What is the Internal Environment of a Company?

All factors that are internal to the organization are known as the internal environment of a company. They are generally audited by applying the ‘Five Ms’ which are

  1. Men
  2. Money
  3. Machinery
  4. Materials and
  5. Markets.
Internal Environment of a Company
Internal Environment of a Company

The internal environment of a company is as important for managing change as the external.

As marketers, we call the process of managing internal change in internal marketing. Essentially we use marketing approaches to aid communication and change management.

The external environment can be audited in more detail using other approaches such as SWOT Analysis, Michael porter’s Five Forces Analysis, or PEST Analysis.

Internal marketing is an important implementation tool; it aids communication and helps us to overcome any resistance to change. It informs and involves all staff in new initiatives and strategies. It is simple to construct, especially if you are familiar with the traditional principles of marketing. If not, it would be valuable to spend some time considering marketing plans.

More about the internal environment of a company

Internal marketing obeys the same rules as and has a similar structure to, external marketing. The main differences are that your customer is staff and colleagues from your own organization.

In another article, you have seen that the process of marketing follows a familiar pattern for which we use the acronym AOSTC- Analysis, Objectives, strategies, tactics, and control. In the diagram above, Jobber (1995) uses a similar approach as a structure for the implementation of internal marketing. The proves is straightforward.

  • Set objectives for internal marketing e.g. to persuade 100 staff to join a new performance Related Pay (PRP) scheme.
  • Your strategy is internal marketing.
  • Tactics would include an internal application of the marketing mix and could conclude staff forums, presentations, an intranet, away days, videos, personal visits by company directory, or newsletters.
  • The evaluation would consider the take up of PRP against your objectives, attendees at away days, visits to an internet page, and so on.

Let’s have a look at a closer look at the practicalities of internal marketing.

At this stage, internal marketing meets traditional ‘change management.’ Firstly you should identify your internal customers. As with your external customers, they will have their own buyer behavior, or way of buying into the changes which you are charged to implement.

The similarities in different groups of internal customers allow you to segment them. As Jobber (1995) explains, you can target three different segments namely supporters, neutral. And finally opposes. Each group requires a slightly different internal marketing mix in order that your internal marketing objectives can be achieved.

For example, if the change was that a company was to relocate closer to its market, you could target supporters with a tailor-made relocation video explaining about the lower property process in the new location; neutral internal customers could be retargeted with incentives such as pay increases, and opposes could be coerced, or forced to accept the change regardless.

How Do We Plan for a Change Program?

  • Always make sure that you have thought through your approach before starting the implementation.
  • Make sure that you have created a cultural climate that is willing to accept change.
  • Appoint a change agent or champion for change that will help to ease your changes through.
  • Audit the skills and capabilities of your team. Train and develop as necessary.
  • Your team must be built around you with the objective as the focus for you all.
  • The change must be correctly marketed to your target audience using an approach such as Jobbers.
  • Decide what the change will be. Give it boundaries. Decide upon the plan.
  • Work out a realistic budget and stick to it. Try to anticipate the arguments against change, and decide how to counteract them positively.

Thus the term internal environment of a company denotes those elements over which the marketing firm has control or which it can use in order to gain information that will better help in its marketing operations.

In other words, these are elements that can be manipulated, or used to glean information, in order to provide full satisfaction to the company’s customers. The objective of marketing philosophy is to make profits through satisfying customers.

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