Managing customers and quality - understanding the wider environment

This article starts by exploring the meaning of ‘the wider environment’: the internal environment, the near (or competitive) environment and the far environment.

• The internal environment is that containing other groups, resources and facilities within your organisation. The internal environment is said (perhaps optimistically) to be one that managers can control. We will not look at this in greater detail in this session, but we will be considering aspects of it in the following session.
  

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• The near environment includes those groups and organisations with which your organisation interacts, including its suppliers and its present and potential competitors and collaborators. These cannot be controlled directly by managers, but they can usually be influenced. This environment is sometimes called the competitive or operating environment. The model in the next section uses the term ‘competitive environment’.
  

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• The far (or external) environment refers to factors that can usually be neither controlled nor influenced directly from within your organisation. Clearly, many different environmental factors have the potential to influence your organisation and what it does, so it is useful to have some kind of framework to structure any analysis. The framework we explore further in this session is referred to by the acronym STEEP, indicating social, technological, economic, environmental and political factors. (You may have come across other acronyms for this.)
  

The competitive environment

The competitive, or near, environment is partly to do with the contests for market share between, for instance, a couple of banks or ice cream manufacturers. However, the term means more than that; many organisations compete for staff, for reputation, for funding or for suppliers, as well as for customers. A charity and a community service might compete for funds to run a drug rehabilitation service; schools and colleges might compete for students; campaigning organisations might compete for government and media attention.

We can envisage competitors in a number of ways beyond companies competing for your customers:

• people who may compete with you for a job in the workplace or wider job market
• departments which compete with outside organisations to provide a service, especially following the shift in the public and private sectors to the outside sourcing of services that are seen as peripheral to organisations' main work
• other companies and organisations seeking to employ the staff you need to recruit
• organisations which might start offering services that affect the demand for the services you currently provide.
  

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An organisation may be one of a few similar service providers or product manufacturers — there are not many passenger jet manufacturers in the world, let alone in one country. Another may be one of thousands of comparable organisations — small shops or schools, for instance — which may or may not have strong local competition from other shops or schools.

You should think of the competitive environment as comprising the other organisations whose actions influence yours, and which your organisation in by its actions. Thus it includes organisations that supply you with services and materials, professional groups that are strongly represented in your organisation, organisations that you collaborate with to provide services or products, and other organisations that provide similar services. ​