Principles of Management Learning Session # 12 Dr. A. Rashid Kausar

Re-cap of Session # 11

General Environment and Environmental Forces Affecting Organizations Cultural Forces Political - Legal Forces Technological Forces Ecosystem Competitive Forces Political System Organization Economic System Demographics 3

External Environment ‘Major forces outside the organisation with potential to influence significantly a product or service’s likely success.’

External Environment External environment is made up of: 1.The Mega-Environment The broad conditions and trends in societies in which an organisation operates. 2.The Task Environment Specific outside elements with which an organisation interfaces in the course of conducting its business.

The External Environment Mega or General Environment Global Suppliers Customers Economic Political The Organization Public Pressure Groups Competitors Demographic Sociocultural Task or Specific Environment Technological

The Mega-Environment The organisation Economic element Technological element Legal–political element The organisation International element Sociocultural element

The Mega-Environment Five major elements: 1.Technological element Current state of knowledge regarding production of products & services. 2.Economic element Systems of producing, distributing & consuming wealth. 3.Legal-political element Legal & governmental systems within which an organisation must function.

The Mega-Environment 4.Socio-cultural element 5.International element Attitudes, values, norms, beliefs, behaviours & associated demographic trends characteristic of a given geographic area. 5.International element Developments in countries outside of an organisation’s home country with potential to influence the organisation.

The Task Environment The Organisation Competitors Government & regulators Customers /clients The Organisation The employment market Suppliers Public pressure groups

The Task Environment Five elements: 1.Customers and clients Individuals and organizations purchasing products/services. 2.Competitors Other organizations either offering (or a high potential of offering) rival products/services. 3.Suppliers Organizations and individuals supplying resources an organization needs to conduct its operations.

The Task Environment 4.Labour supply 5.Government agencies Individuals potentially employable by an organization. 5.Government agencies Agencies providing services and monitoring compliance with laws and regulations at local, State or regional and national levels.

Competitive Forces in the Task Environment Threat of new competitors Suppliers bargaining power Rivalry among existing firms in industry Buyers bargaining power Threat of substitute goods/services

Internal Environment Nature of organisational culture: ‘A system of shared values, assumption, beliefs and norms uniting organisational members’ .‘The way we do things around here.’ The ‘glue’ binding all the parts (or the oil that keeps them moving).

The Organization’s Culture A system of shared meaning and beliefs held by organizational members.

The Organization’s Culture The Source of Culture: Usually reflects the vision or mission of the founder’s image of what the organization should be. How Employees Learn Culture: Stories - a narrative of significant events or people Rituals - repetitive sequences of activities Material symbols – essential in creating an organization’s personality. Language - Members of an organization develop unique terminology or jargon.

ORGANIZATIONAL STAKEHOLDERS

Stakeholders’ Concerns 6.8 Stakeholders’ Concerns Stakeholder Group Examples of Concerns Owners and Investors 1.Financial Soundness 2.Consistency in meeting shareholder expectations 3.Sustained profitability 4.Average return on assets 5.Timely and accurate disclosure of financial information

Stakeholders’ Concerns (contd.) 6.9 Stakeholders’ Concerns (contd.) Stakeholder Group Examples of Concerns Customers 1.Product/service quality, and availability 2.Responsible management of defective or harmful products/services 3.Safety records for products/services 4.Pricing policies and practices 5.Honest, accurate, and responsible advertising

Stakeholders’ Concerns (contd.) 6.10 Stakeholders’ Concerns (contd.) Stakeholder Group Examples of Concerns Employees 1.Nondiscriminatory, merit-based hiring and promotion 2.Diversity of the workforce 3.Wage and salary levels and equitable distribution 4.Availability of training and development 5.Workplace safety and privacy Adapted from Table 6.2

Stakeholders’ Concerns (contd.) 6.11 Stakeholders’ Concerns (contd.) Stakeholder Group Examples of Concerns Community Environmental issues 1.Environmental sensitivity in packaging and product design 2.Recycling efforts and use of recycled materials 3.Pollution prevention 4.Global application of environmental standards

Organisational Social Responsibility ‘The obligation of an organisation to seek actions protecting and improving society’s welfare along with its own interests.’