“remember the difference between a boss & a leader a boss says go!- a leader says “lets go”

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“Remember the difference between a boss & a leader a boss says GO!- a leader says “Lets Go”. PART II The Environment Of Management. Chapter 3 The Environment & Corporate Culture. Organizational Environment. General Environment. Technological. Task Environment. Customers. International. - PowerPoint PPT Presentation


  • Remember the difference between a boss & a leader a boss says GO!- a leader says Lets Go


    The Environment Of ManagementChapter 3 The Environment & Corporate Culture

  • Organizational EnvironmentManagementEmployeesCultureInternal EnvironmentSuppliersCompetitorsCustomersLabor MarketLegal/PoliticalEconomicTechnologicalSocioculturalInternationalGeneral EnvironmentTask Environment

  • Organization Environment All elements existing outside the organizations boundaries that have the potential to affect the Organization CompetitorsResourcesTechnologyEconomic Conditions

  • The External EnvironmentFurther conceptualized having two layersGeneral EnvironmentTask Environment

  • General Environment The layer of the external environment that affects the organization indirectly

    These events do not directly change day-to-day operations but they do affect all organizations eventually

    InternationalTechnologicalSocio-CulturalEconomic Legal-Political

  • Task Environment

    Closer to Organization & includes the sectors that conduct day-to-day transactions with the organization and directly influence its basic operations & performance


  • Internal EnvironmentIncludes the elements within the Org boundaries.EmployeesManagementCorporate Culture

  • General EnvironmentInternational The International dimension of the external environment represents events originating in foreign countries as well as opportunities for American Companies in other countries

    The international environment provides new competitors, customers & suppliers as well as shapes social (bottled water growing consciousness for cleaner and healthier living, today's digital age of mobile phones and the internet ), technological and economic trends

  • Today, every company must think internationallyManagers who used to think only about the domestic environment must learn new rules to cope with goods, services and ideas circulating around the globe

    Industries- including automobiles, entertainment, consumer electronics will have to compete on a global basis or disappear

    Examples: Peace dividend: An amount of money taken from a defense budget and appropriated elsewhere in times of peace when less money is required for defense than in times of hostility or war brought on by the end of the cold war; forcing large Co. to convert a significant portion of their operations into nonmilitary production

  • Technological DimensionThe dimension of the general environment that includes scientific & technological advancements in the industry & society at largeStriking advances have been in the computer industryHome video cameras got more processing power than the old IBM 360One can get real time information from their customers and then make faster, better informed operating decisions: Levis customized products

  • Socio-Cultural Dimension ContinueDemography also shapes societys norms & values. Examples: sociocultrual trends that affecting many companies include trend toward no smoking, greater purchasing power of young children, increased diversity of consumers, with specialized markets for groups such as Hispanics (Spanish-speaking Latin America) and women over age 30 (M&S)Launching a Spanish-language newspaper in order to respond to changes in the sociocultural environment; boosted earnings of ABC

  • Socio-Cultural DimensionImportant characteristics are geographical and population density, age, and education levels.Key demographic trends in the United States:Hispanics will make up nearly a quarter of the U.S. population by the year 2050.Population and the workforce continue to age with the baby boomers.The single father is the fastest growing living arrangement.The U.S. will continue to receive large numbers of immigrants especially from Asia and Mexico.

  • Economic Representing the overall economic health of the country or region in which the Organization functions(Consumer purchasing power, Unemployment rate, interest rates, labor market,) are all part of Org economic environment One significant recent trend in the economic environment is the frequency of mergers & acquisitions ( Disney & ABC Television)The impact on employees can be overwhelming creating uncertainty about the future. HOW?Employee anxiety & fear of losing their jobs?Fear of becoming obsolete, might not be needed anymore

  • Legal-PoliticalIncludes federal, state, and local government regulations & political activities designed to control company behaviorFederal Government influences organizations through the OSHA, EPA ( environmental Protection Agency), import & export restrictions etc.. (minimum wage legislation, trade regulations) Pressure groups that work within the legal-political framework to influence companies to behave in socially responsible ways Examples : Greenpeace, make significant changes in the whaling, tuna fishing and seal fur industries

  • Political Factors.The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. You must consider issues such as:1.How stable is the political environment? 2.Will government policy influence laws that regulate or tax your business?

  • Task Environment

    The task environment includes those sectors that have direct working relationship with the Organization, among them Customer, Competitors, Suppliers & the Labor market

  • CustomersThose people and the Organizations in the environment who acquire goods or service from the organization are CustomersCustomers as are important because they determine the Org SuccessPatients are the Customers of HospitalStudents the customers of SchoolsTravelers the Customers of Airlines

  • Customers.To survive in competition with mass merchandisers like Wal-Mart (World's largest grocery retailer) , small retailers have been forced to come up with new ways to win & keep customersCompanies such as AT&T, General Foods have all designed special programs & advertising campaigns to court their older customers, who are, with the aging of baby boomers

  • CompetitorsOther organizations in the same industry or type of business that provide goods or services to the same set of customersEach industry is characterized by specific competitive issues : Steel---Pharmaceutical IndustryNike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.' Nike has a healthy dislike of is competitors :Reebok Companies in some industries despite the competitive wars worldwide, cooperate to achieve common goals IBM, Apple Compaq joint venture: to break Microsoft domination

  • Suppliers The raw materials the organization uses to produce its output are provided by suppliersUniversity Utilize hundreds of suppliers for paper, pencils, cafeteria food, computers, trucks, fuel, electricity and textbooksCompanies are now using fewer suppliers and trying to build good relationships with them so that will receive high-quality parts at low prices

  • The power of suppliers tends to be a reversal of the power of buyers.Where the switching costs are high e.g. Switching from one software supplier to another. Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft. There is a possibility of the supplier integrating forward e.g. Brewers buying bars. Customers are fragmented (not in clusters) so that they have little bargaining power e.g. Gas/Petrol stations in remote places.

  • Labor MarketThe people in the environment who can be hired to work for the OrganizationOrg needs a supply of trained, qualified personnelUnions, employee association can influence the Org Labor market

    Northern Telecom---Complex environment Case Study

  • The Organization-Environment Relationship

    Why do Organization Care about factors in the external environment?

  • Reason is that the environment creates uncertainty for organization managers, and they must respond by designing the organization to adapt to the environment or to influence the environment

  • External Environment and UncertaintyNumber of Factors in Organization EnvironmentAdapt toEnvironmentHighUncertaintyLowUncertaintyHighLowLowHighRate ofChange inFactors inEnvironment

  • Environmental Uncertainty Uncertainty means that managers do not have sufficient information about environmental factors to understand & predict environmental needs & changesWhen external factors change rapidly, the organization experiences very high uncertainty: electronic industryTwo basic Strategies for coping with high environmental uncertainty

  • Adapting To The Environment

    If the Org faces increased uncertainty with respect to competitors, customers, suppliers or government regulations, managers can use several strategies to adapt to these changes Boundary- Spanning RoleForecast & PlanningFlexible StructureMergers & Joint Ventures

  • Influencing The Environment

    The other major strategy for handling environmental uncertainty is to reach out and change those elements causing problems: Techniques used for changing environment includes:Advertising & Public RelationsPolitical ActivityTrade Associations

  • Boundary-Spanning Roles Departments & boundary-spann


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