chapter 03 the environment and culture of organizations
TRANSCRIPT
The Environmental Context of Management
Part TWO
The Environment and Culture of Organization
Chapter 03
The Environment and Culture of Organization
3Chapter 03
City University of Science and Information Technology
Faisal Ghani
The Nature of Organizational Environment
External Environment is everything outside an organization’s boundaries that might affect it. e.g. competitors, customers, suppliers, strategic partners, regulators and economic, technological, international, political-legal and socioculture dimensions.
Internal Environment consists of the conditions and forces within the organization. e.g. owners, board of directors, employees, physical environment and culture.
The Environment and Culture of Organization
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City University of Science and Information Technology
Faisal Ghani
External Environment
Organization’s External Environment consists of two parts:
General Environment is the set of broad dimensions and forces in an organization’s surroundings that create its overall context. e.g. economic, technological, international, political-legal and socioculture dimensions.
Task Environment is specific organizations or groups that influence an organization. e.g. competitors, customers, suppliers, strategic partners, regulators
The Environment and Culture of Organization
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City University of Science and Information Technology
Faisal Ghani
OwnersEmployees
Board of directors Physical environment
Culture
Competitors
CustomersRegulators
Strategic Partners
Suppliers
TechnologicalInternational
Political-legal
Sociocultural
Economic
Internal EnvironmentTask Environment
General Environment
The Organization and its Environment
The Environment and Culture of Organization
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City University of Science and Information Technology
Faisal Ghani
External Environment
General Environment Economic Dimension - The overall health of
the economic system in which the organization operates.
Technological Dimension – The method available for converting resources into product or services.
Sociocultural Dimension – The customs, values and demographic characteristics of the society in which the organization functions.
The Environment and Culture of Organization
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City University of Science and Information Technology
Faisal Ghani
External Environment
General Environment Political-legal Dimension – The
government regulation of businesses and the relationship of businesses and government.
International Dimension – The extent to which an organization is involved in or affected by businesses in other countries.
The Environment and Culture of Organization
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City University of Science and Information Technology
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External Environment
Task Environment Competitor – An organization that
competes with other organizations for resources.
Customer – Whoever pays money to acquire the organization’s products or services.
Supplier – Organization that provides resources to other organizations.
The Environment and Culture of Organization
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City University of Science and Information Technology
Faisal Ghani
External Environment
Task Environment Strategic Partners (Strategic Allies) –
An organization working together with one or more other organizations in a joint venture or similar arrangements.
Regulator – A unit that has the potential to control, legislate or otherwise influence the organization’s policies and practices. Regulatory agency Interest group
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City University of Science and Information Technology
Faisal Ghani
Internal Environment Owners – Whoever can claim property
rights to an organization. Board of Directors – Governing body
elected by a corporation’s stockholders and charged with overseeing the general management of the firm to ensure that it is being run in a way that best serves the stock holders interests.
Employees Physical Environment Culture
The Environment and Culture of Organization
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The Organization’s Culture
Organization Culture – The set of values, beliefs, customs, and attitudes that helps the members of the organization understand what it stands for, how it does things, and what it considers important.
The Environment and Culture of Organization
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City University of Science and Information Technology
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The Organization’s Culture
The Importance of Organization Culture
Determents of Organization Culture Owners Employees Stories etc.
Managing Organization Culture Managers must know what they want to create Hiring managers (CEO etc.)
The Environment and Culture of Organization
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City University of Science and Information Technology
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Organization-Environment Relationships
How Environments Affect Organizations Environmental Change and Complexity Competitive Forces Environmental Turbulence
The Environment and Culture of Organization
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Organization-Environment Relationships How Environments Affect Organizations
Environmental Change and ComplexityDegree of change
Stable Dynamic
Degree of homogeneity Simple Complex
Uncertainty – Unpredictability created by environmental change and complexity.
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Organization-Environment Relationships
LeastUncertainty
ModerateUncertainty
MostUncertainty
ModerateUncertainty
Degree of Change
Degree of Homogeneity
Simple
Complex
Stable Dynamic
Environmental change, complexity and uncertainty
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City University of Science and Information Technology
Faisal Ghani
Organization-Environment Relationships
How Environments Affect Organizations Porter Competitive Forces1. Threat of New Entrants is the extent to which
new competitors can easily enter a market or market segment.
2. Competitive Rivalry (Jockeying Among Contestants) is the nature of competitive relationship between dominant firms in the industry. (Pepsi-Coke)
3. Threat of Substitute Products is the extent to which alternative products or services may diminish the need for existing products or services. (Typewriter-Computer)
The Environment and Culture of Organization
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Organization-Environment Relationships
How Environments Affect Organizations Porter Competitive Forces4. Power of Buyers is the extent to which
buyer of the products or services in an industry have the ability to influence the suppliers.
5. Power of Suppliers is the extent to which the suppliers have the ability to influence potential buyers.
The Environment and Culture of Organization
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Organization-Environment Relationships
How Environments Affect Organizations Environmental Turbulence
Terrorist attacks Strikes Computer viruses and worms Rumors
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Organization-Environment Relationships
How Organizations Adapt to Their Environment Information management
Boundary Spanner – is an employee who spends most of his time in contact with other organizations.
Environmental Scanning – the process of actively monitoring the environment through activities such as observation and reading.
Information system – gather and organize relevant information for managers and to assist summarizing that information.
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Organization-Environment Relationships
How Organizations Adapt to Their Environment Strategic response
Maintaining status quo Altering strategy a bit or Adopting an entirely new strategy
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City University of Science and Information Technology
Faisal Ghani
Organization-Environment Relationships
How Organizations Adapt to Their Environment Mergers, Acquisitions, and Alliances
Merger occurs when two or more firms combine to form a new firm. (Time-Warner)
Acquisition says that acquired firm often continues to operate as a subsidiary of the acquiring company. (hostile takeover)
Alliance is when one firm undertakes a new venture with another firm.
The Environment and Culture of Organization
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City University of Science and Information Technology
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Organization-Environment Relationships
How Organizations Adapt to Their Environment Organization Design and Flexibility
Organization Design is a overall pattern of structural components and arrangements used to manage the total organization.
Direct Influence Signing long term agreements Lobbying and bargaining
Social Responsibility
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City University of Science and Information Technology
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Organization-Environment Relationships General Environment
Task Environment
TheOrganization
InformationManagement
OrganizationDesign andFlexibility
Social Responsibility
Direct Influence
Mergers,Acquisitions and
Alliances
Strategic Response
The Environment and Culture of Organization
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City University of Science and Information Technology
Faisal GhaniEnvironment and Organization EffectivenessModel of Organizational Effectiveness
Acquiring the resourcesneeded from theenvironment…(System Resource Approach)
and combining them inan efficient and productive manner…(Internal Processes Approach)
facilitates theattainment oforganizational goals…(Goal Approach)
and satisfy the strategicconstituents in theenvironment…(Strategic Constituencies Approach)
making in easierto acquire futureresources.(Combined Approach)
Inputs OutputsOrganizational
System
Transformation
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