context of an organization before starting the strategic planning.To establish the context
means to define the external and internal factors that the organizations must consider when they
manage risks. An organization’s external context includes its outside stakeholders, its local
operating environment, as well as any external factors that influence the selection of its
objectives (goals and targets) or its ability to meet its goals. An organization’s internal context
includes its interested parties, its approach to governance, its contractual relationships with its
customers, and its capabilities and culture.An organization’s internal context is the internal
environment within which the organization seeks to achieve its sustainability goals. The internal
context may include,

 Product and service offerings

 Governance, organizational structure, roles, and accountability
 Regulatory requirements
 Policies and goals, and the strategies that are in place to achieve them,
 Assets (e.g., facilities, property, equipment and technology)
 Capabilities, understood in terms of resources and knowledge (e.g., capital, time, people,
processes, systems, and technologies)
 Information systems, information flows, and decision-making processes (both formal and
informal)
 Relationships of the staff/volunteers/members and the perceptions and values of their internal
stakeholders including suppliers and partners
 Organization’s culture
 Standards, guidelines, and models adopted by the organization and
 Form and extent of the organization’s contractual relationships.

Internal context can also be defined as anything within the organization that may influence
the way in which the organization manages its internal risks.Once the internal context is
understood, one can conduct the macro-environmental external analysis using “PEST” (political,
economic, social and technological) analysis.This analysis determines which factors are can
influence how the organization operates. The organization cannot control these factors, but they
must seek to adapt to them. The PEST factors can be classified as opportunities and threats in a
SWOT (strengths, weaknesses, opportunities and threats) analysis. Alternatively, some
organizations might use Porter’s “Five Forces Model.” These methods are used to review a
strategy or position or direction of an organization. Completing a pest analysis is simple and
helps the individuals involved in the organization to understand and find ways to deal with the
context.

Political Factors Economic Factors

Ecological/Environmental Issues National economies and trends

Current legislation General taxation issues

Anticipated future legislation Taxation to activities, products, services

International legislation (global influences) Seasonality or other weather issues

Regulatory bodies and processes Market and trade cycles

Government policies, terms and change Specific sector factors

Funding, grants, and initiatives Customer/end-user drivers

Market lobbying groups Interest and exchange rates

Wars and conflicts International trade and monetary issues

Social Factors Technology Factors

 Lifestyle trends Competing technology development

Demographics Associated/Dependent technologies

Consumer attitudes and opinions Replacement technology/Solutions

Media views Maturity of Technology

Law changes affecting social behaviors Information and communications

Image of the organization Consumer buying mechanisms

Consumer buying patterns Technology legislation

Fashion and role models Innovation potential

Major events and influences Technology access, licensing, patents

Buying access and trends Intellectual property issues

Ethnic/Religious factors Global communication

Advertising and publicity Social media use

Ethical issues Maturity of organization’s products/services

Although organizations cannot control macro-environment factors they need to manage them to
their advantage. They also need to protect themselves from PEST factors which may increase
operational costs or affect their reputation. The external context’s micro-environment consists of
the organization’s immediate operations and how they affect its performance and decision-
making. These factors have a direct impact on the success of the organization. It is important to
conduct a full analysis of the micor-environment before moving to strategy development. Here
are some of the micro-environmental context factors.

 Customers:
Organizations must attract and retain customers by offering products services that meet their
needs along with providing excellent customer service
 Employees:
There must be availability of people with the motivation to remain as contributing members
of the organization and develop the skills necessary to provide a competitive edge
 Suppliers:
Suppliers provide organizations with the resources they need to carry out their activities. If a
supplier provides bad service, this affects the way the organization operates. Close supplier
relationships are an effective way to remain competitive and secure the resources needed
 Investors:
All organizations require investment to grow. They may borrow the money from a bank or
have people invest in their work. Relationships with investors need to be managed carefully
as problems can detrimentally affect the long term success of the organization
 Media:
Positive media attention can bring success to the organization by maintaining its reputational
strength. Managing the media (including the presence in social media) is a challenge.
 Competitors:

Members of the organization need to have a sense of belonging. Can the organization offer
benefits that are better than those offered by the competitors? Is there a strong value
proposition? Competitor analysis and monitoring is crucial if an organization is to maintain or
improve its position in the competitive landscape of the community. The organization must
always be aware of its competitor’s activities. The landscape can change quickly.

