INFLUENCE OF THE
EXTERNAL
ENVIRONMENT AND
ORGANIZATION'S
CULTURE
CHAPTER 3
THE MANAGER: HOW MUCH
CONTROL?
Omnipotent View
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 most accountable
for an organization’s performance,
yet it is difficult to attribute
good or poor performance
directly to their influence
on the organization
2
THE MANAGER: HOW MUCH
CONTROL? (CONT’D)
Symbolic View
◦ 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
3
EXHIBIT 2-1 CONSTRAINTS ON MANAGERIAL
DISCRETION
Managerial
Managerial
Organizational
OrganizationalEnvironment
Environment Discretion Organizational
OrganizationalCulture
Culture
Discretion
In reality, managers are neither all-powerful nor helpless. But
their decisions and action options are constrained.
Internal constraints come from the organization’s culture, and
external constraints come from the organization’s external
environment.
4
DEFINING THE EXTERNAL
ENVIRONMENT
External Environment
Theforces and institutions outside the organization
that potentially can affect the organization’s
performance
Components of the External Environment
Specificenvironment: external forces that have a
direct and immediate impact on the organization
General environment: broad economic, socio-
cultural, political/legal, demographic, technological,
and global conditions that may affect the organization
5
THE EXTERNAL
ENVIRONMENT
Public
Public
Pressure
Pressure Suppliers
Suppliers
Groups
Groups
THE
THE
ORGANIZATION
ORGANIZATION
Competitors
Competitors Customers
Customers
6
THE GENERAL ENVIRONMENT
Economic conditions
Include interest rates, inflation rates, changes in
disposable income, stock market fluctuations, and the
general business cycle, among other things
Political/legal conditions
Include the general political stability of countries in
which an organization does business and the specific
attitudes that elected officials have toward business
Federal and provincial governments can influence what
organizations can and cannot do. Some examples of
legislation include:
Canadian Human Rights Act
Canada’s Employment Equity Act
Competition Act
Marketing boards
7
THE GENERAL ENVIRONMENT
(CONT’D)
Socio-cultural conditions
Include the changing expectations of society
Demographic conditions
Includephysical characteristics of a population
(gender, age, level of education, geographic
location, income and family composition)
Technological conditions
Include
the changes that are occurring in
technology
Global conditions
Include
global competitors and global consumer
markets
8
HOW THE EXTERNAL ENVIRONMENT
AFFECTS MANAGERS
Jobs and Employment
Changes in external environment has an
impact on jobs and employment.
Global Recession resulted in a massive job
elimination.
Challenges for manager is then to balance
work demand and have the right kind of people
It also affects how those jobs( flexible work
arrangement, freelancing, temporary workers)
are created and managed
HOW THE ENVIRONMENT
AFFECTS MANAGERS
Environmental Uncertainty
Theextent to which managers have knowledge of
and are able to predict change. Their organization’s
external environment is affected by:
Complexity of the environment: the number of
components in an organization’s external environment
Degree of change in environmental components: how
dynamic or stable the external environment is
10
EXHIBIT 2-3 ENVIRONMENTAL
UNCERTAINTY MATRIX
11
STAKEHOLDER RELATIONSHIPS
Stakeholders
Anyconstituencies in the organization’s external
environment that are affected by the
organization’s decisions and actions
Why Manage Stakeholder Relationships?
Can lead to improved organizational
performance
It’s the “right” thing to do given the
interdependence of the organization and its
external stakeholders
12
EXHIBIT 2-4 ORGANIZATIONAL STAKEHOLDERS
Employees Customers
Social and Political
Unions
Action Groups
Shareholders Competitors
Organization
Trade and Industry
Communities
Associations
Suppliers Governments
Media
13
MANAGING STAKEHOLDER
RELATIONSHIPS
Identify the organization’s external
stakeholders
Determine the particular interests and
concerns of the external stakeholders
Decide how critical each external
stakeholder is to the organization
Determine how to manage each individual
external stakeholder relationship
14
THE ORGANIZATION’S CULTURE
What Is Organizational Culture?
A system of shared meanings and common beliefs
held by organizational members that determine,
to a large degree, how they act toward each
other
“The way we do things around here”
Values, symbols, rituals, myths, and practices
Implications:
Culture is a perception
Culture is shared
Culture is a descriptive term
15
EXHIBIT 2-5 DIMENSIONS OF ORGANIZATIONAL
CULTURE
Degree to which
employees are expected
to exhibit precision,
analysis, and attention
to detail
Degree to which Degree to which
employees are managers focus on results
encouraged to be or outcomes rather than
innovative and on how these outcomes
to take risks Attention to are achieved
Detail
Innovation and Outcome
Risk-taking Orientation
Organizational
Culture People
Stability
Orientation
Degree to which
Degree to which management decisions
organizational Team take into account the
decisions and actions Aggressiveness effects on people in
emphasize maintaining Orientation
the organization
the status quo
Degree to which
Degree to which work is organized
employees are aggressive around teams rather
and competitive rather than individuals
than cooperative
16
ORGANIZATIONAL CULTURE
Sources of Organizational Culture
Pastpractices of the organization
The organization’s founder
Continuation of the Organizational Culture
Recruitment of employees who “fit”
Behaviour of top management
Socialization of new employees to help
them adapt to the culture
17
STRONG VS. WEAK CULTURES
Strong Cultures
Key values are deeply held and widely held
Have strong influence on organizational
members
Factors Influencing the Strength of Culture
Size of the organization
Age of the organization
Rate of employee turnover
Strength of the original culture
Clarity of cultural values and beliefs
18
BENEFITS OF A STRONG CULTURE
Creates a stronger employee commitment to
the organization
Aids in the recruitment and socialization of
new employees
Fosters higher organizational
performance by instilling and
promoting employee initiative
19
EXHIBIT 2-7 STRONG VERSUS
WEAK CULTURES
HOW EMPLOYEES LEARN
CULTURE
Stories
Narratives
of significant events or actions of
people that convey the spirit of the organization
Rituals
Repetitivesequences of activities that express
and reinforce the values of the organization
Material Symbols
Physical assets distinguishing the organization
Language
Acronyms
and jargon of terms, phrases, and
word meanings specific to an organization
22
HOW CULTURE AFFECTS
MANAGERS
Cultural Constraints on Managers
Whatever managerial actions the organization
recognizes as proper or improper on its behalf
Whatever organizational activities the organization
values and encourages
The overall strength or weakness of the
organizational culture
Simple rule for getting ahead in an organization:
Find out what the organization rewards and
do those things
23
EXHIBIT 2-9 TYPES OF MANAGERIAL DECISIONS
AFFECTED BY CULTURE
24
CURRENT ISSUES IN ORGANIZATIONAL
CULTURE FACING MANAGERS
Creating an Innovative Culture
Challenge and involvement
Freedom
Trust and openness
Idea time
Playfulness/humor
Conflict resolution
Debates
Risk-taking
CURRENT ISSUES IN ORGANIZATIONAL
CULTURE FACING MANAGERS
Creating a Customer-Responsive Culture
Hire the right type of employees
Have few rigid rules, procedures, and
regulations
Use widespread empowerment of
employees
Encourage good listening skills
Provide role clarity to employees
Have conscientious, caring employees
CURRENT ISSUES IN ORGANIZATIONAL
CULTURE FACING MANAGERS
Spirituality and Organizational Culture
Workplace spirituality
The recognition that people have an inner life that
nourishes and is nourished by meaningful work
that takes place in the context of community.
Characteristics of a Spiritual Organization
Strong sense of purpose
Focus on individual development
Trust and openness
Employee empowerment
Toleration of employees’ expression
