Management Environment

• The management environment consists of external factors and organizational culture.
• It is important to understand why they are important and how they affect managers.

External Environment

• It includes the factors, forces, situations, and events outside the organization that impact performance.
• These include the economic, demographic, technological, global, sociocultural, and political/legal aspects.
• Turmoil in mortgage markets caused a spread to businesses when broader credit markets collapsed.
• This was referred to as the "Great Recession."
• The Great Recession was signified by foreclosures, high rates of unemployment, huge public debt, and widespread social problems.
• The business environment will change through government's role in financial markets and consumer protection.
• There will be government spending comparable to World War II levels.
• Additional regulations and increased enforcement and oversight of current regulations are coming.

Impact on Managers

• The external environment affects managers' decisions about jobs, employment, environmental uncertainty, and stakeholder relationships.
• Assessing environmental uncertainty involves understanding how stable or dynamic and simple or complex the environment is.
• Stakeholders are any constituencies in an organization's environment affected by its decisions and actions.
• Good stakeholder relationships can positively affect organizational performance.
• These relationships get recognized as "doing the right thing" and demonstrate corporate social responsibility.
• They can create and reinforce a positive image of the organization within its community.
• Organizational stakeholders include employees, customers, unions, social and political action groups, shareholders, competitors, communities, trade and industry associations, suppliers, governments, and the media.

Organizational Culture

• Organizational culture includes the shared values, principles, traditions, and ways of doing things influencing how members act.
• Culture is a perception, and isn't concerned with whether members like it.
• Employees often describe the culture in similar terms, despite their diversity.
• Strong cultures reflect employee acceptance, commitment to key values, and can preempt formal rules and regulations.

Assessing Culture

• Culture can be assessed by traits such as:
  • Attention to detail
  • Outcome orientation
  • People orientation
  • Team orientation
  • Aggressiveness
  • Stability
  • Innovation and risk taking
• Employees learn the culture through stories, rituals, material symbols, and language.
• Organizational culture comes from the founder's biases, assumptions, and what early employees learned.

Culture's Effect on Managers

• Organizational culture affects what employees do and how they behave.
• It also affects what managers do as they plan, organize, lead, and control.
• Managerial decisions as affected by culture are:
  • Planning - degree of risk, plans developed by individuals or teams, degree of environmental scanning.
  • Organizing - autonomy in employees' jobs, tasks done by individuals or teams, interaction between department managers.
  • Leading - concern for job satisfaction, appropriate leadership styles, handling disagreements.
  • Controlling - external vs. internal controls, criteria emphasized in performance evaluations, repercussions for exceeding budget.

Learn about the management environment, including external factors and organizational culture. Understand their importance and impact on managers. Explore economic, demographic, technological, global, sociocultural, and political/legal aspects.