If we look around us, in private or globally, we realize that everything is made of organizations. More precisely everything that is connected with two or more people can be considered as an organization. People connected this way come to share tasks within their organization, all in order to achieve specific goals of the organization. This paper will cover analysis of environment of the organization. This organization is a public institution type, it is the city of Zagreb Dramatic Theatre "Gavella". The first part will define what is organization, and its importance, types, characteristics, its dimensions and factors. Through further exploration of the above paper, we'll come to the organizational behavior. Organizational behavior is an area of research within the organization for the purpose of applying this knowledge to improve the efficiency of the organization. Managers cover this field of work in the organization, and that is our link to the next chapter, the management. However, since the topic of this paper is to analyze environment of the organization, which is part of the strategic management, this paper will pay particular attention to this aspect of management. After defining the strategic management, we will start exploring environment of the organization, its parts and features, to help us analyze environment of "Gavella" theater. We'll analyze the external environment using PEST analysis, industrial environment using Porter's model of the five competitive forces, internal environment using VRIO analysis and finally TOWS analysis will help us to connect the external and internal environment in order to obtain four sets of alternative strategies. At the end of each analysis, through interpretation of the results will be given strategic directions of further development of "Gavella" theater.