ISO 9001:2015 clause 4.1 Understanding the organization and its context

The ISO 9001:2015 Requirements

The organization shall determine external and internal issues that are relevant to its purpose and its strategic direction and that affect its ability to achieve the intended result(s) of its quality management system.
The organization shall monitor and review information about these external and internal issues.
NOTE 1 Issues can include positive and negative factors or conditions for consideration.
NOTE 2 Understanding the external context can be facilitated by considering issues arising from legal, technological, competitive, market, cultural, social and economic environments, whether international, national, regional or local.
NOTE 3 Understanding the internal context can be facilitated by considering issues related to values, culture, knowledge and performance of the organization.

Strategic Direction

“Strategic direction” refers to the actions you are taking to achieve the goals of your organizational strategy. Your strategic direction includes the plans and actions you have put in place to work toward this vision of the future for your company. The strategic direction of the company comes up four times in the ISO 9001:2015 requirements in relation to understanding the organization’s context, ensuring the quality policy & quality objectives are compatible with the strategic direction, verifying that the quality policy supports the strategic direction, and confirming that the management review checks that the QMS is in alignment with the strategic direction. The strategic direction of an organization within the context of a Quality Management System (QMS) refers to the long-term vision, goals, objectives, and plans that guide the organization’s efforts to consistently deliver high-quality products or services while meeting the needs of its stakeholders. “Strategic direction” refers to the actions you are taking to achieve the goals of your organizational strategy. Some companies use a “vision statement” or “mission statement” to define where the company wants to be, but in short, this statement is a way for the company to set the direction that the company wants to go, and define what it wants to be in the future. Your strategic direction includes the plans and actions you have put in place to work toward this vision of the future for your company.This strategic direction is aligned with the organization’s mission and values and is aimed at achieving sustainable success and continuous improvement.In the context of a QMS, the strategic direction typically includes the following elements:

1. Quality Objectives: These are specific, measurable goals related to quality that the organization aims to achieve. Quality objectives should be aligned with the organization’s overall strategic goals and provide a clear direction for quality improvement efforts.
2. Customer Focus: The strategic direction of the organization’s QMS should emphasize a strong commitment to understanding and meeting customer requirements and expectations. Customer satisfaction and loyalty are essential components of this focus.
3. Continuous Improvement: An organization’s strategic direction should highlight its commitment to ongoing improvement in all aspects of its QMS. This can include processes, products, services, and the overall quality culture within the organization.
4. Risk Management: Addressing risks and opportunities is an important part of strategic planning within a QMS. The organization should identify potential risks that could impact quality and devise strategies to mitigate or manage them.
5. Resource Allocation: The strategic direction should allocate necessary resources, including personnel, technology, and infrastructure, to support the QMS and its goals effectively.
6. Compliance and Regulatory Considerations: The organization’s strategic direction should include a commitment to complying with relevant industry standards, regulations, and legal requirements that impact quality and safety.
7. Innovation: Emphasizing innovation in products, processes, and approaches to quality management can be an essential part of an organization’s strategic direction.
8. Measurement and Analysis: The strategic direction should emphasize the importance of collecting data, analyzing performance metrics, and making data-driven decisions to support quality improvement efforts.
9. Leadership and Culture: Effective leadership and fostering a culture of quality are integral to the strategic direction of a QMS. This includes promoting a quality mindset throughout the organization, encouraging employee engagement, and ensuring that quality is a shared responsibility.
10. Stakeholder Engagement: Recognizing the importance of engaging and communicating with stakeholders, including customers, suppliers, employees, and regulatory bodies, is a key element of the strategic direction.

Ultimately, the strategic direction of an organization’s QMS provides a roadmap for achieving quality-related goals and aligning quality management efforts with the organization’s overall mission and business strategy. It guides decision-making, resource allocation, and continuous improvement efforts in the pursuit of excellence and customer satisfaction.

1) The organization shall determine external and internal issues that are relevant to its purpose and its strategic direction and that affect its ability to achieve the intended result(s) of its quality management system.

