CHAPTER 2: THE MANAGEMENT ENVIRONMENT
Explain what the external environment is and why it’s important. Discuss how the external environment affects managers.
Define what organizational culture is and explain why it’s important. Describe how organizational culture affects managers.
What Is External Environment?
External environment is the factors, forces, situations, and events outside the organization that affect its performance.
Understanding External Environment
What Role Do Demographics Play?
Demographics, the characteristics of a population used for purposes of social studies, can and do have a significant impact on how managers manage.
Age is a particularly important demographic for managers since the workplace often has different age groups all working together.
Types of Generations
• Veteran: Those born before 1946
– 67 yrs and above
• Baby boomers: between 1946 and 1964
– App. 49 – 67 yrs
Generation X: born 1965 to 1977
– 36 – 48 yrs
Gen Y: born 1978 to 1994
– 19 – 35 yrs
Gen C (iGeneration): born after 1994
– Less than 19 yrs
Globalization and How Does It Affect Organizations?
An important part of the environment that managers must deal with is GLOBALISATION. Globalization is the free movement of goods, services and people across the world in a seamle ss and integrated manner.
Result in new opportunities or threats to managers.
Often make products obsolete very quickly, can change how organizations are managed. HOW DOES THE EXTERNAL ENVIRONMENT AFFECT MANAGERS?
Three ways the external environment constrains and challenges managers:
Through its Impact on Jobs and employment
One of the important organizational factors affected by changes in the external environment is jobs and employment.
For example, economic downturns result in higher unemployment and place constraints on staffing and production quotas for managers.
Through the amount of uncertainty in the environment
The amount of uncertainty found in the environment can affect organizational effectiveness. Environmental uncertainty is the degree of change and complexity in an organization environment.
Two Dimensions of uncertainty:
1. The degree of change in an organization’s environment (dynamic or stable) – In a dynamic environment, components of the environment change frequently. – If change is minimal, the environment is called a stable environment. 2. The degree of complexity in an organization’s environment (looks at the number of components in an organization’s environment and the extent of the knowledge an organization has about those components).
– If the number of components and the need for sophisticated knowledge is minimal, the environment is classified as simple.
– If a number of dissimilar components and a high need for sophisticated knowledge exist, the environment is complex.
Through the various stakeholder relationships that exist between an organization and its external constituencies.
The nature of stakeholder relationships is another way in which the environment influences managers. –
Stakeholders are any constituencies in an organization’s environment that are affected by the decisions and actions of that organization.
Stakeholders have a stake in or are influenced by what the organization does. In turn, these groups can influence the organization.
What Is Organizational Culture?
Organizational culture is the shared values, principles, traditions, and ways of doing things that influence the way organizational members act.
How Can Culture Be Assessed?
Innovation and risk taking (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...
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