LEARNING OUTLINE

Follow this Learning Outline as you read and study this chapter.

•The Manager: Omnipotent or Symbolic

• Contrast the action of manager according to the
omnipotent and symbolic views.
• Explain the parameters of managerial discretion.

•The Environment (cont’d)

• Describe the components of the specific and general
environments.
• Discuss the two dimensions of environmental uncertainty.
• Identify the most common organizational stakeholders.
• Explain the four steps in managing external stakeholder
relationships.

© 2007 Prentice Hall, Inc. All rights reserved. 3–1

 The Manager: Omnipotent or Symbolic?
• Omnipotent View of Management
 Differences in an organizations 'performance are assumed to be
due to decisions and actions of managers
 Good managers anticipate change, exploit opportunities correct
poor performance and lead their organization
 Managers are directly responsible for an organization’s success
or failure.
 The quality of the organization is determined by the quality of its
managers.
 Managers are held accountable
for an organization’s performance
yet it is difficult to attribute
good or poor performance
directly to their influence
on the organization.
 The Manager: Omnipotent or Symbolic?
• Symbolic View of Management
 Much of an organization’s success or failure is due to external
forces outside of managers’ control
 The ability of managers to affect outcomes is influenced and
constrained by external factors
 The economy, customers, governmental policies, competitors,
industry conditions,
technology, and the actions of
previous managers
 Managers symbolize control and influence through their
action
 In this view managers develop plans, make decisions and
engage in other organizational activities to make sense out of
random, confusing, and ambiguous situations
Reality Suggests A Synthesis
In reality, managers are neither powerful nor helpless and
their decisions and action options are constrained
Internal constraints come from the organization’s culture and
external constraints come from the organization's
environment

Exhibit 3–1 Parameters of Managerial Discretion

 The Organizational Environment
 In an organization as an Open System----- An organization
interacts with its environment as it takes inputs and distributes
outputs for absorption
 External environment has the following impacts worldwide,
For Example
 Skyrocketing in costs of food around the world is the biggest factor
in runway demand
 Many Governments are trying to save megawatts of energy
through renewable energy productions
 Systems are being automatic and they are now interconnected for
exchanging information and data
 As these examples show, environmental forces play a major
role in shaping a manager’s actions
Defining the External Environment
• External Environment
 Those factors and forces outside the organization that
affect the organization’s performance.
• Components of the External Environment
(1) Specific environment: external forces that have a
direct and immediate impact on the organization.
(2) General environment: broad economic, socio-
cultural, political/legal, demographic, technological,
and global conditions that may affect the
organization
 The Organizational Environment
1. Specific Environment
“External forces that have a direct impact on manager’s decisions
and actions and are directly relevant to the achievement of an
organization’s goals”.
 An organization’s specific environment is unique to it
Forces That Make Up A Specific Environment:
1. Customers
 An organization exists to meet needs and wants of its
customers and they represent a potential uncertainty to an
organization because their tastes are continuously changed
2. Suppliers
 Managers seek to ensure a constant flow of needed inputs at
the lowest possible price and a limitation and delay in supply
can constrain a manager’s decisions
 The Organizational Environment
3. Competitors
 All organizations either NPOs, NGOs and POs ------ have
competitors
 Managers cannot afford to avoid or ignore competition
 For Example: PTV has completion with digital cable, satellite,
DVDs and the internet----provide customers a broader choice
4. Pressure Groups
 Managers must recognize special-interest groups that attempt to
influence the actions of organizations
 A manager should have information about environmental and
human rights activists picketing, boycotting and threatening some
organizations in order to managers to get change decisions
 For Example: Pressure by PETA on McDonalds
 Pressure by PALPA on PIA for improvements in incentives
 The Organizational Environment
2. The General Environment
“It includes the broad economic, political/legal, sociocultural,
demographic and global conditions that affect an organization”.
 This environment does not impact very much but a manger must
consider them as they plan, organize, lead and control
Forces That Make Up A Specific Environment:
1. Economic Conditions
 Interest rates, inflation, changes in disposable income, stock
market fluctuations and the stage of the general business cycle
are some economic factors that affect management practices
 When consumers income fall or when their confidence about job
security declines, they will postpone purchasing anything that
isn’t a necessity
 The Organizational Environment
2. Political/Legal Conditions
 Federal, State, Provincial and local laws, as well as global and
other country laws and regulations, influence what organizations
can and cannot do
 Organizations spend a great deal of time and money to meet
such Governmental demands and these reduce managerial
discretion by limiting the available choices
 For Example: Quota for disables and minorities, principles of
good faith and dealings with employees by employers
 Besides this, political conditions and stability of a country where
an organization operates and the attitudes that elected
Governmental officials hold towards business also influences a
manager’s decisions
 The Organizational Environment
3. Sociocultural Conditions
 Managers must adapt their practices to the chaining expectations of
the society in which they operate
 As values, customs and tastes change, managers must also change
 For Example: The demand of more balanced life by the workers,
organizations have had to adjust by offering family leave policies,
flexible work hours and on-site child care facilities
4. Technological Conditions
 The most rapid change in general environment
 Technology has introduced the automated offices, electronic
meetings, robotic manufacturing, lasers, integrated circuits, faster
and more powerful microprocessors, synthetic fuels and new models
of business
 Companies that have invested in technology have higher ROI such
as google, GE, e-bay and Wal-Mart
 The Organizational Environment
5. Demographic Conditions
 Demographic conditions encompass trends in population
characteristics such as gender, age, level of education,
geographic location, income and family composition
 Changes in these conditions may constrain how managers plan,
organize, lead and control
 Specific Age Cohorts in United States
 Depression Group (born 1912-1921)
 World War-II Group (born 1922-1927)
 Postwar Group (born 1928-1945)
 Baby Boomers Group (1946-1964)
 Generation X (born 1965-1977)
 Generation Y (born 1978-1994)
 Generation Y is of popular interest because its members are
learning, working, shopping and playing in different ways
 The Organizational Environment
6. Global Conditions
 Managers are challenged by an increasing number of global
competitors and markets as part of the external environment
 Globalization has impacted the way as mangers plan,
organize, lead and control
 For Example
 By the end of this decade Nigeria will have larger population than
that of Russia, Ethiopia than that if Germany and Morocco will
have more people than Canada
Exhibit 3–9 The External Environment
 How the Environment Affects Managers

