Ch. 03 Organisational Environments PDF

Management Part I: Introduction Ch. 3. Organizational environments Dan C. Lungescu, PhD, assistant professor 2015-2016 Course outline Management Part I: Int...

Management Part I: Introduction Ch. 3. Organizational environments Dan C. Lungescu, PhD, assistant professor 2015-2016 Course outline Management Part I: Introduction Part II: Planning Part III: Organizing Part IV: Leading Part V: Controlling Part I outline Management Part I: Introduction Ch. 1. Manager’s job Ch. 2. The evolution of management Ch. 3. Organizational environments Ch. 4. Social responsibility and ethics Learning objectives After studying this chapter, you should be able to:  Explain the nature of organizational culture and its major manifestations.  Explain how organizational cultures can be changed.  Explain the concepts of mega-environment and task environment, and outline their major elements.  Contrast the population ecology and resource dependence views of the organization-environment interface.  Explain how environmental uncertainty and munificence impact organizations.  Describe the major methods the organizations use to manage their environments. Chapter 3 outline A. The major environments B. Organizational culture C. Types of external environments D. Analyzing environmental conditions E. Managing environmental elements  A. The major environments I. Internal environment The general conditions that exist within an organization. the core part: organizational culture II. External environment The major forces outside the organization that have the potential to significantly influence the likely success of products or services. structure Outline » A. The major environments  B. Organizational culture Organizational culture A system of shared values, assumptions, beliefs, and norms that unite the members of an organization. ‘the way things are done around here’ 3 major aspects of OC affect the organization: Direction The degree to which a culture supports, rather than interferes with, reaching organizational goals. Pervasiveness The extent to which a culture is widespread among members. Strength The degree to which members accept the values and other aspects of a culture. Outline » B. Organizational culture  Culture’s layers 1. Beliefs (something is true or false). 2. Values (something is good or bad) and attitudes. 3. Practices (manifestations):  Symbols.  Heroes.  Stories.  Behavior norms.  Rites and rituals. Outline » B. Organizational culture » Culture’s layers  Manifestations of OC Symbols Object, act, event, or quality that serves as a vehicle for conveying meaning. Stories Narratives based on true events, which sometimes may be embellished to highlight the intended value. Rites A relatively elaborate, dramatic, planned set of activities intended to convey cultural values to participants and, usually, an audience. Ceremonial A system of rites performed in conjuration with a single occasion or event. Outline » B. Organizational culture » Manifestations of organizational culture  Characteristics of organizational culture Member identity The degree to which employees identify with the organization as a whole rather than with their type of job or field of professional expertise. Group emphasis The degree to which work activities are organized around groups rather than individuals. People focus The degree to which management decisions take into consideration the effect of outcomes on people within the organization. Unit integration The degree to which units within the organization are encouraged to operate in a coordinated or interdependent manner. Outline » B. Organizational culture » Characteristics of organizational culture  Characteristics of OC (2) Control The degree to which rules, regulations and direct supervision are used to oversee and control employee behavior. Risk tolerance The degree to which employees are encouraged to be aggressive, innovative and risk-seeking. Reward criteria The degree to which rewards such as salary increases and promotions are allocated according to employee performance rather than seniority, favoritism or other nonperformance factors. Conflict tolerance The degree to which employees are encouraged to air conflicts and criticisms openly. Outline » B. Organizational culture » Characteristics of organizational culture (2)  Characteristics of OC (3) Means-ends orientation The degree to which management focuses on results or outcomes rather than on the techniques and processes used to achieve those outcomes. Open-system focus The degree to which the organization monitors and responds to changes in the external environment. Outline » B. Organizational culture » Characteristics of organizational culture (3)  Changing organizational culture 1. Surfacing actual norms 2. Articulating new directions 3. Establishing new norms 4. Identifying culture gaps 5. Closing culture gaps Outline » B. Organizational culture » Changing organizational culture  C. Types of external environments Mega- environment Task environment Customers and clients Government Competitors agencies The organization: Organizational culture Labor Suppliers supply Legal-Political Outline » C. Types of external environments  Types of external environments (2) 1. Task environment The specific outside elements with which an organization interfaces in the course of conducting its business. elements 2. Mega-environment (general environment) The broad conditions and trends in the societies within which an organization operates. elements Outline » C. Types of external environments (2)  1. Task environment Customers and clients Individuals/organizations that purchase an organization’s products/services. Competitors Other