QRT II.

CHAPTER 3:
INDUSTRY AND ENVIRONMENTAL
ANALYSIS
Internal Environment
External Environment
 Environmental Analysis
It refers to the process by which key
decision makers develop an
understanding of organizational
environments – factors that may influence
organizational functioning and
performance currently or in the future. It
involves gathering and analyzing
information and drawing current and
potential implications of changes in the
environment (Narayanan & Nath, 1993).
 Environmental analysis:
• Analysis of the internal environment is
identifying and analyzing the strengths and
weaknesses of the organization.
• Analysis of the external environment is
identifying and analyzing the opportunities
and threats faced by the organization.
Factors in the environment can either
positively or negatively affect the
organization.
 3.1 Environmental Analysis:
Benefits
to Organizations
1. Generates description of current
environmental changes, indicators of
potential changes, alternative descriptions
of future changes. Such descriptions
provide organizations lead time to identify,
understand and adapt to environmental
issues.
 Benefits to Organizations
2. Offers one mechanism for organizational
learning by inducing top level managers to
think beyond their current operating
concerns, forcing them to view the
environment with an open mind.
Environment of Management
Environment of an organization – can be
defined as the sum total of all elements
and forces present in its immediate and
remote surroundings which have a
potential impact on its ability to achieve its
objectives (Rodriguez and Echanis, 2001).
 Environment of Management
Level of organizational environment:
1. Internal environment
2. External environment
a. Specific/task/micro environment
b. General/societal/macro environment

(Bartol, 1991)
 Internal Environment
Internal environment refers to the general
conditions, elements and forces that exist
within an organization (Bartol, 1991). It
includes 1) mission, 2) structure, 3)people,
4) culture, 5) resources and others like
rules and regulations, strategies of the
organization (Higgins, 1991).
 Internal environment of
organization
Other components of the internal
environment:
- organization members
- nature of their interactions
• physical facilities and physical setting
within which they operate
• organizational politics
Internal env– organizational politics
Organizational politics – the attempts to
influence others using discretionary
behaviors to promote personal objectives.

Is organizational politics good or bad?

Internal env- organizational politics
Types of political activities:
• Attacking or blaming others
• Controlling information
• Forming coalitions
• Cultivating networks
• Creating obligations
• Managing impressions
 External Environment
External environment – refers to the major
elements, forces and aspects outside the
organization unit that have the potential
of significantly impacting on the likely
success of the organization (Bartol,
1991).
Types:
1. Specific/ task/micro environment
2. General/societal/ macro environment
 External-Specific Environment
Specific or task environment (Kast, 1974;
Daft, 2005), also known as direct-action
environment (Stoner, 1989) or micro
environment (Kotler, 1988,) or industry
environment (Rodriguez & Echanis, 1997),
or competitive environment (Bateman and
Snell, 2007). It directly influences the
organization’s operations & performance
(Daft, 2005).
 Specific/micro environment
It consists of more specific forces with which
the organization interacts (Bateman &
Snell, 2007) and which are relevant to the
decision making and transformation
processes of the individual organization
(Kast, 1974)
 Specific/micro environment
For most organizations, it is made up of (7)
components:
1. customers/clients/beneficiaries
2. Competitors
3. Suppliers
4. Government agencies
 Specific/micro environment
5. Intermediaries – brokers & merchants
(agents, wholesalers, retailers), financial
institutions (banks), promoters
6. publics – media
7. other organizations
 External-General environment
General or mega-environment (Bartol,
1991), societal or general according to
Kast (1974), macro environment (Kotler,
1988; Bateman & Snell, 2007), indirect
environment (Stoner, 1989) or country
environment (Rodriguez & Echanis, 1997).
 General/societal/macro
It includes the most general elements in the
external environment that potentially can
influence strategic decisions (Bateman
and Snell, 2007). It reflects major trends
and conditions existing outside the
organization (Bartol, 1991).
 General/societal environment
It consists of the following:
1. Physical and natural resources
2. Social environment
3. Economic environment
4. Technological environment
5. Politico-legal environment
6. International environment
 3.2 PRINCIPLES TOOLS AND TECHNIQUES in
Business Opportunity Identification

1. Customers
– people and organizations in the environment
who acquires goods or services from the
organization (Daft,1997)
– individuals and groups that buy the goods
and services that an organization produces
(Hill,2000)
• Hospital (patients), schools (students),
attorney (clients)
bank (depositors), Fast food (customer)
 CUSTOMERS impact:

