4.1 Understanding the organization and its context

Understanding the organization and its context - to be compliant evidence should demonstrate that your organization is reviewing internal and external issues (context) at periodic intervals that might effect your business.

ISO 9001:2015 ISO 9001:2008 Summary of Changes
4.0 Context Of The Organization 1.0 Scope

Title only

4.1 Understanding The Organization And Its Context

1.1

General This new requirement requires an organisation to demonstrate that it understands all internal and external influences that may affect its strategic direction and market position and what effect any changes may have on its future.
4.2 Understanding The Needs And Expectations Of Interested Parties 1.1 General This is a new requirement which requires the organisation to determine the boundaries and applicability of the QMS. It also makes reference to 4.1.

There is now a requirement to state the scope in terms of the ‘goods and services’ delivered and the sites of the organisation to be included. There is a requirement to document and justify any exclusion from the standard; exclusion must be limited to Clauses 7.1.4 to 8.0.
4.3 Determining The Scope Of The Quality Management System 1.2 Application This requirement is comparable to ISO 9001:2008 Clause 4 - Quality Management System and Clause 4.1 – General Requirements. Organizations should review their process-based management system to ensure that it captures elements from 4.1 and 4.2.
4.2.2 Quality Manual
4.4 Quality Management System And Its Processes 4.0 Quality Management System Process approach – now a stated requirement but the content is largely the same as previous clause 4.1 apart from a requirement to determine the risks to conformity if processes are ineffective.
4.1 General Requirements

 

We suggest using a Context & Interested Parties Matrix to document any external and internal issues relevant to your organization's operational purpose and strategic direction that may affect its ability to achieve the intended result of the management system as directed by top management.

To assess whether your organisation has a high-level, conceptual understanding of its internal and external issues that affect it, either positively or negatively, its ability to achieve the intended outcomes, you should describe the processes used by your organization to identify internal and external issues and make reference to all objective evidence, including examples of these issues.

World map Understanding the organization and its context

Examples of organizational issues might include:

  • External: cultural, social, political, regulatory, financial, economic, natural and competitive issues, whether international, national, regional or local
  • Internal: organization’s activities, products, services, strategic direction and capabilities (people, knowledge, processes, systems)

You will need to determine and understand the various internal and external issues typically experienced in your type of organization that can have positive or negative impacts.

Leadership and Commitment

The standards do not specify that these internal and external issues, or their monitoring and review, be documented, so there might not be ‘lists of issues’ or records of reviews. However, information can be obtained via interviews with relevant Top management in relation to your organization’s context and its strategic direction, the identified issues and conditions, and how these may affect the intended outcomes of the management system.

Collate evidence to provide assurance that your organization is regularly, or as necessary, reviewing and updating its external and internal issues.

Context Analysis

Although there is no requirement in ISO standards for documented information to define the context of the organization, your organization will find it helpful to retain the types of documented information listed below to help demonstrate compliance:

  • Business plans and strategy reviews
  • Competitor analysis
  • Economic reports from business sectors or consultant’s reports
  • SWOT analysis for internal issues
  • PESTLE analysis for external issues
  • List of external and internal issues and conditions
  • QMS action plans and objectives
  • Annual reports
  • Minutes of meetings (Management review and, e.g. design review minutes)
  • Process maps, tables, spreadsheets, mind mapping diagrams

Reviewing your organization’s context could include interviews with senior management, questionnaires, surveys, research, drivers and trends, performance indicators, internal audits, gap analysis and other continual improvement, nonconformity and corrective action and analysis tools.

Cross-functional input is essential for the specific expertise required to identify the full breadth of issues, such as finance, training, human resources, commercial, engineering and design, etc.

Not only will this ensure a broader appreciation of the context but also wider engagement, particularly with those functions not previously involved with the QMS.

Production line internal issues

4.1.1 Internal Issues

Using a SWOT Analysis Template identify and analyze your organization’s strengths, weaknesses, opportunities and threats.

