1. Commercial Economics Lectures 3-4 1 The External Environment The External Environment

2. Commercial Economics Lectures 3-4 2 Defining the External Environment External Environment External Environment Those factors and forces outside the organization that affect the organization’s performance. Those factors and forces outside the organization that affect the organization’s performance. Components of the External Environment Components of the External Environment Specific environment: external forces that have a direct and immediate impact on the organization. Specific environment: external forces that have a direct and immediate impact on the organization. General environment: broad economic, socio-cultural, political/legal, demographic, technological, and global conditions that may affect the organization. General environment: broad economic, socio-cultural, political/legal, demographic, technological, and global conditions that may affect the organization.

3. Commercial Economics Lectures 3-4 3

4. 4 Parameters of Managerial Discretion Parameters of Managerial Discretion

5. Commercial Economics Lectures 3-4 5 Logistic Function Organisation

6. Commercial Economics Lectures 3-4 6 Implications of the Systems Approach Coordination of the organization’s parts is essential for proper functioning of the entire organization. Coordination of the organization’s parts is essential for proper functioning of the entire organization. Decisions and actions taken in one area of the organization will have an effect in other areas of the organization. Decisions and actions taken in one area of the organization will have an effect in other areas of the organization. Organizations are not self- contained and, therefore, must adapt to changes in their external environment. Organizations are not self- contained and, therefore, must adapt to changes in their external environment.

7. Commercial Economics Lectures 3-4 7 The Contingency Approach Contingency Approach Defined Contingency Approach Defined Also sometimes called the situational approach. Also sometimes called the situational approach. There is no one universally applicable set of management principles (rules) by which to manage organizations. There is no one universally applicable set of management principles (rules) by which to manage organizations. Organizations are individually different, face different situations (contingency variables), and require different ways of managing. Organizations are individually different, face different situations (contingency variables), and require different ways of managing.

8. Commercial Economics Lectures 3-4 8 Popular Contingency Variables Popular Contingency Variables Organization size As size increases, so do the problems of coordination. Routineness of task technology Routine technologies require organizational structures, leadership styles, and control systems that differ from those required by customized or nonroutine technologies. Environmental uncertainty What works best in a stable and predictable environment may be totally inappropriate in a rapidly changing and unpredictable environment. Individual differences Individuals differ in terms of their desire for growth, autonomy, tolerance of ambiguity, and expectations.

9. Commercial Economics Lectures 3-4 9 Current Trends and Issues Globalization Globalization Ethics Ethics Workforce Diversity Workforce Diversity Entrepreneurship Entrepreneurship E-business E-business Knowledge Management Knowledge Management Learning Organizations Learning Organizations Quality Management Quality Management

10. Commercial Economics Lectures 3-4 10 How Organizations Go Global How Organizations Go Global

11. Commercial Economics Lectures 3-4 11 Current Trends and Issues (cont’d) Globalization Globalization Management in international organizations Management in international organizations Political and cultural challenges of operating in a global market Political and cultural challenges of operating in a global market Working with people from different cultures Working with people from different cultures Coping with anticapitalist backlash Coping with anticapitalist backlash Movement of jobs to countries with low-cost labor Movement of jobs to countries with low-cost labor Ethics Ethics Increased emphasis on ethics education in college curriculums Increased emphasis on ethics education in college curriculums Increased creation and use of codes of ethics by businesses Increased creation and use of codes of ethics by businesses

12. Commercial Economics Lectures 3-4 12 Categories of E-Business Involvement

13. Commercial Economics Lectures 3-4 13 Distribution and Technology Organisation

14. Commercial Economics Lectures 3-4 14 Dimensions of Organizational Culture Dimensions of Organizational Culture

15. Commercial Economics Lectures 3-4 15 Spirituality and Organizational Culture Workplace Spirituality Workplace Spirituality The recognition that people have an inner life that nourishes and is nourished by meaningful work that takes place in the context of community. The recognition that people have an inner life that nourishes and is nourished by meaningful work that takes place in the context of community. Characteristics of a Spiritual Organization Characteristics of a Spiritual Organization Strong sense of purpose Strong sense of purpose Focus on individual development Focus on individual development Trust and openness Trust and openness Employee empowerment Employee empowerment Toleration of employees’ expression Toleration of employees’ expression

16. Commercial Economics Lectures 3-4 16 Benefits of Spirituality Improved employee productivity Improved employee productivity Reduction of employee turnover Reduction of employee turnover Stronger organizational performance Stronger organizational performance Increased creativity Increased creativity Increased employee satisfaction Increased employee satisfaction Increased team performance Increased team performance Increased organizational performance Increased organizational performance