1 chapter 3 organizational environments and cultures dr. ellen a. drost
TRANSCRIPT
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Chapter 3Organizational Environments
and CulturesDr. Ellen A. Drost
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External Environments
After reading the next four sections, you should be able to:
1. discuss how changing environments affect organizations.
2. describe the four components of the general environment.
3. explain the five components of the specific environment
4. describe the process that companies use to make sense of their changing environments.
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External Environment
External environment is dynamic and complex.
Change is constant.
External environment is dynamic and complex.
Change is constant.
Characteristics ofChanging External Environments
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External Environment
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Components of the General Environment
• Economy• Technological trends• Sociocultural trends• Political / Legal
trends
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Economy
• Growing vs. shrinking economies
• Predicting future economic activity
• Business confidence indices
2.12.1
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Technological Component
InformationInformation
OutputOutputInputInputTechnology--
KnowledgeTools
Techniques
Technology--Knowledge
ToolsTechniques
Raw Materials
Raw Materials
ServicesServices
ProductsProducts
2.22.2
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Impact of TechnologyTechnology can be a great benefit or a daunting threat. MP3 players have created a tremendous new business opportunity for some, like Apple, Creative, and other manufacturers. But record labels have suffered from the rapid acceptance of digital music and persistent file swapping.2.22.2
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Sociocultural Component
• Sociocultural Components
– Demographic changes– Changes in behavior, attitudes,
and beliefs
2.32.3
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Demographics Example
2.32.3
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Political / Legal Component• Legislation
• Regulations• Court decisions
Managers must be educated about the
laws, regulations, and potential lawsuits that could affect business
http://www.eeoc.gov/laws/cra91.htmlhttp://www.dol.gov/esa/whd/fmla/
Web Link 2.42.4
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Specific Environment
CustomerCustomer
CompetitorCompetitor
SupplierSupplier
Industry RegulationIndustry Regulation
Advocacy GroupAdvocacy Group
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Customer Component
Reactive customer monitoring– responding to
problems, trends, and events
Proactive customer monitoring–anticipating problems,
trends, and events
Monitoring customer wants and needs
is critical for business success
3.13.1
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Competitor Component
Competitive AnalysisCompetitive Analysis
Deciding who your competitors areDeciding who your competitors are
Anticipating competitors’ movesAnticipating competitors’ moves
Determining competitors’ strengths and weaknessesDetermining competitors’ strengths and weaknesses
3.23.2
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Supplier Component
Opportunistic BehaviorOpportunistic Behavior
SuppliersSuppliersBuyer Dependence
Buyer Dependence
Supplier Dependence
Supplier Dependence
Relationship BehaviorRelationship Behavior
3.33.3
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Industry Regulation Component
Industry Regulation
Consists of regulations and rules that govern the business practices and procedures of specific industries, businesses, and professions
3.43.4
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Federal Regulation AgenciesConsumer Product Safety Commission
Consumer Product Safety Commission http://www.cpsc.govhttp://www.cpsc.gov
Department of LaborDepartment of Labor http://www.dol.govhttp://www.dol.gov
Environmental Protection AgencyEnvironmental Protection Agency http://www.epa.govhttp://www.epa.gov
Equal EmploymentOpportunity Commission
Equal EmploymentOpportunity Commission http://www.eeoc.govhttp://www.eeoc.gov
Federal Communications Commission
Federal Communications Commission http://www.fcc.govhttp://www.fcc.gov
Federal Reserve SystemFederal Reserve System http://www.federalreserve.govhttp://www.federalreserve.gov
Federal Trade CommissionFederal Trade Commission http://www.ftc.govhttp://www.ftc.gov
Food and Drug AdministrationFood and Drug Administration http://www.fda.govhttp://www.fda.gov
National Labor Relations BoardNational Labor Relations Board http://www. nlrb.govhttp://www. nlrb.gov
Occupational Safety andHealth Administration
Occupational Safety andHealth Administration http://www.osha.govhttp://www.osha.gov
Securities and ExchangeCommission
Securities and ExchangeCommission http://www.sec.govhttp://www.sec.gov
3.43.4
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Cost of ComplianceResearchers studied U.S. manufacturers and the
cost they incur complying with the 25 major federal regulations. Researchers found:
There are about 300,000 manufacturing companies in the U.S.
Each company spends roughly $2.2 million
So, the aggregate cost of complying with federal regulations is roughly
$660 billionAnd that’s just for manufacturing.
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Advocacy GroupsAdvocacy GroupsGroups of concerned citizens who
band together to try to influence the business practices of specific industries, businesses, and professions
Techniques to try to influence companies public communications media advocacy product boycotts3.53.5
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Advocacy Groups
PETA (People for the Ethical Treatment of Animals)
is a well-known advocacy group that attempts to influence consumers and companies to pursue animal-friendly practices.
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Making Sense of Changing Environments
Acting on Threats and Opportunities
Acting on Threats and Opportunities
Interpreting Environmental Factors
Interpreting Environmental Factors
Environmental Scanning
Environmental Scanning
EvaluatingExternal
Environments
EvaluatingExternal
Environments
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Environmental Scanning
• Environmental scanning: – searching the environment for
events or issues that might affect an organization
keeps companies current on industry factors
reduces uncertaintyalters organizational strategiescontributes to organizational performance
4.14.1
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Interpreting Environmental Factors
EnvironmentalScan
EnvironmentalScan
Opportunities?Opportunities? Threats?Threats?
4.24.2
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Internal Environments
After reading this section, you should be able to:
5. explain how organizational cultures are created
and how they can help companies be successful.
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Internal Environments
Internal Environment
Consists of the trends and events within an organization that affect its resources, such as technology, IT, finance, management, employees, and organizational culture.
important because it affects what people think, feel, and do at work
organizational culture is the set of key values, beliefs, and attitudes shared by organizational members
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Creation and Maintenance of Organizational Cultures
Organizational HeroesOrganizational HeroesOrganizational StoriesOrganizational Stories
Company FounderCompany Founder
5.15.1
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Successful Organizational Cultures
EmployeeSatisfactionEmployee
Satisfaction
QualityQuality
ConsistencyConsistency
AdaptabilityAdaptability
InvolvementInvolvement
Clear VisionClear Vision
SalesGrowthSales
Growth
Return onAssets
Return onAssets
ProfitsProfits
Source: D.R. Denison & A.K. Mishra, Organization Science 6 (1995): 204-223
5.25.2
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Levels of Organizational Culture
Symbolic artifacts Behaviors
Symbolic artifacts Behaviors
1. SurfaceLevel
1. SurfaceLevel SEENSEEN
What people say How decisions
are made
What people say How decisions
are made2. Expressed Values
and Beliefs2. Expressed Values
and Beliefs HEARDHEARD
Beliefs andassumptions
Rarely discussed
Beliefs andassumptions
Rarely discussed
3. Unconsciously Held Assumptionsand Beliefs
3. Unconsciously Held Assumptionsand Beliefs BELIEVEDBELIEVED
5.35.3