Chapter 2

Faculty of Business, Hospitality,
Accounting & Finance
Principles of Management
(MGT 1023)
If its important to you, you will find a way. If its not, you’ll find an excuse.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-1
Copyright by Ms Syikin@ 1 1
Chapter 2
The Environment of
Management
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

2 1-2
Learning outcomes:
• contrast the actions of managers according to the

omnipotent and symbolic views.
• discuss the characteristics and importance of
organizational culture.
• describe current issues in organizational culture.
• identify the features of the specific and general
environments.

3 1-3
The manager
• The manager: omnipotent or symbolic:

• Omnipotent view: the dominant view in general
is that managers are directly responsible for an
organization's success or failure.

4 1-4
The manager: continued
• Symbolic view of management: much of an

organization's success or failure is due to
external forces outside managers' control.
• Its called symbolic because it's based on the
belief that managers symbolize control and
influence, but the part that the managers actually
play in organizational success or failure is
limited.
The manager: continued
• Reality suggest a synthesis:

• The managerial discretion (manager decisions
and actions) are constrained because they
coming between organizational culture and
organizational environment, as shown in exhibit
2.1.

Constraints on Managerial Discretion

Organizational Culture:
The shared values, principles, traditions, and the

ways of doing things that influence the way
organizational members act.
• These shared values and practices have
evolved over time and determines how things
are done in the organization.

Organizational Culture: continued
The definition implies three things:

• culture is perception: it's not something that can be
physically touched or seen.
• culture is descriptive: it's concerned with how
members perceive the culture, not with whether they
like it
• culture is shared: individuals tend to describe the
organization's culture in similar terms, even they
may have different backgrounds or work at different
organizational levels
• Researchers suggests that there are

seven dimensions that describe an
organization's culture ranging from low to
high: exhibit 2-2 showing that:
• All organizations have cultures, but not all
cultures equally influence employees'
behaviors and actions.
Dimensions of Organizational Culture

• Strong and Weak cultures:

• Strong culture: organizational cultures in which the
key values are intensely (deeply) held and widely
shared. Have greater influence on employees than do
weaker cultures.
• Exhibit 2-3 showing comparison between strong and
weak cultures.
• As more employees accept the organization's
values, the greater their commitment to those values.

Strong Versus Weak Cultures

• The strong culture is important because in

organization with strong cultures, employees are
more loyal than employees with weak culture,
and the strong cultures are associated with high
organizational performance, and the employees
can act quickly to take care of problems if values
are clear and widely accepted by them.
• But strong culture might prevent employees from
trying new approaches.
• Where culture come from and how it

continues: original source of the culture:
Exhibit 2-4 showing that:

Establishing and Maintaining Culture

• 1- philosophy of organization’s founders: Its

usually reflects the vision of the founders.
• 2- Selection criteria: certain organizational
practice help maintain the culture, ex: during the
employees selection process, managers judge job
candidates not only on job requirement but also
on how well they might fit into the organization.

• 3- the action of top managers also have a major
impact on the organization’s culture. Top managers
establish norms that can have positive effect on
employees behavior, the actions of top managers can
also lead to undesirable outcomes.
• 4- socialization: the process that helps employees
adapt to organization’s culture, helping them to learn
the way of doing things, understand the culture and
become enthusiastic and knowledgeable with
customers, and minimize the chance that new
employees who are unfamiliar with organization’s
culture might disrupt current beliefs and customs.
• How employees learn culture: through the following

ways:
• 1- Stories: by narrative of significant events or
people, like organization’s founders. Story tellers
could be executives who explain the company’s
heritage and tell stories that celebrate people getting
things done.
• 2- Rituals: by repetitive sequences of activities that
express and reinforce the important values and
goals of the organization.
• 3- Material Symbols: ex: how employees dress, the type of

automobiles provided to top managers, the elegance of
furnishings, employees fitness center, health club memberships.
Its convey to employees who is important and the kinds of
behavior.
• 4- Language: many organizations use language as a way to
identify and unite members of culture. Some organizations have
its unique vocabularies, ex:
Work judo (deflecting a work assignment to someone else without
making it appear that you are avoiding it), death march
(countdown to shipping a new product).

