Introduction
Organizations are constantly changing, they have to know how to adapt to them, or they simply will not be able to continue being in the market and they will be destined to perish.
Something that is vital for organizations is the analysis of their external environment, since it is necessary to be able to develop strategies of different kinds, such as for the implementation of a new product, penetrate a new market, reshape their marketing campaigns, among other things. With this they will be able to visualize various possible scenarios, the difficulties and threats that exist in the environment, that can benefit or harm the organization.
Within the external environment of the organizations, we can find the macroenvironment and the microenvironment, which will be described in depth within this article in order to better understand how it affects and benefits an organization analyzing these situations.
An organization that is aware of what is happening both inside and outside its environment will be better prepared to adapt to changes and to have well supported any decision they make.
Key concepts
Here are some concepts that are considered key, for a better understanding of the article.
“They are administrative structures and administrative systems created to achieve goals or objectives through human organisms or the management of human and other talent. They are made up of interrelation systems that fulfill specialized functions. It is also a systematic agreement between people to achieve some specific purpose. ” (Wikipedia, 2018)
"Those elements outside the organization that directly or indirectly influence the fulfillment of objectives, this concept being the basis of this research." (Rosas, 2011).
Macroenvironment.
The main goal of any organization is to generate profits through products and / or services that they offer to consumers and the general public, but to achieve what they offer, they must know how to locate and see when certain Opportunities, otherwise when faced with a potential threat that hinders the organization's goal, these may originate in the macro environment, which is formed by the economic environment, technological environment, political and legal environment, environmental environment, environment demographic and sociocultural environment, necessary parts that intervene in everything that is done day to day in organizations, then we will talk a little about each of these environments, so that they are understood in a better way, with information from Yánez & Pazmiño (2015).
Economic environment.
The economic environment is defined as the force that determines the purchasing power, and as are the purchasing standards of people. It means that the state, as the economy is, will be an essential piece for achieving the objectives of the organization. Employee salaries, the amount paid to suppliers and the price handled by the competition, such as the laws that arise from the government, intervene in the total cost that it costs the organization to produce its product or offer its service. and the conditions in which the market in which it participates is found.
The economic factors that can indicate the economic situation of a country are the following: Gross Domestic Product (GDP), inflation, currency devaluation, employment and unemployment rates, external debt, among others. Each of these factors must be evaluated by the organization in order to determine how to act in certain situations.
Technological environment.
Something that is booming today is the technological environment that surrounds organizations, as this will be an opportunity to create new products and to have new opportunities in the market.
Technology has become a banner for any organization that boasts of having great growth and that can take hold in both national and international markets. Technological changes require organizations to constantly update their products and / or services, in turn the processes necessary to carry them out, must be improved.
Collaborators, or rather senior management within an organization, should never see technology as a threat, on the contrary, it should be seen as a great opportunity to be more competitive in the market, it guarantees many improvements over its competitors, such as, streamlining your processes, saving resources, more competitive prices, among many other advantages.
Political and legal environment.
The laws and regulations that govern a society or country, the public servants and the different government agencies that they represent, are part of this environment. A government may have a severe or accessible judgment before the management of an organization within its jurisdiction, severely use the laws, or promote the development of the organization.
The political and legal environment is something that the organization must take into account for its stability, and this largely rests on the way of being of the entire political sector, from the moment its processes are found, among other factors.
We can define politics as the place where “power” is concentrated, it means the faculty that one or more people have to be able to make decisions on behalf of a society and that will have repercussions on its behavior.
The policy will decide which laws or regulations must be followed by all people and organizations that are in its jurisdiction. In the case of organizations, you are interested in the laws that act on the sector in which you exercise, who is exercising power, and which political parties are the most represented. Whoever is in command within the organization, must make a thorough analysis of laws and regulations that the government has in force, since these can be both an opportunity or a threat if they are not followed.
Environmental environment.
The environmental environment, are all those natural resources that surround the organization, hence the organization can provide resources or be affected by nature.
This environment is made up of the physical peculiarities of the environment, nature, the supplies it provides, natural phenomena, the type of climate, among others. Organizations must reflect on the impact that this generates on the environment, when interacting with it, whether it is when it uses the resources that it gives it, the climatic changes derived from excess pollution, putting in the balance whether it will be a season of much or little water for example. All these factors intervene in all the actions carried out by the organization day by day.
Like the other macroenvironment with which the organization has to coexist, the study should be done to determine if the environment could be an opportunity or threat to the organization.
Demographic environment.
The demographic environment is the population that surrounds the organization, its characteristics, which could be: Number of people who live in a certain place, their location, average age, the male or female sex predominates, to which they dedicate, for mention some.
