Management (2021) PDF

Management Fifteenth Edition, Global Edition Topic 5 Managing the External Environment and the...

Management Fifteenth Edition, Global Edition Topic 5 Managing the External Environment and the Organisation’s Culture Chapter 3 Influence of the External Environment and the Organization’s Culture Copyright © 2021 Pearson Education Ltd.  Learning Objectives 1. Contrast the actions of managers according to the omnipotent and symbolic views. 2. Describe the constraints and challenges facing managers in today’s external environment. 3. Discuss the characteristics and importance of organizational culture. 2  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’ In reality, control. managers are neither all- powerful nor helpless. But their decisions and actions are constrained. 3  Exhibit 3.1 Constraints on Managerial Discretion Exhibit 3.1 shows that external constraints come from the organization’s environment and internal constraints come from the organization’s culture. 4 Copyright © 2021 Pearson Education Ltd.  The External Environment The External Environment: Factors, forces and components outside the organization that affect it’s performance: 1. Economic – Encompasses factors such as interest rates, inflation, changes in disposable income, stock market fluctuation, business cycle stages, etc. 2. Demographic – Concerned with trends in population characteristics such as age, race, gender, education level, geographic location, income and family composition. 3. Political/Legal – Concerned with federal, state and local laws, as well as global laws and laws of other countries. It also includes a country’s political conditions and stability. 5  the External Environment (cont.) 4. Technological – Concerned with scientific or industrial innovations. 5. The Sociocultural – Concerned with societal and cultural factors such as values, attitudes, trends, traditions and lifestyles, beliefs, tastes, and patterns of behavior. 6. Global – Encompasses issues associated with globalization and a world economy. 6  Exhibit 3.3 Components of External Environment Exhibit 3.3 shows the different components that make up the external environment. 7 Copyright © 2021 Pearson Education Ltd.  Analyze whether the external environment pose a positive impact OR negative impact to Café de Coral fast food. Name of Factor Elaboration Positive OR Negative Economic 8  Degree of Change There are two dimensions of environmental uncertainty - Environments can be either dynamic or stable: 1. Degree of change. Organizations are stable – minimal change, predictable Organizations are dynamic – frequent change, unpredictable (Refer to Notes Page for extra 9 reading!) Degree of Environmental Complexity (cont.) 2. Degree of Complexity Organizations are simple 1. few components 2. Components are somewhat similar 3. Minimal need for sophisticated knowledge of components Organizations are complex 1. many components 2. Components are NOT similar to one another 3. High need for sophisticated knowledge of components (Refer to Notes Page for extra 10 reading!) Exhibit 3.2 Environmental Uncertainty Matrix Exhibit 3.2 shows the two dimensions of environmental uncertainty. 11 Copyright © 2021 Pearson Education Ltd.  The Specific Environment (1 of 2) Specific Environment: the part of the environment directly relevant to the achievement of organizational goals Most of management’s attention typically focuses on the specific environment Stakeholders – Any constituencies in an organization’s decisions and actions. 12  Exhibit 7-4 (14th edition of R&C) Organizational Stakeholders Exhibit 7-4 identifies some of an organization’s most common stakeholders 13 Copyright © 2018 Pearson Education, Ltd. All Rights Reserved  Exhibit 3.4 the Organization and Its Environment Exhibit 3.4 shows the examples of different components that make up the specific environment. 14 Copyright © 2021 Pearson Education Ltd.  Organizational Culture Just as each individual has a unique personality — traits and characteristics influence the way we act and interact with others. An organization, too, has a personality, which is referred to as organizational culture. 15  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. Cultural Values and practices evolve over time. Organizational Culture is: Perception — based on employee experience within the organization. Descriptive — how members describe it. Shared — employees share perception and experiences. Research suggests six dimensions of culture that seem to capture the essence of an organization’s culture. These range from low to high. 16 Six Dimensions of Organizational Culture Adaptability (the degree to which employees are en­couraged to be innovative and take risks) Attention to detail (the degree to which employees are expected to exhibit precision, analysis, and attention to detail) Outcome orientation (the degree to which managers focus on results or outcomes rather than on the techniques and processes used to achieve those outcomes) People orientation (the degree to which management decisions take into consideration the effect on people within the organization) Team orientation (the degree to which work activities are organized around teams rather than 17 individuals)  Contrasting Organizational culture In many organizations, one cultural dimension is often emphasized more than others and essentially shapes the organization’s personality and the way the organization works. Examples: – At Tesla Motors, the focus is product innovation (High Adaptability). – Southwest Airlines has made its employees a central part of its culture (High People Orientation). 