The External Environment

1. The External Environment Commercial Economics Lectures 3-4

2. Defining the External Environment • External Environment • Those factors and forces outside the organization that affect the organization’s performance. • Components of the External Environment • Specific environment: external forces that have a direct and immediate impact on the organization. • General environment: broad economic, socio-cultural, political/legal, demographic, technological, and global conditions that may affect the organization. Commercial Economics Lectures 3-4

3. Commercial Economics Lectures 3-4

4. Parameters of Managerial Discretion Commercial Economics Lectures 3-4

5. Logistic Function Organisation Commercial Economics Lectures 3-4

6. Implications of the Systems Approach • Coordination of the organization’s parts is essential for proper functioning of the entire organization. • Decisions and actions taken in one area of the organization will have an effect in other areas of the organization. • Organizations are not self-contained and, therefore, must adapt to changes in their external environment. Commercial Economics Lectures 3-4

7. The Contingency Approach • Contingency Approach Defined • Also sometimes called the situational approach. • There is no one universally applicable set of management principles (rules) by which to manage organizations. • Organizations are individually different, face different situations (contingency variables), and require different ways of managing. Commercial Economics Lectures 3-4

8. Popular Contingency Variables • Organization size • As size increases, so do the problems of coordination. • Routineness of task technology • Routine technologies require organizational structures, leadership styles, and control systems that differ from those required by customized or nonroutine technologies. • Environmental uncertainty • What works best in a stable and predictable environment may be totally inappropriate in a rapidly changing and unpredictable environment. • Individual differences • Individuals differ in terms of their desire for growth, autonomy, tolerance of ambiguity, and expectations. Commercial Economics Lectures 3-4

9. Current Trends and Issues • Globalization • Ethics • Workforce Diversity • Entrepreneurship • E-business • Knowledge Management • Learning Organizations • Quality Management Commercial Economics Lectures 3-4

10. How Organizations Go Global Commercial Economics Lectures 3-4

11. Current Trends and Issues (cont’d) • Globalization • Management in international organizations • Political and cultural challenges of operating in a global market • Working with people from different cultures • Coping with anticapitalist backlash • Movement of jobs to countries with low-cost labor • Ethics • Increased emphasis on ethics education in college curriculums • Increased creation and use of codes of ethics by businesses Commercial Economics Lectures 3-4

12. Categories of E-Business Involvement Commercial Economics Lectures 3-4

13. Distribution and Technology Organisation Commercial Economics Lectures 3-4

14. Dimensions of Organizational Culture Commercial Economics Lectures 3-4

15. Spirituality and Organizational Culture • Workplace Spirituality • The recognition that people have an inner life that nourishes and is nourished by meaningful work that takes place in the context of community. • Characteristics of a Spiritual Organization • Strong sense of purpose • Focus on individual development • Trust and openness • Employee empowerment • Toleration of employees’ expression Commercial Economics Lectures 3-4

16. Benefits of Spirituality • Improved employee productivity • Reduction of employee turnover • Stronger organizational performance • Increased creativity • Increased employee satisfaction • Increased team performance • Increased organizational performance Commercial Economics Lectures 3-4