Strategic Management

Chapter 3

Environment and Organisational Culture: The Constraints
How much control do managers have?
y Omnipotent view: managers are directly responsible for success or failure o The dominant view  Good managers: y Anticipate change y Exploit opportunities y Correct poor performance y Lead organisation toward it s objectives  When organisations perform poorly someone has to be held accountable Symbolic view: success or failure is due to external forces outside the manager s control o A manager s ability to impact an organisation Is limited and constrained by external factors o Influenced by:  Economy, market (customer) changes, governmental policies, competitors actions, industry conditions, control of proprietary technology and the decisions of previous managers o Managers symbolize control and influence  Manifest and illusion of control through planning and making decisions o Manager s play a minimal part in the success or failure In reality, managers are neither helpless nor all-powerful because external and internal constraints exist



What influence does the environment have on managers?
y External environment o Those factors an forces outside the organisation that affect the organisation s performance  Specific (customers, suppliers, competitors, pressure groups) y External forces that have direct impact on manager s decisions and actions and are directly relevant to the achievement on the organisation s goals 

Unique and changes with conditions Customers o Changing demands o Organisations exist to meet the needs of customers y Suppliers o Provide materials, equipment, financial and labour inputs o Seek to ensure steady flow of needed inputs for lowest price o Certain amount of uncertainty with suppliers, therefore can significantly impact organisations effectiveness y Competitors o As technological capabilities expand competition expands o The internet ahs also eliminated geographical boundaries for competitors y Pressure Groups o PETA, Greenpeace for example o Changes as social and political movements change General (economic, political/legal, sociocultural, demographic, technological and global) y The broad external conditions that may affect the organisation o Economic  Interest rates  Changes in disposable income  Share market fluctuations o Political/Legal  Governments influence what organisations can and cannot do  Increase in regulation and policies y Requires time and monetary resource  Reduce managerial discretion  General stability of a country o Sociocultural  Changing expectations require changing managerial practices  Increasing concern for global warming for e.g.  Values and cultures of different countries o emographic Conditions  Age, gender, level of education, geographic location, income, family composition y y



y Baby boomers o Technological conditions  Continuous and rapidly changing technology  Fundamentally changing the way organisations are structured and the way managers manage o Global Conditions  Globalisation y Boundaries are becoming more meaningless in business terms y Influenced by advances in communication technology and reduction in cross-nation trade barriers y Expanding competition y Expansion in manufacturing by branching off to other countries to gain cost advantages Environmental Uncertainty o egree of change: the frequency and speed of change  Components in an organisation s environment change frequently it is called a dynamic environment  Change is minimal = stable environment y o new competitors, few breakthroughs etc. egree of complexity: whether there are few or many o environmental components  The number of components in an organisation s environment and the extent of the organisation s knowledge about these components y The less complex the less uncertain Stakeholder Relationships o Stakeholder = all the different constituencies in the organisation s environment that have a stake in or are affected by the organisation o Includes eternal and internal groups such as: customers, competitors, governments, suppliers etc. o Managers manage these stakeholder relationships by knowing who the stakeholders are and how critical they are

What is organisational culture?
y y Shared values, principles, traditions an ways of doing things: influences the way organisational members act Seven dimensions include o Attention to detail o Outcome orientation o People orientation

o o o o

Team orientation Aggressiveness Stability Innovation/Risk taking

What do we know about organisational culture?
y y y y Strong cultures (where values are deeply held and widely shared) have greater influence than weaker ones. Original source of culture is the organisation s founder(s) Culture is continued by what manages say and how they behave and through socialization Employees learn culture through stories, rituals, material symbols and language.

What kinds of organisational cultures can managers create?
y y y y y Ethical Innovative Customer-responsive Sustainability focused Spiritual

What effect does organisational culture have on managers?
y Constrains the way managers plan, organise, lead, and control.

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