The environment that surrounds us in general is part of our daily life without paying any attention to it, however, for organizations, the environment is a very important issue since it directly influences the decisions made by managers and even on sales they make or the behavior of their customers.
external-environment-of-organizationsThe environment can be divided into two parts for organizations; internal environment, made up of the entire chain that makes possible the manufacture of the product they make and the external environment, which allows said product to reach their customers, influencing not only the purchasing behavior of people, but the perceptions that can be have of the organization, the impact they have on the environment, etc.
This article will delve into every detail of the environment that surrounds organizations, allowing an overview of how they influence people's lives, not only economically but in a deeper way.
EXTERNAL ENVIRONMENT OF ORGANIZATIONS
General
(Robbins & Judge, 2009) “The environment of an organization is made up of institutions or forces outside an organization that potentially affect its performance. This includes suppliers, government regulatory offices, public pressure groups, etc. ”
But, in this case the question would be: why can the environment affect our organization? Precisely due to environmental uncertainty, some organizations face static environments since there are no very significant changes from the current competition; Others, however, present very dynamic environments and since uncertainty is a threat, organizations try to reduce them as much as possible and one way to achieve this is through adjustments in the organization's structure.
According to (Robbins & Judge, 2009) there are three key dimensions to the environment of any organization: capacity, volatility and complexity.
- By capacity, it refers to the degree of growth it can withstand. Regarding volatility is the dimension of the degree of instability in an environment, when there is a great change it is called dynamic. Finally, the environment needs to be evaluated based on its complexity, that is, the degree of heterogeneity and concentration of the elements of the environment.
Illustration 1 Three-dimensional model of the environment (See PDF)
The following figure summarizes Robbins & Judge's definition of the environment and its three dimensions.
Specifically, the more dynamic and complex the environment, the more organic its structure should be; on the other hand, the more abundant, stable and simple it is, the better it has a mechanistic structure.
General environment sectors
(Arano Chávez, 1998) “In the general sense, the environment is infinite and includes everything that is outside the organization; Thus, the strategies in the companies do not come out of the blue. And they must respond to the business environment in which the company is immersed ”.
The (Inter-American University for Development, 2005) indicates that within the general environment of the organizations are:
- Micro environment made up of sectors such as: raw materials, human resources, international and national markets. Macro environment, which is the general environment and is made up of sectors such as: government, sociocultural, economy, technology, financial resources.
(Kotler, 2001) "A company's marketing environment consists of external marketing actors and forces that affect the ability of the marketing management to create and maintain profitable relationships with its target customers."
For this author, the marketing environment comprises a microenvironment and a macroenvironment.
- Microenvironment: Consists of forces close to the company (companies, suppliers, marketing intermediaries, customer markets, competitors and the public) that affect the ability to serve the customer. Macroenvironment: It is constituted by great forces of society (demographic, economic, natural, technological, political and cultural) that affect the macroenvironment.
Company microenvironment
The Microenvironment is also known as a specific environment, direct action environment or immediate environment, according to the names used by various authors in their works, whatever the term with which it is named, according to the author (Fernández, 2005) are "Elements that are permanently related to the company and that influence operations and results."
Illustration 2 Actors present in the microenvironment
Some of the main elements that make up the Microenvironment of an organization will be described below:
Providers
They are an important link in the global system of delivering value to the company's customers, since they provide resources that the company needs to be able to produce goods and services. (Kotler, 2001)
The main inputs that the supplier can offer to the buyer can be monetary loans, equipment, services, materials or energy necessary for its facilities to function properly. (Barrios, 2011)
Marketing intermediaries
These help the company to promote, sell and distribute its products to final buyers, including distributors, physical distribution companies, marketing service agencies and financial intermediaries.
- Distributors are distribution channel companies that help the company find customers or sell to customers. Physical distribution companies help the organization source and move goods from their points of origin to their destination. Marketing comprises market research teams, advertising agencies, media companies and consulting firms. Financial intermediaries include banks, credit companies, insurers and other companies that help finance transactions.
customers
There are five types of customer markets:
- Consumer markets: Consists of individuals and households that purchase goods and services for personal consumption. Industrial markets: They buy goods and services to process or use them in their production process. Dealer markets: They buy goods and services to resell and make a profit. Government markets: Formed by government agencies that purchase goods and services to produce public services or transfer them to those who need it. International markets: Includes all the types mentioned above but possibly located in different countries.
