Chapter Three: Managing The External Environment PDF

MGT212: Organizational Management Instructor: Dr. Jashim U. Ahmed Chapter Three Managing the External Environment 1  The Manager: Omnipotent or Symbolic? Omnipotent View of Man...

MGT212: Organizational Management Instructor: Dr. Jashim U. Ahmed Chapter Three Managing the External Environment 1  The Manager: Omnipotent or Symbolic? Omnipotent View of Management  The view that managers are directly responsible for an organization’s success or failure. Symbolic View of Management  The view that much of an organization’s success or failure is due to external forces outside managers’ control. 2, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 2  Exhibit 2-1 Constraints on Managerial Discretion 2, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 3  External Environment External Environment  Refers to factors and forces outside the organization that affect its performance. Components of External Environment  Economic component: Encompasses factors such as interest rates, inflation, changes in disposable income, stock market fluctuations, business cycle stages.  Demographic component: Concerned with trends in population characteristics such as age, race, gender, education level, geographic location, income, and family composition. 2, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 4  External Environment (cont’d)  Political/legal component: Looks at federal, state, local and global laws, and also includes a country’s political conditions and stability.  Socio-cultural component: Concerned with societal and cultural factors such as values, attitudes, trends, traditions, lifestyles, beliefs, tastes and patterns of behavior.  Technological component: Concerned with scientific and industrial innovations.  Global component: Encompasses those issues associated with globalization and a world economy. 2, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 5  Exhibit 2-2 Components of External Environment 2, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 6  Components of External Environment Demographic Component  The new workforce is getting larger, increasingly female, more racially and ethnically diverse, older, and more age- diverse. Chapter 2, Carlene M. Cassidy and Robert Kreitner, Principles of Management, Twelfth Edition. Copyright © 2013 Cengage Learning. 4, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 7  Components of External Environment (cont’d) Social Component  Inequalities  Persistent barriers encountered by women, minorities, and others in the workplace.  Glass Ceiling  The invisible barrier that separates women and minorities from top management positions.  Under the glass ceiling, women continue to experience a significant gender-wage gap and strong barriers to advancement.  Managing Diversity  Creating an organizational culture that enables all employees, including women and minorities, to realize their full potential. Chapter 2, Carlene M. Cassidy and Robert Kreitner, Principles of Management, Twelfth Edition. Copyright © 2013 Cengage Learning. 4, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 8  Components of External Environment (cont’d) Technological Component  Technology  Technology is facilitating the evolution of the information age and thus information has become a valuable strategic resource for gaining competitive advantage.  The Innovation Process  The systematic and practical application of a new idea.  Steps in the Innovation Process – Conceptualization: When a new idea occurs to someone. – Product technology: Creation of a working prototype. – Production technology: Development of a profitable production process. 9 Chapter 2, Carlene M. Cassidy and Robert Kreitner, Principles of Management, Twelfth Edition. Copyright © 2013 Cengage Learning.  Figure 2.4: The Three-Step Innovation Process Chapter 2, Carlene M. Cassidy and Robert Kreitner, Principles of Management, Twelfth Edition. Copyright © 2013 Cengage Learning. 10  How the External Environment Affects Managers Environmental Uncertainty  Refers to the degree of change and complexity in organization’s environment. Organization’s external environment is affected by two dimensions:  Degree of change in environmental components: How dynamic or stable the external environment is.  Degree of environmental complexity: The number of components in an organization’s external environment and the extent of the organization’s knowledge about those 2, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren components. 11  Environmental Uncertainty Matrix 2, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 12  Managing Stakeholder Relationships Stakeholders  Any constituencies in the organization’s environment that are affected by an organization’s decisions and actions.  Stakeholder audit: Systematically identifying all the parties that could possibly be affected by the company’s performance. Chapter 4, Carlene M. Cassidy and Robert Kreitner, Principles of Management, Twelfth Edition. Copyright © 2013 Cengage Learning. 2, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 13  Exhibit 2-4 Organizational Stakeholders 2, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 14  What Is Organizational Culture? Organizational Culture  The shared values, principles, traditions, and ways of doing things that influence the way organizational members act and that distinguish the organization from other organizations. Strong Cultures  Organizational cultures in which key values are intensely held and widely shared. 2, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 15  Exhibit 2-6 Contrasting Organizational Cultures 2, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 16  Exhibit 2-7 Strong Versus Weak Cultures 2, Stephen P. Robbins and Mary Coulter, Management, Twelfth Edition. Copyright © 2013 Pearson Education, Inc. publishing as Pren 17 Thank you  18