1 / 37

Reacting to Southwest Europe Competition and Rising Costs

Learn how to navigate stiff competition and political pressures in Southwest Europe. Understand the changing organizational environments and develop strategies to respond effectively.

phillipjoseph
Download Presentation

Reacting to Southwest Europe Competition and Rising Costs

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 2 Organizational Environments and Cultures

  2. 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?

  3. Learning ObjectivesExternal Environments After discussing this section, you should be able to: • discuss how changing environments affect organizations. • describe the four components of the general environment. • explain the five components of the specific environment. • describe the process that companies use to make sense of their changing environments.

  4. Changing Environments • Environmental Change • Environmental Complexity • Environmental Munificence • Uncertainty

  5. 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

  6. Punctuated Equilibrium: U.S. Airline Industry Adapted from Exhibit 2.1

  7. 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.

  8. Environmental Munificence • The degree to which an organization’s external environment has an abundance or scarcity of critical organizational resources

  9. Uncertainty • How well managers can understand or predict the external changes and trends affecting their businesses

  10. High Medium Environmental Uncertainty Low Environmental Characteristics Complexity Change Resources Environmental Change, Complexity, & Munificence Adapted from Exhibit 2.2

  11. General & Specific Environments Specific Environment Sociocultural Component Economy General Environment Customers Competitors Business A Customers Competitors Advocacy Groups Business B Suppliers Advocacy Groups Industry Regulation Suppliers Industry Regulation Political/Legal Component Technological Component Adapted from Exhibit 2.3

  12. General Environment • Economy • Technological • Sociocultural • Political/Legal

  13. Economy • Growing vs. shrinking economies • Future economic activity is difficult to predict • Business confidence indices • owners’/managers’ confidence in the growth of the economy

  14. Technological • 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

  15. Sociocultural • Refers to the demographic characteristics and general behavior, attitudes, and beliefs of people in a particular society • Two important components • Demographic changes • Changes in behavior, attitudes, and beliefs

  16. Political/Legal • Includes the legislation, regulation, and court decisions that govern and regulate business behavior • Managers must be aware of relevant laws and regulations • track changes • avoid lawsuits and penalties

  17. Specific Environment • Customer • Competitor • Supplier • Industry Regulation • Advocacy Group

  18. Customer Component • Customers are essential for business survival • Managers must monitor customers’ wants and needs • reactive • responding to complaints • proactive • anticipating problems

  19. 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

  20. Supplier Component • Companies that provide material, human, financial, and informational resources to other companies • Supplier & buyer dependence • Opportunistic vs. relationship behavior

  21. Industry Regulation Component • Consists of regulations and rules that govern the business practices and procedures of specific industries, businesses, and professions

  22. Federal Regulatory Agencies & Commissions Adapted from Exhibit 2.5

  23. Federal Regulatory Agencies & Commissions Adapted from Exhibit 2.5

  24. Advocacy Group Component • 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 boycotts

  25. Making Sense of Changing Environments • Environmental Scanning • Interpreting Environmental Factors • Acting on Threats and Opportunities

  26. 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

  27. Interpreting Environmental Factors • Managers determine what environmental events and issues mean to the organization • Opportunities vs. threats

  28. 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

  29. Too small to get volume discounts Low employee turnover Reasonable selection prices Know customers well Strength & Weaknesses Environmental Factors Potential Actions Cognitive Maps Success, Profits + Good location + - - Kmart - - Good value Good service Large selection of latest fashions Low-cost strategy + - + + - + + - Low rent & taxes Large mall 20 minutes away Wal-Mart Adapted from Exhibit 2.6

  30. Learning ObjectivesInternal Environments After discussing this section, you should be able to: • explain how organizational cultures are created and how they can help companies be successful.

  31. Organizational Cultures: Creation, Success, and Change • Creation and Maintenance of Organizational Cultures • Successful Organizational Cultures • Changing Organizational Cultures

  32. Creation and Maintenance of Organizational Cultures • Company founders help create culture • Cultures are maintained through: • Stories • Heroes

  33. Blast From The Past • Capturing corporate history • Preserves culture and values

  34. Successful Organizational Cultures Adaptability Consistency Involvement Clear Mission Adapted from Exhibit 2.7 D.R. Denison & A.K. Mishra, Organization Science 6(1995): 204-223

  35. Been There, Done That • The beliefs and values of Starbucks Coffee • sharing success • a culture of meaning and loyalty • grassroots decision making

  36. Changing Organizational 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.

  37. What Really Happened? • Challenges in the economic, supplier, competitor, and industry components • Avoids travel agents by using the Web • Directly confronts competitors and regulators

More Related