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MGMT5 © 2012 Cengage Learning Organizational Environments and Cultures 3
© 2012 Cengage Learning 1.discuss how changing environments affect organizations 2.describe the four components of the general environment 3.explain the five components of the specific environment 4.describe the process that companies use to make sense of their changing environments 5.explain how organizational cultures are created and how they can help companies be successful
External Environments 1.discuss how changing environments affect organizations 2.describe the four components of the general environment 3.explain the five components of the specific environment 4.describe the process that companies use to make sense of their changing environments © 2012 Cengage Learning
Environmental Change The rate at which a company’s general and specific environments change. Stable –slow rate of change Dynamic –fast rate of change © 2012 Cengage Learning
Punctuated Equilibrium Theory © 2012 Cengage Learning Stability Dynamic Change Stability Dynamic Change
Environmental Complexity Simple –few environmental factors that affect organizations Complex –many environmental factors that affect organizations © 2012 Cengage Learning
Resource Scarcity The abundance or shortage of critical resources in an organization’s external environment. © 2012 Cengage Learning
Uncertainty The extent to which managers can understand or predict the external changes and trends affecting their business. © 2012 Cengage Learning
Environmental Change, Environmental Complexity, and Resource Scarcity © 2012 Cengage Learning
General Environment General environment –the economy and the technological, sociocultural, and political/legal trends that indirectly affect all organizations Specific environment –unique to a firm’s industry –directly affects the way its conducts daily business © 2012 Cengage Learning
General and Specific Environments © 2012 Cengage Learning
Economy A growing economy provides a favorable environment for business growth. Business confidence indices show how confident managers are about future business growth. © 2012 Cengage Learning
Technological Component Technology –an umbrella term for the knowledge, tools, and techniques used to transform inputs into outputs Changes in technology can help companies provide better products or produce their products more efficiently. © 2012 Cengage Learning
Sociocultural Component Demographic characteristics, general behavior, attitudes, and beliefs of people in a particular society © 2012 Cengage Learning
Demographics: Percentage of Married Women (with Children) Who Work © 2012 Cengage Learning
Political/Legal Component The legislation, regulations, and court decisions that govern and regulate business behavior Many managers are unaware of the potential legal risks associated with traditional managerial decisions like recruiting, hiring, and firing employees. © 2012 Cengage Learning
Specific Environment Customers Competitors Suppliers Industry regulations Advocacy groups © 2012 Cengage Learning
Customer Component Reactive customer monitoring –Identifying and addressing customer trends and problems after they occur Proactive customer monitoring –Identifying and addressing customer needs, trends, and issues before they occur © 2012 Cengage Learning
Competitor Component Competitors –companies in the same industry that sell similar products or services Competitive analysis –a process of monitoring the competition that involves identifying competition, anticipating their moves, and determining their strengths and weaknesses © 2012 Cengage Learning
Supplier Component Suppliers –companies that provide material, human, financial, and informational resources to other companies Supplier dependence vs. Buyer dependence © 2012 Cengage Learning
Behaviors Opportunistic behavior – when one party benefits at the expense of another Relationship behavior –focuses on establishing a mutually beneficial, long- term relationship between buyers and sellers © 2012 Cengage Learning
Industry Regulation Component Regulations and rules that govern the practices and procedures of specific industries, businesses, and professions © 2012 Cengage Learning
Federal Regulatory Agencies and Commissions Consumer Product Safety Commission Department of Labor Environmental Protection Agency Equal Employment Opportunity Commission Federal Communications Commission Federal Reserve System Federal Trade Commission Food and Drug Administration National Labor Relations Board Occupational Safety and Health Administration Securities and Exchange Commission © 2012 Cengage Learning
Advocacy Groups Concerned citizens who band together to try to influence the business practices of specific industries, businesses, and professions Public communication Media advocacy Product boycott © 2012 Cengage Learning
Environmental Scanning Searching the environment for important events or issues that might affect an organization. Managers scan the environment to reduce uncertainty. Organizational strategies affect environmental scanning. Environmental scanning contributes to organizational performance. © 2012 Cengage Learning
Interpreting Environmental Factors Threat or opportunity? Threat –managers typically take steps to protect the company from further harm Opportunity –managers consider strategic alternatives for taking advantage of those events to improve performance © 2012 Cengage Learning
Acting on Threats and Opportunities: Cognitive Maps © 2012 Cengage Learning
Internal Environments 5. explain how organizational cultures are created and how they can help companies be successful © 2012 Cengage Learning
Creation and Maintenance of Organizational Cultures Primary source of organizational culture is the company founder. Organizational culture is sustained by… –organizational stories –organizational heroes © 2012 Cengage Learning
Keys to an Organizational Culture that Fosters Success © 2012 Cengage Learning
Three Levels of Organizational Culture © 2012 Cengage Learning
Changing Organizational Cultures Behavioral addition Behavioral substitution Change visible artifacts Hiring people with values and beliefs consistent with desired culture © 2012 Cengage Learning
REELTOREAL Charlie Wilson’s War 1.This chapter discussed organizational culture as having three levels of visibility. Visible artifacts are at the first level and are the easiest to see. Which visible artifacts did you observe in this sequence? 2.Values appear at the next level of organizational culture. You can infer a culture’s values from the behavior of organizational members. Which values appear in this sequence? 3.Organizational members will unconsciously behave according to the basic assumptions of an organization’s culture. You also infer these from observed behavior. Which basic assumptions appear in this sequence? © 2012 Cengage Learning
REELTOREAL Camp Bow Wow 1.What aspects of Camp Bow Wow’s corporate culture reflect the surface level of the organizational culture? What aspects reflect the values and beliefs? What aspects reflect the unconsciously held assumptions and beliefs. 2.Why did Camp Bow Wow have to change its culture when it became a national franchise? 3.What impact does Heidi Ganahl’s personal story have on employees at Camp Bow Wow? © 2012 Cengage Learning
Chapter 3 Organizational Environments and Culture MGMT6 © 2014 Cengage Learning.
1 Chapter 3 Organizational Environments and Cultures Dr. Ellen A. Drost.
Chapter 3 Organizational Environments and Cultures Management Principles Craig W. Fontaine, Ph.D.
Chapter 3 Organizational Environments and Culture Management Principles Craig W. Fontaine, Ph.D.
Chapter 2 Organizational Environments and Cultures.
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Chapter Objectives The Marketing Environment, Ethics, and Social Responsibility CHAPTER Identify the five components of the marketing environment.
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