It states that an organization must determine the external and internal issues that are relevant to its purpose and strategic direction, and that may affect its ability to achieve the intended results of its quality management system (QMS). In simpler terms, this clause emphasizes the importance of identifying and understanding the factors both within and outside the organization that could impact its ability to deliver quality products or services. These factors can include:

1. External Issues: These are conditions, situations, and events that occur outside the organization and might affect its operations. They can include things like market trends, customer expectations, regulatory changes, technological advancements, economic conditions, and competition.
2. Internal Issues: These are factors within the organization that could influence its ability to achieve quality objectives. They might include organizational culture, resources (such as personnel, facilities, technology), processes, management practices, and financial stability.

By identifying and analyzing these external and internal issues, an organization can better understand its environment, anticipate challenges, and make informed decisions to ensure its QMS is effective in achieving its intended results. This knowledge should be used to develop strategies, set objectives, and make improvements that align with the organization’s quality goals.In essence, the purpose of this requirement is to encourage organizations to take a proactive approach to quality management by understanding the broader context in which they operate.

External issues

In ISO 9001:2015, the standard doesn’t provide an exhaustive list of specific external issues that organizations must determine. Instead, it emphasizes that organizations need to identify the external issues that are relevant to their purpose and strategic direction and that could affect their ability to achieve the intended results of their quality management system (QMS).External issues can vary widely depending on the nature of the organization, its industry, and its operating environment.  External issues might typically be influenced by Cultural, social, political and regulatory; Innovation, technology, industry requirements, market requirements, suppliers and partners; Financial, economic, natural and competitive issues, whether international, national, regional or local; Quality, safety and environmental conditions capable of affecting or being affected by your organization. Sources of information relating to external issues might include:

1. Reports relating to market environment, economic conditions, new technology, new markets, customer expectations;
2. Reports relating to supplier intelligence, political considerations, investment opportunities, social factors etc.;
3. Identification of factors relating to changes in legislation and regulation, including environmental and H&S impact;
4. Feedback relating to product/service performance and lessons learned;
5. Register of identified external risks and their treatment.

Some examples of external issues that organizations might consider include:

1. Market Trends: Understanding shifts in customer preferences, market demand, and industry trends that could impact the organization’s products or services.
2. Competitive Landscape: Analyzing the actions and strategies of competitors that might affect the organization’s market share or competitive position.
3. Regulatory Changes: Staying updated on changes in laws, regulations, and industry standards that could influence how the organization operates and delivers its products or services.
4. Economic Factors: Considering economic conditions such as inflation, interest rates, and currency fluctuations that might impact the organization’s financial stability and customer purchasing power.
5. Technological Advancements: Monitoring developments in technology that could affect the organization’s processes, products, or services.
6. Social and Cultural Factors: Recognizing shifts in societal values, cultural norms, and consumer expectations that could influence how the organization interacts with its stakeholders.
7. Environmental Factors: Identifying environmental concerns and sustainability initiatives that might affect the organization’s operations and reputation.
8. Political Factors: Considering political stability, government policies, and geopolitical events that could have implications for the organization’s operations and markets.
9. Supplier and Partner Relationships: Assessing the performance and reliability of suppliers, partners, and collaborators that contribute to the organization’s value chain.
10. Customer Expectations: Understanding evolving customer needs, preferences, and feedback to ensure that the organization’s products or services remain relevant and competitive.
11. Demographic Changes: Recognizing shifts in demographics that could impact the organization’s target audience and customer base.

It’s important for each organization to conduct a thorough analysis of its unique external environment to determine which issues are most relevant and could have the greatest impact on its quality management system and overall success. This analysis helps organizations make informed decisions and establish strategies that align with their quality objectives and strategic direction.

