SHS

Organization and Management

Module 3: Quarter 1 - Week 3
ABM - Organization and Management
Grade 11 Module 3: Quarter 1, Week 3
First Edition, 2020

Copyright © 2020
La Union Schools Division
Region I

All rights reserved. No part of this module may be reproduced in any form without
written permission from the copyright owners.

Development Team of the Module

Author: Fatima D. Tatunay

Editor: SDO La Union, Learning Resource Quality Assurance Team

Illustrator: Ernesto F. Ramos Jr., P II

Management Team:

ATTY. Donato D. Balderas, Jr.

Schools Division Superintendent

Vivian Luz S. Pagatpatan, Ph.D

Assistant Schools Division Superintendent

German E. Flora, Ph.D, CID Chief

Virgilio C. Boado, Ph.D, EPS in Charge of LRMS

Mario B. Paneda, Ed.D, EPS in Charge of Araling Panlipunan

Michael Jason D. Morales, PDO II

Claire P. Toluyen, Librarian II
Organization and Management
Module 3: Quarter 1 - Week 3
 Target

Organizational environment is the set of forces surrounding an or-

ganization that have the potential to affect the way it operates and performs
which consists of both external and internal factors.

The acronym PEST (or sometimes rearranged as “STEP”) is used to

describe a framework for the analysis of macro-environmental factors ex-
pressed as:
Political,
Economic,
Social &
Technological +Legal and Environmental

The SWOT Analysis enables organizations to identify both internal

and external influences; its primary objective is to help organization develop
full awareness of all the factors involved in decision making; it stands for:
Strengths
Weaknesses
Opportunities
Threats

In your previous lesson, you are done with the functions, roles and
skills of a manager and among them is to monitor and regularly seek out in-
formation related to your organization and industry, looking for relevant
changes in the environment.

At the end of this learning material, you are expected to:

1. Analyze the various environmental forces affecting the firm
(ABM_AOM11-Ic-d-4)
2. Summarize various environmental forces using Political Economic Social
and Technological Analysis (PEST) and Strengths, Weaknesses, Opportuni-
ties and Threats (SWOT) Analysis frameworks (ABM_AOM11-Ic-d-5)

Before going on, check how much you know about this topic by answering the pre-
test.

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 Jumpstart

For you to understand the lesson well, do the following activities. Have fun and
good luck!

Activity 1. Comprehension is the key! Read and understand me!

Directions: Read the types of Organizational Environment and cite their dif-
ference.
Understanding Organizational Environment is a very important factor
in determining if a business is feasible because things around us are not
permanent and everything changes. These changes greatly impact business
and, in some situations, businesses control the consequences of change.
However, this is not always the case. Organizational Environment may ei-
ther be internal or external.
Internal Environment – are environmental factors within the
company and can be controlled. It consists of organization’s owners,
board of directors, regulators, physical work environment and culture;
it includes strengths and weaknesses of an organization.
External environment – are the forces and events outside the
company that have the potential to influence or affect its opera-
tion. It consists of legal, physical, economic, technology, social, politi-
cal culture; it includes opportunities and threats of an organization.
Directions: Read the following questions carefully and write your answer
before the number.
Q1. Statement 1. Environmental changes greatly affect the business and
businesses always control the consequences.
Statement 2. Mr. Dy, the CEO of ABC Company gave incentive to Mr.
Eef and Mr. Ghi because they closed a huge deal with XYZ Corporation is an
example of an Internal Environmental factor.
Which of the statements is correct?
a. Only Statement 1 is correct
b. Only Statement 2 is correct
c. Both Statements are correct
d. Neither Statement nor Statement 2 is correct
Q2. Which of the following best defines External environment factor?
a. External environment are the forces and events outside the company
that have no potential to influence or affect its operation.

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 b. External environment consists of legal, physical work environment,
economic, technology, social, political culture; it includes opportuni-
ties and threats of an organization.
c. External environment consists of legal, physical, economic, technolo-
gy, social and political culture that have the potential to influence its
operation.
Q3. The following statements define an Internal Environment, which one is
incorrect?

a. An internal environment factor can be evaluated through SWOT and

PESTLE Analysis.
b. An internal environment factor consists of the owners of the company,
its employees, the prevailing norms and values and board of directors
c. An internal environment are environmental factors within the compa-
ny that can be controlled.
d. Internal environment factors can be evaluated using SWOT Analysis.

Q4. ABC Company has decided to launch a new line of clothing and wants
to identify only the treats and opportunities that may identify the success or
failure of their launch. What kind of Analysis is recommended for them to
use?

a. Only SWOT Analysis is recommended

b. Only PESTLE Analysis is recommended
c. Both SWOT and PESTLE Analysis is recommended
d. Neither SWOT nor PESTLE Analysis is recommended

Q5. Which of the following statements is correct?