- Customers can be very demanding in

desires for low price, high quality, on-time
delivery, and great service
- No customers = no business
• A study of customers will help managers
determine what are the customers’ needs
and wants to be satisfied
*Product planning – product features,
packaging, pricing, promotion, distribution
*Human resource planning – knowledge,
skills and training of needed manpower
 External Organizational Environment
Task Environment
Competitors/and Competition
• DIRECT COMPETITORS - Organizations that
produces goods and services that are similar to
a particular organizations goods and services.
(Hill,2000)
ex. Bank ( LBP, Equitable PCI, BPI, Metrobank)
Fast food (Jollibee, Mcdonald)
Pharmaceutical (Pfizer, Unilab, Philpharma)
etc.
 External Organizational Environment
Task Environment
2. Competitors
• INDIRECT COMPETITOR - Other organizations
in the same industry or type of business that
provide goods or services to the same sets of
customers. (Daft,1997)
– All business in the same locality who are
selling the same type/category of good but
with different specialization
– Ex. A vendor selling suman vs banana que
 Competitor impact:
• Rivalry between competitors is potentially
the most threatening force.
• High level of rivalry often result in price
competition which result to lower profits.
 External Organizational Environment
Task Environment

3. Suppliers
• individuals and organizations that provide
an organization with the input resources
(such as raw materials, component parts,
or employees) that it needs to produce
goods and services.(Hill,2000)
• People and organizations who provide the
raw materials the organization uses to
produce its output.(Daft,1997)
SUPPLIERS impact
- A supplier’s pricing
strategy does affect the
organization’s level of
revenue earned
- Availability of supply (raw
material) needed is crucial
to the organization.
4. Substitute goods - are goods which, as
a result of changed conditions, may replace
each other in use (or consumption).
A substitute good, in contrast to a
complementary good, is a good with a
positive cross elasticity of demand. ...
Conversely, the demand for a good is
decreased when the price of
another good is decreased.
( https://en.wikipedia.org/wiki/Substitute_good) 
 3.3 Types of Industries
1. Agribusiness - an industry engaged in
the producing operations of a farm, the
manufacture and distribution of farm
equipment and supplies, and the
processing, storage, and distribution of farm
commodities (https://www.merriam-
webster.com/dictionary/agribusiness)
 Types of Industries
2. Manufacturing - make (something) on a
large scale using machinery

3. Retail and services - Retail is the

process of selling consumer goods
orservices to customers through multiple
channels of distribution to earn a
profit. Retailers satisfy demand identified
through a supply chain.
(https://en.wikipedia.org/wiki/Retail)
 Types of Industries
4. International trade (exports and imports)
- is the exchange of capital, goods, and
services across international borders or
territories. In most countries,
such trade represents a significant share of
gross domestic product (GDP).(
https://en.wikipedia.org/wiki/International_tra
de
)
 Identification of Business
Opportunities
• Activity 1: Business Opportunity
Identification Using Trend Analysis (by
group) (20 minutes)
SOME CURRENT TRENDS POSSIBLE BUSINESS
OPPORTUNITIES
 3.4 Identification of Business
Opportunities
Activity 2: Business Opportunity
Identification Using Product Innovation (20
minutes)
PRODUCTS I USE AND POSSIBLE BUSINESS
SOME PROBLEMS I HAVE OPPORTUNITIES OR
ENCOUNTERED IN USING POSSIBLE PRODUCT
THESE PRODUCTS INNOVATIONS
CHAPTER 4: SOCIO-ECONOMIC
IMPACT (BENEFITS)
A) consumer (new products and services) –
(https://www.theguardian.com/sustainable-business/manage-company-
socio-economic-impact)
• There are a variety of reasons, ranging
from reducing cost and risk to creating and
capturing new opportunities, which
underpin a company's decision to
measure its socio-economic impacts.
1. Obtaining or maintaining a license to
operate
• Very clearly, measuring socio-economic
impact can help companies show
stakeholders that their activities benefit the
economies and societies in which they
operate. It can also help them better
understand if they are fulfilling their
commitments and stakeholder
expectations or if there is a gap between
their impacts and what stakeholders think.
2. Improving the business enabling
environment
• Measuring socio-economic impact is also
a powerful way for companies to show
policymakers how their business activities
are contributing to public policy goals –
thus helping to develop the right mix of
rules, incentives, and public services
needed to maximize business
contributions.
3. Strengthening value chains
• By assessing their socio-economic impact,
companies are better equipped to predict
the loyalty, performance, stability, and
capacity for growth of their suppliers,
distributors, and retail partners –
identifying vulnerabilities and opportunities
to address them.
4. Fueling product and service innovation
• Measuring socio-economic impact can
help companies better understand the
needs, aspirations, resources, and
incentives of their customers – enabling
them to develop new products and
services and improve existing offerings.
B). suppliers investors(capital, income)
- Prioritization and the judicious use of
proxies( https://www.enterprise-development.org/wp-content/uploads/WBCSDGuidetoMeasuringImpact.pdf)
C). government(tax revenues, poverty
alleviation , basic services)
http://www.inclusivebusinesshub.org/measuring-socio-economic-impact-a-starti
ng-point-for-business/