organizations that either offer or have a high potential of offering rival products or services. Suppliers Those organizations and individuals that supply the resources an organization needs to conduct its operations. Labor supply Those individuals who are potentially employable by an organization. Government agencies Agencies that provide services and monitor compliance with laws and regulations at local, state or regional, and national levels. Outline » C. Types of external environments » 1. Task environment  2. Mega-environment Technological element The current state of knowledge regarding the production of products and services. Economic element The system of producing, distributing, and consuming wealth. Legal-political element Legal & governmental systems within which an organization must function. Socio-cultural element The attitudes, values, norms, beliefs, behaviors, and associated demographic trends that are characteristic of a given geographic area. International element The developments in countries outside an organization’s home country that have the potential to influence the organization. Outline » C. Types of external environments » 2. Mega-environment  D. Analyzing environmental conditions I. Views of the organization-environment interface II. Characteristics of the environment Outline » D. Analyzing environmental conditions  I. Organization-environment interface Population ecology model (Natural selection model) A model that focuses on populations or groups of organizations and argues that environmental factors cause organizations with appropriate characteristics to survive and others to fail. Resource dependence model A model that highlights organizational dependence on the environment for resources and argues that organizations attempt to manipulate the environment to reduce that dependence. Outline » D. Analyzing environmental conditions » I. Organization-environment interface  II. Characteristics of the environment Environmental munificence The extent to which the environment can support sustained growth and stability. Environmental uncertainty A condition in which future environmental circumstances affecting an organization cannot be accurately assessed and predicted. dimensions Outline » D. Analyzing environmental conditions » II. Characteristics of the environment  Environmental uncertainty Environmental complexity The number of elements in an organization’s environment and their degree of similarity. Environmental dynamism The rate and predictability of change in the elements of an organization’s environment. Outline » D. Analyzing environmental conditions » II. Characteristics » Uncertainty  Assessing environmental uncertainty Environmental complexity homogeneous heterogeneous Low uncertainty Moderate low uncertainty 1. Small number of similar 1. Large number of dissimilar Environmental dynamism stable external elements external elements 2. Elements stay the same or 2. Elements stay the same or change slowly change slowly Example: Funeral homes Example: Insurance companies Moderate high uncertainty High uncertainty 1. Small number of similar 1. Large number of dissimilar unstable external elements external elements 2. Elements change rapidly 2. Elements change rapidly and unpredictably and unpredictably Example: Women’s apparel Example: Software companies Outline » D. Analyzing the environment » II. Characteristics » Uncertainty » Assessment  E. Managing environmental elements I. Adaptation Changing internal operations and activities to make the organization more compatible with its environment. ways II. Favorability influence Attempting to alter the environmental elements in order to make them more compatible with the needs of the organization. ways III. Domain shifts Changes in the mix of products and services offered so that an organization will interface with more favorable environmental elements. Outline » E. Managing environmental elements  I. Adaptation Buffering Stockpiling either inputs into or outputs from a production or service process in order to cope with environmental fluctuations. Smoothing Taking actions aimed at reducing the impact of fluctuations, given the market. Forecasting Making predictions about changing conditions and future events that may significantly affect the business of an organization. Rationing Providing limited access to a product or service that is in high demand. Outline » E. Managing environmental elements » I. Adaptation  II. Favorability influence Advertising and public relations Using communications media (1) to gain favorable publicity for particular products and services and (2) to create a favorable overall impression of the organization among the public. Boundary spanning Creating roles within the organization that interface with important elements in the environment. Recruiting Finding and attempting to attract job candidates who are capable of effectively filling job vacancies. Negotiating contracts Seeking favorable agreements on matters of importance to the organization. Outline » E. Managing environmental elements » II. Favorability influence  Favorability influence (2) Co-opting Absorbing key members of important environmental elements into the leadership or policy-making structure of an organization. Joint venture An agreement involving two or more organizations that arrange to produce a product or service jointly. Trade associations Organizations composed of individuals or firms with common business concerns. Political activity Influencing legislation and/or the behavior of government regulatory agencies. Outline » E. Managing environmental elements » II. Favorability influence (2) Dan C. Lungescu, PhD, assistant professor 2015-2016