Internal issue

In ISO 9001:2015, the standard doesn’t provide a specific list of internal issues that organizations must determine. However, it emphasizes the importance of identifying internal issues that are relevant to the organization’s purpose and strategic direction, and that could affect its ability to achieve the intended results of its quality management system (QMS).Internal issues can vary widely depending on the nature of the organization, its industry, and its internal environment. Internal issues might typically be influenced by Organizational activities; Types of product and service; Strategic direction; Capabilities (people, knowledge, processes, systems); Working practices; Employment practices; Location and conditions; Worker knowledge; Organizational structure; Policy and objectives; Values; Strategy; Competence; Culture; Knowledge; Performance; Quality, safety and environmental conditions capable of affecting or being affected by your organization. Sources of information relating to internal issues might include:

1. Organizational structure, including the identification of roles and responsibilities and governance arrangements;
2. External reports showing how well your business is performing;
3. Statements relating to your organization’s mission, vision and core values;
4. Emphasis placed upon business ethics and organizational codes of conduct;
5. Feedback obtained from employees through opinion surveys;
6. Information management systems and processes for capturing and deploying knowledge and lessons learned;
7. Organizational capability studies, identification of load/capacity and resource requirements to achieve demand;
8. Register of identified internal risks and their treatment.

Some examples of internal issues that organizations might consider include:

1. Organizational Culture: Understanding the values, beliefs, and norms that shape the organization’s culture and how they might impact the organization’s quality management efforts.
2. Resource Availability: Assessing the availability of human resources, facilities, technology, and other assets needed to support the QMS and deliver quality products or services.
3. Processes and Workflows: Evaluating the efficiency and effectiveness of internal processes, workflows, and procedures that contribute to the production or delivery of products or services.
4. Leadership and Management Practices: Examining the leadership and management practices within the organization to ensure they align with the goals of the QMS and promote a culture of quality.
5. Employee Competence and Training: Assessing the skills, knowledge, and training needs of employees to ensure they are equipped to perform their roles effectively and contribute to quality outcomes.
6. Communication: Evaluating the effectiveness of communication channels within the organization to ensure that information related to quality is effectively shared among different departments and levels.
7. Change Management: Considering how changes in the organization, such as organizational restructuring or process changes, could impact the QMS and the ability to maintain quality.
8. Performance Metrics: Establishing relevant key performance indicators (KPIs) to monitor and measure the performance of the QMS and the organization’s ability to meet quality objectives.
9. Quality Culture: Assessing the level of commitment to quality across the organization and ensuring that all employees understand and embrace their role in achieving quality objectives.
10. Risk Management: Identifying potential risks within the organization’s processes, operations, and systems that could negatively impact quality outcomes.
11. Supplier Relationships: Evaluating the performance of suppliers and subcontractors that contribute to the organization’s products or services and assessing their impact on quality.
12. Innovation and Improvement: Encouraging a culture of innovation and continuous improvement to drive enhancements in processes, products, and services.

It’s essential for each organization to conduct a thorough internal analysis to determine which issues are most relevant to their QMS and overall business objectives. This analysis helps organizations make informed decisions, allocate resources effectively, and establish strategies that align with their quality goals and strategic direction.

Relevant to the organization’s purpose and strategic direction

Ensuring that the determined external and internal issues are relevant to the organization’s purpose and strategic direction and that affect its ability to achieve the intended result(s) of its quality management system is a critical aspect of aligning the Quality Management System (QMS) with the organization’s overall goals. Here’s how the organization can achieve this:

