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  • 3 External Environment General environment is everything outside an organization’s boundaries—economic, legal, political, socio-cultural, international, and technical forces. Task environment is composed of specific groups and organizations that effect the firm. Internal Environment Conditions and forces within an organization.
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  • The Importance of Organization Culture Culture determines the overall “feel” of the organization, although it may vary across different segments of the organization. Culture is a powerful force that can shape the firm’s overall effectiveness and long-term success. Determinants of Organization Culture Organization’s founder (personal values and beliefs). Articulate the culture through symbols, stories, heroes, slogans, and ceremonies that embody and personify the spirit of the organization. Corporate success strengthens the culture.
  • Mgt4201#3

    1. 1. Principles of Management The Environment and Culture of Organizations Lecture 3
    2. 2. The Organization’s Environment <ul><li>External Environment </li></ul><ul><ul><li>General environment </li></ul></ul><ul><ul><li>Task environment </li></ul></ul><ul><li>Internal Environment </li></ul><ul><ul><li>Conditions and forces within an organization. </li></ul></ul>
    3. 3. The Organization and Its Environments Owners Employees Physical environment Board of directors Culture Competitors International dimension Political- legal dimension Technological dimension Sociocultural dimension Economic dimension Regulators Customers Strategic partners Suppliers Internal environment Task environment External environment General environment
    4. 4. Five Dimensions of the General Environment <ul><li>The economic dimension - the overall health and vitality of the economic system in which the organization operates </li></ul><ul><li>The technological dimension - the methods available for converting resources into products or services </li></ul><ul><li>The political-legal dimension - government regulation of business and the relationship between business and the government </li></ul><ul><li>The socio-cultural dimension — the general societal/cultural norms that the organization functions under </li></ul><ul><li>The international dimension — the extent to which an organization is involved in or affected by business in other countries. </li></ul>
    5. 5. McDonald’s General Environment Figure 3.2 McDonald’s International Dimension • Restaurants in 115 countries • About two-thirds of sales from outside the United States Political-Legal Dimension • Government food standards • Local zoning climate • General posture toward business regulation Technological Dimension • Improved information technology • More efficient operating systems Sociocultural Dimension • Demographic shifts in number of single adults and dual-income families • Growing concerns about health and nutrition Economic Dimension • Strong economic growth • Low unemploy- ment • Low inflation Internal environment Task environment External environment General environment
    6. 6. Five Dimensions of the Task Environment <ul><li>Specific groups affecting the organization </li></ul><ul><ul><ul><li>Competitors seeking the same resources as the organization. </li></ul></ul></ul><ul><ul><ul><li>Customers who acquire an organization’s products or resources. </li></ul></ul></ul><ul><ul><ul><li>Suppliers that provide resources for the organization. </li></ul></ul></ul><ul><ul><ul><li>Regulators (agencies and interest groups) that control, legislate, or influence the organization’s policies and practices. </li></ul></ul></ul><ul><ul><ul><li>Strategic partners (allies) who are in a joint venture or partnership with the organization. </li></ul></ul></ul>
    7. 7. McDonald’s Task Environment McDonald’s Competitors • Burger King • Wendy’s • Subway • Dairy Queen Customers • Individual consumers • Institutional customers Suppliers • Coca-Cola • Wholesale food processors • Packaging manufacturers Strategic Partners • Wal-Mart • Disney • Foreign partners Regulators • Food and Drug Administration • Securities and Exchange Commission • Environmental Protection Agency Internal environment Task environment
    8. 8. The Internal Environment <ul><li>Conditions and stakeholder forces within an organization </li></ul><ul><ul><li>Owners </li></ul></ul><ul><ul><li>Board of Directors </li></ul></ul><ul><ul><li>Employees </li></ul></ul><ul><ul><li>Physical Work Environment - the actual physical environment of the organization and the work that people do. </li></ul></ul>
    9. 9. The Organization’s Culture <ul><li>Organization Culture – collection of values, beliefs, behaviors, customs, and attitudes that characterize a community of people. </li></ul><ul><li>Determinants of Organization Culture </li></ul><ul><ul><li>Organization’s founder </li></ul></ul><ul><ul><li>Articulate the culture through symbols, stories, heroes, slogans, and ceremonies that embody and personify the spirit of the organization. </li></ul></ul><ul><ul><li>Corporate success strengthens the culture. </li></ul></ul>
    10. 10. Organization Culture <ul><li>Managing Organization Culture </li></ul><ul><ul><li>Understand the current culture to understand whether to maintain or change it. </li></ul></ul><ul><ul><li>Reward and promote people whose behaviors are consistent with desired cultural values. </li></ul></ul><ul><ul><li>Promote shared experiences that bond organizational members together. </li></ul></ul>
    11. 11. Organization Culture <ul><li>Changing Organization Culture </li></ul><ul><ul><li>Develop a clear idea of what kind of culture you want to create. </li></ul></ul><ul><ul><li>Bring in outsiders to important managerial positions. </li></ul></ul><ul><ul><li>Adopt new slogans, stories, ceremonies, and purposely break with tradition. </li></ul></ul>
    12. 12. Organization- Environment Relationships
    13. 13. Environmental Change and Complexity Least uncertainty Moderate uncertainty Moderate uncertainty Most uncertainty Complex Simple Stable Dynamic
    14. 14. Competitive Forces <ul><li>The threat of new entrants </li></ul><ul><li>Competitive rivalry </li></ul><ul><li>The threat of substitute products </li></ul><ul><li>The power of buyers </li></ul><ul><li>The power of suppliers </li></ul>
    15. 15. Environmental Turbulence <ul><li>Changes happen unexpectedly – due to crisis of some sort, suddenly without warning etc. </li></ul><ul><li>Terrorist attack </li></ul><ul><li>Workplace violence </li></ul><ul><li>Computer viruses </li></ul>
    16. 16. Organization’s adaptation to Environment <ul><li>Information Management </li></ul><ul><li>-Boundary spanner </li></ul><ul><li>-Environment scanning </li></ul><ul><li>-Computer based information system </li></ul><ul><li>Strategic Response </li></ul><ul><li>-Status quo </li></ul><ul><li>-Adopting new strategy </li></ul>
    17. 17. Organization’s adaptation to Environment <ul><li>Mergers, Acquisitions and Alliances </li></ul><ul><li>Organization design and flexibility </li></ul><ul><li>Mechanistic organization design </li></ul><ul><li>Organic design </li></ul><ul><li>Direct Influence </li></ul><ul><li>Long term contract with suppliers </li></ul><ul><li>Become own supplier </li></ul><ul><li>Influence customer </li></ul><ul><li>Influence regulators </li></ul>