PRINCIPLES AND PRACTICES OF MANAGEMENT

Lecture 3: Understanding the Organization’s Environment

Managers must develop and maintain a deep understanding and appreciation of the
environment in which they and their organization function. Without this developed
understanding, they are like rudderless ships, moving along, but with no way of manuevering
or changing directions.
For example, when we consider a swimmer crossing a wide stream, the factors like current,
obstacles and the distance before setting out are to be evaluated well, if these factors are well
evaluated, then the swimmer will arrive at the expected point at the bank of that stream, but
in case, these are not properly analyzed or evaluated, the swimmer might end up at being too
far upstream or downstream. Herein, the organization is the swimmer and the environment is
the stream. More specifically, key element is of determining the ideal alignment between the
environment and organization and then working to maintain that alignment,
The organization’s environments:
External environment – everything outside the boundaries of the organisation that may affect
it. Eg – Suppliers, weather, technology, etc.
Internal environment – conditions and forces within the organisation. Eg – employees,
cultures and physical environment.
The organization and its environments:
Organizations have both – internal and external environment, where the external environment
consists of General and task environment, for example, a small partnership firm may not
consists of a Board of directors, unlike a big company, where it is a legal requirement,
General environment – set of dimensions and forces in surroundings that create the overall
context.
Task environment – specific external organizations or groups that influence the working of an
organization.
The Internal environment:
The internal environment consists of owners, board of directors, employees, physical work
environments and cultures.
The importance of organizational culture:
Organizational culture: organizational culuture is the set of values, ideas, behaviour and
traditions that help the members of the organization understand as to the standing of the
organiation. It is an amorphous concept that defies objective and measurement or an
observation. And as a foundation of organization’s internal environment, it plays a major role
in shaping managerial behaviour. Importance:-
 - Determines the feel of an organization, for example, in case of Microsoft, the
stereotypical image of the organization is related to the casual dressing of the
employees and the long working hours, in contrast, in case of Citibank, the
stereotypical image of the organization relates to rigid work rules and people dressed
in business attire,
- Same culture not necessarily found anywhere in the whole organization, for example,
2 departments maybe having different culture in an organization.
- Culture is a powerful source that helps shape the firm’s overall effectiveness and long-
term success, example, Apple, Starbucks, Proctor & Gamble, etc.
Determinants of organization’s culture:
- an organization’s culture is modified, shaped and refined by symbols, stories, heroes,
slogans and ceremonies. For example, HP, where the important value is of the
avoidance of a bank debt,
- corporate success and shared success to help in the shaping of an organization’s
culture. For example, Hallmark Cards has a strong culture derived from its years of
success in the greeting cards industry.
Managers must understand the current culture of the organization and then it has to be
decided, whether this needs to stay or to be changed. By understanding this, the managers can
take appropriate actions. Various situations that can have an impact on the culture of an
organization are Mergers, Internationalisation, Privatisation, etc.
The Multicultural environment:
Multicultural environment: employees in the organization and the other organizations,with
which the interaction takes place belonging to different backgrounds and locations that
reflecting different values, viewpoints, attitudes and experiences, the broad issues associated
with these differences in values, beliefs, behaviours and customs held by people from
different cultures is known as multiculturalism.
How environment affects the organization..
Focusing on 2 dimensions:-
- Rate of change: the extent to which the organization is relatively dynamic.
- Degree of homogeneity: the extent to which an organization is simple or relatively
complex.
Uncertainity, which is created due to environmental changes and complexity, is a driving
force that influences many organisational decisions.
 Environmental change, complexity and uncertainity.
How organisations adapt to their environments?

- Information management: within the organization, the firms have established their
own computer based information systems, for the purposes of gathering and
organizing the information for the managers.
- Strategic response: includes alteration of strategies and development of new strategy
models according to the circumstances.
- Mergers, acquisitions, etc
- Organization design and flexibility
- Direct influence:
Managerial ethics: standards of behaviour that guide the individual managers in their work.
It includes:
- How an organisation treats its employees: policies such as hiring and firing, wage and
working conditions, etc.
- How employees treat the organization: conflicts of interest, secrecy and
confidentiality, etc
- How other economic agents are treated: includes customers, competitors,
stakeholders, etc.
Social responsibility: the set of obligations an organization has to protect and enhance the
societal context in which it functions.
Organizational approaches to social responsibility:’
- Obstructionist stance: describes firms who do as little as possible in the social
responsibility arena
- Defensive stance: describes firms who do only for the legal requirements and nothing
else.
- Accomodative stance: describes firms, who not only fulfil the legal requirements, but
put some more contributions.
- Proactive stance: describes firms, who always do far more than what is legally
required, view themselves as a citizen in the society.
Lecture 4: Navigating the Global environment
The concept of international business and the Levels of international activity:
Domestic business: acquires all of its resources and sells of its products or services within a
single country.
An international business: based in single country, acquiring meaningful share of its
revenue and resources from other countries.
A multinational business: a multinational business has a worldwide marketplace from which
to buy raw materials, borrowing money, manufacturing products and seeling of products take
place. It is also responsive to local preferences.
A Global business: it transcends national boundaries, and not committed to single home
country, high standardisation and world is considered as a single market wholetogether.