1. Strategic Planning: The organization should engage in strategic planning processes that define its long-term vision, mission, and goals. During this process, leaders can identify the key factors, both internal and external, that are critical to achieving the organization’s strategic objectives.
2. Stakeholder Analysis: Understanding the needs and expectations of stakeholders, including customers, employees, suppliers, and regulatory bodies, can provide insights into the issues that are most relevant to the organization’s purpose and strategic direction.
3. SWOT Analysis: Conducting a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) can help the organization identify internal strengths and weaknesses, as well as external opportunities and threats, that align with its strategic direction.
4. Market Research: Regularly monitoring market trends, customer preferences, and industry developments can help the organization identify external issues that impact its strategic direction.
5. Risk Assessment: Conducting risk assessments can help identify both internal and external risks that could affect the organization’s ability to achieve its strategic objectives. Risks that align with the organization’s purpose and direction should be prioritized.
6. Leadership Involvement: The organization’s leadership team should actively participate in the identification and assessment of external and internal issues. Their insights and strategic perspective are valuable in ensuring alignment.
7. Cross-Functional Collaboration: Collaborating across different departments and functions within the organization can help ensure that a comprehensive range of internal issues are considered and that they align with the overall strategic direction.
8. Regular Review and Update: The organization should regularly review and update its understanding of external and internal issues. Changes in the business environment, market conditions, and other factors can impact the relevance of these issues over time.
9. Communication: Effective communication across the organization is key to ensuring that everyone understands the importance of the identified issues and how they relate to the organization’s purpose and strategic direction.
10. Alignment with Quality Objectives: The identified issues should directly contribute to the establishment of quality objectives. These objectives, in turn, should be aligned with the organization’s strategic direction.
11. Feedback and Data: Collecting feedback from customers, employees, and other stakeholders and analyzing relevant data can provide insights into whether the identified issues are indeed impacting the organization’s purpose and strategic direction.
12. Integration into Improvement Initiatives: The issues identified should inform improvement initiatives and projects. This ensures that efforts to address these issues are in line with the organization’s strategic priorities.

By integrating these practices into their quality management approach, organizations can effectively ensure that the determined external and internal issues remain relevant to their purpose and strategic direction. This alignment enhances the organization’s ability to achieve its intended results and continuously improve its quality management efforts.

2) The organization shall monitor and review information about these external and internal issues.

Monitoring and reviewing information about external and internal issues is a crucial ongoing process to ensure that an organization remains informed and responsive to factors that could impact its quality management system (QMS) and its ability to achieve intended results. Here’s how the organization can effectively monitor and review this information:

1. Designate Responsibility: Assign specific individuals or teams within the organization to be responsible for monitoring and reviewing external and internal issues. This helps ensure accountability for staying updated on relevant information.
2. Establish Information Sources: Identify key sources of information for both external and internal issues. This might include industry publications, market research reports, customer feedback, regulatory updates, internal performance metrics, and employee insights.
3. Regular Data Collection:a. External Issues: Set up mechanisms to regularly gather information about external factors. This could involve subscribing to industry newsletters, monitoring news outlets, attending conferences, and engaging with industry associations.b. Internal Issues: Continuously collect data from various departments and stakeholders within the organization. This can include regular check-ins, performance reviews, feedback sessions, and surveys.
4. Document and Organize: Create a centralized repository to store the collected information. This could be a digital platform, document management system, or a designated physical location for relevant materials.
5. Scheduled Reviews: Establish a regular schedule for reviewing the collected information. Depending on the nature of the issues and the pace of change in the industry, reviews could be conducted monthly, quarterly, semi-annually, or annually.
6. Cross-Functional Collaboration: Encourage collaboration between different departments and teams during the review process. This ensures that a diverse range of perspectives is considered when assessing the impact of external and internal issues.
7. Analysis and Evaluation:a. External Issues: Analyze the collected external information to identify trends, emerging challenges, and opportunities. Consider how these factors could impact the organization’s strategic direction and quality objectives.b. Internal Issues: Evaluate internal data to identify areas where improvements are needed. Look for patterns in performance metrics, employee feedback, and process inefficiencies.
8. Risk Assessment: For both external and internal issues, assess their potential impact on the organization’s QMS and quality objectives. Prioritize issues based on their severity and likelihood.
9. Update Documentation: Regularly update the documentation that outlines the identified issues, their impact, and any changes made to address them. This documentation can serve as a reference for decision-making and strategy development.
10. Continuous Improvement: Use the insights gained from monitoring and reviewing issues to drive continuous improvement initiatives. Develop action plans to address identified issues and capitalize on opportunities.
11. Communication: Ensure that relevant information about external and internal issues is communicated effectively across the organization. This could involve sharing insights through reports, presentations, meetings, and internal communication channels.
12. Feedback Loop: Encourage employees to provide feedback and insights based on their observations. Create an environment where employees feel empowered to contribute to discussions about issues that could impact the QMS.

