Understanding External Environment Factors

External Environment Factors

• External environment consists of external factors, forces, situations, and events that affect an organization's performance
• Components of the external environment include:
  • Economic factors (e.g. global productivity, trade, employment rates)
  • Social factors (e.g. demographics, sharing economy)
  • Technological factors

Economic Factors

• Current economic conditions: global productivity is slow, global trade is sluggish, and U.S. employment is up
• Economic inequality is a concern, with only 10% of adults thinking it's "not a problem at all" (Harris Interactive Poll)

The Sharing Economy

• Asset owners share underutilized physical assets or knowledge, expertise, skills, or time with others through peer-to-peer services for a fee

Demographics

• Demography is destiny, with different age cohorts having distinct characteristics:
  • Baby Boomers
  • Gen X
  • Gen Y
  • Gen Z

External Environment's Effect on Managers

• The external environment affects managers in three ways:
  • Jobs and employment
  • Assessing environmental uncertainty
  • Managing stakeholder relationships

Stakeholder Relationships

• Stakeholders: any constituencies in an organization's environment affected by its decisions and actions
• Managing stakeholder relationships is crucial for managers

Organizational Culture

• Organizational culture: shared values, principles, traditions, and ways of doing things that influence an organization's members' behavior
• Organizational culture is:
  • Perceived
  • Descriptive
  • Shared

Dimensions of Culture

• Various dimensions of culture can be assessed, including:
  • (Dimensions not specified in the text)

Learning Organizational Culture

• Organizational culture affects what employees do and how they behave
• Strong cultures can substitute for formal rules and regulations, creating predictability, orderliness, and consistency

Organizational Culture's Effect on Managers

• Organizational culture affects what managers do, influencing their behavior and decision-making
• Company values can affect managers' behavior, with some companies adopting a "ready-aim-fire" approach versus a "ready-fire-aim" approach

Learn about the external environment factors that can impact an organization's performance, including global economic trends and factors affecting the American economy. Explore concepts like global productivity, trade, employment, and economic inequality.