For ITM subject

1. Organizational and Natural
Environment
Chapter 3

2. External Environment
All elements outside an organization that
are relevant to its operation; includes direct-
action and indirect-action element.
Input
Output

3. Organization Is Divided into
Following
The Direct Action Environment
(stakeholders): elements of the environment that
directly influence an organization’s activity.
The Indirect Action Environment : elements of
the external environment that affect the climate in
which an organization’s activity take place, but
do not affect the organization directly.

4. Stakeholders
Those groups or individuals who are
directly or indirectly affected by an
organization’s pursuit of its goals.

5. The Direct Action
Environment
The Direct Action Environment is
divided into the following
Internal Stake holders
External Stakeholders

6. Internal Stake Holders
Groups or individuals, that are not strictly
part of organization’s environment but for
whom an individual manager remains
responsible.
Employees
Shareholders
Board of Directors

7. External Stakeholders
 Groups or individual in an organization’s
external environment that affect the activities
of the organization.
 Customers
 Suppliers
 Government
 Special-interest Group
 Financial institution
 Competitor
 The media
 Labor union

8. The Indirect Action Environment
The Indirect Action Environment is
divides following
Economic Variables
Political Variables
Social Variables
Technological Variables

9. Contd…
 CUSTOMERS
A customers may be an institution such as
a school, hospital or government agency or
another firm, such as a contractor,
distributor or manufacturer or an individual

10. niche marketing
• Concentrating all marketing efforts on a small
but specific and well defined segment of
the population.
• Niches do not 'exist' but are 'created' by
identifying needs, wants, and requirements that
are being addressed poorly or not at all by other
firms, and developing and
delivering goods or services to satisfy them.
• As a strategy, niche marketing is aimed at
being a big fish in a small pond instead of being
a small fish in a big pond.
Also called micromarketing.

11. Contd..
SUPPLIERS
Every organization buys inputs raw
materials, services energy, equipment and
labour from the environment and uses
them to produce output comes in this
category

12. Contd…
GOVERNMENT
State and local governments, too, have
assumed the role of watchdog and passed
laws concerning the operation of businesses
within their boundaries

13. Contd…
SPECIAL INTEREST GROUP (SIGs)
Groups of people who organize to use the
political process to advance their position on
particular issues.
A group of persons working on behalf of or
strongly supporting a particular cause, such as an
item of legislation, an industry, or a special
segment of society.
A group of people drawn or acting together
because of a common interest, concern, or
purpose.

14. Contd…
• MEDIA
The mass communications allowed
increasingly extensive and sophisticated
coverage, ranging from general news
reports to feature articles to in-depth
investigative exposes.

15. Contd…
• Labor Union
Lu’s normally engage in some from of ‘collective
bargaining' to negotiate wages, working
condition, hours and so on
Collective bargaining is the processes of
negotiation and administering agreement
between labor and management concerning
wages, working conditions, and other aspects of
the work environment

16. Contd…
• FINANCIAL INSTITUTIONS
Organization depends on a variety of
financial institution, including commercial
banks, investment banks, and insurance
companies to supply funds for maintain
and expanding their activities

17. Contd…
• COMPETITORS
It must gain additional customers, either
by a greater market share or by finding
ways to increase the size of the market
itself
It must beat its competitors in entering and
winning in an expanding market

18. Indirect Action Environment
Social variable
Is factors such as demographics lifestyles
and social values that may influence an
organization form its external environment
• Demographic
• Lifestyles
• Social Values

19. Contd…
Economic variables
General economic conditions and trends
that may be factors in an organization's
activities

20. Contd…
Political variable
The factors that may influence an
organization activities as that of political
process climate

21. Contd…
Technological Variables
New development in products or processes
as well as advances in science, that may
affect an organization's

22. Managing the indirect action
environment
• Early warning sign of changes (sale of car)
• Information comes from many sources
• Within industry, govt. reports, statistical
data, trade journals, on-line, financial
publications.
• Hints, predication, gossips.

23. Natural Environment

24. Current Environmental concerns
• Pollutions
• Climate changes
• Ozone depletion
• Other Global issues

25. Frameworks for Thinking about
the natural environment
• Cost Benefit Framework
• Sustainable development
• Movement to clean up
• The Greening of organization

26. Cost Benefit Framework
“A traditional approach to thinking about
environment solution that says a proposed
environmental regulations should be
implemented if the potential benefit
outweigh the potential costs”

27. Sustainable development
• “A more modern approach to thinking about
environmental issues that says that
organization should engage in activities
that can be sustained for a long period of
time or which renew themselves
automatically”

28. Movement to clean up

29. The Greening of organization
• The legal posture
• The Market Posture
• The Stakeholders Posture
• The Dark Green Posture

30. Managing Organization and
Natural Environment

31. Managing Multiple Stakeholders
Relations
• Networks and coalitions
• Multiples Roles
• The special role of Management