Environmental Management Concepts

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Questions and Answers

What does the degree of change in environmental uncertainty refer to?

  • The frequency of changes in environmental components (correct)
  • The number of organizations present in an industry
  • The complexity of organizational structure
  • The stability of the economic environment

Which of the following components does NOT belong to the general environment according to PESTEL analysis?

  • Technological factors
  • Economic factors
  • Socio-cultural factors
  • Competitive factors (correct)

What factor would be considered part of the economic component of the general environment?

  • Inflation rates (correct)
  • Age demographics
  • Technological advancements
  • Cultural trends

In the competitive environment, which force is associated with the organization’s suppliers?

<p>Input availability (D)</p> Signup and view all the answers

Which demographic characteristic is generally assessed in the context of the general environment?

<p>Population age (B)</p> Signup and view all the answers

Which component of the international PESTLE analysis relates to the stability of currency exchange rates?

<p>Economic (B)</p> Signup and view all the answers

What aspect of the competitive environment considers the organization’s competitors?

<p>Pricing strategies (D)</p> Signup and view all the answers

Which of the following best describes the technological factor in both general and international environments?

<p>Technological advancements and infrastructure (A)</p> Signup and view all the answers

What is the primary role of suppliers in an organization?

<p>To provide input resources needed for production (B)</p> Signup and view all the answers

In Porter's five forces model, which factor increases rivalry among competitors?

<p>Standardized products with no differentiation (B)</p> Signup and view all the answers

What does the bargaining power of suppliers refer to?

<p>Suppliers' ability to negotiate prices based on their own capabilities (B)</p> Signup and view all the answers

Which dimension of organizational culture emphasizes collaboration and teamwork?

<p>Team orientation (C)</p> Signup and view all the answers

What is an example of a visible artifact in an organization’s culture?

<p>Employee dress code (A)</p> Signup and view all the answers

What influences an organization's culture over time?

<p>The vision of the founders (A)</p> Signup and view all the answers

How does high bargaining power of buyers affect an industry?

<p>It decreases industry profits (A)</p> Signup and view all the answers

The degree to which management emphasizes results rather than methods is known as?

<p>Outcome orientation (A)</p> Signup and view all the answers

What is one of the main barriers to new entrants in an industry?

<p>High customer loyalty to existing firms (A)</p> Signup and view all the answers

Which of the following is NOT a dimension of organizational culture?

<p>Employee engagement (A)</p> Signup and view all the answers

How do distributors typically relate to organizations?

<p>They help organizations sell their goods (D)</p> Signup and view all the answers

Which option correctly describes the stakeholders of a company?

<p>Individuals or groups with an interest in the company’s performance (D)</p> Signup and view all the answers

Which factor can lead to high intensity of rivalry in an industry?

<p>Decreasing demand in the industry (A)</p> Signup and view all the answers

Flashcards

Environmental Uncertainty

The degree of change and complexity in the environment surrounding an organization.

Degree of Change

Refers to how often the components of an organization's environment change.

Complexity

The number and diversity of factors in an organization's environment, and the level of knowledge about them.

General Environment

External factors that can influence an organization's performance, but are not directly related to its industry.

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Competitive Environment

The industry-specific environment, including customers, suppliers, and competitors.

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PESTEL Analysis

A framework analyzing the political, economic, socio-cultural, technological, environmental, and legal factors affecting an organization.

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Competitive Environment

The competitive environment, including factors like customers, suppliers, and competitors, which affect an organization's effectiveness.

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Competitive Forces

Factors that can impact an organization's ability to acquire resources and sell its products or services.

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Suppliers

Organizations that offer resources required for producing goods and services, expecting payment in return.

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Distributors

Organizations that assist other companies in selling their products and services to customers.

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Customers

Individuals or groups who purchase the goods and services produced by an organization.

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Competitors

Companies that produce similar goods and services, competing for the same customer base.

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Porter's Five Forces Model

A framework for analyzing an industry's attractiveness, revealing potential for profitability.

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Rivalry Among Competitors

The intensity of competition among existing players in a particular industry, affecting profitability.

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Threats of New Entrants

Factors influencing the ease or difficulty for new players to enter a specific industry.

