2

Chapter

The
Management
Environment

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Learning Objectives
• Explain what the external environment is and
why it’s important.
• Discuss how the external environment affects
managers.
• Define what organizational culture is and
explain why it’s important.
• Describe how organizational culture affects
managers.

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What Is External Environment?
External environment is
the factors, forces,
situations, and events
outside the organization
that affect its
performance.

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Components of External Environment

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How Has the Economy Changed?
• Began with turmoil in mortgage markets
• Spread to businesses when broader credit
markets collapsed
• Called the “Great Recession”
• Characterized by foreclosures, high rates of
unemployment, huge public debt, and
widespread social problems

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What Role Do Demographics Play?

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How Does External Environment
Affect Managers?
• Jobs and employment
• Assessing
environmental
uncertainty
• Managing stakeholder
relationships

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Managing Stakeholder Relationships

Stakeholders are any

constituencies in an
organization’s
environment that are
affected by the
decisions and actions
of that organization.

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Why Manage Stakeholder
Relationships?
• Good stakeholder relationships can:
– Positively affect organizational performance
– Be recognized as “doing the right thing” and show
corporate social responsibility
– Create and reinforce a positive image of the
organization among its stakeholders and
community

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Organizational Stakeholders

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What Is Organizational Culture?
Organizational culture is
the shared values,
principles, traditions, and
ways of doing things that
influence the way
organizational members
act.

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Defining Culture and Its Impact
• Culture is a perception.
• Organizational culture
isn’t concerned with
whether members like
it.
• Employees describe the
culture in similar terms
despite their diversity.

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Strong Corporate Culture = Success

“Deliver WOW
through Service.”

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How Can Culture Be Assessed?

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How Do Employees Learn the
Culture?

• Stories
• Rituals
• Material symbols
• Language

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Where Does an Organization’s Culture
Come From?

• Organizational culture derives from:

– The founder’s biases and assumptions about what
the organization and its values should be
– What the first employees learned from their own
experiences

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How Does Organizational Culture
Affect Managers?

• Through its effect on what employees do and

how they behave

• Through its effect on what managers do as

they plan, organize, lead, and control

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Acclimating to Corporate Culture

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How Does Culture Affect What
Employees Do?
• A strong culture reflects employee acceptance
of, and commitment to, the organization’s key
values.
• The stronger the culture, the more it affects
employee and manager actions.
• A strong culture preempts the need for formal
rules and regulations.

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How Does Culture Affect What
Managers Do?

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Managerial Decisions Affected by
Culture

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Copyright ©2013 Pearson Education, Inc.
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