The document summarizes key topics in Chapter 3 on environmental forces affecting organizations, including: 1) Cultural, political-legal, technological, competitive, and demographic forces influence organizations. 2) Hofstede's framework analyzes cultural dimensions like power distance and individualism that vary across countries. 3) Porter's five competitive forces model examines threats from new entrants, substitutes, and bargaining power of suppliers and buyers that influence industry competition. 4) Managers use political strategies like negotiation, lobbying, and alliance building to influence the political-legal environment.

1. Chapter 3
Environmental Forces
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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
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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
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Adapted from Figure 3.1

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
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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
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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
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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
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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
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Adapted from Figure 3.2

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
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Adapted from Figure 3.3

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
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Adapted from Figure 3.4