Introduction to Management 11e

John Schermerhorn

Chapter 4
External Environment
and
Organizational Culture
Planning Ahead — Chapter 4 Study Questions

1. What is the external environment of

organizations?
2. What are key issues in organization-
environment relationships?
3. What are the emerging challenges of
sustainability and the environment?
4. How do organizations accomplish innovation?
Study Question 1: What is the external environment of organizations?

The general or macroenvironment — all of the background

conditions in the external environment of the organization
including:
Figure 4.1 Starbucks general environment
Study Question 1: What is the external environment of organizations?

The specific (task) environment - actual

organizations, groups, and persons with
whom an organization interacts and
conducts business
Includes important stakeholders such as:
Study Question 2: What are key issues in organization-environment
relationships?

 Customer relationship management

 establishes and maintains high standards of
customer service in order to strategically build lasting
relationships with and add value to customers
 Supply chain management
 strategic management of all
operations relating to an
organization’s resource
suppliers
Figure 4.2 Multiple stakeholders in the environment of an
organization
Study Question 2: What are key issues in organization-environment
relationships?

 Competitive advantage
 a core competency that clearly sets an
organization apart from competitors and
gives it an advantage over them in the
marketplace
Study Question 2: What are key issues in organization-environment
relationships?

 Companies may achieve competitive

advantage in many ways, including:
 Products
 Pricing
 Customer service
 Cost efficiency
 Quality
 Knowledge
Study Question 2: What are key issues in organization-environment
relationships?

 Customers want:
 High quality
 Low price
 On-time delivery
 Great service
Study Question 2: What are key issues in organization-environment
relationships?

 Key customer service lessons:

 Protect reputation for quality products
 Treat customers right
Study Question 2: What are key issues in organization-environment
relationships?

 Environmental uncertainty
 a lack of complete information regarding
what exists and what developments may
occur in the external environment
 Two dimensions of environmental
uncertainty:
 Degree of complexity
 Rate of change
Figure 4.3 Dimensions of uncertainty
Study Question 2: What are key issues in organization-environment
relationships?

Organizational Effectiveness
sustainable high performance in using
resources to accomplish mission and
objectives
Study Question 3: What are the emerging challenges of
sustainability and the environment?

 Sustainable development
 makes use of environmental resources to
support societal needs today while also
preserving and protecting them for future
generations
Study Question 3: What are the emerging challenges of
sustainability and the environment?

Three P’s of organizational performance

Study Question 3: What are the emerging challenges of
sustainability and the environment?

 Environmental capital – natural resources

used to sustain life and produce goods
and services for society
 Land
 Water
 Minerals
Study Question 3: What are the emerging challenges of
sustainability and the environment?

 Green management – managing people

and organizations in ways that preserve
the natural environment
 Reducing energy consumption
 Minimizing environmental impact
Study Question 3: What are the emerging challenges of
sustainability and the environment?

 Human sustainability – concern for the

effect of management practices on
employee physical and psychological
well-being
 Health and wellness programs
 Stress management
 Minimizing work-family conflict
 Control over work
 Fair wages and opportunities
Study Question 4: How do organizations accomplish innovation?

 Innovation - process of putting new ideas

into practice
 Business innovations
 Product innovation
 Process innovation
 Business model innovation
Study Question 4: How do organizations accomplish innovation?

 Sustainable innovations – reduce carbon

footprints and environmental impacts of
organizations, their practices and
products
Study Question 4: How do organizations accomplish innovation?

 Social business innovations – find ways

to use business models to address
important social problems
Study Question 4: How do organizations accomplish innovation?

 The innovation process

Reverse innovation – innovation can come from

any level in the organization or location
Study Question 4: How do organizations accomplish innovation?

 Commercializing Innovation - turning new

ideas into products services or processes
to increase profits through
 Greater sales
 Reduced costs
 3M’s process to
develop Post-It Notes
is a good example
Study Question 4: How do organizations accomplish innovation?

External
environment
and market
Example of sensitivity

commercializing
Internal
innovation organization
process al
sensitivity
Study Question 4: How do organizations accomplish innovation?

 Characteristics of innovative
organizations
 Strategy and culture
 Structures
 Systems
 Staffing and management
Chapter 4 Case

 Panera Bread Company: Staying on Top

of Long-Term Trends

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