They are seeking to use the information

gained to generate dialogue with partners
and policymakers, to strengthen their
operations, and to better engage and serve
their customers and communities.
C). government(tax revenues, poverty
alleviation , basic services)
http://www.inclusivebusinesshub.org/measuring-socio-economic-impact-a-starti
ng-point-for-business/

Define and articulate the business case for

socio-economic impact measurement within
their organization, based on four pillars:
maintaining the license to operate;
improving the business enabling
environment; strengthening value chains;
and fueling product and service innovation.
D). households (standard of living,
employment)
• Economic activities such as food
provision, payment of school fees,
accommodation are affected.
E). international trade (exports and imports
of goods and services)
https://www.grin.com/document/269146

-The shift in international trade shows that

certain countries gained importantly
in impact in the global economy. A rising
GDP can be seen as an indicator of a
country's economic development; and it is,
in turn, more or less linked to
its trading activity.
Thank you!
 SWOT Analysis
• It is a framework for analyzing the
Strengths, Weaknesses, Opportunities,
and Threats (SWOT) that affect
organizational performance. It emphasizes
that the organizational strategies must
result in a good fit between the
organization’s internal and external
environment.
SWOT Analysis
Strength – the internal resources,
capabilities, and characteristics that will
assist the firm in accomplishing its
objectives. A well developed listing of
strengths should be able to answer:
1. What are the firm’s advantages?
2. What does the firm do well?
Ex: strong brand names, patent,
experienced personnel, much money
SWOT Analysis
Weakness – indicates obstacles that must
be overcome or minimized to achieve
desired results. It should answer:
1. What can be improved?
2. What is done poorly?
Ex: poor quality of goods/services, poor
reputation among customers
SWOT Analysis
Opportunity – characteristics of the external
environment that have the potential to help
the organization achieve or exceed its
strategic goals.
Examples: unfulfilled customer need, arrival
of new technologies, faster market growth,
favorable laws, abundant natural resource
SWOT Analysis
Threat – characteristics of the external
environment that may prevent the
organization from achieving its goals.

Examples: changing buyer needs and taste,

increase of trade barriers, emergence of
substitute products, terrorism, war
 SWOT Exercise
• List the STRENGTHS (internal variables)
• List the WEAKNESSES (internal variable)
• List the OPPORTUNITIES (external)
• List the THREATS (external)
Training output

• The output required of you is an

environmental analysis of your own
organization or one that you are familiar
with and you have access to information
that will be gathered.
• Title : ENVIRONMENTAL ANALYSIS OF
(Organization XYZ )
 Research Problem
• The Statement of the Problem will be the
same for all.
• The paper is an analysis of the
environment of management of
(XYZ Firm)
• Specifically, the paper answers the following questions:
1. What are the critical factors of the internal and external
environment of (XYZ Firm) ?
2. What are the effects of the critical factors of the internal
and external environment on the management of (XZY
Firm)?
3. What are the responses of management to the
pressures of its internal and external environment?
 Contents of the chapters
Chapter 1 – INTRODUCTION
• Background of the Study
• Statement of the Problem
• Significance of the Study
• Scope and delimitation of the Study
• Research Methodology
• Definition of Terms
Chapter 2 – PRESENTATION, ANALYSIS AND
INTERPRETATION OF DATA
• Company Profile
• The Environmental Factors and their Impact to the
Organization
A. Internal Environment
B. External Environment
• Management Responses to the Pressures of the
Environmental Factors
Chapter 3 – SUMMARY, CONCLUSION
AND RECOMMENDATION.
• Summary
• Conclusion
• Recommendation
 References
• List your references alphabetically or
appropriately.

• Reminder: Observe proper rules of

documentation and citation in your paper
presentation /discussion.
ORAL PRESENTATION OF
ENVIRONMENTAL
ANALYSIS PAPERS