BUS104 – Discovering Management

Module 2

The Managerial Environment & Communication

 Upon completion of this Module,
Module 2 you will be able to:
Learning
• Explain what the external environment is and
Outcomes why it’s important.
• Discuss how the external environment affects
managers.
• Define organisational culture and explain why it’s
important and how it affects managers.
• Describe what managers need to know about
communicating effectively.

2
What is the external environment
of an organisation?
…The factors, forces, situations,
events and conditions outside the
organisation’s boundaries that
can potentially affect it
There are two components of
the external environment
1. The general environment
2. The specific environment
What is the general environment of an organisation?

Includes the broad…

Political/legal
Economic
Sociocultural
Technological
Physical &
Global
…conditions in the society in which the
organisation operates
General environment: Political / Legal dimension

Consists of the legal and governmental

systems within which an
organisation operates
Includes general conditions and
stability of the political system,
government regulation of
organisational behaviour, and
impact of government spending on
the economic environment
General environment: Economic dimension
Relates to the general economic health of the country in which the
organisation operates
Includes the type of economic system that’s in effect, the country’s
current economic conditions and its economic cycles
Economic systems
Capitalist economy: individuals or corporations own the means of
production and market forces operate

Socialist economy: a central government owns the means of

production and plans all economic activity
General environment: Sociocultural dimension
Includes cultural characteristics and demographic conditions:
Cultural characteristics: customs, values, tastes, attitudes and
behaviours in a particular society
Demographic conditions: physical characteristics of the population, such
as gender, average age, level of education, geographic dispersal, income
and household composition
Also includes the racial and ethnic characteristics of the population.
• Race: social groupings of people based on biological and
physical characteristics
• Ethnicity: social groupings of people based on cultural
background and allegiances
General environment: Sociocultural dimension
Determines the products, services and types of
organisational behaviour that are valued in a
society
Affects workplace diversity
• Workforce diversity: ways in which people
in a workforce are similar to and different
from one another
Diversity in gender, age, race, ethnicity,
physical abilities, mental health, sexual
orientation and gender identity,
socioeconomic and cultural background
General environment: Technological dimension
Comprises the knowledge, tools and
methods used to convert resources
into products and services
Includes technological and
scientific advancements in society
at large, as well as specific
industries
 10

Difficulty in predicting technological advancement

1876: "The Americans have need of the telephone, but we do not. We have plenty of messenger boys." — William Preece, British Post Office.
1876: "This 'telephone' has too many shortcomings to be seriously considered as a means of communication." — William Orton, President of Western
Union.
1889: “Fooling around with alternating current (AC) is just a waste of time. Nobody will use it, ever.” — Thomas Edison
1903: “The horse is here to stay but the automobile is only a novelty – a fad.” — President of the Michigan Savings Bank advising Henry Ford’s lawyer,
Horace Rackham, not to invest in the Ford Motor Company.
1921: “The wireless music box has no imaginable commercial value. Who would pay for a message sent to no one in particular?”
1946: "Television won't be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box
every night." — Darryl Zanuck, 20th Century Fox.
1955: "Nuclear powered vacuum cleaners will probably be a reality within 10 years." — Alex Lewyt, President of the Lewyt Vacuum Cleaner Company.
1959: "Before man reaches the moon, your mail will be delivered within hours from New York to Australia by guided missiles. We stand on the
threshold of rocket mail." — Arthur Summerfield, U.S. Postmaster General.
1961: "There is practically no chance communications space satellites will be used to provide better telephone, telegraph, television or radio service
inside the United States." — T.A.M. Craven, Federal Communications Commission (FCC) commissioner.
1966: "Remote shopping, while entirely feasible, will flop.” — Time Magazine.
1981: “Cellular phones will absolutely not replace local wire systems.” — Marty Cooper, inventor.
1995: "I predict the Internet will soon go spectacularly supernova and in 1996 catastrophically collapse." — Robert Metcalfe, founder of 3Com.
2005: "There's just not that many videos I want to watch." — Steve Chen, CTO and co-founder of YouTube expressing concerns about his company’s
long term viability.
2006: "Everyone's always asking me when Apple will come out with a cell phone. My answer is, 'Probably never.'" — David Pogue, The New York
Times.
2007: “There’s no chance that the iPhone is going to get any significant market share.” — Steve Ballmer, Microsoft CEO.
https://www.forbes.com/sites/robertszczerba/2015/01/05/15-worst-tech-predictions-of-all-time/#e1b6fe212997
General environment: Physical dimension
Includes geographic locations, and
biological, ecological, constructed,
climate and natural resources elements
of its surroundings