Statement 1. Understanding Organizational Environment is a very im-

portant factor in determining if a business is feasible.

Statement 2. Organizational Environment can be classified as Internal

or External and has no direct impact on the business.

a. Only Statement 1 is correct

b. Only Statement 2 is correct
c. Both Statements are correct
d. her Statement nor Statement 2 is correct

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 Discover

Organizational environment must be scanned so as to determine de-

velopment and forecasts of factors that will influence organizational success.
If an idea of a business or product comes into your mind and you
want to determine if it is feasible or a failure, a SWOT or PESTLE analysis
can be a good help.
What is a PESTLE and SWOT Analysis?
A PESTLE analysis is used to evaluate the outside factors that af-
fect a business:
Political -governmental activities and political conditions that may af-
fect your business
Economic- economic factors affect the purchasing power of custom-
ers; e.g. economic growth, interest rates, exchange rates, inflation rate
Social- includes demographic and cultural aspects of the external
macro-environment; e.g. health consciousness, population, age distri-
bution
Technology- Evaluate your company's current technology. Is it up-to-
date?
Legal- Anticipate any new laws and regulations that can impact your
operations.
Environment- Identify the environmental factors that should be con-
sidered.
Below is an example of a PESTLE Analysis of Starbucks
POLITICAL ECONOMIC
-Need to adhere to fair trade practices on -Rising labor and operational cost
sourcing raw materials -Buyers shift to cheaper coffees due to
-follow the laws and regulations of countries economic recession
where Starbucks buy raw materials

SOCIAL Technological+ Legal and Environment

- Consumer preferences - Enabling mobile payments
- Changes in lifestyle and work patterns - Staying alert about introduction of
of population caffeine production and consumption
- Tapping to Gen X and the Millennials as related policies by health authorities
Customers - Environmental rules and regulations

Figure 1. PESTLE ANALYSIS OF STARBUCKS

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SWOT ANALYSIS - while PESTLE Analysis only evaluates the outside fac-
tors that can affect the business, SWOT examines both the internal and ex-
ternal business environment; where:
Strengths - refers to internal competencies possessed by an organiza-
tion that will enable it to achieve its objectives.
Weaknesses - refers to the areas that limits the organization’s overall
success
Opportunities - refers to the external trends and events that can ben-
efit the organization in the future.
Threats - refers to the trends and events that are potentially harmful
to the organization’s present and future position.

Below is a SWOT Analysis of Starbucks

Figure 2. SWOT ANALYSIS OF STARBUCKS

Hafizullah Mohd Amin. (2017, July 30). Starbucks Case Study, SWOT, Internal and External Analysis. Re-
trieved from https://www.slideshare.net/HafizullahMohdAmin/starbucks-case-study-swot-internal-and-external-analysis

SWOT and PESTLE analyses are useful tools in:

1. identifying the pros and cons of a business;
2. Determining the future opportunities and threats outside the com-
pany and a vital guide in making action plans for the management.

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 Explore

For you to understand the lesson well, do the following activities. Have fun and good luck!
Use a separate sheet of paper.

Enrichment Activity 1: Differentiate to appreciate!

There are two types of Environmental factors of an Organizational environ-
ment that can affect the operation and performance of a business. Below is
a list of words that describes/example of each factor.

What you need

Ruler
Pencil/Pen
What you have to do
Prepared for you is a two-column box for Internal and External factors. The
following words should be segregated accordingly.
Reward system Recession Customer Preference Politics
Office norms Scarcity of resources Taxes Licenses
Media Fashion Profit Human Resource
Inflation Climate Change Organizational Structure Supply and De-
mand Global Competition Resellers Company Policies
Machinery

Internal Factor External Factor

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Enrichment Activity 2: Enumerate and Elaborate!
What you have to do

Enumerate what is being asked on the following situations and elabo-

rate your answer in not more than three sentences.

1. There are two types of Organizational Environment and they are

identified as:

2. PESTLE Analysis is used to evaluate outside factors in an organiza-

tion including the opportunities and threats that can be beneficial
or harmful in the business. PESTLE stands for:

3. SWOT Analysis measures both the internal and external factors in

an organizational environment, and SWOT is an abbreviation for:

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 Deepen

At this point, you have mastered the two types of Organizational envi-
ronment and now ready to apply them on real time situations. The scoring
rubric on the next page will be used to assess your outputs.
What you have to do
1. Choose one of the given situations and make a PESTLE or SWOT Analysis
for a business idea stated. List at least 5 PESTLE and SWOT for each quad-
rant.
2. Discuss in not more than 10 sentences your choice of Analysis to be
used.
A. You are a graduate of K-12- ABM Strand and your parents cannot
afford to send you to college. Your thriftiness since you entered
high school enabled you to save a sum of money enough to put up
a small snacks and beverage business in your barangay. Your ea-
gerness to help and save up for your future enrolment in college,
you rely completely on what you have learned and tried recalling
on how you might apply SWOT and PESTLE analysis before you
start up your business.
B. You and your friends decided to contribute money to start a small
business of selling school supplies in your department. This has
been approved by your adviser but required your group to make a
PESTLE and SWOT Analysis before you can proceed to selling.

