Environmental Management Concepts

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.