Two categories: natural environment

(soil, water and other natural resources)
and built environment (influenced or
created by humans)
General environment: Global dimension
Consists of factors that operate across national boundaries
Includes events or changes that originate in foreign countries
(such as the COVID-19 pandemic) as well as physical and
institutional forces of an international scale
General environment: Global dimension
All countries have different values, morals, customs, political and economic systems,
and laws, all of which can affect how a business is managed
Geert Hofstede found that managers and employees vary on four dimensions of
national culture: power distance, uncertainty avoidance, individualism and masculinity

Hofstede’s framework was extended by the Global Leadership and Organizational

Behavior Effectiveness (GLOBE) research program, which studies cross-cultural
leadership behaviours
General environment: Global dimension
• Dimensions of national culture
developed by GLOBE:
• Power distance
• Performance orientation
• Uncertainty avoidance
• In-group collectivism
• Humane orientation
• Assertiveness
• Future orientation
Gillian Warner-Soderholm, 2012
• Gender egalitarianism ‘Culture Matters: Norwegian Cultural Identity Within a Scandinavian Context’
Dimensions of national culture developed by GLOBE research program

DIMENSION DEFINITION
Power distance The extent to which the community accepts and endorses authority,
power differences and status privileges.

Performance The degree to which a group encourages and rewards members for
orientation performance improvement and excellence.

Uncertainty The extent to which a society, organisation or group relies on social

avoidance norms and procedures to alleviate the unpredictability of future events.

In-group collectivism The degree to which individuals express pride, loyalty and cohesiveness
in their groups (e.g. families and organisations).
Dimensions of national culture developed by GLOBE research program

DIMENSION DEFINITION
Humane orientation The extent to which kindness, fairness, altruism, generosity and caring
are encouraged and rewarded.

Assertiveness The extent to which individuals in a society are encouraged to be

confrontational, assertive and aggressive.

Future orientation The extent to which a society encourages and rewards future-oriented
behaviour such as planning, investing in the future and delaying
gratification.

Gender The extent to which a society minimises gender inequality.

egalitarianism
What is the specific environment of an organisation?
Consists of the organisations, groups and
individuals with whom it interacts as it conducts
its business
Factors in the specific environment have a direct
and immediate effect on the organisation’s
operations and performance
Stakeholders are anyone who affects or is affected
by the achievement of the organisation’s
objectives
Customers are people and organisations that
acquire goods or services from the organisation,
usually in exchange for money
What is the specific environment of an organisation?
Suppliers are companies and individuals who
provide inputs that organisations use to
conduct their operations
Competitors are individuals and organisations
with whom the organisation competes for
resources
Employees are those individuals who labour
on behalf of the organisation in exchange for
payment
The labour market or labour supply is the pool
of people employable by the organisation
What is the specific environment of an organisation?
Unions are employee associations who
negotiate pay and conditions with employers
on behalf of their members
Strategic partners are organisations that work
together for mutual benefit
Regulators are people and organisations that
create and enforce regulations to protect
consumers, workers and society as a whole
Interest groups influence business activities in
specific areas, such as environmental impact
and ethical conduct
How does the external environment affect
managers?
It affects how managers can facilitate their
organisation’s operations and achieve its goals
It influences the opportunities and threats that an
organisation faces
It creates uncertainty:
• Environmental uncertainty refers to how
well managers can understand or predict
the changes and trends in environments
that affect their organisations
• Dynamism is the rate and predictability of
change in the elements of the organisation’s
environment
How does the external environment affect managers?
Food industry in Environmental complexity is determined
normal conditions by the number of external factors affecting
(e.g. bakeries, fast
food)
the organisation and the extent of their
influence
Resource availability refers to the
abundance of critical resources in an
organisation’s external environment
Simple environment + plentiful resources + slow
change = low environmental uncertainty
Complex and dynamic environment + scarce
resources = high environmental uncertainty

Any technology or
communications
firm
What is organisational culture and why is it important?
‘The shared values, principles, traditions and ways of doing things that
influence how organisational members act.’
or
‘How we do things around here.’

• Several approaches to understanding an organisation’s culture:

• Survey research – common for measuring ‘organisational climate’
• Analytical descriptive approach – looks at the ‘deeper’ aspects of
culture
• Ethnographic approach – focus is on the deepest understanding of
culture – must be ‘watched and lived’ to be understood.
• Models for explaining culture
• Iceberg Model (Edgar Schein, 1990)
• 7 dimensions of culture (Chatman and Jehn, 1994)

• An organisation’s culture usually (hopefully!) reflects the vision or mission

of its founders www.fortune.com

• Would you like to work at Zappos.com

What is organisational culture and why is it important?