When conducting research on demographics, it should be borne in mind that any population does not grow or decline steadily, but changes rapidly or slowly, depending on the situation in the country. Also, each person's income is not the same and this affects their purchasing power, if the product or service is intended for men or women, in short, there are several factors that must be considered for the organization to meet its objectives.
Sociocultural environment.
The beliefs and customs that each society has, is a determining factor for any activity carried out by the organization, this is due to the values, the culture, the way of appreciating a situation (whether a certain action is right or wrong), among other things. Customs that are inherited from generation to generation and are deeply rooted by the community, something that every organization must take into account and know about the customs that prevail in the community with which it interacts. Any culture has six important elements, which according to Yánez & Pazmiño (2015) are the following:
- Beliefs, set of ideologies that the community has Values, conviction that each person has Norms, set of rules that the community must follow so that everyone can coexist calmly Symbols, a perceptible representation that has a meaning Language, method of communication through spoken and written symbols Technology, group of knowledge, devices and methods
The sociocultural environment worries the progress of the activities of the organization, since a detailed study has to be made to establish whether it will be a threat or an opportunity, determine the behavior of consumers, since they are the ones who pay for the products and / or services offered by the organization, are our source of income.
Tools to analyze the macroenvironment.
There are various tools that will help any organization to determine what its macro environment is like, that will help it find opportunity situations or avoid future threats. Some examples that we can use are the following:
PEST Analysis
The PEST analysis is a study of the political, economic, social and technological environment with which the organization lives, which can alter its behavior and actions.
This analysis is an easy tool to use to assess the situation the organization is going through and thus be able to determine the main external factors (macroenvironment) that can harm the organization and prevent it from meeting its objective. It may also be the case that there are opportunities that the organization can take advantage of to improve its situation. According to Riquelme (2017), some objectives pursued by the PEST analysis are the following:
- Find the external factors that harm the company. From the external factors that were found, determine which ones are more likely to change in the future. Make the most of the opportunities that will arise. o Know how to avoid or defend against possible threats better than your competition.
Martin (2017) talks that if a company knows how to use the PEST analysis correctly, it will bring various advantages, which are:
- Help in decision-making. Proactive guidance, the organization will be able to go one step ahead of its competitors, helping to facilitate the projection of its immediate future. Various applications, can be used to give a new focus to the brand, determine if it is feasible to open a new office or headquarters, among others. Easy to adapt to different situations.
ETOP analysis (Profile of environmental threat and opportunity).
This analysis forms a profile of threats and opportunities derived from the external environment of the organization.
The primary objective of the ETOP analysis is to assist senior management in deciding the future direction of the organization. The order of environmental problems is necessary for them to have full meaning for the formulation of strategies.
Understanding the organization's management strategy or policy and effectiveness is not so easy; it requires looking at how the company challenges are faced, analyzing the threats and opportunities and finding solutions to face it. It requires a proper assessment of an organization's position, whether the strategy adopted is working well, and if not, why and how it should move forward.
ETOP involves segmenting the environment into different sectors. Each sector can be subdivided into subsectors.
"For example, the oil and gas sector can be divided into subsectors such as exploration and production, integrated oil and gas, oil equipment and services, pipelines, renewable energy equipment, alternative fuel producers, equipment, services and oil distribution, alternative energy, among others. ETOP additionally analyzes the impact of each sector and subsector in the organization. ” (Hattangadi, 2017)
Microenvironment.
The microenvironment is made up of the elements closest to the organizations and that influence their decision-making. Among these elements that form the microenvironment we can find the market, suppliers, customers, intermediaries and competition. This microenvironment has different types of inclination on different aspects, for which they intervene directly with the progress of the organization's tasks and are linked to its development, both in its structure and in the market with which it interacts.
Competition.
An organization, if it wants to increase its intervention in the market to which it belongs or even enter a new one, must carefully study the opportunities that this brings, by having the opportunity to attract new consumers, this will only be achieved if it manages to penetrate the market before than its main competitors, improving the product and / or service already offered, having a more efficient marketing campaign, among other things.
The organization will have to compare itself with its competition, to establish what is the best strategy to follow, which guarantees that the consumer will prefer them over any other organization.
Customers.
The client is another element within the microenvironment that affects the course of the organizations, by client we can understand the person or even another company which is buying the products or services of another by means of economic remuneration.
Being able to meet the expectations of the clients that an organization owns could be considered one of its most transcendental activities, since it is through them that the profits that the organization will receive will be obtained.
