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

2. Re-cap of
Session # 11

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

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

5. 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.

6. 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

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

8. 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.

9. 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.

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

11. 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.

12. 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.

13. 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

14. 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).

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

16. 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.

17. ORGANIZATIONAL STAKEHOLDERS

18. 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

19. 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

20. 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

21. 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

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