Adapted from Edgar Schein, 1990

What is organisational culture and why is it important?
Artefacts
• Organisational stories: A narrative of significant events or people, including
the organisation’s founders, rule breaking, reactions to past mistakes, etc.
• Corporate rituals: are repetitive sequences of activities that express and Sunshine Coast Daily

reinforce the important values and goals of the organization

• Material symbols or artefacts: communicate an organisation’s personality
Espoused Beliefs and Values Whose values are these?
• Stated values and rules of behavior. It is how the members represent
the organisation both in terms of their behavior and the shared values.
Basic Assumptions
• Organizational assumptions are usually “known,” but are not discussed, nor
are they written or easily found. They are comprised of unconscious
thoughts, beliefs, perceptions, and feelings (Schein, 2004).
Dimensions of organisational culture
How does organisational culture affect managers?
• Establishes the internal environment of
the organisation by defining:
• What is important,
• What is ‘good’ behaviour,
• What it takes to get ahead,
• and so on….

• Acts as a form of control system to

promote the behaviours that the
organisation wants.
www.campaignlive.com
How does organisational culture affect managers?
Managerial functions affected by organisational culture:
• Planning
• Organising
• Leading
• Controlling
The stronger a culture becomes, the more it affects and aligns the way
managers and employees behave
Strong cultures are those in which the key values are deeply held and
widely shared
The more employees who accept the organisation’s key values and the
greater their commitment to those values, the stronger the culture.
Strong cultures can have a negative affect if they become so strong,
there is ‘no room for debate’.
How do managers communicate effectively?
How does the communication process work?
• Communication is a transfer of understanding and meaning from
one person to another
• Communication process is the process by which understanding
and meaning are transferred from one person to another

BUS104, Discovering Management - Week 2 28

How does the communication process work?
Many factors influence the communication process:
Encoding is converting a message into symbolic form
• Four conditions affect the encoded message: skill,
attitudes, knowledge and the social cultural system
Message is a purpose for communicating that’s to be conveyed
Channel is the medium by which a message travels
Media richness is the capacity for different communication
media to facilitate shared meaning
Decoding is translating a received message
Feedback is checking to see how successfully a message has
been transferred
Noise is any factor that interferes with or disrupts the
communication process

BUS104, Discovering Management - Week 2 29

Are written communications more effective than verbal ones?

Written communication has advantages and disadvantages

• Advantages
• Tangible
• Verifiable
• More permanent than the oral variety
• Disadvantages
• Time consuming
• Lack of built-in feedback mechanism

BUS104, Discovering Management - Week 2 30

Is the grapevine an effective way to communicate?

Grapevine is an unofficial channel of communication

• Accuracy of the rumours is the biggest concern

BUS104, Discovering Management - Week 2 31

How do non-verbal cues affect communication?

Body language includes facial expressions,

gestures and other body movements

Verbal intonation is an emphasis given to

words or phrases that conveys meaning

Every oral communication also has a non-

verbal message that carries the greatest
impact

BUS104, Discovering Management - Week 2 32

Barriers to effective communication
BARRIER DESCRIPTION

Filtering The deliberate manipulation of information to make it appear more favourable

to the receiver.
Selective Receiving communications on the basis of what one selectively sees and hears
perception depending on their needs, motivation, experience, background and other personal
characteristics.

Information When the amount of information one has to work with exceeds one’s processing
overload capacity.

Emotions How the receiver feels when a message is received.

Language Words have different meanings to different people. Receivers will use their definition
of words being communicated.

Gender How males and females react to communication may be different, and they each have
a different communication style.

National culture Communication differences arising from the different languages that individuals use to
communicate and the national culture of which they are a part.

BUS104, Discovering Management - Week 2 33

How can managers overcome communication barriers?

Active listening
• Listening for full meaning without making premature
judgments or interpretations
Use feedback
Simplify language

BUS104, Discovering Management - Week 2 34

References

Robbins, S, Coulter, M, DeCenzo, D, & Woods, M 2022, Management: The essentials,

5th edn, Pearson, Melbourne.

Schein, E 2004, Organizational culture and leadership, 3 rd edn, Jossey-Bass, New York.

Schein, E 1990, Organizational culture. American Psychologist, vol. 45 no. 2, pp. 109–
119.

Szczerba, R 2015, 15 Worst Tech Predictions Of All Time, viewed 17 January, 2020,
https://www.forbes.com/sites/robertszczerba/2015/01/05/15-worst-tech-prediction
s-of-all-time/#e1b6fe212997