Strengths are characteristics of our organization that allow operation more efficiently and effectively than competitors. For example:

  • What does our organization do well?
  • What advantages does our business have over other internal sections or external organizations, including competitors?
  • What makes our organization different from competitors?

Weaknesses are areas that are recognized as needing improvement. Consider:

  • What can be done better?
  • What causes problems or complaints (information from root cause analysis)?
  • Which capabilities need modifying, strengthening or divesting for the future?

Opportunities are trends, circumstances or business opportunities that may be taken advantage of. E.g.

  • What are the changes in technology or markets?
  • What local and global events may be useful?
  • What are the changes in customer/societal values?

Threats can be external or internal and are anything that can adversely affect business or operations. External threats could be economic, new legislation or even a new competitor in the market. Internal threats could be a skill or staff shortage within our organization. For example:

  • What obstacles are there for ongoing operation?
  • Are there any potential competitors to the business?
  • Who might be the new competition?
  • Are there any potential changes to staffing, products, services or technology that could threaten operation or business?

Looking at external issues

4.1.2 External Issues

A workshop approach often allows ideas to be shared and provides an effective and efficient way of achieving a valuable outcome. The workshop could simply be a discussion identifying the issues that can be mapped out using Political, Economic, Social, Technological, Legal and Environmental (PESTLE) analysis.

This method helps to structure the conversation and will also help to achieve buy-in to what is often seen as a peripheral or niche area.

What is happening politically in the environment in which we operate?

  • Trading policies
  • Funding, grants and initiatives
  • Home market lobbying/pressure groups
  • International pressure groups
  • Wars and conflict
  • Government policies, term and change
  • Inter-country relationships and attitudes
  • Political trends
  • Internal political issues
  • Shareholder needs and demands

What is happening with respect to ecological and environmental issues?

  • General market conditions that affect the business
  • Market direction
  • Environmental issues
  • Environmental regulations
  • Stakeholder/investor values
  • Needs for the organization’s products and services in the market
  • Customer market technology opportunities
  • Competitors and differences between competitors
  • Competitiveness of the organization and what affects its ability to compete
  • Customer problems and complaints with current products and services

What is happening technology-wise which can impact what we do?

  • Maturation of existing technologies
  • Technological developments or trends that affect or could affect the busines
  • New product development and potential markets: government, international, resource sector, etc.
  • Productivity improvements through automation
  • Telecommunication infrastructure
  • Online connectivity and digital data

What is occurring socially and culturally in the markets in which we operate?

  • Current or emerging trends in lifestyle and their implications
  • Demographic trends that may affect market size (growth rate, income, population shifts)
  • Whether these trends represent an opportunity or a threat
  • Changes in consumer behaviour
  • Increasing environmental awareness
  • Urbanization
  • Consumer demands; personalization and high-end experiences
  • Public demand for transparency and participation in decision-making

What is happening with changes to legislation?

  • Possible changes in regulation/legislation
  • Impacts of these changes on business
  • Stability of government
  • Outsourcing regulations
  • Government bureaucracy – rules and regulations
  • Legal constraints
  • Health and safety, safety management, regulatory requirements

What is happening within the economy?

  • National and internal financial trends (trends in economic forces)
  • Economic trends that may have an impact on business activity
  • Emerging markets
  • Inflation, employment levels, supply
  • Energy available
  • Global financial situation

In Summary

To be compliant, evidence should be obtained that proves that your organization is reviewing all pertinent internal and external issues at periodic intervals.

Although there is no requirement for documented information to define the context of the organization, your organization will find it helpful to retain the following documents and information to help justify compliance:

  • Business plans and strategy reviews
  • Competitor analysis
  • Economic reports from business sectors or consultant’s reports
  • SWOT analysis
  • Minutes of meetings (Management and design review minutes)
  • Process maps, tables, spreadsheets, mind mapping diagrams

 

ISO 9001 Clauses - PLAN

 

Updated: 9th October 2019
Author: Richard Keen

Richard Keen

Richard Keen

Richard is our Compliance Director, responsible for content & product development.
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