 There are two ways the environment affects

managers
(1) Through the degree of Environmental
Uncertainty
(2) Thorough managing stakeholders
relationships
How the Environment Affects Managers
1. Assessing Environmental Uncertainty
“The degree of change and complexity in an organization's
environment is called Environmental Uncertainty”.
 Hence Environmental Uncertainty has two dimensions
(a) Degree of Change
(b) Degree of Complexity
(a) Degree of Change
 Stable Environment: If components in an origination's
environment change infrequently, its called Stable Environment
 A stable environment might be one in which there are no new competitors,
few technological breakthroughs by current competitors, little activity by
pressure groups to influence the organization and so forth e.g. Zippo Lighters
have stable environment
How the Environment Affects Managers
 Dynamic Environment: If components in an origination's environment
change frequently, its called Stable Environment
 A dynamic environment is highly uncertain and unpredictable
 E.g. The recorded music industry faces a dynamic environment due to digital
formats and music-downloading websites

 When we talk about degree of change, we mean change that is

unpredictable and if change can be accurately anticipated, it’s not
uncertainty that mangers must confront
(b)Environmental Complexity
 The number of components in an organization's environment and the
extent of the organization’s knowledge about those components
 When an organization has fewer competitors, customers, suppliers,
government agencies and so forth, the less complex and uncertain it’s
environment is
 Exhibit 3–11 Environmental Uncertainty Matrix

© 2007 Prentice Hall, Inc. All rights reserved. 3–18

How the Environment Affects Managers
(2) Managing Stakeholder's Relationships
Stakeholders: Any constituencies in the organization’s
environment that are affected by the organization’s decisions and
actions
The more obvious and secure the relationships among
stakeholders, the more influence the managers will have over
organizational outcomes
Hence Stakeholders are influenced by an organization and
influence on an organization in return
These stakeholders include both internal and eternal stakeholders
Mangers take inputs (resources) from External Stakeholders and
as outlets for outputs (goods and services)
Managing Stakeholder Relationships
Why Manage Stakeholder Relationships?
 It can lead to improved organizational performance
 It’s the “right” thing to do given the interdependence of the
organization and its external stakeholders
 Managers can manage Stakeholders relationships in following
ways
(a) Identify the organization’s external stakeholders
(b) Determine the particular interests and concerns of the
external stakeholders
(c) Decide how critical each external stakeholder is to the
organization
(d) Determine how to manage each individual external
stakeholder relationship
 Exhibit 3–12 Organizational Stakeholders

© 2007 Prentice Hall, Inc. All rights reserved. 3–21