A review of organizational context could include interviews with senior management, questionnaires, surveys and research. 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 organizational context but also wider engagement, particularly with those functions not previously involved with the management system. You will need to determine and understand the various quality, safety and environmental conditions that could become inputs to internal and external issues, which are typically experienced in your type of organization that can have positive or negative impacts. By implementing a systematic approach to monitoring and reviewing information about external and internal issues, the organization can remain agile, responsive, and proactive in adapting its QMS to changing circumstances. This continuous monitoring and review process supports informed decision-making and contributes to the organization’s overall quality improvement efforts.

3) Issues can include positive and negative factors or conditions for consideration.

External and internal issues for a Quality Management System (QMS) can indeed include both positive and negative factors or conditions. These factors play a crucial role in shaping an organization’s approach to quality management and its ability to achieve its intended results. Here’s how positive and negative factors can be considered for both external and internal issues:

External Issues:

1. Positive Factors:
   • Emerging market opportunities that align with the organization’s strengths.
   • Positive shifts in customer preferences that could boost demand for the organization’s products or services.
   • Technological advancements that enable more efficient production processes.
   • Favorable regulatory changes that reduce compliance burdens.
2. Negative Factors:
   • Economic downturns that could lead to reduced consumer spending.
   • Stringent new regulations that could require significant adjustments to operations.
   • Increased competition from new entrants in the market.
   • Adverse weather conditions that affect supply chain operations.

Internal Issues:

1. Positive Factors:
   • High employee morale and engagement that contribute to a positive quality culture.
   • Efficient and streamlined processes that enhance productivity and reduce waste.
   • Strong leadership commitment to quality improvement initiatives.
   • Well-trained and skilled workforce that consistently delivers quality results.
2. Negative Factors:
   • Inefficient internal processes that lead to delays and errors.
   • Lack of proper resources, including skilled personnel and technological tools.
   • Inconsistent communication between departments, leading to misunderstandings.
   • Quality control issues that result in defects and customer complaints.

Incorporating both positive and negative factors into the consideration of external and internal issues ensures a balanced view of the organization’s environment and capabilities. It allows the organization to capitalize on strengths and opportunities while also proactively addressing weaknesses and potential threats.When identifying, monitoring, and reviewing these factors, it’s important to approach them with a clear understanding of their potential impact on the organization’s QMS and overall performance. This holistic approach helps the organization make well-informed decisions, set appropriate quality objectives, and take actions that align with its strategic direction.

4) Understanding the external context can be facilitated by considering issues arising from legal, technological, competitive, market, cultural, social and economic environments, whether international, national, regional or local.

Understanding the external context is a fundamental step in developing and maintaining an effective Quality Management System (QMS). Considering the various issues arising from legal, technological, competitive, market, cultural, social, and economic environments provides a comprehensive view of the organization’s external landscape. This understanding helps organizations anticipate challenges, identify opportunities, and align their quality management efforts with the broader context. Here’s a breakdown of how each of these factors contributes to understanding the external context:

1. Legal Environment: Staying aware of relevant laws, regulations, and compliance requirements that impact the organization’s industry and operations. This includes understanding potential changes in regulations that might affect product safety, quality standards, and processes.
2. Technological Environment: Monitoring technological advancements and innovations that could influence the organization’s processes, products, and services. This can help the organization adopt new technologies to enhance efficiency and maintain competitiveness.
3. Competitive Environment: Analyzing the competitive landscape to identify strengths and weaknesses of competitors, market trends, and shifts in consumer preferences. This understanding guides the organization in positioning its products or services effectively.
4. Market Environment: Keeping track of market trends, demand patterns, and customer expectations. This information helps the organization align its offerings with customer needs and preferences.
5. Cultural and Social Environment: Recognizing shifts in societal values, cultural norms, and social expectations that could impact the organization’s reputation and relationship with stakeholders. This is particularly important for industries with strong consumer-driven brands.
6. Economic Environment: Understanding economic conditions such as inflation rates, interest rates, and consumer purchasing power. Economic fluctuations can impact customer spending and demand for products or services.
7. International, National, Regional, or Local Factors: Considering the geographical scope of the organization’s operations and how various external factors might differ based on location. This includes adapting strategies to suit different markets and regulatory environments.

