1. External Environment and Organizational Culture
Chapter 4
External Environment and Organizational Culture

2. Planning Ahead—Chapter 4 Study Questions
What is in the general or macro environment of organizations?
What are key elements and issues in the specific or task environment of organizations?
How do organizations accomplish innovation?
What are the emerging issues of sustainability and the environment?

3. Chapter 4 Learning Dashboard
The General or Macro Environment
Economic conditions
Legal-political conditions
Sociocultural conditions
Technological conditions
Natural environment conditions
The Specific or Task Environment
Stakeholders and value creation
Competitive advantage
Uncertainty, complexity, and change

4. Chapter 4 Learning Dashboard
Environmental and Innovation
Types of innovations
The innovation process
Disruptive innovation and technology
Environment and Sustainability
Sustainable development
Sustainable business
Human sustainability

5. Takeaway 1: The General or Macro Environment
The general or macroenvironment — all of the background conditions in the external environment of the organization including:
Economic health of the economy
Legal-political philosophy/objectives of political party running the government
Socio-cultural norms, customs, social values
Technological development and availability of technology
Natural environment nature and conditions of environment

6. Figure 4.1 Sample elements in the general environments of organizations

7. Takeaway 1: The General or Macro Environment
Economic conditions
Things like the overall health of the economy in terms of financial markets, inflation, income levels, and job outlook are always important.
All such economic conditions affect the prospects for individual companies, the spending patterns and lifestyles of consumers, and even a nation’s priorities.
They must be assessed, forecasted, and considered when executives make decisions about the strategies and operations of their organizations.

8. Takeaway 1: The General or Macro Environment
Economic conditions
Offshoring – outsourcing of jobs to foreign locations
Reshoring – return of jobs from foreign locations

9. Takeaway 1: The General or Macro Environment
Legal-political conditions
laws and regulations, government policies, and the objectives of political parties
vary from one country to the next
Ex.Not all countries stand up for international copyright and intellectual property
protection.
Internet censorship - deliberate blockage of public access to information posted on the Internet

10. Takeaway 1: The General or Macro Environment
Sociocultural conditions
diversity issues relating to educational opportunity, access to technology, housing/job options
norms, customs, demographics, and societal values
Generational cohorts -- people born within a few years of one another and who experience somewhat similar life events during their formative years
Cohorts: افواج، جماعه

11. Takeaway 1: The General or Macro Environment
Technological conditions
social media, features and “apps” on smart phones
brings both opportunities “ new product development and advertising to employee networking and data sharing to virtual meetings and always-available chats. Between new applications and fast- developing mobile and smart device technologies” and problems”many employees spend a lot of time doing personal things online. Some employers call this loss of productive time “social notworking.”
work-life balance ““never free from the job””

12. Takeaway 1: The General or Macro Environment
Natural environment conditions
nuclear plant failure, oil spill, hurricane
“carbon neutral,” “green”, “sustainability”
Sustainable business – meets both the needs of customers and protects the natural environment

13. Takeaway 2: The Specific or Task Environment
The specific (task) environment - actual organizations, groups, and persons with whom an organization interacts and conducts business
Includes important stakeholders such as:
Customers
Suppliers
Competitors
Regulators
Owners

14. Stakeholders are the persons, groups, and institutions directly affected by an organization.
The important stakeholders for most organizations include customers, suppliers, competitors, regulators, advocacy groups, investors or owners, and employees. “Society at large” and “future generations” are also part of the stakeholder map; they introduce, in particular, concerns for sustainability and the natural environment.
Organizations should create value for and satisfy the needs of their multiple stakeholders.
Advocacy:”تأييد” public support for or recommendation of particular cause or policy

15. Takeaway 2: The Specific or Task Environment
Multiple stakeholders in the environment of an organization

16. Takeaway 2: The Specific or Task Environment?
Competitive advantage
a core competency that clearly sets an organization apart from competitors and gives it an advantage over them in the marketplace
Companies may achieve competitive advantage in many ways, including:
Costs,
quality,
delivery,
flexibility

17. costs—finding ways and using technology to operate with lower costs than one’s competitors and thus earn profits with prices that one’s competitors have difficulty matching.
quality— finding ways and using technology to create products and services that are of consistently higher quality for customers than what is offered by one’s competitors.
delivery— finding ways and using technology to outperform competitors by delivering products and services to customers faster and on time, and by developing timely new products.
flexibility— finding ways and using technology to adjust and tailor products and services to fit customer needs in ways that are difficult for one’s competitor to match.

18. Takeaway 2: The Specific or Task Environment
Environmental uncertainty
a lack of complete information regarding what exists and what developments may occur in the external environment
The more uncertain the environment, the harder it is to analyze environmental conditions and predict future states of affairs.
Two dimensions of environmental uncertainty:
Degree of complexity
Rate of change

19. Takeaway 2: The Specific or Task Environment
Environmental uncertainty
a lack of complete information regarding what exists and what developments may occur in the external environment
The more uncertain the environment, the harder it is to analyze environmental conditions and predict future states of affairs.
Two dimensions of environmental uncertainty:
Degree of complexity: or the number of different factors in the environment. An environment is typically classified as relatively simple or complex
Rate of change: An environment is typically classified as stable or dynamic

20. Figure 4.2 Dimensions of uncertainty

21. Takeaway 3: Environment and Innovation
Innovation - process of putting new ideas into practice
Innovation is often a high priority when executives and leaders try to steer organizations through complex and uncertain environments
Business innovations
Product innovation: result in the creation of new or improved goods and services
Process innovation: result in better ways of doing things
Business model innovation: result in new ways of
making money for the firm.

22. Takeaway 3 : Environment and Innovation
Social business innovations – find ways to use business models to address important social problems
Ex. “microcredit”

23. Takeaway 3: Environment and Innovation
The innovation process:
Step 1: Imagining
Step 2: Designing
Step 3: Experimenting
Step 4: Assessing
Step 5: Scaling
Reverse innovation – innovation can come from any level in the organization or location

24. Takeaway 3: Environment and Innovation
The innovation process:
Step 1: Imagining
Step 2: Designing
Step 3: Experimenting
Step 4: Assessing
Step 5: Scaling
Reverse innovation – innovation can come from any level in the organization or location

25. Takeaway 3: Environment and Innovation
Disruptive innovation – creates products/services that become so widely used that they largely replace prior practices and competitors

26. Takeaway 4: Environment and Sustainability
Sustainability – commitment to protect the rights of present and future generations as co-stakeholders of present-day natural resources

27. Takeaway 4: Environment and Sustainability
Sustainable development
makes use of environmental resources to support societal needs today while also preserving and protecting them for future generations

28. Takeaway 4: Environment and Sustainability
Environmental capital – natural resources used to sustain life and produce goods and services for society
Land
atmosphere
Water
Minerals

29. Takeaway 4: Environment and Sustainability
Triple Bottom Line: Three P’s of organizational performance
Profit
People
Planet

30. Takeaway 4: Environment and Sustainability
Sustainable business – operates in ways that meets the needs of consumers while protecting the environment
Sustainable/green innovations – help reduce an organization’s negative impact; enhance positive impact

31. Takeaway 4: Environment and Sustainability
Human sustainability – concern for the effect of management practices on employee physical and psychological well-being
Health and wellness programs
Stress management
Minimizing work-family conflict
Control over work
Fair wages and opportunities