Competitors
Call all those organizations that produce and market goods or services, with which the company competes for obtaining customers and consumers. (Barrios, 2011)
Competitors can come in two forms:
- Organizations that produce or manufacture goods or services similar to those offered by the other company.Different organizations that can influence the customer's interests to modify their purchase intentions.
Public
"A public is any group that has a real or potential interest in, or an impact on the ability of an organization to achieve its objectives" (Kotler, 2001). Seven classes of public are identified:
- Financial public: They influence the company's ability to obtain funds. Media audiences: Carry news, articles and editorial opinion. Government publics: Management must take into account government actions. Citizen Action Audience: The public relations department can help the company keep in touch with consumers and citizens. Local audiences: Include community residents and organizations. General public: A company needs to take into account the attitude of the general public, since the image that the public has of a company influences its purchases. Internal audiences: They include workers, managers, volunteers and the board of directors. If employees are comfortable with your company, their positive attitude will be reflected towards the external public.
Company macro environment
The company and all other actors operate in a broader macroenvironment of forces that shape opportunities and present risks to the company. (Fernández, 2005)
Illustration 3 Main forces of the macro environment of the company
Demographic environment
Demography is the study of human populations in terms of size, density, location, age, sex, race, occupation, and other statistical data. It is considered the first factor because people create markets. The main features and trends are:
- Explosive growth of the world population: It is one of the main causes that worry governments due to two fundamental causes, the first; The possible depletion of natural resources and the second is that this growth is being observed precisely in countries and communities less prepared to face this change. Population age: A population can be classified into six groups: preschool, school-age children, adolescents, young adults (between 25 and 40 years old), adults of mature age (40 to 65 years old) and elderly adults (65 years and more). Each of these categories has particular characteristics, desires, and needs; where marketers have to define more precisely the offers for each market. Ethnic markets:Countries and communities have specific characteristics such as ethnic and racial makeup. Educational groups: The world population is also often divided into five educational groups in this regard: illiterate or illiterate, high school dropouts, high school graduates, university interns, and licensed professionals. Formation of households: Currently, households are usually made up of single people who live alone, adults of the same or different sex, families where the father or mother are missing, families that do not have children, or simply people who choose not to form households; These new markets are the product of each person's decisions. Geographic changes in population: Where people are located means a difference in their purchasing preferences.Change from a mass market to a micro-market: Product of all these changes that cause a differentiation between them.
Economic environment
"The economic environment consists of factors that affect the purchasing power and spending patterns of consumers." (Fernández, 2005)
Nations vary considerably in their levels and distribution of income. Marketers should be aware of major revenue trends and changes in consumer purchasing patterns.
- Income distribution: One of the most important determinants is the country's industrial structure, from which four types can be distinguished: subsistence economies, commodity-exporting economies, and industrializing economies, industrialized economies
The marketer must distinguish five patterns of income distribution:
- Very low income, mostly low income, very low or high income, low, medium and high income, mostly Saving, debt and availability of credit: Marketers should be aware of any change in income, cost of living, interest rates, saving behavior and financing patterns since they could have a high impact on the sale of companies.
Natural environment
"They are the natural resources required as inputs or that are affected by marketing activities." (Kotler, 2001)
Marketers should be aware of the four trends in the natural environment:
- Raw material shortage: Infinite resources such as air, renewable finite resources (forests and food) and non-renewable finites (oil, coal, and various minerals). Increase in pollution: Some industrial activities damage the quality of the natural environment. This aspect represents an opportunity for marketing, as they can create solutions for pollution control. Increasing government intervention: The governments of different countries vary in their concern and efforts to promote a clean environment. The greatest hope is that all organizations accept greater social responsibility and find ways to reduce pollution. Increased energy costs: Businesses need to be aware of fluctuations in oil and other energy prices.
Technological environment
The technological environment is probably the force that is most dramatically shaping our destiny. Each new technology is a creative force of destruction whose number affects the growth rate of the economy. The marketer should be aware of the following trends:
- Accelerated pace of technological change Unlimited opportunities in innovation Variable budgets Greater control over technological change
Political environment
(Fernández, 2005) This environment consists of laws, government agencies and pressure groups that influence and limit various organizations and individuals in a given society.
(Kotler, 2001) The main trends in this environment are:
- Excessive legislation for the control of companies: The legislation that governs business activities has several purposes: Protect companies from other companies, Protect consumers from unfair trade practices, Protect the interests of society against unbridled commercial conduct. Growth of public interest groups: New laws and increased pressure from the government.