• How Culture Affect Managers:
• Because an org. culture constrains what they can
and cannot do, such constrains are rarely explicit,
they are not written down, managers should quickly
learn what to do and not to do in their org. some
values are not written down, but come from a real
org. as:
- look busy even if you are not.
- what made us successful in the past will make us
successful in the future.
- if you want to get to the top, your have to be a
team player.
• Exhibit 2-5 showing how the managerial

decisions affected by culture.

Managerial Decisions Affected by Culture

Current Organizational Culture Issues:

1- creating an ethical culture: the content and strength
of an organization’s culture influences its ethical
climate and the ethical behavior of its members,
• If the culture is strong and supports high ethical
standards, it should have a very powerful and positive
influence on employee behavior, and vice versa.

2- Creating An innovative Culture: any successful org. needs a
culture that supports innovation.
• What does an innovative culture characterized:
- Challenge and involvement:
- Freedom: can employees take initiative in their activities.
- Trust and Openness: are employees supportive and respectful to
each other.
- Idea Time: do employees have time to elaborate on new ideas
before taking action.
- Playfulness/Humor: is the work place spontaneous and fun.
- conflict resolution: do employees make decisions and resolve
issues.
- Debates: are employees allow to express opinions and put ideas
- Risk taking: do managers tolerate uncertainty and ambiguity.
3- Creating A customer Responsive Culture:

exhibit 2-6 showing the characteristics of
customer responsive culture, and the
suggestions for managers.

Creating a Customer-Responsive Culture
• How Do You Create a Customer Responsive

Culture?
– Hire the right type of employees (those with a
strong interest in serving customers)
– Have few rigid rules, procedures, and
regulations
– Use widespread empowerment of employees
– Have good listening skills in relating to
customers’ message
4- Creating a culture that support diversity:

• Workforce diversity: a workforce that’s
heterogeneous in terms of gender, race,
ethnicity, age, and other characteristics that
reflect differences.
• Diversity contributes to more creative solutions
and enhances employees morale, the managing
workforce diversity box discusses what
managers can do.
5- Spirituality and organizational culture: it’s a

feature of a culture where organizational values
promote a sense of purpose through meaningful
work that takes place in the context of
community.
• Organizations with spiritual culture recognize that
people have a mind and a sprit, seek to find
meaning and purpose in their work, and desire to
connect with other human beings and to be part of
community.
• Workplace spirituality seems to be important

now for a number of reasons:
• - employees are looking for ways to cope with
the stresses and pressures of a turbulent pace
of life. Like: single parent families, geographic
mobility, temporary jobs.

Research shows that spiritual organizations tend

to have five cultural characteristics:
a- strong sense of purpose: that’s create a more
productive, efficient, loyal, and committed
employee base.
b- focus on individuals development: that’s create
cultures in which employees can continually
grow and learn.
c- trust and oppeness: managers aren’t afraid to admit
mistakes, and they tend to upfront with employees,
customers, and suppliers.
d- employee empowerment: managers trust employees
to make thoughtful and conscientious decisions, even
if it means going against company policies.
e- toleration of employee expression: they allow people
to be themselves, to express their moods and
feelings without guilt and profits compatible.

The Environment:
• An organization interacts with its environment as

it takes in inputs and distributes outputs.
• Environmental forces play a major role in
shaping managers’ actions, even external or
internal environment.

The environment: Continued:
• External environment: refers to factors and

forces outside the organization that affect the
organization’s performance.
• Organization environment includes two
components: specific and general environment.
As shown in exhibit 2-7.