Categories of Assess- Excellent Good Needs Improvement

ment 20 pts 10pts 0 pts
IDENTIFICATION Student goes Student did Student did not
Identify the sections of above and be- not research identify any sec-
a PESTLE/SWOT yond research of all sections, tions
analysis and what all sections. Us- incomplete
each section is. es proper re- analysis.
sources and lists
the proper at-
tributes found.
PESTLE/SWOT Con- PESTLE/SWOT PESTLE/SWOT PESTLE/SWOT
tent Analysis con- Analysis con- Analysis contains
tains more than tains less than less than 3 points
5 points for each 4 points for for each quadrant.
quadrant. A par- each quadrant.

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 agraph is pro-
vided for each
point explaining
their inclusion.
DISCUSSION Student identi- Student identi- Student cannot
Discuss the why and fies proper usage fies the proper identify why and
when a PESTLE or of when and why usage of when when a PES-
SWOT analysis is used to use one. to use PES- TLE/SWOT analy-
TLE/SWOT but sis is used
cannot identify
why.
PRESENTATION The quality of The quality of The quality of
presentation is presentation presentation is
clear and un- is fair not legible
derstandable

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 Gauge

Directions: Read the statements carefully, identify the word or phrase

that makes the statement wrong and supply the correct one beside of it. If
the statement is correct, write NONE. Write your answer on a separate sheet
of paper.
1. Changes less likely impact business and some businesses can control
the consequences.
2. Strengths, Weaknesses, Opportunities, Threats (SWOT) Analysis’ pri-
mary objective is to help organization develop full responsibility of all
the factors involved in decision making.
3. Social factors on a PESTLE Analysis includes demographic and cul-
tural aspects of the internal micro-environment; e.g. health con-
sciousness, population growth, age distribution
4. SWOT and PESTLE analyses are useful tools in identifying the pros
and cons of a business.
Strengths and Weaknesses are internal factors which an organization
possess where Strength is defines as internal competencies possessed
by an organization that will enable it to achieve its objectives while
Weaknesses refers to the areas that limits the organization’s overall
success.
5. SWOT Analysis only evaluates outside factors that can affect the
business.
6. Organizational environment is the set of forces surrounding an organ-
ization that have the potential to affect the way it operates and per-
forms which consists of both internal and external factors and evalu-
ated by PESTLE and SWOT.
7. SWOT and PESTLE analyses are tools used in determining the future
opportunities and threats outside the company and a vital guide in
making action plans for the management.
8. Opportunities are external factors that refers to the external trends
and events that can harm the organization in the future.
9. The letter T on the abbreviation PESTLE stands for Technical Ad-
vancement.
10. Internal Environment consists of legal, physical, economic, technolo-
gy, social, political culture; it includes opportunities and threats of an or-
ganization.
11. Threats usually refers to the trends and events that are potentially
harmful to the organization’s present and future position.

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12. PESTLE Analysis is used to evaluate outside factors in an organiza-
tion including the opportunities and threats that can be beneficial or
harmful in the business.
13. There are two types of organizational environment and they are clas-
sified as internal and extra-curricular environment.
14. The laws and regulations in a country in which a business is situated
does not directly affect its operation.
15. Environmental factors should always be considered when doing a
SWOT Analysis.

Good job! You are half-way done with this learning material.

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References

Printed Materials:
Department of Education. (2016). Organization and Management, Textbook
for Senior High School (pp137-138), Quezon City, Philippines.

Payos, Ranulfo P. et al. (2016). Organization and Management (pp42-49),

Manila, Philippines: Rex Bookstore, Inc.

Website:
Patrick Gleeson, Ph.D. (2019, March 11). Internal and External Factor that
Affect an Organization. Retrieved June 22, 2020 from
https://smallbusiness.chron.com/internal-external-factors-affect-
organization-16641.html

Jim Woodruff. (2019, January 28). Reasons to Use SWOT and PESTLE
Analysis. Retrieved June 22, 2020 from
https://smallbusiness.chron.com/reason-use-swot-pestle-analysis-
40810.html

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