Complementing a bit of what was previously discussed, we could name as customers "consumers" those who acquire the product and / or service for personal use and "business" customers to other companies that acquire the product and / or service to add it in your production system, make an addition to the product or some other requirement. The total of the organization's actual clients and potential future clients represent its market.
It is important that the organization is in constant contact with its clients, being able to use various tools such as surveys, in order to know your satisfaction or their opinion of the organization.
Providers.
By suppliers we can understand that they are the rest of the companies that interact with our organization, granting them the necessary inputs for the elaboration of the products they manufacture or the services they provide, which may be: raw material, any accessory, different types of energy, among others. Suppliers will give us intellectual capital, technological resources, economic resources or supplies.
Suppliers are extremely necessary elements to be able to carry out the daily activities of any organization, since they will be what will provide them with all the resources that the organization requires.
The organization must assess whether its suppliers may be a strength or a weakness, since it could be that they do not deliver the supplies on time or are of a lower quality than the customer requires.
Intermediaries.
The intermediary will be that organization that helps our organization to promote, trade or distribute our products and / or services to real and potential customers, whether through physical means, marketing services or bank mediators.
We could also define intermediaries as the “bridge” that helps to get the product and / or service offered from the company of origin to the final customer.
Tools to analyze the microenvironment.
There are various tools that will help any organization determine what its microenvironment is like, that will help it to find opportunities or to avoid future threats. An example that we can use is that of Porter's five forces.
Porter's Five Forces.
The study of the five forces of Porter, is an instrument for strategic management, (also used to study the microenvironment of the organization) that was created by Engineer Michael Porter, which will give us the ability to study the desired part of the organization's environment, through the study and analysis of five forces.
In a more concrete way, this study will give us information on the competitiveness that prevails among organizations, or, although it may also be within an organization, an external study must be made that is the foundation to establish strategies that allow taking the opportunities that They show up and the company doesn't use and combat threats before they damage it.
Porter's five forces are:
- Rivalry between competitors. Threat of entry of new competitors. Threat of entry of substitute products. Bargaining power of suppliers. Bargaining power of consumers. (Arturo, 2014)
SWOT matrix.
The SWOT matrix is an instrument for the analysis of different points of the management of companies, their macro and micro environment or even for the analysis of any person or situation.
An internal (Strengths and Weaknesses) and external (Threats and Opportunities) study will be analyzed, which derives the name of SWOT from the first letters of these concepts.
The particularities or abilities of the organization with which you can achieve the goals that have been established and that are currently doing well.
The weaknesses that the organization currently has, not very positive elements that are causing the company to not reach its goal.
External situations, in which the organization could find a support area to achieve its goal.
As its name implies, the threats that the organization already has or that could be presented and that harm it.
Example of a Dofa Matrix
Example of the content of a SWOT Matrix, taken from (Leiva, 2016)
Thesis proposal.
Application of PEST Analysis in a SME in the Orizaba - Córdoba Zone.
Objective.
By applying the PEST analysis, it will be possible to know the Political, Economic, Social and Technological environment of SMEs and determine areas of opportunity.
Thanks.
I thank my family, for giving me all the support and the drive to continue day by day, the Orizaba Technological Institute for opening its doors to me and allowing me to continue my studies with the Master in Administrative Engineering and Doctor Fernando Aguirre y Hernández for motivating me with their Knowledge in the Administrative Engineering Foundations seminar to carry out each of the assigned articles.
Conclusion.
Through reading, it was possible to understand the macro and microenvironment of the organization, as well as different tools that serve to analyze it. That an organization can know how it is positioned with respect to everything that surrounds it, will serve to determine how competitive it is, if there are areas of opportunity in which it could venture, if there are threats as it must face them, among many other things plus.
In conclusion, it is very important that a company knows what its external environment is and that it knows how to “interpret” it with the different tools that exist, since this will increase their chances of making the best possible decision.
Bibliography.
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Hattangadi, V. (January 23, 2017). VH. Obtained from
Leiva, MR (December 2016). SWOT Analysis. Obtained from
Martín, J. (May 15, 2017). cerem International Bussiness School. Obtained from
Riquelme, M. (2017). Web and companies. Obtained from
Rosas, VI (November 30, 2011). Gestiopolis. Obtained from
Wikipedia. (March 9, 2018). Wikipedia The Free Encyclopedia. Obtained from
Wikipedia. (January 17, 2018). Wikipedia The Free Encyclopedia. Obtained from
Yánez, JF, & Pazmiño, JF (2015). Consideration of external and internal factors or forces to take into account for the situational analysis of a company. Publishing Magazine, 163-183.
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