ORGANISATIONAL ENVIRONMENTS AND CULTURES

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GENERAL ENVIRONMENT

  • The general environment consists of events and trends that affect all organisations.
  • Because the economy influences basic business decisions, managers often use economic statistics and business confidence indices to predict future economic activity.
  • Changes in technology (which transforms inputs into outputs) can be a benefit or a threat to a business.
  • Sociocultural trends, like changing demographic characteristics, affect how companies run their businesses.
  • Similarly, sociocultural changes in behaviour, attitudes and beliefs affect the demand for a business’ products and services.
  • Court decisions and new federal and state laws have imposed much greater political/legal responsibilities on companies.
  • The best way to manage legal responsibilities is to educate managers and employees about laws and regulations and potential lawsuits that could affect a business.
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GENERAL ENVIRONMENT CONT.

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SPECIFIC ENVIRONMENT

  • The specific environment is made up of the five components shown here.
  • Companies can monitor customers’ needs by identifying customers’ problems after they occur or by anticipating problems before they occur.
  • Because they tend to focus on well-known competitors, managers often underestimate their competition or do a poor job of identifying future competitors.
  • Suppliers and buyers are very dependent on each other, and that dependence sometimes leads to opportunistic behaviour, in which one benefits at the expense of the other.
  • Regulatory agencies affect businesses by creating rules and then enforcing them.
  • Advocacy groups cannot regulate organisations’ practices.
  • Nevertheless, through public communications, media advocacy and product boycotts, they try to convince companies to change their practices.
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SPECIFIC ENVIRONMENT CONT.

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MAKING SENSE OF CHANGING ENVIRONMENTS

  • Managers use a three-step process to make sense of external environments: environmental scanning, interpreting information and acting on it.
  • Managers scan their environments based on their organisational strategies, their need for up-to-date information and their need to reduce uncertainty.
  • When managers identify environmental events as threats, they take steps to protect the company from harm.
  • When managers identify environmental events as opportunities, they formulate alternatives for taking advantage of them to improve company performance.
  • Using cognitive maps can help managers visually summarise the relationships between environmental factors and the actions they might take to deal with them.
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