2024-09-20

NETA PowerPoint Slides

to accompany
CHAPTER 2
Williams/Champion/Hall
Organizational
MGMT Environments and Cultures
Fourth Canadian Edition

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Characteristics of the Changing External Environmental Change

Environment
The second characteristic of the external environment
is environmental change, which refers to the rate at
Characteristics of the changing external which a company’s general and specific environments
environment include change.
• Environmental change Rate of change comes in two forms:
• Environmental complexity • Stable environment: low rate of environmental
• Resource scarcity change
• Uncertainty • Dynamic environment: high rate of environmental
change (influenced by competition, technological
innovation, and consumer demand)
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Environmental Change Environmental Complexity

• Research shows that companies experience both The second characteristic of the external environment
stable and dynamic environmental changes. is environmental complexity.
• Explained by the punctuated equilibrium theory • Refers to the number and intensity of external
o e.g., the automobile industry factors in the environment that affect organizations:
– Simple environments have few environmental
factors.
– Complex environments have many environmental
factors.
• Speed of change is also a consideration
• More factors mean something is always changing
The punctuated equilibrium model. Based on Gersick (1988). | Download Scientific Diagram (researchgate.net): 24/09/11)

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Environmental Complexity Environmental Complexity

Example of a complex environment:
Example of a simple environment:
• The newspaper industry: revenues from classified ads,
• The dairy industry: milk is processed very for instance, have dropped because of popular websites
similarly to the way it was 100 years ago. such as these:
– Facebook Marketplace
(N.B., A dairy farmer may well disagree with this – kijiji.ca
assessment of their business ) – ebayclassifieds.com

• Digital content is very inexpensive to distribute

compared to print content.
• Most consumers expect Internet-based news to be free.

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Resource Scarcity Uncertainty

• Uncertainty refers to how well managers can

The third characteristic of the external environment is understand or predict the external changes and
resource scarcity. trends affecting their business.

• Refers to abundance or shortage of critical resources • All three characteristics of the changing external
in the organization’s external environment environment (environmental change, environmental
– We live in a time of seeming plenty and yet our complexity, and resource scarcity) affect
distribution networks are so fragile a small hiccup can
environmental uncertainty.
have significant rippling effects

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Four Components of the General

Environmental Uncertainty
Environment
The general environment consists of the following
components:
• The economy
• Technological trends
• Sociocultural trends
• Political/legal trends

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Components of the General Environment: Components of the General Environment:

The Economy The Economy

• The current state of a country’s economy affects • In a shrinking economy, consumers have less money
every business that operates in it. to spend and relatively fewer products are bought
Businesses generate less revenue.
• In an expanding economy, more people work, wages
increase, consumers have more money to spend. • A shrinking economy thus makes growth for
Businesses generate more revenue and profit. businesses more difficult.

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Components of the General Environment: Components of the General Environment:

The Economy Technological
• A sudden change in a country’s economy can send a
ripple effect through the entire country or even • Technology refers to the knowledge, tools, and
around the world. techniques used to transform inputs into outputs.

• Example: the 2008 global recession, which started • Changes in technology can help companies to
from the subprime mortgage market in the United provide products and services more efficiently.
States

scyther5/Shutterstock

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Components of the General Environment: Components of the General Environment:

Technological Sociocultural
Demographic changes
Input: raw • Working women with children
materials and • Growth of visible minorities
information
• Impact on supply and demand of
Output: human resources
Products and
services
Behaviour, attitudes, belief changes
Technology:
Knowledge, • Work–life balance
tools, and • New products/services
techniques

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Sociocultural Component: Components of the General Environment:

Pursuing International Growth Political/Legal Trends
• Organizations should do their research prior to Include
entering a foreign market. • Laws
• Regulations
• Widely different social and cultural norms may exist • Court decisions
in the chosen foreign market.
Examples:
• Legislative changes that increase minimum wage
• Occupational Health and Safety Act
• Employment Standards Act

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Components of the General Environment: Components of the

Political/Legal Trends Specific Environment
Companies looking to pursue international
opportunities should look for differences in • Besides the general environment just discussed,
each organization also has a specific environment
• political systems
that is unique to its industry.
• government regulations
• intellectual property laws
• What are some components of the specific
• the labour force environment?
• financial matters

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Components of the
Specific Environment
Reactive/proactive
Customer
customer monitoring

Competitor Competitive analysis

Buyer/supplier
Supplier
dependencies

Industry Regulation Govern procedures

Influence business
Advocacy Group
practices
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Changes in the External Environment Changes in the External Environment

Environmental scanning:
• Gathering key up-to-date market information
• The external environments of businesses can be • Reduces uncertainty
dynamic, confusing, and complex. • Organizational strategies affect scanning.
• Scanning contributes to organizational performance.
• Managers use a three-step process to make sense of Interpreting environmental factors:
changes in the external environment: • Opportunity
1. environmental scanning • Threat
2. interpreting environmental factors
Acting on threats and opportunities:
3. acting on threats and opportunities • Understand and assess information gathered
• Minimize impact of threats and capitalize on
opportunities
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Class Activity: Walmart and Organic Internal Environment:

Cotton Suppliers Organizational Culture
• Watch this video: Walmart and Organic Cotton • Previous discussions have focused on the external
Suppliers environments and the impact they have on business
operations.
• Discuss the steps that Walmart used in evaluating • The internal environment consists of trends and
the external environment. events within an organization that affect
management, employees, and the organizational
culture.
• Report back to the class.

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Organizational Culture How Is Organizational Culture Created?

• Values, beliefs, and attitudes shared by members of

an organization.
– Best identified from the ground up Organizational Organizational
• It is a key part of the internal environment and exists Stories Heroes

in three levels.
Values
Company
Beliefs Founder

Attitudes

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An Organization’s Culture Consists Of:

Note, symbols
include language
too

Source: Johnson and Scholes Model PowerPoint Presentation Slides - PPT Template (collidu.com) (Accessed 24/09/15)

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Culture Changing Organizational Cultures

• Managers wishing to change an organizational
• Culture determines how we behave when no
culture should focus on the first two levels (practices
one is looking. that are seen and/or heard).
– Degrees of: • Unconsciously held assumptions
• Honesty
and beliefs about a company are
• Attentiveness (i.e., staying on task)
difficult to change.

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