© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 4 Organizational Environments

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives Discuss the nature of the organizational environment. Identify and describe the components of the general environment. Identify and describe the components of the task environment.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Learning Objectives Discuss the internal environments of organizations. Identify and describe how the environment affects organizations and how organizations respond to their environments.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Nature of Organizational Environments External environment: everything outside of organization that might affect it. Internal environment: best reflected by its culture. Not all aspects of the environment are equally important for all organizations.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Nature of Organizational Environments

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The General Environment of Organizations General environment: broad dimensions and forces in surroundings that provide opportunities and constraints on organization. – Economic – Technological – Sociocultural – Political-legal – International

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The General Environment of Organizations Economic environment: health of economic system in which organization operates. Technological environment: methods available for converting resources into products or services. Sociocultural environment: customs, mores, values, demographic characteristics of society in which organization functions.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The General Environment of Organizations Political-legal environment: government regulation of business and relationship between business and government. International environment: forces that extend beyond national boundaries.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Task Environment of Organizations Task environment: other specific organizations or groups likely to influence organization. – Competitors – Customers – Suppliers – Regulators – Labor – Owners – Strategic allies

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Internal Environment: Corporate Culture Culture – Set of values that helps its members understand what organization stands for, how it does things, what it considers important. – Determines “feel” of organization. – Develops over long period of time. – Starting point often upper management. – Success and shared experiences shape culture.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Internal Environment: Corporate Culture Managing Organizational Culture – Understand current culture and decide if it should be maintained or changed. – Managers must have clear idea of what they want to create.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Organization-Environment Relationships How Environments Affect Organizations – Environmental change and complexity Least environmental uncertainty: simple and stable environments. Moderate degree of uncertainty: simple but dynamic environments.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Organization-Environment Relationships How Environments Affect Organizations – Environmental change and complexity Moderate uncertainty: stability and complexity. High degree of uncertainty: very dynamic and complex environmental conditions.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Organization-Environment Relationships

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Organization-Environment Relationships How Environments Affect Organizations – Five competitive forces Threat of new entrants Competitive rivalry Threat of substitute products Power of buyers Power of suppliers

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Organization-Environment Relationships How Environments Affect Organizations – Environmental turbulence Effects of crises can be devastating to organization. Many organizations develop crisis plans and teams. Fewer than half of major companies in the United States have plan for dealing with major crises.

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Organization-Environment Relationships How Organizations React to Their Environment – Information management – Strategic response – Mergers, takeovers, acquisitions, alliances – Organization design – Direct influence

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter Summary Environmental factors play major role in determining organization’s success or failure. External environment: general and task environment layers. General environment: – Economic – Technological – Sociocultural – Political-legal – International

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter Summary Task environment: – Competitors – Customers – Suppliers – Regulators – Labor – Owners – Strategic allies

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter Summary Internal environment: organization’s culture. Environmental influence can occur through: – Uncertainty – Competitive forces – Turbulence

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter Summary Organizations use information management, organization design, strategic response, mergers, takeovers, acquisitions, alliances, direct influence, and social responsibility to influence their task environment.