Chapter 2

Report
2
Chapter
The
Management
Environment
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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.
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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
organization’s
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
isn’t concerned with
whether members like
it.
• Employees describe the
culture in similar terms
despite their diversity.
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Strong Corporate Culture = Success
“Deliver WOW
through Service.”
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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 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
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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 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.
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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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