Chapter 3 Understanding Internal & External Environments
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Transcript of Chapter 3 Understanding Internal & External Environments
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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CHAPTER 3
UNDERSTANDING INTERNAL & EXTERNAL ENVIRONMENTS
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Lecture outline
External environment• Types of external
environment• Analysing the environment• Managing the environment
Internal environment (culture)
• Nature of organisational. culture
• Manifestations of culture• Promoting innovation• Changing organisational.
culture• Leadership & cultural
change
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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External environment
‘Major forces outside the organisation with potential to influence significantly a product or service’s likely success.’
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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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 environmentSpecific outside elements with which an organisation interfaces in the course of conducting its business.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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The Mega-environment
The organisation
Sociocultural element
Legal–political element
International element
Technological element
Economic element
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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The Mega-environmentFive major elements:• Technological element
Current state of knowledge regarding production of products & services.
• Economic elementSystems of producing, distributing & consuming wealth.
• Legal-political elementLegal & governmental systems within which an organisation must function.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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The Mega-environment• Socio-cultural element
Attitudes, values, norms, beliefs, behaviours & associated demographic trends characteristic of a given geographic area.
• International elementDevelopments in countries outside of an organisation’s home country with potential to influence the organisation.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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The Task environment
Suppliers
Competitors
Government & regulators
The employment
market Public pressure groups
The Organisation
Customers/clients
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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The Task environmentFive elements:• Customers and clients
Individuals and organisations purchasing products/services.
• CompetitorsOther organisations either offering (or a high potential of offering) rival products/services.
• SuppliersOrganisations and individuals supplying resources an organisation needs to conduct its operations.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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The Task environment• Labour supply
Individuals potentially employable by an organisation.
• Government agenciesAgencies providing services and monitoring compliance with laws and regulations at local, State or regional and national levels.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Analysing the environmentPerspectives on environment:• Population ecology model
Argues that environmental factors cause organisations to survive or fail.
• Resource dependence modelHighlights the dependence of organisations on environment but attempt to manipulate the environment to reduce this dependence.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Analysing the environment
Environment characteristics:• Uncertainty
Condition in which future environmental circumstances affecting an organisation cannot be accurately assessed and predicted.
• ComplexityNumber of elements in an organisation’s environment and their degree of similarity.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Analysing the environment
• DynamismRate and predictability of change in the elements of an organisation’s environment.
• BountyExtent to which the environment can support sustained growth and stability.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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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 influenceInvolves trying to alter environmental elements to make them more compatible with the organisation’s needs.
• Domain shiftingChanging product/service mix to create favourable interface.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Adaptation• Buffering
Stockpiling either inputs into or outputs from a production or service process to cope with environmental fluctuations.
• SmoothingTaking actions aimed at reducing the impact of fluctuations, given the market.
• ForecastingPredicting changing conditions & future events that significantly affect an organisation’s business.
• RationingProviding limited access to a product or service in high demand.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Favourability influence• Advertising & public relations• Boundary spanning• Recruiting• Negotiating contracts• Co-opting• Strategic alliances• Trade associations• Political activity
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Domain shifting• 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
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Internal environmentNature of organisational culture:• ‘A system of shared values, assumption, 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.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Manifestations of culture• Symbols
Object, act, event or quality serving as a vehicle for conveying meaning.
• StoriesNarrative based on true events, which may be embellished to highlight intended value.
• RitesRelatively elaborate, dramatic, planned set of activities intended to convey cultural values to participants and, usually, an audience.
• CeremoniesSystem of rites performed in conjunction with a single occasion or event.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Promoting innovation• Strategic
Focussed on identifying opportunities.
• Committed to seizing opportunitiesWilling to make major, fast changes.
• Commitment of resourcesMany stages with risk assessed for each stage.
• Control of resourcesRental or outsourcing of resources for flexibility.
• Management structureFew levels with informal communication.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Changing organisational cultureBecause they involve fairly stable values,assumptions, beliefs & norms, organisations canbe difficult to change.An approach to changing culture:• Surfacing actual norms• Articulating new directions• Establishing new norms• Identifying culture gaps• Closing culture gaps.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Leadership and 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
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Lecture summary
External environment:• Types of external environment
Mega environment; Task environment• Analysing the environment
Models: Ecology & Resource dependence• Managing the environment
Adaptation, Favourability influence & Domain shift
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Lecture summaryInternal environment (culture):• Nature of organisational culture
System of shared values, assumption, beliefs and norms uniting organisational members.
• Manifestations of cultureSymbols, stories, rites and ceremonies.
• Promoting innovationRequires strategically oriented organisations with ability to change quickly.
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© 2003 McGraw-Hill Australia Pty Ltd. PowerPoint Slides t/a Management: A Pacific Rim Focus Enhanced Edition. Slides prepared by David Meacheam & George Sansbury.
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Lecture summary
Internal environment (culture):• Changing organisational culture
Difficult because of need to change values & behaviour.
• Leadership & cultural changeLeaders convey need for change, provide new vision & motivate key staff.