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Subject: Management
Chapter 3: MANAGERIAL ENVIRONMENT
Topic 1: Internal Environment
Hi Everyone,
Welcome to study chapter 3, Managerial Environment. After studying this chapter, you
should be able to use English to:
 Explain why managers must study the managerial environment.
 Identify the main forces in the managerial environment.
In this chapter, we study two topics: (1) Internal environment; (2) Global environment.
Topic 1: Internal environment. After studying this topic, you should be able to use
English to:
 Explain the role of a manager in the managerial environment
 Identify the elements in the internal environment.
Firstly, we explain the role of a manager in the managerial environment. The role of a
manager is to monitor and shape the internal and external environments and to anticipate
changes and react quickly to them. Managers can monitor the environments through
boundary spanning. It is a process of gathering information about developments that
could impact the future of the organization.
Managers can access information through a variety of sources: customers and suppliers’
feedback, professionals, trade, and government publications, industry associations, and
personal contacts. Managers can also actively work to influence their external
environments through lobbying, voting, and using the media to influence public
opinion…
Internal environment comprises forces within the organization. Managers can gather
information by conducting a thorough evaluation of the internal operations of the
organization.
Now, we consider the internal environment. The internal environment is a component of
the business environment, which is composed of various elements present inside an
organization, that can affect or can be affected by, the choices, activities, and decisions of
the organization. An organization's internal environment is composed of the elements
within the organization, including tangible elements such as equipment, machinery, land,
buildings, and cash and intangible elements such as trademarks, brand reputation, patents,
and licenses. It can be identified as the six following components: (1) Value System, (2)
Vision, Mission and Objectives, (3) Organization Structure, (4) Corporate Culture, (5)
Human Resources, (and (6) Physical Resources and Technological Capabilities.
Value System: The value system of an organization means the ethical beliefs that guide
the organization in achieving its mission and objective. The value system of a business
organization also determines its behavior towards its employees, customers, and society
at large. For example, due to a firm's value system, a business firm may refuse to produce
or distribute liquor for it may think morally wrong to promote the consumption of liquor.
Vision, Mission, and Objectives: The company’s vision describes its future position,
mission defines the company’s business and the reason for its existence and objectives
implies the ultimate aim of the company and the ways to reach those ends.
Organizational Structure: The structure of the organization determines the way in which
activities are directed in the organization so as to reach the ultimate goal. These activities
include the delegation of the task, coordination, the composition of the board of directors,
level of professionalization, and supervision. It can be matrix structure, functional
structure, divisional structure, etc.
Corporate Culture: Corporate culture or otherwise called an organizational culture refers
to the values, beliefs, and behavior of the organization that ascertains the way in which
employees and management communicate and manage the external affairs.
Human Resources: Human resource is the most valuable asset of the organization, as the
success or failure of an organization highly depends on a great extent on the skills,
capabilities, attitudes, and commitment of its employees.
Physical Resources and Technological Capabilities: Physical resources refer to the
tangible assets of the organization that play an important role in ascertaining the
competitive capability of the company. Further, technological capabilities imply the
technical know-how of the organization.
In summary, the purpose of this internal analysis is to identify the organizational assets,
resources, skills, and processes that represent either strengths or weaknesses. Strengths
are aspects of the organization's operations that represent potential competitive
advantages, while weaknesses are areas that are in need of improvement. Several key
areas of the organization's operations should be examined in the internal analysis. Key
areas to be assessed include marketing, financial, research and development, production,
and general management capabilities. These areas are typically evaluated in terms of the
extent to which they foster quality and support the competitive advantage sought by the
organization.
Thank you for your attention and see you in the next topic.

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