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Ch 3. Principle of Management

Name 4 factoers of Changing External Environments
Environmental Change, Environmental Complexity, Resource Scarcity , Uncertainty
Environmental Change
is the rate at which a company’s environments change
what are the two kinds of environmental change
stable environments and dynamic environments
In stable environments
the rate of environmental change is slow – decision makers can be more deliberate.
In dynamic environments
the rate of environmental change is fast – decision makers must be nimble and quick.
The fast-paced world of EA Sports is a good example of a
dynamic environment.
EA Sports is a good example of a dynamic environment because…
EA Sports business environment changes quickly.
Environmental Complexity
The number of external factors in the environment that affect organizations.
What are the two factors of Environmental Complexity
Simple and complex environments
Simple Environments
are the dairy industry and the liquor distribution industry. The key systems for each have not changes for nearly a century.
Complex Environments
is the changing nature of Kellogg’s environment. because it is an organization dealing with an increasingly competitive nature.
Resource Scarcity
The degree to which an organization’s external environment has an abundance or scarcity of critical organizational resources
What are the three characteristics of the external environment?
Resources, Environmental Complexity, Environmental Change
How does the there external environment characteristics affect environmental uncertainty.
environmental uncertainty is lowest when environmental change and complexity are at low levels and resources are plentiful. By contrast, environmental uncertainty is highest when environmental change and complexity are extensive and resources are scarce.
How does environmental uncertainty affect managers confidence?
In these environments, managers may not be at all confident that they can understand and predict the external forces affecting their businesses
what are the characteristics of the general environment?
Technologies, political/legal trends, sociocultural trends, and economy
what are characteristics of the specific environmental?
Competition, Organizations, Suppliers, advocacy groups, customers, and industry regulations.
Growing vs. shrinking economies, Predicting future economic activity , Business confidence indices
Business confidence indices
show how confident actual managers are about future business growth.
in a shrinking economy
consumers have less money to spend, and relatively fewer products, making growth for individual businesses more difficult.
In a growing economy
more people are working and have more money to spend. A growing economy provides an environment favorable to business growth.
why do managers prefer business confidence indices to economic statistics.
Managers often prefer business confidence indices to economic statistics, because they know that the level of confidence reported by real managers affects their business decisions. In other words, it’s reasonable to expect managers to make decisions today that are in line with their expectations concerning the economy’s future.
is the knowledge, tools, and techniques used to transform input into output.
what are the two Sociocultural Component
Demographic changes and Changes in behavior, attitudes, and beliefs
How do the Sociocultural component: demographic changes, affect the business.
changing demographic characteristics, such as the number of people with particular skills, or the growth or decline in particular population segments (single or married; old or young; men or women; Caucasians, Hispanics, Blacks, or Asians; etc.) affects how companies run their businesses.
The political/legal component includes
the legislation, regulations, and court decisions that govern and regulate business behavior.
Two characteristics of the Customer Component are
Reactive customer monitoring and proactive customer monitoring
Reactive customer monitoring
responding to problems, trends, and events
Proactive customer monitoring
anticipating problems, trends, and events
Competitor Component
Competitive Analysis, Deciding who your competitors are, Anticipating competitors’ moves, and Determining competitors’ strengths and weaknesses
competitive analysis
companies need to keep close track of what their competitors are doing.
Supplier dependence
is the degree to which a company relies on a supplier because of the importance of the supplier’s product to the company and the difficulty of finding other sources of that product.
Buyer dependence
is degree to which a supplier relies on a buyer because of the importance of that buyer to the supplier and the difficulty of selling its products to other buyers.
opportunistic behavior
A higher degree of buyer or seller dependence can lead to a relationship in which one party benefits at the expense of the other
Relationship behavior
focuses on establishing a mutually beneficial, long-term relationship between buyers and suppliers.
Industry Regulation
Consists of regulations and rules that govern the business practices and procedures of specific industries, businesses, and professions.
Advocacy Groups
Groups of concerned citizens who band together to try to influence the business practices of specific industries, businesses, and professions
Techniques to try to influence companies
public communications, media advocacy, and product boycotts
public communications approach
relies on voluntary participation by the news media and the advertising industry to get an advocacy group’s message out. Such as the public service announcements for World No Tobacco Day.
media advocacy approach
typically involves framing issues as public issues (i.e., affecting everyone); exposing questionable, exploitative, or unethical practices; and obtaining media coverage by buying media time or creating controversy that is likely to receive extensive news coverage. PETA’s actions are a good example of this approach.
A product boycott
is a tactic in which an advocacy group actively tries to convince consumers to not purchase a company’s product or service. Such groups are now using the web to get “the word out” on boycotts as evidenced by Ecopledge.com.
Making Sense of Changing Environments
Environmental Scanning,Interpreting Environmental Factors, and Acting on Threats and Opportunities.
Environmental Scanning is…
Searching the environment for events or issues that might affect an organization
Environmental Scanning can…
keeps companies current on industry factors, reduces uncertainty, alters organizational strategies, and contributes to organizational performance
Scanning the environment allows companies to identify what?
opportunities and threats.
Internal Environments
Consists of the trends and events within an organization that affect the management, employees, and organizational culture
Internal environment affects the way people do what?
affects what people think, feel, and do at work
organizational culture
is the set of key values, beliefs, and attitudes shared by organizational members.
Organizational stories
make sense of organizational events and changes and emphasize culturally consistent assumptions, decisions, and actions. For example, at Wal-Mart, stories abound about the thriftiness of Sam Walton.
Organizational heroes
organizational culture is sustained by recognizing and celebrating heroes, admired for their qualities and achievements.
Creation and Maintenance of Organizational Cultures
is done by maintaining organizational heroes and stories
Three Levels of Organizational Culture
are seen heard and believed
Seen Levels of Organizational Culture
At surface level, the reflections of an organization’s culture can be seen. (the dress code and how workers and managers behave)
Heard Levels of Organizational Culture
the values and beliefs expressed by the company. By listening to what people say and how decisions are made, those values and beliefs become clear.
Believed Levels of Organizational Culture
unconsciously held assumptions and beliefs are buried below the surface. These are the unwritten views and rules that are strongly held and widely shared, but are not discussed or thought about unless someone attempt to change them or violates them.
Changing Organizational Cultures
Behavioral addition, Behavioral substitution, and Change visible artifacts
Behavioral addition
is the process of having managers and employees perform a new behavior
Behavioral substitution
is having managers and employees perform a new behavior in place of another behavior
Change visible artifacts
such as the office design and layout, company dress codes, etc.

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