As in the case of the macro-environmental context, the organization cannot always control its
micro-environment factors. But they must be carefully managed together and with the internal
context understanding.

PESTLE Analysis
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PESTLE Analysis
What is a PESTLE analysis? Organisations don’t exist in a vacuum. They are
intricately connected to an outside world with a constantly changing landscape.
If you can analyse this landscape, and the features that impact on your
organisation’s performance, then you can begin to make decisions and plans.
Regardless of the uncertainties of the future.
A PESTLE analysis is a tool to help you do this. Each letter stands for an
element of the organisation’s external operating environment. They stand for
Political, Economic, Socio-cultural, Technological, Legal and Eco-environmental
elements.

Most models and tools provide a structure to help you think about context. They
are valuable to the extent that they help you structure your thoughts, but
remember – they don’t replace the need for you to get the right people together
to do that thinking!

Situation Analysis

To gain a “big” picture view of the environment you need to analyze both the
external and the internal context. A PESTLE analysis will provide the external
perspective, leading to an assessment of opportunities and threats. The internal
perspective can be determined by a review of strengths and weaknesses.

The combination of an external focus with the internal perspective enables you
to assess the opportunties and threats from outside the organization and the
strengths and weaknesses from inside the organization. This is commonly
referred to as a SWOT analysis (strengths, weaknesses, opportunities and
threats). For more on SWOT see our article: SWOT analysis: combining internal
and external views.

The Macro Environment – PESTLE Analysis

A PESTLE analysis is a useful tool to help you consider the potential impact of
influences in the macro-environment. It allows you to identify possible key
changes in the outside world, in a structured mannner. That external
environment is broad and complex, so any tool to help you assess existing and
future influences on your organization is worth using. Examples of these
 influences, and the way in which they can be categorized using a PESTLE
analysis, are given below:

Political influences:

 government stability
 government policy
 government sp
ending
 education policies
Economic influences:

 business/economic cycles
 bunding mechanisms
 interest rates
 inflation
 unemployment
Socio-cultural influences

 deal influences:mographics;
 attitudes to work and leisure;
 levels of education;
 health and lifestyle;
 social mobility.
Technological influences:

 new discoveries
 spread of new technologies
 research
 rates of development
 rates of obsolescence
Eco-environment

 environmental protection laws

 waste disposal
 energy consumption
 other resource consumption
 sustainability
Legal influences:

 welfare legislation
 employment law
 health and safety
 consumer protection
Using the PESTLE headings think about the following questions:
 What environmental factors are affecting your organization?
 What evidence and data do you have to support your assertions?
 What is the likely impact of the influences – in terms of opportunities and threats – on
your organization
 Which of these are most important at the present time? In the next few years?
A list of PESTLE influences on its own is of limited value. Each must be
considered but not in isolation. What’s important is that you understand what
they all mean for your organization, and that you can identify the key drivers of
structural change for your industry or sector.
For example: public services are more likely to be impacted by changes in
government policy, public spending levels, a declining birth rate, and the need to
manage a culturally diverse society.

Whereas a software company may be more immediately concerned with changes

in the technical environment which lead to product innovation and
obsolescence. Of course this shouldn’t be over-simplified. Software companies
will also be affected by changes in politcal or economic influences as these may
affect market conditions. All organizations should be concerned about social and
eco-environmental influences as these relate to people and the physical world
we inhabit.

Remember, a PESTLE analysis is only one of several management tools. For

example it allows you to focus more specifically on the opportunities and threats
part of a SWOT analysis.

Summary – Know Your Business

Developing an understanding of your environment is a crucial step towards
developing your strategy, and providing the information and intelligence to
inform your Business Goal Setting process.

Organizations don’t exist in a vacuum. The business industry environment is

constantly changing and being aware of those changes is crucial. A PESTLE
analysis is one of the best known tools to help assess that environment.