Midterm 2 MAN2 summary
Chapter 3: Influence of external environment and organization’s culture
Learning objectives:
- Contrast the actions of managers according to the omnipotent and symbolic
views
- Describe the constraints and challenges facing managers in today’s external
environment.
- Discuss the characteristics and importance of organizational culture.
Management view
- The omnipotent view: the view that managers are directly responsible for an
organization’s success or failure.
o Differences in an organization’s performance are assumed to be due to
the decisions and actions of its managers. In the omnipotent view,
someone has to be held accountable when organizations perform
poorly regardless of the reasons or get the credits when things go well
the manager. This view of managers as omnipotent is consistent
with the stereotypical picture of the take-charge business executive who
overcomes any obstacle in seeing that the organization achieves its
goals. (coach)
- The symbolic view: the view that much of an organization’s success or failure
is due to external forces outsides managers’ control.
o According to this view, it’s unreasonable to expect managers to
significantly affect an organization’s performance. Instead, performance
is influenced by factors such as the economy, customers, governmental
policies, competitors’ actions, industry conditions, and decisions made
by previous managers. Management has only a limited effect on
substantive organizational outcomes. Management creates the illusion
of control for the benefit of stockholders, customers, employees, and
the public. However, according to the symbolic view, the actual part
management plays in success or failure is minimal
Reality
Internal constraints that restrict a manager’s decision options exist within every
organization derived from the organization’s culture.
In addition, external constraints affect the organization and restrict managerial
freedom come from the organization’s environment.
Defining the Environment and Environmental Uncertainty
Environment: institutions or forces that are outside the organization and potentially
affect the organization’s performance.
Environmental uncertainty: the degree of change and complexity in an organization
environment.
, Managers have the greatest influence on organizational outcomes in Cell 1 and the least in Cell 4.
1. The first dimension of uncertainty is the degree of change. If the components
in an
organization’s environment change frequently, it’s a dynamic environment. If
change is minimal, it’s a stable one.
o A stable environment might be one with no new competitors, few
technological breakthroughs by current competitors, little activity by
pressure groups to influence the organization.
When we talk about degree of change change that’s unpredictable. If
change can be accurately anticipated, it’s not an uncertainty for managers.
2. The other dimension of uncertainty describes the degree of environmental
complexity, which looks at the number of components in an organization’s
environment and the extent of the knowledge that the organization has about
those components.
o An organization with fewer competitors, customers, suppliers,
government agencies, and so forth faces a less complex and uncertain
environment
The environment can also be analyzed at two levels
- General environment: everything outside the organization. The general
environment covers conditions that may affect the organization but whose
relevance isn’t clear.
o The economic component encompasses factors such as interest
rates, inflation, changes in disposable income, stock market
fluctuations, and business cycle stages.
o The demographic component is concerned with trends in population
characteristics such as age, race, gender, education level, geographic
location, income, and family composition.
o The political/legal component looks at federal, state, and local laws
as well as global laws and the laws of other countries. It also includes a
country’s political conditions and stability.
o The sociocultural component is concerned with societal and cultural
factors such as values, attitudes, trends, traditions, lifestyles, beliefs,
tastes, and patterns of behavior.
o The technological component is concerned with scientific or industrial
innovations.
o The global component encompasses those issues associated with
globalization and a world economy
, - Specific environment: the part of the environment consisting of crucial
constituencies or stakeholders that can positively or negatively influence an
organization effectiveness.
o Suppliers: provides the organization with labor, materials, and
equipment. Management seeks to ensure a steady flow of needed
inputs at the lowest price possible. Because these inputs represent
uncertainties their unavailability or delay can significantly reduce the
organization’s effectiveness— management typically goes to great
efforts to ensure a steady reliable flow.
o Customers: Organizations exist to meet the needs of customers.
Customers obviously represent potential uncertainty to an organization
because customers can be fickle (change in consumer buying
preferences)
o Competitors: that competitors in terms of pricing, services offered,
accessibility, new products developed, and the like represent an
important environmental force that management must monitor and to
which it must be prepared to respond.
o Government: Federal, state, and local governments influence what
organizations can and cannot do. Organizations spend a great deal of
time and money to meet government regulations. But the effects of
these regulations go beyond time and money. They also reduce
managerial discretion. They limit the choices available to managers.
o Pressure groups: the special-interest
groups that attempt to influence the actions
of organizations. (Black Lives Matter
protesters attacked Starbucks and
demanded changes in policies when a
Philadelphia store manager called police
who then arrested two black men that were
sitting at a table without ordering anything.)
