CHP03 The Organizational Environment PDF

11/2/2024 The Organizational Environment and Culture Chapter Three chapter3 Open Systems Organizations are open systems – Organizations that are affected by, and that affect, their external environment. – The environment of an or...

11/2/2024 The Organizational Environment and Culture Chapter Three chapter3 Open Systems Organizations are open systems – Organizations that are affected by, and that affect, their external environment. – The environment of an organization is its surroundings – anything that affects its operations, favorably or unfavorably. 1  11/2/2024 Are You Fit for chapter3 Managerial Uncertainty? The environment in which businesses operate are increasingly dynamic Some managers cannot respond to environmental surprises In an uncertain environment, managers need to facilitate new thinking, new ideas and new ways of working Types of organizational chapter3 environment External environment - All relevant forces outside a firm’s boundaries that might affect it. - The uncontrollable environment. - Includes the General and the Task environment Internal environment - Elements within the organizational boundaries - The controllable environment. 2  11/2/2024 chapter3 The External chapter3 Environment The General environment: Includes governments, economic conditions, and other fundamental factors that generally affect all organizations. The Task environment Includes Sectors that conduct transactions with the organization like costumers, competitors…that affects specifically the organization 3  11/2/2024 chapter3 General Environment International Portion of the external environment that Technological represents events originating in foreign Socio-cultural countries as well as Economicopportunities for U.S. companies in other Legal-Political countries. Natural chapter3 International Dimension Events originating Portioninofforeign countries as well as the external opportunities in other countries environment that Exp: World Trade Organization / War in the middle east and between represents events Russia and Ukraine and its effect in the world originating in foreign Impacts all aspects of the external environment countries as well as New competitors/ New customers/ opportunities for U.S.New suppliers companies Economic power in other has shifted to China and India countries. Today, all companies compete globally 4  11/2/2024 chapter3 Technological Dimension Scientific and technological advances allowing innovation : (new business models/ cost saving/ customer targeting, etc.) Impacts: Organizations/Managers/Customers Organizations should always keep an eye on the recent technological changes (Can be an opportunity or a threat) chapter3 Socio-Cultural Dimension Today’s demographics are the foundation of the future workforce Demographic trends affect organizations globally: Business strategies/ Product & service offer influence marketing, advertising, and human resources policies 5  11/2/2024 chapter3 In China, decades of the one-child policy have changed its demographics into the shape of an hourglass, with the elderly at the top and the youngest at the bottom. The policy has created a challenge in which an only child will be relied on to support their two ageing parents, and four grandparents. 11 Copyright ©2010 by South-Western, a division chapter3 Economic Dimension General economic state in terms of: Inflation/ Interest rates/ Income levels/ Gross Domestic Product/ Consumer purchasing power/ Unemployment rate … Recent Trends - Frequency of mergers and acquisitions - Small business sector vitality Exp: The forecast of business recession influences managers to reduce expenses or postpone a new projects. 6  11/2/2024 chapter3 Legal-Political Dimension Deals with the effects of government policy, and other political institutions. This includes items such as government stability, taxation policy, and government regulation. Exp: US trade policy toward China/ Iran The government intervenes in the economy through setting policies (import/export policy, taxation policy, investment policy, labor policy, competition policy, consumer protection policy, etc.) A good business-government relationship is crucial chapter3 Natural Dimension It is often said that ‘consumers are becoming more green’ and their primary focus is a concern for the environment This includes how waste is recycled, the amount of plastic packaging being used to store and distribute products, animal welfare, and the effects of climate change 7  11/2/2024 Tools to analyze the chapter3 external environment A useful tool when scanning the macro- environment is PESTLE analysis. This refers to political, economic, social, technological, legal, and environmental factors. Help the organization detect and monitor signals of change in the hope of recognizing, and responding, to changes taking place in the macro-environment. 15 8  11/2/2024 chapter3 Task Environment These are stakeholders with which the company interacts directly to achieve its objectives.: Customers Competitors Suppliers Labor Market Investors Regulators 9  11/2/2024 The Task chapter3 Environment Customer: whoever pays money to acquire an organization’s products or services. -Customer's purchase keeps a company alive and profitable -They may drive down prices and push for more or higher- quality products Competitors: an organization that competes with other organizations chapter3 Supplier: provider of resources for other organizations. Labor market: (or job market) refers to the supply of and demand for labor. Regulators: control, regulate or influence an organization’s policies and practices. 20 10  11/2/2024 Tools to analyze the task environment: chapter3 Porter’s five forces model 21 Tools to analyze internal and chapter3 external environment: SWOT analysis 11  11/2/2024 The Internal chapter3 Environment: The internal environment of an organization refers to all the factors, resources, and dynamics within the organization that affect its performance, decision-making, and operational effectiveness. These elements are controllable and are directly influenced by the organization’s leadership and management. The Internal chapter3 Environment Owner(s): someone who has legal property rights to a business. Board of directors: governing body elected by a corporation’s stockholders and charged with overseeing the general management of the firm. Employees: those employed by the organization. Physical work environment: the firm’s facilities. Culture:shared values and norms 12  11/2/2024 How environments affect chapter3 organizations: The environment can be described along two dimensions: its degree of homogeneity and its degree of change. The degree of change is the extent to which the environment is relatively stable or dynamic. The degree of homogeneity is the extent to which the environment is relatively simple or relatively complex. The interaction between the degree of change and degree of homogeneity determines the level of uncertainty faced by organization. chapter3 26 13  11/2/2024 chapter3 How organizations adapt to their environments: strategic response partnerships organization design and flexibility direct influence social responsibility 27 14