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Threats of Substitutes

Products from other industries that fulfill similar needs or functionalities, potentially impacting the existing market.

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Bargaining Power of Suppliers

The power of suppliers to negotiate favorable prices with buyers, potentially impacting industry profits.

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Bargaining Power of Buyers

The power of buyers to negotiate favorable prices with sellers, potentially impacting industry profits.

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Internal Environment

The internal factors within an organization such as people, culture, structure, and technology.

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Organizational Culture

Shared values, principles, traditions, and ways of working that distinguish an organization.

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Adaptability

The extent to which employees are encouraged to experiment, take risks, and adapt to change.

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Attention to Detail

The emphasis placed on precise work, analysis, and attention to details in an organization.

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Outcome Orientation

The importance placed on achieving results regardless of the specific methods used.

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Study Notes

Environmental Uncertainty

  • Defined as the degree of change and complexity in an organization's environment.
  • Degree of change: How frequently components in the environment alter.
  • Complexity: The number of components and the organization's understanding of them.

General Environment (PESTEL)

  • External factors impacting all organizations.
  • Components:
    • Political: Government regulations, political stability, changes in laws.
    • Economic: Interest rates, inflation, unemployment, economic growth.
    • Socio-cultural: Values, trends, beliefs, customs, lifestyles.
    • Technological: Infrastructure, technology advancements, innovation, change in management technologies.
    • Environmental: Natural resources, environmental issues (e.g., climate change).
    • Legal: Trade agreements, company taxation, employment protection.
    • Demographic: Population characteristics (age, gender, race, social class).
    • International: Involvement in international business and the impact of other countries' behaviour.

International PESTLE Analysis

  • Focuses on international implications of PESTEL factors.
  • Factors include: Government attitudes towards foreign investment, political stability, patent/intellectual property protection, economic growth rates, wealth distribution, currency and exchange rate stability, national cultures, attitudes towards foreign firms/staff, telecommunications, power supply, transport infrastructure, natural resources, trade agreements/tariffs, environmental quality and potential climate change effects.

Competitive Environment

  • Internal forces specific to an industry.
  • Components:
    • Suppliers: Provide input resources.
    • Distributors: Help sell goods/services.
    • Customers: Purchase the goods/services.
    • Competitors: Offer similar goods/services.

Porter's Five Forces Model

  • Model for analyzing industry attractiveness.
  • Helps understand factors influencing business profitability.
    • Rivalry among competitors: High number/similar sized competitors, decreasing demand, standardized products, high barriers to exit lower profitability.
    • Threat of new entrants: Low barriers to entry = lower profits for existing firms.
    • Threat of substitutes: Products from other industries fulfilling similar needs decrease profitability.
    • Bargaining power of suppliers: High supplier power less profit for industry.
    • Bargaining power of buyers: High buyer power lower industry profit.

Organizational Culture

  • Shared values, principles, traditions, and ways of working influencing employee behaviour.

Dimensions of Organizational Culture

  • Adaptability: Encouraging risk-taking, innovation, flexibility.
  • Attention to detail: Precision, analysis, focus on specifics expected.
  • Outcome orientation: Management prioritizing results over processes.
  • People orientation: Management considering people's effect on organizational outcomes.
  • Team orientation: Collaboration and team-based work emphasized.
  • Integrity: Honesty and ethical principles in work conduct.

Strong vs. Weak Cultures

  • Strong cultures: More significant impact on employee behaviour.
  • Weak cultures: Less cohesive and impactful.

Levels of Organizational Culture

  • Visible artefacts: Observable behaviours, dress, office layout, symbols.
  • Invisible: Unseen values, beliefs, assumptions, and deep-seated beliefs underlying behaviours.

How Organizational Culture is Established

  • Founders' vision shapes initial culture.
  • Culture spreads through stories, rituals, symbols, and languages.
  • Established practices and top management actions maintain the culture.

Stakeholders

  • Individuals/groups with a stake in a company.
  • Examples:
    • Stockholders: Want maximized returns.
    • Managers: Decide on goals and resource utilization.
    • Employees: Seek consistent rewards.
    • Suppliers: Expect fair and timely payment.
    • Distributors: Require quality goods and agreed prices.
    • Customers: Crucial for company survival.
    • Community: Offers physical and social infrastructure.

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