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BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
BUS137 Chapter 2
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BUS137 Chapter 2

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  • 1. McGraw-Hill/Irwin
    Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 2. Learning Objectives
    L01: How do environmental forces influence organizations influence their environments?
    L02: Can you distinguish between the macro environment and the competitive environment?
    L03: Why should managers and organizations attend to economic and social developments?
  • 3. Learning Objectives
    L04: Can you identify elements of the competitive environment?
    L05: Summarize how organization respond to environmental uncertainty.
    L06: Define elements of an organization’s culture.
    L07: Discuss how an organization’s culture affects its response to its external environment
  • 4. “The essence of a business is outside itself.” – Peter Drucker
    2-4
  • 5. How organizations interact with their environment
  • 6. The Macroenvironment
    General elements in the external environment that potentially can influence strategic decisions.
    Laws and regulations
    Economy
    Technology
    Demographics
    Social Values
  • 7. The External Environment
  • 8. Managing the Macroenvironment
    The economy affects a company’s value
    Technology is changing every business function
    Demographics describe employees and customers
    Social issues shape attitudes toward your company and its products
  • 9. The Competitive Environment
  • 10. Who is the Competition?
    Worldwide Competition
    New Entrants
    Barriers to entry low
    Substitutes and Complements
    Resources from Suppliers
  • 11. Barriers to Entry
    Barriers to entry – conditions that prevent new companies from entering an industry
    Government policy (e.g., patent laws)
    Capital requirements (start-up costs)
    Brand identification (consumer brand loyalty)
    Cost disadvantages (Established economies of scale)
    Distribution channels (e.g., supermarket shelf space)
  • 12. Resources from Suppliers
    People – from schools, colleges and universities
    Raw materials – from producers, wholesalers, and distributors
    Information– from researchers and consulting firms
    Financial capital – from banks and other sources
  • 13. Suppliers are important because…
    They can:
    Raise their prices
    Provide poor quality goods and services
    Fail to provide human resources
  • 14. Supply Chain Management
    The managing of the network of facilities and people that obtain materials from outside the organization, transform them into products and distribute them to customers.
    “The right product in the right quantity
    available at the right place at the right time”
  • 15. Without customers, a company won’t survive…
    Final consumers – those who purchase products in their finished form.
    Intermediate consumers – those who purchase raw materials or wholesale products before selling them to final customers.
  • 16. Environmental Analysis
    Managers must identify organizational opportunities and threats.
    Managers must use environmental analysis to make decisions
  • 17. Environmental Scanning
    Searching for and sorting through information about the environment that is unavailable to most people to determine what is important.
  • 18. Questions managers can ask about the environment
    Who are our current competitors?
    Are there few or many entry barriers to our industry?
    What substitutes exist for our product or service?
    Is the company too dependent on powerful suppliers?
    Is the company too dependent on powerful customers?
  • 19. Competitive Intelligence
    The information necessary to decide how best to manage in the competitive environment they have identified.
  • 20. Identifying Your Environment
  • 21. Scenario Development
    Scenarios – alternative combinations of different factors into a total picture of the environment and the firm.
    Best-case scenario: occurrence of events that are favorable to the firm
    Worst-case scenario: occurrence of events that are unfavorable to the firm
  • 22. Forecasting
    Predicts exactly how some variable or variables will change the future.
  • 23. Successful forecasting involves
    Using multiple forecasts, and perhaps average their predictions
    Remembering that accuracy decreases as you go further into the future
    Collecting data carefully
    Using simple forecasts where possible
    Remembering that important events are often surprises that depart from predictions
  • 24. Benchmarking
    Identifying the best-in-class performance by a company in a given area and then comparing your processes with theirs.
  • 25. Adapting at the boundaries
    Buffering – creating supplies of excess resources in case of unpredictable needs
    Internal (Contingent workers)
    External (ending inventories)
    Smoothing – leveling normal fluctuations at the boundaries of the environment
  • 26. Adapting at the core
    Flexible processes – methods for adapting the technical core to changes in the environment.
    Mass customization – use of a network of independent operating in which each performs a specific process or task
  • 27. Influence your environment
    Two proactive responses to changing the environment
    Independent action – when a company acts on its own to change some aspect of its current environment.
    Cooperative action – two or more organizations work together to change some aspect of the current environment.
  • 28. Cooperative strategies make sense when…
    Taking joint action will reduce the organizations’ costs and risks
    Cooperation will increase their power (their ability to successfully accomplish the changes they desire).
