MCO 101 • MANAGEMENTUnit 3: Organisation, Globalisation and the resulting environments

MANAGEMENT 2MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights

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Managing Expectations

LEARNING OUTCOMES:

At the end of the course, students will be able to:

• Explain fundamental concepts and principles of management including the basic roles, skills, and functions of management

• Discuss the knowledgeable of historical development, theoretical aspects and practice application of managerial process

• Examine the environment, technology, human resources, and organisations in order to achieve high performance

• Discuss the ethical dilemmas faced by managers and the social responsibilities of businesses.

MANAGEMENT 3MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights

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Managing Expectations

SUBJECTS DISCUSSED:

1. Management, Managers and evolution of Management theory

2. Personality traits and diversity3. Organisation, Globalisation and the resulting

environments4. Decision-making and Planning5. Structure and Strategy6. Executing and Controlling7. Human Resources Management as a function8. Motivation, Leadership, Groups and Teams9. Communication, conflicts and politics10. Operations Management. Entrepreneurship. Innovation

MANAGEMENT 4MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights

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Managing Expectations

TOPIC DETAILS:

After going through UNIT 3, you should be able to:

1. Discuss how changing environments affect organisations.2. Describe the four components of the general environment.3. Explain the five components of the specific environment4. Describe the process that companies use to make sense of their

changing environments.5. Explain how organisational cultures are created and how they

can help companies be successful

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Changing Environments

Environmental Change

Environmental Complexity

Resource Scarcity

Uncertainty

Characteristics ofChanging External Environments

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Environmental Change

Environmental Change is the rate at which a company’s environments change,

• stable environments

• dynamic environments

Punctuated equilibrium theory:

• Companies cycle through stable and dynamic environments.

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Punctuated Equilibrium: U.S. Airline Industry

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Environmental Complexity

Environmental Complexity: the number of external factors in the environment that affect organisations

• Simple Environment• Complex Environment

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Resource Scarcity

Resource Scarcity

The degree to which an organization’s external environment has an abundance or scarcity of critical organisational resources

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Natural Resources

There is general concern over the scarcity of natural resources. Companies like Weyerhauser work extra hard to correct the misperception that they are "using up" valuable resources. In fact, through careful planning and good management, Weyerhauser is able to both guarantee its lumber resources and be a good environmental steward.

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Uncertainty

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External Environment

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Components of the General Environment

Economy Technological trends Sociocultural trends Political / Legal trends

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Economy

• Growing vs. shrinking economies

• Predicting future economic activity

• Business confidence indices

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Technological Component

Information

OutputInputTechnology--

KnowledgeTools

TechniquesRaw

Materials

Services

Products

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Impact of Technology

Technology can be a great benefit or a daunting threat. MP3 players have created a tremendous new business opportunity for some, like Apple, Creative, and other manufacturers. But record labels have suffered from the rapid acceptance of digital music and persistent file swapping.

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Socio-cultural Component

Socio-cultural Components

• Demographic changes

• Changes in behavior, attitudes, and beliefs

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Political / Legal Component

• Legislation

• Regulations

• Court decisions

Managers must be educated about the laws, regulations, and potential lawsuits that could affect business

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Specific Environment

Customer

Competitor

Supplier

Industry Regulation

Advocacy Group

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Customer Component

Monitoring customer wants and needs is critical for business success

Reactive customer monitoring: responding to problems, trends, and events

Proactive customer monitoring: anticipating problems, trends, and events

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Competitor Component

Competitive Analysis

Deciding who your competitors are

Anticipating competitors’ moves

Determining competitors’ strengths and weaknesses

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Supplier Component

Opportunistic Behavior

SuppliersBuyer Dependence

Supplier Dependence

Relationship Behavior

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Supplier Dependence

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Industry Regulation Component

Industry Regulation

Consists of regulations and rules that govern the business practices and procedures of specific industries, businesses, and professions.

Identify and discuss relevant regulatory agencies that affect business practices.

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Cost of Compliance

Researchers studied U.S. manufacturers and the cost they incur complying with the 25 major federal regulations.

Researchers found:

• There are about 300,000 manufacturing companies in the U.S.

• Each company spends roughly $2.2 million

So, the aggregate cost of complying with federal regulations is roughly

$660 billionAnd that’s just for manufacturing.

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Dealing with Gifts and Suppliers

Guidelines to Avoid Conflicts of Interest

There’s no such thing as a free lunch Meals and entertaining are valid business No gifts worth more than $25 in value No cash or cash equivalents No discount on goods and services No stock in suppliers’ companies Don’t allow personal friendship to influence decisions

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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 product boycotts

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Advocacy GroupsExamples

The Body Shop has emphasised its support for a wide range of issues around the globe. Its slogans included: Against Animal Testing, Support Community Trade, Activate Self Esteem, Defend Human Rights, and Protect Our Planet.

PETA is a well-known advocacy group that attempts to influence consumers and companies to pursue animal-friendly practices.

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Making Sense of Changing Environments

Acting on Threats and Opportunities

Interpreting Environmental Factors

Environmental Scanning

EvaluatingEvaluatingExternalExternal

EnvironmentsEnvironments

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Environmental Scanning

Environmental scanning: searching the environment for events or issues that might affect an organisation

keeps companies current on industry factors

reduces uncertainty alters organizational strategies contributes to organizational

performance

Interpreting the scans into opportunities and threats

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Acting on Threats and Opportunities

Cognitive Maps

simplified models of external environments depicts how managers believe environmental

factors relate to possible organisational actions

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Acting on Threats and Opportunities

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Internal Environments

Consists of the trends and events within an organisation that affect the management, employees, and organisational culture

important because it affects what people think, feel, and do at work

organisational culture is the set of key values, beliefs, and attitudes shared by organisational members

Creation & Maintenance of Organisational Culture

Organisational HeroesOrganisational Stories

Company Founder

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Successful Organisational Cultures

EmployeeSatisfaction

Quality

Consistency

Adaptability

Involvement

Clear Vision

SalesGrowth

Return onAssets

Profits

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Levels of Organizational Culture

Symbolic artifacts Behaviors

Symbolic artifacts Behaviors

1. SurfaceLevel

1. SurfaceLevel SEENSEEN

What people say How decisions

are made

What people say How decisions

are made2. Expressed Values

and Beliefs2. Expressed Values

and Beliefs HEARDHEARD

Beliefs andassumptions

Rarely discussed

Beliefs andassumptions

Rarely discussed

3. Unconsciously Held Assumptionsand Beliefs

3. Unconsciously Held Assumptionsand Beliefs BELIEVEDBELIEVED

MANAGEMENT 36MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights

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Changing Organisational Cultures

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.

MANAGEMENT 37MCO 101Issue date: 15 June 2008 Source: by South-Western, a division of Thomson Learning. All rights

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What Would You Do?

Wendy’s International Headquarters

• Obesity is at epic proportions, with 66 percent of Americans overweight

• Fast food restaurants are faced with lawsuits, regulation, and complaints

• Healthier cooking techniques costs more with less tasty results

Should Wendy’s pay attention to activists or give customers what they

want?

Your opinion please…