Components of External Environment

a- specific environment: external forces that

directly or indirectly impact managers’ decisions
and actions and are directly relevant to the
achievement of the organization’s goals. And
include:

1- Customers: an organization exist to meet the needs

of customers who use its output, customers taste
can change or they can become dissatisfied with the
organization’s product.
2- Suppliers: managers seek to ensure a steady flow
of needed inputs, at the lowest price possible, org.
suppliers might be delay or limited in delivery and
that can constrain managers to meat the right
demand levels for customers.
3- Competitors: managers can’t afford to ignore

the competitors.
4- Pressure groups: special interest groups that
attempt to influence the actions of organizations
in order to get managers to change some
decisions or actions, like: human rights,
boycotting, consumer’s protection societies.

b- The general environment: broad external conditions
that may affect an organization. And include:
1- Economic conditions: As: interest rates, inflation,
changes in disposable income, stock market
fluctuations, and the stage of general business cycle.
2- Political/Legal conditions: As: national and local
laws, regulations in other countries where a business
operate.

3- Sociocultural conditions: managers must adapt

their practices to the changing in customer attitudes,
values, customs, tastes, and must respond to
customers changing. Like flexible, work hours, child
care facilities, leave policies.
4- Demographic conditions: refer to population
characteristics such as gender, age, level of
education, geographic location, income, and family
composition.
5- Technological conditions: the rapid changes

that occurred in technology.
6- Global conditions: is one of the major factors
affecting managers and organizations. As the
markets and competitors. WTO.

• How the Environment Affects Managers: by two

ways:
a- the degree of environmental uncertainty
(changes and complexity): the degree of
changes and complexity in an organization’s
environment.

• the degree of environmental complexity: the

number of components in an organization’s
environment and the extent of the organization’s
knowledge about these components.
Exhibit 2-8 showing the environmental

uncertainty matrix:
Environmental Uncertainty Matrix

b- managing the various stakeholder relationships

that exist between the organization and its
external constituencies.
• Stakeholders: any constituencies in an
organization’s environment that are affected by
the organization’s decisions and actions.
Exhibit 2-9 showing the organizational
stakeholders.
Organizational Stakeholders

• Reasons for keeping good relationships with

stakeholders:
1- to reduce the impact of change.
2- the organizations depend on these forces as a
sources of inputs.

• How managers manage stakeholders relationships:

• 1- need to identify the organization’s stakeholders.
• 2- need to determine what particular interests or
concerns the stakeholders might have.
• 3- need to decide how critical each stakeholders is
to the organization’s decisions and actions.
• 4- need to determine how to manage external
stakeholders relationships.

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Faculty of Business, Hospitality,

Accounting & Finance

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

• contrast the actions of managers according to the

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

• The manager: omnipotent or symbolic:

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

• Symbolic view of management: much of an

• Reality suggest a synthesis:

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-6

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-7

The shared values, principles, traditions, and the

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-8

The definition implies three things:

• Researchers suggests that there are

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-11

• Strong and Weak cultures:

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-12

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-13

• The strong culture is important because in

• Where culture come from and how it

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-15

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-16

• 1- philosophy of organization’s founders: Its

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-17

• How employees learn culture: through the following

• 3- Material Symbols: ex: how employees dress, the type of

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-20

• Exhibit 2-5 showing how the managerial

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-22

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-23

Current Organizational Culture Issues:

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-24

3- Creating A customer Responsive Culture:

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-26

• How Do You Create a Customer Responsive

4- Creating a culture that support diversity:

5- Spirituality and organizational culture: it’s a

• Workplace spirituality seems to be important

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-30

Research shows that spiritual organizations tend

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-32

• An organization interacts with its environment as

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-33

• External environment: refers to factors and

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-34

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-35

a- specific environment: external forces that

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-36

1- Customers: an organization exist to meet the needs

3- Competitors: managers can’t afford to ignore

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-38

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-39

3- Sociocultural conditions: managers must adapt

5- Technological conditions: the rapid changes

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-41

• How the Environment Affects Managers: by two

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-42

• the degree of environmental complexity: the

Exhibit 2-8 showing the environmental

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-44

b- managing the various stakeholder relationships

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 1-46