  • 29. Ways to change the boundaries of your environment
    • Strategic maneuvering – organizations can redefine or change which environment they are in
    • 30. Domain selection – the entrance by a company into another suitable market or industry.
    • 31. Diversification – when a firm invests in different types of business or products or when it expands geographically to reduce its dependence on a single market or technology
  • Ways to change the boundaries of your environment (cont’d)
    Merger– when one or more companies combine with another.
    Acquisition – when one firm buys another.
    Divestiture– when a firm sells or more businesses.
    Prospectors – companies that continuously change the boundaries for their task environments by seeking new products and markets, diversifying and merging, or acquiring new enterprises.
    Defenders – companies that stay within a stable product domain as a strategic maneuver.
  • 32. Culture and the Internal Environment
    Culture– the set of important assumptions about the organization and its goals and practices that members of the company share.
    System of shared values about what is important and beliefs about how the world works.
    Provides a framework that organizes and directs people’s behavior on the job.
  • 33. Culture clues
    Corporate mission statements and official goals
    Business practices (how a company responds to problems, makes strategic decisions, and treats employees and customers)
    Symbols, rites, and ceremonies
    Stories (myths, legends, and true stories)
  • 34. The Ritz Carlton Service Values
    “I Am Proud To Be Ritz-Carlton”
    I build strong relationships and create Ritz-Carlton guests for life.
    I am always responsive to the expressed and unexpressed wishes and needs of our guests.
    I am empowered to create unique, memorable and personal experiences for our guests.
    I understand my role in achieving the Key Success Factors and creating The Ritz-Carlton Mystique.
    I continuously seek opportunities to innovate and improve The Ritz-Carlton experience.
    I own and immediately resolve guest problems.
    I create a work environment of teamwork and lateral service so that the needs of our guests and each other are met.
    I have the opportunity to continuously learn and grow.
    I am involved in the planning of the work that affects me.
    I am proud of my professional appearance, language and behavior.
    I protect the privacy and security of our guests, my fellow employees and the company's confidential information and assets.
    I am responsible for uncompromising levels of cleanliness and creating a safe and accident-free environment.
    Excerpt from www.corporate.ritzcarlton.com
  • 35. Types of Organizational Culture
    Group culture
    -internally oriented and flexible
    -based on value and norms associated with affiliation
    -compliance stems from trust, tradition, and long-term commitment
    -emphasizes member development
    Hierarchical culture
    • Internally oriented
    • 36. Focused on control and stability
    • 37. Values and norms associated with a bureaucracy
    • 38. Values stability
    • 39. Assumes compliance will occur through formalized roles
  • Types of Organizational Culture
    Rational culture
    - Externally oriented
    - Focused on control
    - Productivity, planning
    and efficiency are
    primary objectives
    • Members motivated by the belief that performance leads to rewards
    Adhocracy
    • Externally oriented
    • 40. Flexible
    • 41. Emphasizes change (growth, resource acquisition, and innovation)
    • 42. Members motivated by the importance or idealogical appeal
    • 43. Leaders are entrepreneurial and risk takers
  • Managing cultures
    Make sure that underlying values align with the desired culuture
    Managers should espouse lofty ideals and visions for the company that will inspire organization members
    Managers must give constant attention to the mundane details of daily affairs and set examples
    Routinely celebrate and reward those who exemplify the values
    Hire, socialize newcomers, and promote employees based on the values
  • 44. What kind of culture do you want to work in?
    To determine the type of culture best fits you visit:
    http://career-advice.monster.com/at-the-interview/Assess-Company-Culture-to-Find-the-/home.aspx
  • 45.
  • 46. You should be able to
    L01: Describe how do environmental forces influence organizations influence their environments
    L02: Distinguish between the macroenvironment and the competitive environment.
    L03: Explain why managers and organizations should attend to economic and social developments.
  • 47. You should be able to
    L04: Identify elements of the competitive environment.
    L05: Summarize how organization respond to environmental uncertainty.
    L06: Define elements of an organization’s culture.
    L07: Discuss how an organization’s culture affects its response to its external environment.
  • 48. Test Your Knowledge
    An open system organization:
    ___________, goods and services organizations take in and use
    and ______________, products and services organizations create.
    Inputs
    Outputs
  • 49. Test Your Knowledge
    Identify elements of the competitive environment
  • 50. Test Your Knowledge
    Describe the three ways that organizations can respond to their environments.
    Adapt to the environment
    Influence the environment
    Select a new environment
  • 51. Test Your Knowledge
    The Ritz Carlton service values are an example of which aspect of culture?
    1. corporate mission statement
    2. business practices
    3. ceremony
    4. myth

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