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  1. 1. Chapter 3 Environmental Forces© SB InstitutE
  2. 2. 3.1 Learning Objectives After reading this chapter, you should be able to: Describe how economic and cultural factors influence organizations Identify the five competitive forces that affect organizations in an industry Describe the principal political and legal strategies used by managers to cope with changes in the environment Explain how technological changes influence the structure of industries© SB InstitutE
  3. 3. 3.2 The General Environment and Environmental Forces Affecting Organizations The General Environment Cultural Forces Political - Legal Forces em Po Technological Forces yst liti Competitive Forces os alc Ec Sy st e Organization m Dem ys te m ogr ap h om ic S ics n© SB InstitutE Eco Adapted from Figure 3.1
  4. 4. 3.3 Environmentally Conscious Business Practices Avoid confrontation with state and federal pollution control agencies Compensate for environmentally risky endeavors Comply early with government regulations Cut back on environmentally unsafe operations Promote new manufacturing technologies Recycle wastes Management action plans© SB InstitutE
  5. 5. 3.4 Value System Multiple beliefs that are compatible and supportive of one another Greatly affect how a manager: • Views other people/groups, thus influencing interpersonal relationships • Perceives situations and problems • Goes about solving problems • Determines what is and is not ethical behavior • Leads and controls employees© SB InstitutE
  6. 6. 3.5 Hofstede’s Framework Power Distance • Degree to which influence/control are unequally distributed among individuals within a particular culture Uncertainty Avoidance • Degree to which members of a society attempt to avoid ambiguity, risk, and indefiniteness of future Individualism • Extent to which society expects people to take care of themselves and their immediate families • The degree to which individuals believe they are masters of their own destiny© SB InstitutE
  7. 7. 3.6 Hofstede’s Framework (cont.) Collectivism • Measures tendency of group members to focus on the common welfare and feel loyalty toward one another Masculinity • Degree to which acquisition of money and material things is valued and high quality of life is not Confucian dynamism • Stability of society is based on unequal relationships • Family is the prototype of all organizations • People should treat others as they would like to be treated© SB InstitutE
  8. 8. 3.7 Relative Ranking of Four Countries on Cultural Values R 50 a n k i n Canada a da g 40 an C A o u US t 30 A Taiwan o f US 5 0 20 Ja c Ta pa o iw u n 10 an n t r n i Japa e s Power Uncertainty Individualism Masculinity Confucian Distance Avoidance Dynamics Rank Numbers: Cultural Value Dimension 1 = Highest; 50 = Lowest Source: Adapted from G. Hofstede and M. H. Bond. The Confucius connection: From cultural roots to economic growth. Organization Dynamics, Spring 1988, pp. 12-13© SB InstitutE Adapted from Figure 3.2
  9. 9. 3.8 Competitive Forces in the Task Environment Threat of new competitors Suppliers Rivalry among Buyers bargaining existing firms bargaining power in industry power Threat of substitute© SB InstitutE goods/services Adapted from Figure 3.3
  10. 10. 3.9 Managerial Political Strategies Political Strategies Political-Legal Forces • Negotiation • Political action committees • Lobbying (PACs) • Alliance • Laws • Representation • Government • Socialization • Labor unions • Others© SB InstitutE Adapted from Figure 3.4