EMGT 1162 Principles of Management PDF

Shared using Xodo PDF Reader and Editor BET Honors Degree Program Faculty of Technology Wayamba University of Sri Lanka  Shared using Xodo PDF Reader and Editor EMGT 1162 – Principles of Management ENVIRONMENT ANALYSIS...

Shared using Xodo PDF Reader and Editor BET Honors Degree Program Faculty of Technology Wayamba University of Sri Lanka  Shared using Xodo PDF Reader and Editor EMGT 1162 – Principles of Management ENVIRONMENT ANALYSIS Prof. MMDR Deegahawature B.Sc. (Bus.Ad.) Sp, MBA (Col), MBA (AIT), PhD (HUST), MIM, MAA Department of Industrial Management Faculty of Applied Sciences Wayamba University of Sri Lanka  Shared using Xodo PDF Reader and Editor Learning Objectives  On the successful completion of this lesson, participants will be able to: – Discuss the nature of the organizational environment and identify the environments of interest to most organizations. – Describe the components of the general and task environments and discuss their impact on organizations. – Identify the components of the internal environment and discuss their impact on organizations. EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 3  Shared using Xodo PDF Reader and Editor Environment Analysis What Constitute An Organization’s Environment?  Understanding the dynamic nature of an organization’s environment is essential  Organizations must adapt to the changing needs  Environment includes – Internal Environment – External Environment EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 4  Shared using Xodo PDF Reader and Editor The Business Environment  Internal Environment – The factors which are under the control of the organization, but can influence business strategy and other decisions – Conditions and forces present and at work within an organization Owners & Board of Directors Employees & Trade Unions Physical Resources & Technological Capabilities Corporate Culture Vision, Mission and Objectives Organizational Structure – Capabilities: Resources and Competencies EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 5  Shared using Xodo PDF Reader and Editor The Business Environment  External Environment — everything outside an organization’s boundaries that might affect it: includes direct and indirect-action elements – General environment is everything outside an organization’s boundaries and makes general context for businesses — political, economic, socio- cultural, technological, environmental , legal, and international forces : includes elements that affect the climate in which organizational activities take place – Task environment (Specific environment) is composed of specific groups of organizations that affect the firm: includes elements that directly influence the organizational activities EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 6  Shared using Xodo PDF Reader and Editor The Business Environment EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 7  Shared using Xodo PDF Reader and Editor WHAT IS GENERAL ENVIRONMENT? WHAT DOES IT INCLUDE?  Shared using Xodo PDF Reader and Editor The External Environment  The General Environment – The set of broad dimensions and forces in an organization’s surroundings that create its overall context. – Economic dimension is the overall health and vitality of the economic system in which the organization operates. Interest rates, inflation, unemployment, exchange rate, economic growth, spending power, and other factors that affect the general health and well-being of a nation or the regional economy Managers usually cannot influence or control these factors but, they have profound impact on firms. EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 9  Shared using Xodo PDF Reader and Editor The External Environment  The General Environment (Contd.) – Technological dimension refers to the knowledge, tools and techniques available for converting resources into products or services. Changes in the technology that managers use to design, produce, or distribute goods and services – Results in new opportunities or threats to managers – Often makes products obsolete very quickly. – Can change how managers manage. EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 10  Shared using Xodo PDF Reader and Editor The External Environment  The General Environment (Contd.) – Sociocultural dimension includes the customs, norms, values, demographic characteristics, and related characteristics of the society in which the organization functions. Pressures emanating from the social structure of a country or society or from the national culture Cultures and their associated social structures, values, and norms differ widely throughout the world Pressure due to changes in demographic characteristics EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 11  Shared using Xodo PDF Reader and Editor The External Environment  The General Environment (Contd.) – Demographic Forces Outcomes of change in, or changing attitudes toward, the characteristics of a population, such as age, gender, ethnic origin, race, sexual orientation, and social class During the past two decades, women have entered the workforce in increasing numbers and most industrial countries’ populations are aging. Working-mothers changes the opportunities