Embed Size (px)
Citation preview
The External The External EnvironmentEnvironment
and and Organizational Organizational
CultureCulture
Chapter 02Chapter 02
Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Learning ObjectivesLearning Objectives
LO 1 Describe how environmental forces influence organizations and how organizations can influence their environments
LO 2 Distinguish between the macro environment and the competitive environment
LO 3 Explain why managers and organizations should attend to economic and social developments.
LO 4 Identify elements of the competitive environment.
2-2
Learning ObjectivesLearning Objectives
LO 5 Summarize how organizations respond to environmental uncertainty
LO 6 Define elements of an organization’s cultureLO 7 Discuss how an organization’s culture affects
its response to its external environment
2-3
© 2006 by South-Western, a division of Thomson Learning.
All rights reserved.2-4
Employees Culture
Management
InternalEnvironment
Technological
Econom
icLegal/Political
Inte
rnat
ion
al
So
ciocu
ltura
l
General Environment
CustomersC
om
pe
titors
La
bo
r M
ark
et
Suppliers
Task Environment
Ex. 2.1 Location of the Organization’s General, Task, and Internal Environments
Organization Inputs and OutputsOrganization Inputs and Outputs
2-5Figure 2.1
Open SystemsOpen Systems
Macroenvironment The general environment; includes governments,
economic conditions, and other fundamental factors that generally affect all organizations.
2-7
The EconomyThe Economy
The economic environment dramatically affects managers’ ability to function effectively and influences their strategic choices.
Interest and inflation rates affect the availability and cost of capital, growth opportunities, prices, costs, and consumer demand for products.
2-8
Twelve Month Comparison of Twelve Month Comparison of Stock MarketsStock Markets
2-9Figure 2.3
The EconomyThe Economy
In publicly held companies, managers may feel required to meet Wall Street’s earnings expectations.
Managers may focus on short-term results at the expense of long-term success
Some managers may be tempted to engage in unethical or unlawful behavior that misleads investors
2-10
TechnologyTechnology
Technological advances create new products, advanced production techniques, and better ways of managing and communicating.
As technology evolves, new industries, markets, and competitive niches develop.
2-11
DemographicsDemographics
Demographics Measures of various characteristics of the people
who make up groups or other social units
2-12
The Competitive EnvironmentThe Competitive Environment
2-13Figure 2.4
CompetitorsCompetitors
Competition is most intense when: There are many direct competitors Industry growth is slow Product/service is not easily differentiated
2-14
New EntrantsNew Entrants
Barriers to entry conditions that prevent new companies from
entering an industry capital requirements, restrictive distribution
channels Profit potential Outlook Downstream
2-15
Substitutes and ComplementsSubstitutes and Complements
Substitutes alternative products or
services video games
watching television movies
Complements products or services that
increase purchases of other products
car insurance automobile purchases
Tennis Work-leisure
2-16
SuppliersSuppliers
suppliers Supply chain management
managing the network of facilities and people that obtain materials from outside the organization, transform them into products, and distribute them to customers
2-17
CustomersCustomers
Final customers purchase products in
their finished form retail
Intermediate customers purchase raw material
or wholesale products before selling them to final customers
Wholesale
2-18
Environmental AnalysisEnvironmental Analysis
Environmental uncertainty Lack of information needed to understand or
predict the future. SWOT
2-19
Environmental UncertaintyEnvironmental Uncertainty
Environmental complexity The number of issues
to which a manager must attend as well as the interconnectedness of these issues
If-then
Environmental dynamism The degree of
discontinuous change that occurs within an industry
2-20
Environmental AnalysisEnvironmental Analysis
Environmental scanning searching out
information that is unavailable to most people and sorting that information to interpret what is important and what is not.
Competitive intelligence Information that helps
managers determine how to compete better.
downstream
2-21
Environmental AnalysisEnvironmental Analysis
Scenario development A narrative that
describes a particular set of future conditions
Best-case, worst-case
Forecasting Method for predicting
how variables will change the future
Probability
2-22
Environmental AnalysisEnvironmental Analysis
Benchmarking The process of comparing an organization’s
practices and technologies with those of other companies.
2-23
Influencing Your EnvironmentInfluencing Your Environment
Independent strategies Strategies that an
organization acting on its own uses to change some aspect of its current environment.
Cooperative strategies Strategies used by two
or more organizations working together to manage the external environment.
2-24
Independent ActionIndependent Action
2-25Table 2.4
Cooperative ActionCooperative Action
2-26Table 2.5
Changing the Environment You are InChanging the Environment You are In
Strategic maneuvering An organization’s conscious efforts to change the
boundaries of its task environment. Domain selection
Entrance to a new market or industry with an existing expertise
Diversification Occurs when a firm invests in a different product,
business, or geographic area
2-27
Changing the Environment You are InChanging the Environment You are In
Mergers One or more companies combine with another
Acquisitions One firm buys another
Divestiture A firm sells one or more businesses
Prospectors Continuously change the boundaries or their task environment by
seeking new products and markets, diversifying and merging, or acquiring new enterprises
Defenders Stay within a stable product domain as a strategic maneuver
2-28
Culture and the Internal Environment of Culture and the Internal Environment of the Organizationthe Organization
Organizational culture The set of important assumptions about the
organization and its goals and practices that members of the company share
In strong cultures, the majority of people within the organization agree on organizational goals
In weak cultures, the majority of people within the organization disagree on organizational goals
2-29
© 2006 by South-Western, a division of Thomson Learning.
All rights reserved.2-30
Ex. 2.5Ex. 2.5 Levels of Corporate Culture Levels of Corporate Culture
Visible
1. Artifacts, such as dress, office layout, symbols, slogans, ceremonies
2. Expressed values, such as “The Penney Idea,” “The HP Way”
3. Underlying assumptions and deep beliefs, such as “people are lazy and can’t be trusted”
Invisible
Culture that can be seen at the surface level
Deeper values and shared understandings held by organization members
Competing Values Model of CultureCompeting Values Model of Culture
2-31Figure 2.6
© 2006 by South-Western, a division of Thomson Learning.
All rights reserved.2-32
Cultural Leadership InfluenceCultural Leadership Influence
1. Cultural leadership articulates a vision for the organizational culture in which employees can believe.
2. Cultural leadership heeds the day-to-day activities that reinforce the cultural vision.
