Principles of management Chapter 3 – the environment and corporate culture.

Learning objectives –chapter 3. Understand the different environments in which companies operate. Understand how these different environments affect the operation of a company and management.

The organization's environments. External environment - everything outside an organization’s boundaries that might affect it. The uncontrollable environment. It includes the General and task environments. Internal environment - the conditions and forces within an organization. The controllable environment.

General Environment The layer of the external environment that affects the organization indirectly. 3

The General Environment Technological. Sociocultural. Economic. Legal / political. International.

General Environment Technological Task Environment International the organization’s The layer of the external environment that directly influences operations and performance. Sociocultural Legal/Political Economic 9

The Task Environment. Competitors Customers Suppliers Labor Market.

The Internal Environment. Owners Board of directors Employees Physical work environment Organizational culture

Technological Customers Internal Environment Suppliers General Environment Technological Task Environment International Social & cultural Customers Internal Environment Labor Market Competition Employees Culture Management Suppliers Legal/Political Economic 14

Organizational culture. The set of values, beliefs, behaviors, customs, and attitudes that helps the members of the organization understand what it stands for, how it does things, and what it considers important. important because it determines the “feel” of the organization. Its starting point is often the founder.

Organization – environment relationships Change, Complexity, Uncertainty. Competitive forces: Threat of new competitive entrants. Competitive rivalry. Threat of substitute products. The power of buyers. The power of suppliers. Environmental Turbulence: Terrorist attacks. Workplace violence. Computer viruses.

How do organizations adapt to their environments. Each organization must assess its own unique situation then adapt through six basic mechanisms Information systems. Strategic responses. Mergers, acquisitions, and alliances. Organizational design and flexibility. Direct influence of the environment. Social responsibility.

The environment and organizational effectiveness. The systems resources approach: extent to which the organization can acquire needed resources. The internal processes approach: internal mechanisms of the organization and forces on minimizing strain. The goal approach: how well the firm obtains goals. Strategic constituencies approach: focus is on groups who have a stake in the organization.