2- organizational environments and cultures

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Chapter 2Organizational Environments and Cultures

2004 by Nelson, a division of Thomson Canada Limited

1

What Would You Do?

The Southwest of Europe Stiff competition from go & rising costs How do you react to the competition & political pressures? What would you do?

2004 by Nelson, a division of Thomson Canada Limited

2

Learning Objectives: External EnvironmentsAfter 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 of that companies use to make sense of their changing environments2004 by Nelson, a division of Thomson Canada Limited

3

Changing Environments

Environmental complexity and munificence Environmental change Uncertainty

2004 by Nelson, a division of Thomson Canada Limited

4

Environmental Change

The rate at which a companys general and specific environments change

stable environments dynamic environments

Punctuated equilibrium theory

2004 by Nelson, a division of Thomson Canada Limited

Companies cycle through stable and dynamic environments 5

Environmental Complexity and MunificenceEnvironmental complexity The number of external factors in the environment that affect organizations

Simple environments

have few environmental factors have many environmental factors6

Complex environments

2004 by Nelson, a division of Thomson Canada Limited

Environmental Munificence

The degree to which an organizations environment has an abundance or scarcity of critical organizational resources

2004 by Nelson, a division of Thomson Canada Limited

7

Environmental Change, Complexity, and Munificence

Exhibit 2.1 2004 by Nelson, a division of Thomson Canada Limited

8

Uncertainty

How well managers can understand or predict the external changes and trends affecting their businesses

2004 by Nelson, a division of Thomson Canada Limited

9

General and Specific Environments

Exhibit 2.2 2004 by Nelson, a division of Thomson Canada Limited

10

General Environment

Economy Technological Component Sociocultural Component Political/Legal Component

2004 by Nelson, a division of Thomson Canada Limited

11

Economy

Growing versus shrinking economies Future economic activity is difficult to predict Business confidence indices

managers confidence in the growth of the economy12

2004 by Nelson, a division of Thomson Canada Limited

Technological Component

Technology is the knowledge, tools, and techniques used to transform inputs (raw materials, information, etc.) into outputs (products and services) Technological changes can benefit or threaten businesses13

2004 by Nelson, a division of Thomson Canada Limited

Sociocultural Component

Refers to the demographic characteristics and general behaviour, attitudes and beliefs of people in a particular society Two important components

Demographic changes Changes in behaviour, attitudes, and beliefs14

2004 by Nelson, a division of Thomson Canada Limited

Political/Legal Component

Includes the legislation, regulation, and court decisions that govern and regulate business behaviour Managers must be aware of relevant laws and regulations

Education is a key component

2004 by Nelson, a division of Thomson Canada Limited

15

Specific Environment

Customer Component Competitor Component Supplier Component Industry Regulation Component Advocacy Groups

2004 by Nelson, a division of Thomson Canada Limited

16

Customer Component

Companies cannot exist without customers Managers must monitor customer wants and needs

reactive

responding after the fact anticipating problems17

proactive

2004 by Nelson, a division of Thomson Canada Limited

Competitor Component

Companies in the same industry that sell similar products or services to customers Competitive analysis

deciding who your competitors are anticipating competitors moves determining competitors strengths and weaknesses18

2004 by Nelson, a division of Thomson Canada Limited

Supplier Component

Companies that provide material, human, financial, and informational resources to other companies Supplier & buyer dependence Opportunistic vs. relationship behaviour19

2004 by Nelson, a division of Thomson Canada Limited

Industry Regulation Component

Consists of regulations and rules that govern the business practices and procedures of specific industries, businesses, and professions

2004 by Nelson, a division of Thomson Canada Limited

20

Advocacy GroupsGroups of concerned citizens who band together to try to influence the business practices of specific industries, businesses, and professions. Influence techniques:

public communications media advocacy product boycott21

2004 by Nelson, a division of Thomson Canada Limited

Making Sense of Changing Environments

Environmental scanning Interpreting environmental factors Acting on threats and opportunities

2004 by Nelson, a division of Thomson Canada Limited

22

Environmental ScanningSearching the environment for important events or issues that might affect an organization. Scanning:

reduces uncertainty alters organizational strategies contributes to organizational performance23

2004 by Nelson, a division of Thomson Canada Limited

Interpreting Environmental Factors

Managers determine what environmental events and issues mean to the organization Opportunities versus threats

2004 by Nelson, a division of Thomson Canada Limited

24

Acting on Threats and Opportunities

Managers have to decide how to respond to these environmental factors Cognitive maps

2004 by Nelson, a division of Thomson Canada Limited

simplified models of external environments depicts how managers believe environmental factors relate to possible organizational actions

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Cognitive Maps

Exhibit 2.4 2004 by Nelson, a division of Thomson Canada Limited

26

Learning Objectives: Internal EnvironmentsAfter reading the next section, you should be able to: 5. explain how organizational cultures are created and how they can help companies be successful2004 by Nelson, a division of Thomson Canada Limited

27

Organizational Cultures: Creation, Success, and Change

Creation and maintenance of organizational cultures Successful organizational cultures Changing organizational cultures

2004 by Nelson, a division of Thomson Canada Limited

28

Creation and Maintenance of Organizational Cultures

Visible artifacts Company founders help create culture Cultures are maintained through:

stories organizational heroes rituals, ceremonies, and symbols29

2004 by Nelson, a division of Thomson Canada Limited

Successful Organizational Cultures

Exhibit 2.5 2004 by Nelson, a division of Thomson Canada Limited

30

Changing Organizational Cultures

Behavioural addition

is the process of having managers and employees perform a new behaviour is having managers and employees perform a new behaviour in place of another behaviour Such as the office design and layout, company dress codes, etc.31

Behavioural substitution

Change visible artifacts

2004 by Nelson, a division of Thomson Canada Limited

What Really Happened?

Challenges in the economic, supplier, competitor, and industry components Avoids travel agents by using the Web Directly confronts competitors and regulators Experiences new opportunities32

2004 by Nelson, a division of Thomson Canada Limited

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