18 Exhibit 3.6 Strong Versus Weak Cultures Strong Cultures Weak Cultures Values widely shared Values limited to a few people – usually top management Culture conveys consistent Culture sends contradictory messages about what’s messages about what’s important important Most employees can tell stories Employees have little knowledge about company history or heroes of company history or heroes Employees strongly identify with Employees have little culture identification with culture Strong connection between Little connection between shared shared values and behaviors values and behaviors 19 Copyright © 2021 Pearson Education Ltd.  Where Culture Comes From and How it Continues Philosophy of Organization’s Founders – The original source of the culture usually reflects the vision of the founders. – The small size of most new organizations makes it easier to establish organizational culture. Selection Criteria – Once the culture is in place, certain organizational practices such as the hiring process help maintain it. 20  Where Culture Comes From and How it Continues Top Management – The actions of top managers also have a major impact on the organization’s culture. – e.g. Gravity CEO, Dan Price, raised the minimum wage at his firm to $70,000 annually and has cut his million dollar salary to fund those pay increases. Since making this decision, Gravity’s financial performance has soared Socialization – New employees learn the organization’s way of doing things through socialization the process that helps employees adapt to the organization’s culture 21  Exhibit 3.7 Establishing and Maintaining Culture Exhibit 3.7 illustrates how an organization’s culture is established and maintained. 22 Copyright © 2021 Pearson Education Ltd.  How Employees learn culture Employees “learn” an organization’s culture in a number of ways. The most common are stories, rituals, material symbols, and language. 1. Stories — organizational stories about significant events or people in the life of the company help keep culture alive. e.g. organization founders, rule breaking, reaction to past mistakes etc. 2. Rituals — repetitive sequences of activities that express and reinforce important organizational values and goals. 23  How Employees learn culture (cont.) 3. Material Artifacts and Symbols — convey to employees what is important and the kinds of expected behaviors, e.g. Adaptability, etc. 4. Language — is often used to identify and unite members of a culture. New employees are frequently overwhelmed with acronyms and jargon that quickly becomes a part of their language. 24  Exhibit 3.8 Types of Managerial Decisions Affected by Culture As shown in Exhibit 3.8, a manager’s decisions are influenced by the culture in which he or she operates. 25 Copyright © 2021 Pearson Education Ltd.  Review of Learning objective 1 Contrast the actions of managers according to the omnipotent and symbolic views. 1. Omnipotent View — Managers are directly responsible for the organization’s success or failure. 2. Symbolic View — Much of the organization’s success or failure is due to external forces outside of the manager’s control. 3. The two constraints on managers' discretion are organizational culture (internal) and the environment (external). 26  Review of Learning objective 2 Describe the constraints and challenges facing managers in today’s external environment. 1. The external environment includes those factors and forces outside the organization that affect its performance. 2. The main components of the external environment are, economic, demographic, political/legal, Sociocultural, technological, and global. 3. Managers face constraints and challenges from these components because they have an impact on jobs, environmental uncertainty, and stakeholder relationships. 27 Review of Learning objective 3 Discuss the characteristics and importance of organizational culture. 1. The dimensions of culture 2. The stronger the culture, the greater the impact on the way managers plan, organize, lead, and control. 3. The original source of the organizational culture reflects the founder’s vision. 4. Culture is transmitted through stories, rituals, material symbols, and language. 28  Review Question 1 Which of the following factors is an economic component of an organization's external environment? A. Lifestyles and behavior B. Education level Demographic C. Disposable income D. Geographic location 29  Review Question 2 Which of the following factor is information about population characteristics such as age, sex, marital status, education, and geographical location related to? A. Economic B. Political/Legal C. Demographic D. Global 30  Review Question 3 Which of the following are the two dimensions of environmental uncertainty? A. Degree of change and degree of complexity B. Degree of change and degree of volume C. Degree of complexity and degree of impact 31  Review Question 4 Which of the following is described as the shared values, principles, traditions and ways of doing things that influence the way organization members act? A. Corporate hierarchy B. Business configuration C. Organizational culture D. Industrial psychology 32  Review Question 5 In 2013, there was a debate on what actually is the sprit/culture of the Chinese University. People often cited stories about the first president of the college to support their arguments. This is an example that culture come from ____________. A. Vision and mission B. Organization founder C. Past practices D. Top management behavior 33  Review Question 6 ______________is a process that helps new employees learn the organization’s way of doing things? 34  Terms to Know omnipotent view of external management environment symbolic view of environmental management uncertainty organizational stakeholders culture strong cultures socialization 35