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Chapter

The Management Environment

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Learning Objectives
Explain what the external environment is and why its important. Discuss how the external environment affects managers. Define what organizational culture is and explain why its important. Describe how organizational culture affects managers.
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What Is External Environment?

External environment is the factors, forces, situations, and events outside the organization that affect its performance.

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Components of External Environment

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How Has the Economy Changed?

Began with turmoil in mortgage markets Spread to businesses when broader credit markets collapsed Called the Great Recession Characterized by foreclosures, high rates of unemployment, huge public debt, and widespread social problems

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How Will Business Change?

Role of government in financial markets and in consumer protection Government spending comparable to World War II levels Additional regulations and increased enforcement and oversight of current regulations

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What Role Do Demographics Play?

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How Does External Environment Affect Managers?

Jobs and employment Assessing environmental uncertainty Managing stakeholder relationships

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Assessing Environmental Uncertainty

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Managing Stakeholder Relationships

Stakeholders are any constituencies in an organizations environment that are affected by the decisions and actions of that organization.

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Why Manage Stakeholder Relationships?

Good stakeholder relationships can:
Positively affect organizational performance Be recognized as doing the right thing and show corporate social responsibility Create and reinforce a positive image of the organization among its stakeholders and community

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Organizational Stakeholders

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What Is Organizational Culture?

Organizational culture is the shared values, principles, traditions, and ways of doing things that influence the way organizational members act.

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Defining Culture and Its Impact

Culture is a perception. Organizational culture isnt concerned with whether members like it. Employees describe the culture in similar terms despite their diversity.

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Strong Corporate Culture = Success

For China Zhongwang, the key has been to transform a corporate slogan into a corporate reality

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How Can Culture Be Assessed?

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How Do Employees Learn the Culture?

Stories Rituals Material symbols Language

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Where Does an Organizations Culture Come From?

Organizational culture derives from:
The founders biases and assumptions about what the organization and its values should be What the first employees learned from their own experiences

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How Does Organizational Culture Affect Managers?

Through its effect on what employees do and how they behave Through its effect on what managers do as they plan, organize, lead, and control

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Acclimating to Corporate Culture

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How Does Culture Affect What Employees Do?

A strong culture reflects employee acceptance of, and commitment to, the organizations key values. The stronger the culture, the more it affects employee and manager actions. A strong culture preempts the need for formal rules and regulations.

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How Does Culture Affect What Managers Do?

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Managerial Decisions Affected by Culture

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Case Study: Honest Tea Company

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