Introduction to Management 11e

John Schermerhorn

Chapter 4 External Environment and Organizational Culture

Planning Ahead Chapter 4 Study Questions

1. What is the external environment of organizations? 2. What are key issues in organizationenvironment relationships? 3. What are the emerging challenges of sustainability and the environment? 4. How do organizations accomplish innovation?

Study Question 1: What is the external environment of organizations?

The general or macroenvironment all of the background conditions in the external environment of the organization including:
Economic health of the economy Legal-political norms, customs, social values Socio-cultural philosophy/objectives of political party running the government

Technological development and availability of technology

Natural environment nature and conditions of environment (Sustainable business)

Study Question 1: What is the external environment of organizations?

The specific (task) environment Managers and org deal everyday actual organizations, groups, and persons with whom an organization interacts and conducts business Includes important stakeholders such as:
Customers Suppliers Competitors Regulators Owners

Study Question 2: What are key issues in organization-environment relationships?

Customer relationship management

establishes and maintains high standards of customer service in order to strategically build lasting relationships with and add value to customers

Supply chain management

strategic management of all operations relating to an organizations resource suppliers

Figure 4.2 Multiple stakeholders in the environment of an organization

Study Question 2: What are key issues in organization-environment relationships?

Competitive advantage
Is something that an organization does extremely well, is difficult to copy, and gives it advantage over competitors in the marketplace.

Study Question 2: What are key issues in organization-environment relationships?

Companies may achieve competitive advantage in many ways, including:

Products Pricing Customer service Cost efficiency Quality Knowledge

Study Question 2: What are key issues in organization-environment relationships?

Customers want:
High quality Low price On-time delivery Great service

Study Question 2: What are key issues in organization-environment relationships?

Key customer service lessons:

Protect reputation for quality products Treat customers right

Study Question 2: What are key issues in organization-environment relationships?

Environmental uncertainty
a lack of complete information regarding what exists and what developments may occur in the external environment

Two dimensions of environmental uncertainty:

Degree of complexity : Factors in environment : Simple VS Complex Rate of change :Stable VS Dynamic

Figure 4.3 Dimensions of uncertainty

Study Question 2: What are key issues in organization-environment relationships?

Organizational Effectiveness
Is a measure of how well an organization performs while using resources to accomplish mission and objectives.

Study Question 2: What are key issues in organization-environment relationships?

Approach
Approach Goal System Resource Description Focus on output side. Depends on achievement of objectives. Focus on input side. Does the org get the needed resources from the orgs environment? Focus on transformation process. How efficient resources are utilized to produce goods and services. Focus on external environment. Does organization meet stakeholders expectation.

Internal Process

Strategic Constituencies

Study Question 3: What are the emerging challenges of sustainability and the environment?

Sustainable development
makes use of environmental resources to support societal needs today while also preserving and protecting them for future generations

Study Question 3: What are the emerging challenges of sustainability and the environment?

Three Ps of organizational performance

Profit

Planet

People

Study Question 3: What are the emerging challenges of sustainability and the environment?

Environmental capital natural resources used to sustain life and produce goods and services for society
Land Water Minerals

Study Question 3: What are the emerging challenges of sustainability and the environment?

Green management managing people and organizations in ways that preserve the natural environment
Reducing energy consumption Minimizing environmental impact

Study Question 3: What are the emerging challenges of sustainability and the environment?

Human sustainability concern for the effect of management practices on employee physical and psychological well-being
Health and wellness programs Stress management Minimizing work-family conflict Control over work Fair wages and opportunities

Study Question 4: How do organizations accomplish innovation?

Innovation - process of putting new ideas into practice Business innovations

Product innovation: better product/service. Process innovation: better ways of doing things. Business model innovation: better ways making money for business.

Study Question 4: How do organizations accomplish innovation?

Sustainable innovations reduce carbon footprints and environmental impacts of organizations, their practices and products

Study Question 4: How do organizations accomplish innovation?

Social business innovations find ways to use business models to address important social problems

Study Question 4: How do organizations accomplish innovation?

The innovation process

Step 1
Imagining

Step 2
Designing

Step 3
Experimenting

Step 4
Assessing

Study Question 4: How do organizations accomplish innovation?

Reverse innovation/ trickle up innovation Reverse Innovation is the strategy of innovating in emerging (or developing) markets and then distributing/marketing these innovations in developed markets. Nestles Maggi brand Low-cost, low-fat dried noodles developed for rural India and Pakistan found a market in Australia and New Zealand as a healthy and budget-friendly alternative.

Study Question 4: How do organizations accomplish innovation?

Commercializing Innovation - turning new ideas into products services or processes to increase profits through Greater sales Reduced costs
3Ms process to develop Post-It Notes is a good example

Study Question 4: How do organizations accomplish innovation?

Idea creation

Example of commercializing innovation Final application process

External environment and market sensitivity

Internal organization al sensitivity

Initial experimentation

Feasibility determination

Study Question 4: How do organizations accomplish innovation?

Characteristics of innovative organizations

Strategy and culture: Innovation is expected, failure is accepted. Structures: Skunkworks (Yahoo!:brickhouse) VS Ambidextrous Systems:provide system that support innovation (Beehives, Blogs) Staffing and management: Hire innovative employees and let them be creative.

Chapter 4 Case

Panera Bread Company: Staying on Top of Long-Term Trends

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