1. 3-1 王青 - 管理学院 - 上海交通大学 2000-1 3 3 The Organizational Environment * Organization-Environment TheoryTheory * Organizational Environment Organizational Environment

2. 3-2 王青 - 管理学院 - 上海交通大学 2000-1 Organization-Environment Theory Considers relationships inside and outside the organization. An open system interacts with the environment. A closed system is self-contained.

3. 3-3 王青 - 管理学院 - 上海交通大学 2000-1 The Organization as an Open System Input Stage ConversionStage OutputStage Sales of outputs Firm can then buy inputs Figure 2.4

4. 3-4 王青 - 管理学院 - 上海交通大学 2000-1 Systems between org. n env. Inputs TransformationOutputs Raw materials Human resources Capital Technology Information Products & services Financial results Information Human results Employees` work activities Management activities Technology and operations methods System

5. 3-5 王青 - 管理学院 - 上海交通大学 2000-1 Organizational Environment Those forces outside its boundaries that can impact it with : Opportunities: openings for managers to enhance revenues or open markets. Threats: issues that can harm an organization. Managers must seek opportunities and avoid threats.

6. 3-6 王青 - 管理学院 - 上海交通大学 2000-1 Environment Range Task Environment: forces from suppliers, distributors, customers, and competitors. General Environment : Consists of the wide economic, technological, demographic and similar issues.

7. 3-7 王青 - 管理学院 - 上海交通大学 2000-1 Chart of environment Figure 3.1 DistributorsFirm Supplier s Competitors Customers Economic Forces Global Forces Socio-cultural Forces Demographic Forces Technological Forces Political & Legal Legal Forces

8. 3-8 王青 - 管理学院 - 上海交通大学 2000-1 Suppliers Suppliers provide raw materials, components, and even labor. Working with suppliers can be hard due to : shortages, unions, lack of substitutes. Managers need to secure reliable input sources. So managers prefer to have many, similar suppliers of each item.

9. 3-9 王青 - 管理学院 - 上海交通大学 2000-1 Distributors Organizations that help others to sell goods. Some distributors like Wall-Mart have strong bargaining power.

10. 3-10 王青 - 管理学院 - 上海交通大学 2000-1 Customers people who buy the goods. Usually, there are several groups of customers. Business buyers, Home buyers, government buyers.

11. 3-11 王青 - 管理学院 - 上海交通大学 2000-1 Competitors Organizations that produce similar goods. High levels of rivalry often means lower prices. Barriers to entry keep new competitors out and result from: Economies of scale Brand loyalty Capital need

12. 3-12 王青 - 管理学院 - 上海交通大学 2000-1 Economic forces Affect the national economy and the organization. Includes: interest rates, unemployment rates, economic growth.

13. 3-13 王青 - 管理学院 - 上海交通大学 2000-1 Skills & equipment used in design, production and distribution. Result in new opportunities or threats to managers. Often make products obsolete very quickly. Technological forces

14. 3-14 王青 - 管理学院 - 上海交通大学 2000-1 The Industry Life Cycle Figure 3.3 BirthGrowthShakeoutMaturityDecline

15. 3-15 王青 - 管理学院 - 上海交通大学 2000-1 In the stage firms seek to develop a winning technology. Birth stage

16. 3-16 王青 - 管理学院 - 上海交通大学 2000-1 Growth stage Product gains customer acceptance and grows rapidly. New firms enter industry, production improves, distributors emerge.

17. 3-17 王青 - 管理学院 - 上海交通大学 2000-1 At end of growth, there is a slowing customer demand. Competitor rivalry increases, prices fall. Least efficient firms fail and leave industry. Shakeout stage

18. 3-18 王青 - 管理学院 - 上海交通大学 2000-1 Maturity stage Most customers have bought the product, growth is slow. Relationships between suppliers, distributors more stable. Usually, industry dominated by a few, large firms.

19. 3-19 王青 - 管理学院 - 上海交通大学 2000-1 Decline stage Falling demand for the product. Prices fall, weaker firms leave the industry.

20. 3-20 王青 - 管理学院 - 上海交通大学 2000-1 Result from changes in the social or national culture of society. values, norms, knowledge, beliefs, practices that unite a country. Social-cultural forces

21. 3-21 王青 - 管理学院 - 上海交通大学 2000-1 Result from changes in the nature, composition and diversity of a population. gender age ethnic origin Currently, most industrial countries are aging. Demographic forces

22. 3-22 王青 - 管理学院 - 上海交通大学 2000-1 Political-legal forces: result from changes in the political arena. These are often seen in the laws of a society. Today, there is increasing deregulation of many state-run firms. Political-legal forces

23. 3-23 王青 - 管理学院 - 上海交通大学 2000-1 Global forces Result from changes in international relationships between countries. Tariff Barriers Economic Systems Distance barriers culture barriers International Expansion

24. 3-24 王青 - 管理学院 - 上海交通大学 2000-1 Economic Systems Free market economy: production of goods and services is in private ownership. Command economy: decisions on what to produce, how much, done by the government. Mixed economy: certain economic sectors controlled by private business, others are government controlled.

25. 3-25 王青 - 管理学院 - 上海交通大学 2000-1 *Changing Political and Economic Forces Russia 1985 Russia 1995 Democratic Political Freedom Totalitarian China 1985 China 1995 Command Market Mixed Economic Freedom Britain 1985 Britain 1995 Hungary 1985 Hungary 1995 Figure 4.4

26. 3-26 王青 - 管理学院 - 上海交通大学 2000-1 * Free-trade agreements GATT: General Agreement on Tariff and Trade NAFTA: North American Free Trade Agreement. No tariffs on goods traded between Mexico, Canada and the U.S. Allows unrestricted cross-border flows of resources. EU:European Union

27. 3-27 王青 - 管理学院 - 上海交通大学 2000-1 * International Expansion Importing Exporting Licensing Franchising Joint Ventures Strat. Alliances Alliances Wholly- owned For. Subsidiary Subsidiary Low High Level of Foreign involvement and investment needed by a global organization Figure 4.6

28. 3-28 王青 - 管理学院 - 上海交通大学 2000-1 Importing and Exporting the least complex method of expansion. Exporting: firm makes products and sells abroad. Importing: firm sells products made abroad.

29. 3-29 王青 - 管理学院 - 上海交通大学 2000-1 Licensing Firm allows foreign organization to make and distribute goods for a fee. Helps the home firm since it does not have to set up a complete production and distribution network.

30. 3-30 王青 - 管理学院 - 上海交通大学 2000-1 Franchising Company sells a foreign organization the rights to use brand name and know-how in return for payment and profit percentage.

31. 3-31 王青 - 管理学院 - 上海交通大学 2000-1 Strategic Alliances Managers pool resources with a foreign firm and both organizations share the rewards and risks. Allows firm to maintain control which is a problem with exporting, licensing, and franchising.

32. 3-32 王青 - 管理学院 - 上海交通大学 2000-1 Wholly-owned foreign subsidiary Firm invests in production operations in a foreign country. This is very expensive but can yield high returns.