The environment constrains managers but does not tie
their hands completely Management should identify
the key external constituencies and build a relationship
with them
Organizational culture: shared values, principles,
traditions, and ways of doing things that influence the way organizational members
act and that distinguish the organization from other organizations.
o In most organizations, these shared values and practices have evolved over
time and determine, to a large extent how “things are done around here.”
Our definition of culture implies three things;
1. Perception: It’s not something that can be physically touched or seen, but
employees perceive it on the basis of what they experience within the
organization
2. Descriptive: It’s concerned with how members perceive the culture and
describe it, not with whether they like it.
, 3. Shared aspect: even though individuals may have different backgrounds or
work at different organizational levels, they tend to describe the organization’s
culture in similar terms
Six dimensions that appear to capture the essence of an organization’s culture:
1. Adaptability —The degree to which employees are encouraged to be
innovative and flexible and to take risks and experiment.
2. Attention to detail—The degree to which employees are expected to exhibit
precision, analysis, and focus on details.
3. Outcome orientation—The degree to which management emphasizes results
rather than on the techniques and processes used to achieve them.
4. People orientation—The degree to which management decisions consider
the effect of outcomes of people within and outside the organization.
5. Team orientation—The degree to which collaboration is encouraged and
work activities are organized around teams rather than individuals.
6. Integrity—The degree to which people exhibit honesty and high ethical
principles in their work.
Example:
Managers are expected to fully document all Management encourages and rewards risk-
decisions taking and change.
Creative decisions that incur significant Decisions based on intuition are valued as
change or risk are not encouraged much as those that are well rationalized
“If it ain’t broke, don’t fix it.” Good idea are encouraged to “run with it,” and
failures are treated as “learning experiences.”
There are extensive rules and regulations in There are few rules and regulations for
this firm that employees are required to follow employees to follow
Work activities are designed around Job activities are designed around work teams
individuals
Performance evaluations and rewards Individuals and teams have goals, and
emphasize individual effort bonuses are based on achievement o
outcomes.
Strong culture: organizational cultures in which the key values are intensely held
and widely shared
The more employees accept the organization’s values and the greater their
commitment to those value the stronger the culture
Strong culture Weak culture
Values widely shared Values limited to a few people usually
Chapter 3: Influence of external environment and organization’s culture
Learning objectives:
- Contrast the actions of managers according to the omnipotent and symbolic
views
- Describe the constraints and challenges facing managers in today’s external
environment.
- Discuss the characteristics and importance of organizational culture.
Management view
- The omnipotent view: the view that managers are directly responsible for an
organization’s success or failure.
o Differences in an organization’s performance are assumed to be due to
the decisions and actions of its managers. In the omnipotent view,
someone has to be held accountable when organizations perform
poorly regardless of the reasons or get the credits when things go well
the manager. This view of managers as omnipotent is consistent
with the stereotypical picture of the take-charge business executive who
overcomes any obstacle in seeing that the organization achieves its
goals. (coach)
- The symbolic view: the view that much of an organization’s success or failure
is due to external forces outsides managers’ control.
o According to this view, it’s unreasonable to expect managers to
significantly affect an organization’s performance. Instead, performance
is influenced by factors such as the economy, customers, governmental
policies, competitors’ actions, industry conditions, and decisions made
by previous managers. Management has only a limited effect on
substantive organizational outcomes. Management creates the illusion
of control for the benefit of stockholders, customers, employees, and
the public. However, according to the symbolic view, the actual part
management plays in success or failure is minimal
Reality
Internal constraints that restrict a manager’s decision options exist within every
organization derived from the organization’s culture.
In addition, external constraints affect the organization and restrict managerial
freedom come from the organization’s environment.
Defining the Environment and Environmental Uncertainty
Environment: institutions or forces that are outside the organization and potentially
affect the organization’s performance.
Environmental uncertainty: the degree of change and complexity in an organization
environment.
, Managers have the greatest influence on organizational outcomes in Cell 1 and the least in Cell 4.
1. The first dimension of uncertainty is the degree of change. If the components
in an
organization’s environment change frequently, it’s a dynamic environment. If
change is minimal, it’s a stable one.
o A stable environment might be one with no new competitors, few
technological breakthroughs by current competitors, little activity by
pressure groups to influence the organization.
When we talk about degree of change change that’s unpredictable. If
change can be accurately anticipated, it’s not an uncertainty for managers.