for firms competing in these areas as demands for child care and health care are to increase dramatically. EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 12  Shared using Xodo PDF Reader and Editor The External Environment  The General Environment (Contd.) – Political-legal dimension is the extent of government regulation of business and the general relationship between business and government. Outcomes of changes in laws and regulations, such as the deregulation of industries, the privatization of organizations, changes in tax policy, and increased emphasis on environmental protection, minimum wage law, consumer protection laws Increases in laws and regulations increase the costs of resources and limit the uses of resources that managers are responsible for acquiring and using effectively and efficiently. EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 13  Shared using Xodo PDF Reader and Editor The External Environment  The General Environment (Contd.) – Global dimension is the extent to which the organization is affected by the matters in other countries. Outcomes of changes in international relationships; changes in nations’ economic, political, and legal systems; and changes in technology Eg. falling trade barriers, the growth of representative democracies, speed transportation, invention of trading blocks, and reliable and instantaneous communication Important opportunities and threats to managers EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 14  Shared using Xodo PDF Reader and Editor The External Environment EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 15  Shared using Xodo PDF Reader and Editor WHAT IS TASK ENVIRONMENT? WHAT DOES IT INCLUDE?  Shared using Xodo PDF Reader and Editor The External Environment  The Task Environment (Specific Environment) – Specific groups directly affecting the organization Customers who acquire an organization’s products or resources. Competitors seeking the same resources as the organization. Suppliers that provide resources for the organization. Regulators that control, legislate, or influence the organization’s policies or practices: – regulatory agencies. – interest groups. Strategic Partners (allies) who are in a joint venture or partnership with the organization. EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 17  Shared using Xodo PDF Reader and Editor HOW ENVIRONMENTS AFFECT ORGANIZATIONS?  Shared using Xodo PDF Reader and Editor How Environments Affect Organizations?  Three basic perspectives are used to explain how environments affects organizations – Environment change and complexity – Environmental turbulence – Competitive forces EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 19  Shared using Xodo PDF Reader and Editor How Environments Affect Organizations? (cont’d)  Change and Complexity – Environmental change occurs in two ways: Degree of change – the extent to which the environment is relatively stable or relatively dynamic Degree of homogeneity – the extent to which the environment is relatively simple (few elements/segments) or relatively complex (many elements/segments) – Uncertainty (the outcome of change and homogeneity) is a driving force that influences organizational decisions. EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 20  Shared using Xodo PDF Reader and Editor How Environments Affect Organizations? (cont’d)  Environmental Change, Complexity and Uncertainty Simple Degree of Homogeneity Least Moderate uncertainty uncertainty Moderate Most uncertainty uncertainty Complex Stable Degree of Change Dynamic EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 21  Shared using Xodo PDF Reader and Editor How Environments Affect Organizations? (cont’d)  Environmental Turbulence – Unexpected changes and upheavals in the environment  Competitive Forces – Forces that create competitive environment to a firm: Porter’s Five Competitive Forces Threat of new entrants into the market Competitive rivalry among present competitors Threat of substitute products Power of buyers Power of suppliers EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 22  Shared using Xodo PDF Reader and Editor Porter’s Five Competitive Forces Threat of new entrants – Extent to and ease with which new competitors can enter market Competitive rivalry – Rivalry among existing firms in an industry Threat of substitute products – Extent to which alternative products/services may replace the need for existing products/services Power of buyers – Extent to which buyers influence market rivals Power of suppliers – Extent to which suppliers influence market rivals EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 23  Shared using Xodo PDF Reader and Editor HOW ORGANIZATIONS RESPOND TO THEIR ENVIRONMENTS?  Shared using Xodo PDF Reader and Editor How Organizations Respond to Their Environments?  Organization must adopt to the environment changes by assessing its own unique situation  Six basic mechanisms through which an organization adopts to the environment  Information Management  Strategic Response  Mergers, Acquisition and Alliance  Organization design and flexibility  Direct influence to the environment  Social Responsibility EMGT1162 Principles of Management - Prof. MMDR Deegahawature, Dept. of IMGT, FAS, WUSL 25