By considering all these aspects, organizations can develop a comprehensive understanding of their external context. This understanding informs decision-making, risk assessment, and the establishment of quality objectives. It also helps organizations proactively respond to changes and challenges, enhancing their ability to achieve the intended results of their QMS while staying aligned with their purpose and strategic direction.

5) Understanding the internal context can be facilitated by considering issues related to values, culture, knowledge and performance of the organization.

Understanding the internal context within a Quality Management System (QMS) is crucial for effective quality management and achieving desired results. Considering issues related to values, culture, knowledge, and performance of the organization provides insights into the organization’s internal environment and helps shape its approach to quality. Here’s how each of these aspects contributes to facilitating understanding of the internal context:

1. Values:
   • Mission and Vision: Review the organization’s mission and vision statements. These statements often encapsulate the core values and purpose of the organization, providing a foundation for quality-related goals.
   • Ethical Framework: Assess the organization’s ethical principles and values. These values guide decision-making and behavior, including those related to quality and customer satisfaction.
   • Quality Commitment: Examine the extent to which quality is a core value for the organization. A strong commitment to quality can influence organizational behavior and priorities.
2. Culture:
   • Organizational Culture: Evaluate the prevailing culture within the organization. A culture that promotes collaboration, accountability, and continuous improvement is conducive to effective quality management.
   • Quality Culture: Consider the degree to which a quality-oriented culture is cultivated. A culture that prioritizes quality empowers employees to take ownership of quality-related responsibilities.
3. Knowledge:
   • Competence and Training: Assess the organization’s approach to employee competence and training. Investing in training ensures that employees have the necessary knowledge and skills to contribute to quality.
   • Knowledge Sharing: Evaluate how knowledge is shared across the organization. Encouraging the sharing of best practices and lessons learned supports continuous improvement.
4. Performance:
   • Key Performance Indicators (KPIs): Review KPIs related to quality, process efficiency, and customer satisfaction. KPIs provide a measurable way to assess the organization’s performance in line with its quality goals.
   • Process Improvement: Consider the organization’s approach to process improvement. A commitment to identifying and addressing inefficiencies contributes to overall performance and quality.

Facilitating understanding of the internal context using these factors involves several steps:

• Assessment: Assess the organization’s current state with regards to values, culture, knowledge, and performance. This could involve surveys, interviews, and data analysis.
• Leadership Involvement: Involve leadership in discussions and decisions related to these factors. Leadership plays a pivotal role in shaping organizational values and culture.
• Documentation: Document the organization’s values, culture statements, training plans, and performance goals. This documentation serves as a reference point for alignment with the QMS.
• Regular Review: Continuously review and monitor these internal aspects. As the organization evolves, these factors may change, and regular review ensures that the QMS remains aligned.
• Communication: Ensure effective communication of the organization’s values, culture, and performance goals. This helps reinforce a consistent understanding throughout the organization.

By considering values, culture, knowledge, and performance, the organization can create a comprehensive picture of its internal context. This understanding forms the basis for setting quality objectives, implementing improvement initiatives, and fostering a culture of quality within the QMS.

Documented Information Required

 There is no requirement for any documented information to defining organizational context, it is helpful to retain the following types of documented information to help justify compliance:

• Procedure for context of Organization
• Policy statement(s) regarding your organization’s purpose and strategic direction;
• Individual strategy documents underpinning your organization’s policies that provide a road map to achieve its goals;
• Records of meetings where context is routinely discussed and monitored;
• Structured risk assessments of external and internal issues;
• Business plans and strategy reviews;
• Competitor analysis;
• Economic reports from business sectors or consultant’s reports;
• SWOT template analysis output;
• PESTLE template analysis output;
• Risk and opportunity assessments;
• Statement contained within a Management System Manual;
• Minutes of management review meetings (that show decisions and actions relating organizational context);
• Process maps, tables, spreadsheets, mind mapping diagrams.