2. The other dimension of uncertainty describes the degree of environmental
complexity, which looks at the number of components in an organization’s
environment and the extent of the knowledge that the organization has about
those components.
o An organization with fewer competitors, customers, suppliers,
government agencies, and so forth faces a less complex and uncertain
environment
The environment can also be analyzed at two levels
- General environment: everything outside the organization. The general
environment covers conditions that may affect the organization but whose
relevance isn’t clear.
o The economic component encompasses factors such as interest
rates, inflation, changes in disposable income, stock market
fluctuations, and business cycle stages.
o The demographic component is concerned with trends in population
characteristics such as age, race, gender, education level, geographic
location, income, and family composition.
o The political/legal component looks at federal, state, and local laws
as well as global laws and the laws of other countries. It also includes a
country’s political conditions and stability.
o The sociocultural component is concerned with societal and cultural
factors such as values, attitudes, trends, traditions, lifestyles, beliefs,
tastes, and patterns of behavior.
o The technological component is concerned with scientific or industrial
innovations.
o The global component encompasses those issues associated with
globalization and a world economy
, - Specific environment: the part of the environment consisting of crucial
constituencies or stakeholders that can positively or negatively influence an
organization effectiveness.
o Suppliers: provides the organization with labor, materials, and
equipment. Management seeks to ensure a steady flow of needed
inputs at the lowest price possible. Because these inputs represent
uncertainties their unavailability or delay can significantly reduce the
organization’s effectiveness— management typically goes to great
efforts to ensure a steady reliable flow.
o Customers: Organizations exist to meet the needs of customers.
Customers obviously represent potential uncertainty to an organization
because customers can be fickle (change in consumer buying
preferences)
o Competitors: that competitors in terms of pricing, services offered,
accessibility, new products developed, and the like represent an
important environmental force that management must monitor and to
which it must be prepared to respond.
o Government: Federal, state, and local governments influence what
organizations can and cannot do. Organizations spend a great deal of
time and money to meet government regulations. But the effects of
these regulations go beyond time and money. They also reduce
managerial discretion. They limit the choices available to managers.
o Pressure groups: the special-interest
groups that attempt to influence the actions
of organizations. (Black Lives Matter
protesters attacked Starbucks and
demanded changes in policies when a
Philadelphia store manager called police
who then arrested two black men that were
sitting at a table without ordering anything.)
The environment constrains managers but does not tie
their hands completely Management should identify
the key external constituencies and build a relationship
with them
Organizational culture: shared values, principles,
traditions, and ways of doing things that influence the way organizational members
act and that distinguish the organization from other organizations.
o In most organizations, these shared values and practices have evolved over
time and determine, to a large extent how “things are done around here.”
Our definition of culture implies three things;
1. Perception: It’s not something that can be physically touched or seen, but
employees perceive it on the basis of what they experience within the
organization
2. Descriptive: It’s concerned with how members perceive the culture and
describe it, not with whether they like it.
, 3. Shared aspect: even though individuals may have different backgrounds or
work at different organizational levels, they tend to describe the organization’s
culture in similar terms
Six dimensions that appear to capture the essence of an organization’s culture:
1. Adaptability —The degree to which employees are encouraged to be
innovative and flexible and to take risks and experiment.
2. Attention to detail—The degree to which employees are expected to exhibit
precision, analysis, and focus on details.
3. Outcome orientation—The degree to which management emphasizes results
rather than on the techniques and processes used to achieve them.
4. People orientation—The degree to which management decisions consider
the effect of outcomes of people within and outside the organization.
5. Team orientation—The degree to which collaboration is encouraged and
work activities are organized around teams rather than individuals.
6. Integrity—The degree to which people exhibit honesty and high ethical
principles in their work.
Example:
Managers are expected to fully document all Management encourages and rewards risk-
decisions taking and change.
Creative decisions that incur significant Decisions based on intuition are valued as
change or risk are not encouraged much as those that are well rationalized
“If it ain’t broke, don’t fix it.” Good idea are encouraged to “run with it,” and
failures are treated as “learning experiences.”
There are extensive rules and regulations in There are few rules and regulations for
this firm that employees are required to follow employees to follow
Work activities are designed around Job activities are designed around work teams
individuals
Performance evaluations and rewards Individuals and teams have goals, and
emphasize individual effort bonuses are based on achievement o
outcomes.
Strong culture: organizational cultures in which the key values are intensely held
and widely shared
The more employees accept the organization’s values and the greater their
commitment to those value the stronger the culture
Strong culture Weak culture
Values widely shared Values limited to a few people usually
