1. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–1 CHAPTER 3 UNDERSTANDING INTERNAL & EXTERNAL ENVIRONMENTS

2. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–2 EXTERNAL ENVIRONMENT ‘Major forces outside the organisation with potential to influence significantly the likely success of a product or service.’

3. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–3 EXTERNAL ENVIRONMENT External environment is made up of: The mega-environment The broad conditions and trends in societies in which an organisation operates. The task environment Specific outside elements with which an organisation interfaces in the course of conducting its business.

4. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–4 THE MEGA-ENVIRONMENT The organisation Sociocultural element Legal-political element International element Technological element Economic element

5. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–5 Five major elements: 1) Technological element: Current state of knowledge regarding production of products & services 2) Economic element: Systems of producing, distributing & consuming wealth Consumers purchasing power, unemployment rate, interest rates mergers and acquisition. Capitalist and socialist economy 3)Legal-political element: Legal & governmental systems within which an organisation must function

6. 4)Sociocultural element: Attitudes, values, norms, beliefs, behaviours & associated demographic trends characteristic of a given geographic area. Delay marriages, single parents, growing work force diversity 5)International element: Developments in countries outside of an organisation’s home country with potential to influence the organisation. currency fluctuations, free trade agreements(NAFTA) Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–6

7. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–7 THE TASK ENVIRONMENT Suppliers Competitors Government & regulators The employment market Public pressure groups THE ORGANISATION Customers/ clients

8. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–8 Five elements: 1) Customers and clients: Individuals and organisations purchasing products/services ---- people who buy the goods. Usually, there are several groups of customers. IMPORTANCE OF CUSTOMER SERVICE INTERNET threat 2) Competitors: Other organisations offering (or with a high potential to offer) rival products/services Rivalry between competitors is usually the most serious force facing managers.

9. 3)Suppliers: Organisations and individuals supplying resources an organisation needs to conduct its operations --- Managers need to secure reliable input sources. ---Suppliers provide raw materials, components, and even labor. Cooperation key element to save money, maintain quality and time Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–9

10. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–10 4)Labour supply: Individuals potentially employable by an organisation. Every organization needs a supply of trained personnel 5)Government agencies: Agencies providing services and monitoring compliance with laws and regulations at local, state or regional and national levels Tax, consumer affairs, police,

11. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–11 1 ) Uncertainty: Condition in which future environmental circumstances affecting an organisation cannot be accurately assessed and predicted. more uncertain-more time and effort spent by the managers. 2)Complexity: Number of elements in an organisation’s environment(task) and their degree of similarity 3)Dynamism: Rate and predictability of change in the elements of an organisation’s environment 4)Bounty: Extent to which the environment can support sustained growth and stability Characteristics of the Environment:

12. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–12 MANAGING THE ENVIRONMENT Three approaches to managing the environment: Adaptation: Involves changing internal operations & activities to make the organisation and its environment more compatible Favourability influence: Involves trying to alter environmental elements to make them more compatible with the organisation’s needs Domain shifting: Changing product/service mix to create favourable interface

13. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–13 ADAPTATION Buffering Stockpiling either inputs into, or outputs from, a production or service process to cope with environmental fluctuations Smoothing Taking actions aimed at reducing the impact of fluctuations, given the market Forecasting Predicting changing conditions & future events that significantly affect an organisation’s business Rationing Providing limited access to a product or service in high demand

14. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–14 FAVOURABILITY INFLUENCE Advertising & public relations Boundary spanning Recruiting Negotiating contracts Co-opting Strategic alliances Trade associations Political activity

15. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–15 DOMAIN SHIFTS Move out of a current product, service or geographic area into a more favourable domain Expand current domains through diversification or expansion of products/services offered

16. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–16 LECTURE # 3 REMAINING CHAPTER # 3

17. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–17 INTERNAL ENVIRONMENT Nature of organisational culture: ‘A system of shared values, assumptions, beliefs and norms uniting organisational members’ (Smircich 1983; Kilman et al. 1986). ‘The way we do things around here.’ The ‘glue’ binding the disparate parts (or the oil that keeps them moving). The interpretive part of organisational behaviour: it explains, gives direction, sustains energy, commitment, and cohesion.

18. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–18 MANIFESTATIONS OF CULTURE Symbols Objects, acts, events or qualities serving as a vehicle for conveying meaning Stories Narratives based on true events, which may be embellished to highlight intended value Rites Relatively elaborate, dramatic, planned sets of activities intended to convey cultural values to participants and, usually, an audience Ceremonials Systems of rites performed in conjunction with a single occasion or event

19. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–19 PROMOTING INNOVATION Strategic Focused on identifying opportunities Committed to seizing opportunities Willing to make major, fast changes Commitment of resources Many stages with risk assessed for each stage Control of resources Rental or outsourcing of resources for flexibility Management structure Few levels, with informal communication

20. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–20 CHANGING ORGANISATIONAL CULTURE An approach to changing culture : Surfacing actual norms Articulating new directions Establishing new norms Identifying culture gaps Closing culture gaps

21. Copyright  2005 McGraw-Hill Australia Pty Ltd PPTs t/a Management: A Pacific Rim Focus 4e by Bartol, Tein, Matthews, Martin 3–21 LEADERSHIP & CULTURAL CHANGE Crisis identification Communication of a new vision Motivation of key staff to lead cultural change by implementing the new vision and its corresponding strategy