Cultural environment
It is made up of institutions and other forces that affect the basic values, perceptions, preferences and behaviors of a society. People absorb almost unconsciously, the world they see, which defines their relationships with themselves, with others, with the environment and with the universe in general.
The following cultural characteristics can affect marketing decision making:
- Persistence of cultural values: The members of a given society have many beliefs and values, these have a high level of persistence; the marketer has the possibility of modifying certain secondary values but little of altering the central values. Shifts in secondary cultural values: The marketer wants to predict cultural shifts in order to anticipate new opportunities or dangers. People's perspective on themselves: People change according to the importance they give to serving other people or themselves, some seek personal pleasure, others seek self-realization. People's perspective on others: Recently, observers have noticed a tendency to shift the concept of "society of the self" towards a "society of the us",in which people prefer to be with other people and serve them. People's perspective on organizations: In general, people are willing to work for companies that are important and expect them to do some social work. People's perspective on society: People's orientation towards their society influences their consumption patterns, saving levels and attitudes towards the market. People's perspective on nature: A long-term trend has been the increasing dominance of nature by humans through technology and the belief that nature is prodigal. People's perspective on the Universe: Finally, people often vary in their beliefs about the origin of the Universe and the place they occupy,People have begun to move away from materialism and ambition to seek more important values such as family, community, faith, the Earth, and an understanding of good and evil.
Analysis of the external environment through the SWOT matrix
The acronym SWOT, is an acrostic of Strengths (positive critical factors that it has), Opportunities (positive aspects that we can take advantage of using our strengths), Weaknesses (negative critical factors that must be eliminated or reduced) and Threats (external negative aspects that could hinder the achievement of our goals).
The SWOT matrix is an analysis tool that allows us to form a picture of the current situation of the object of study, thus allowing us to obtain an accurate diagnosis that allows us to make decisions based on the objectives and policies formulated.
It should be used when developing a strategic plan, or when planning a specific solution to a problem once the external environment has been analyzed. (Undersecretariat for innovation and quality, 2000)
As elaborated?
Internal analisis
For this diagnosis it is necessary to know the internal forces that facilitate the achievement of objectives and their limitations that prevent the achievement of goals in an efficient and effective way.
External analysis
For this analysis, it is necessary to analyze the favorable conditions or circumstances of her environment that can benefit her, identified as opportunities; as well as environmental trends that at any time can be threats.
Illustration 4 SWOT Matrix
conclusion
As it could be seen through the development of this article, it is possible to detect the needs of today's consumers or clients, since they are not only looking to satisfy materialistic needs but they are looking for organizations that have a certain social responsibility or that generate shared value with the society or community of which they are part.
In today's world, people prefer to consume products that although they may represent a higher cost, harm the environment in a minimal way since the world situation is very difficult and resources are beginning to run out.
I believe that if organizations make optimal use of both their material and human resources, they will take advantage of this situation by providing solutions that are in accordance with the needs of today, and in addition to creating competitive advantages over other organizations.
In general, the internal and external environment of organizations is governed by the constant changes in the society of which they are a part; since without it they would not be able to create the products or services that are capable of covering certain needs of the people, for which the marketers or marketing teams of the organizations have a very important task since they can make a difference in a world that you are looking for a significant difference.
Thesis topic proposal
"Analysis of the external environment of organizations in national and international companies"
General objective
Establish through analysis, competitive advantages for national companies in reference to the external environment of international organizations.
Gratitude
To the National Technological Institute of Mexico for being my alma mater and to Dr. Fernando Aguirre y Hernández for their support and motivation to write these articles on the subject of Fundamentals of Administrative Engineering.
References
- Arano Chávez, R. (1998). The importance of the general environment in companies Barrios, V. (2011). Academia Edu. Obtained from https://www.academia.edu/8790218/Ambiente_externo_de_las_organizaciones_deFernández, E. (2005). Introduction to Management. Spain: Polytechnic University of Valencia, Kotler, P. (2001). Marketing management. Pearson Educacion.Robbins, SP, & Judge, T. (2009). Organizational behavior. San Diego: Pearson Prentice Hall, Under Secretary for Innovation and Quality. (2000). Virtual Learning Course. Obtained from http://www.cca.org.mx/funrarios/cursos/ap089/apoyos/m3/analisis.pdf Inter-American University for Development. (2005). Organizational design.
