2 Chapter The Management Environment Copyright ©2013 Pearson Education, Inc. publishing as Prentice...

2Chapter

The Management Environment

Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall 2-1

Learning Objectives

• Explain what the external environment is and why it’s important.

• Discuss how the external environment affects managers.

• Define what organizational culture is and explain why it’s important.

• Describe how organizational culture affects managers.


What Is External Environment?

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


Components of External Environment


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


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


What Role Do Demographics Play?


How Does External Environment Affect Managers?• Jobs and employment• Assessing

environmental uncertainty

• Managing stakeholder relationships


Assessing Environmental Uncertainty


Managing Stakeholder Relationships

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


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


Organizational Stakeholders


What Is Organizational Culture?

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


Defining Culture and Its Impact

• Culture is a perception.• Organizational culture

isn’t concerned with whether members like it.

• Employees describe the culture in similar terms despite their diversity.


Strong Corporate Culture = Success

“Deliver WOW through Service.”


How Can Culture Be Assessed?


How Do Employees Learn the Culture?

• Stories• Rituals• Material symbols• Language


Where Does an Organization’s Culture Come From?

• Organizational culture derives from:– The founder’s biases and assumptions about what

the organization and its values should be– What the first employees learned from their own

experiences


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


Acclimating to Corporate Culture


How Does Culture Affect What Employees Do?• A strong culture reflects employee acceptance

of, and commitment to, the organization’s 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.


How Does Culture Affect What Managers Do?


Managerial Decisions Affected by Culture


Case Study: Honest Tea Company


2 Chapter The Management Environment Copyright ©2013 Pearson Education, Inc. publishing as Prentice...

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