University:
Massachusetts Institute of Technology
Course:
15.992 | S-Lab: Laboratory for Sustainable Business
Academic year:

2023
Views:

420

Pages:

32
Author:

Howard Tucker

Chapter 2 Organizational Environments and Cultures What Would You Do?     The “Southwest” of Europe Stiff competition from “go” & rising costs How do you react to the competition & political pressures? What would you do? Learning Objectives: External Environments After reading the next four sections, you should be able to: 1. discuss how changing environments affect organizations 2. describe the four components of the general environment 3. explain the five components of the specific environment 4. describe the process of that companies use to make sense of their changing environments Changing Environments    Environmental complexity and munificence Environmental change Uncertainty Environmental Change The rate at which a company’s general and specific environments change    stable environments dynamic environments Punctuated equilibrium theory   Companies cycle through stable and dynamic environments Environmental Complexity and Munificence Environmental complexity  The number of external factors in the environment that affect organizations  Simple environments   have few environmental factors Complex environments  have many environmental factors Environmental Munificence  The degree to which an organization’s environment has an abundance or scarcity of critical organizational resources Environmental Change, Complexity, and Munificence Uncertainty  How well managers can understand or predict the external changes and trends affecting their businesses General and Specific Environments General Environment     Economy Technological Component Sociocultural Component Political/Legal Component Economy    Growing versus shrinking economies Future economic activity is difficult to predict Business confidence indices  managers’ confidence in the growth of the economy Technological Component   Technology is the knowledge, tools, and techniques used to transform inputs (raw materials, information, etc.) into outputs (products and services) Technological changes can benefit or threaten businesses Sociocultural Component   Refers to the demographic characteristics and general behaviour, attitudes and beliefs of people in a particular society Two important components   Demographic changes Changes in behaviour, attitudes, and beliefs Political/Legal Component   Includes the legislation, regulation, and court decisions that govern and regulate business behaviour Managers must be aware of relevant laws and regulations  Education is a key component Specific Environment      Customer Component Competitor Component Supplier Component Industry Regulation Component Advocacy Groups Customer Component   Companies cannot exist without customers Managers must monitor customer wants and needs  reactive   responding after the fact proactive  anticipating problems Competitor Component   Companies in the same industry that sell similar products or services to customers Competitive analysis    deciding who your competitors are anticipating competitors’ moves determining competitors’ strengths and weaknesses Supplier Component    Companies that provide material, human, financial, and informational resources to other companies Supplier & buyer dependence Opportunistic vs. relationship behaviour Industry Regulation Component  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. Influence techniques:    public communications media advocacy product boycott Making Sense of Changing Environments    Environmental scanning Interpreting environmental factors Acting on threats and opportunities Environmental Scanning Searching the environment for important events or issues that might affect an organization. Scanning:    reduces uncertainty alters organizational strategies contributes to organizational performance Interpreting Environmental Factors   Managers determine what environmental events and issues mean to the organization Opportunities versus threats Acting on Threats and Opportunities   Managers have to decide how to respond to these environmental factors Cognitive maps   simplified models of external environments depicts how managers believe environmental factors relate to possible organizational actions Cognitive Maps Learning Objectives: Internal Environments After reading the next section, you should be able to: 5. explain how organizational cultures are created and how they can help companies be successful Organizational Cultures: Creation, Success, and Change    Creation and maintenance of organizational cultures Successful organizational cultures Changing organizational cultures Creation and Maintenance of Organizational Cultures    Visible artifacts Company founders help create culture Cultures are maintained through:    stories organizational heroes rituals, ceremonies, and symbols Successful Organizational Cultures Changing Organizational Cultures  Behavioural addition   Behavioural substitution   is the process of having managers and employees perform a new behaviour is having managers and employees perform a new behaviour in place of another behaviour Change visible artifacts  Such as the office design and layout, company dress codes, etc. What Really Happened?     Challenges in the economic, supplier, competitor, and industry components Avoids travel agents by using the Web Directly confronts competitors and regulators Experiences new opportunities