MGMT Ch. 3
How can culture problems arise?
Culture problems sometimes arise from mergers or the growth of rival factions within an organization.
What are the two parts to the external environment?
The general environment and the task environment
What is multiculturalism?
The idea that the people comprising an organization, as well as other organizations with which it interacts, come from different backgrounds and locations and reflect different values, beliefs, customs, viewpoints, attitudes, and experiences
What is the power of buyers?
The power of buyers is the extent to which buyers of the products or services in an industry can influence the suppliers
What is the power of suppliers?
The power of suppliers is the extent to which suppliers can influence potential buyers. Ex. The local electric company may be the only source of electricity in your community. Subject to local or state regulation (or both), it can therefore charge what it wants for its product, provide service at its convenience, and so forth.
What are the 5 competitive forces that Michael Porter says managers can view their environment by?
The threat of new entrants, competitive rivalry, the threat of substitute products, the power of buyers, and the power of suppliers
What is the threat of substitute products?
The threat of substitute products is the extent to which alternative products or services may supplant or diminish the need for existing products or services. Ex. Digital tablets like the iPad are cutting demand for personal computers.
What is uncertainty?
*It is a driving force that influences many organizational decisions
What are the dimensions of diversity and multiculturalism?
The workforce is continuing to age; there are increasingly more women in the workforce; the ethnicity of the workforce is changing--whites are expected to decrease in % and Hispanics, Blacks, and Asians is expected to increase;
Why do most organizations tend to focus on the task environment?
•Because the impact of the general environment is often vague, imprecise, and long term •It provides useful information more readily than does the general environment because the manager can identify environmental factors of specific interest to the organization, rather than having to deal with the more abstract dimensions of the general environment
What is an organization's task environment?
•It consists of specific external organizations or groups that influence an organization. •It include competitors, customers, suppliers, strategic partners, and regulators
What is the sociocultural dimension of the general environment?
•It includes the customs, morals, values, and demographic characteristics of the society in which the organization functions. •They determine the products, services, and standards of conduct that the society is likely to value •The shape of the market, the ethics of political influence, and attitudes in the workforce are only a few of the many ways in which culture can affect an organization.
What is the economic dimension of an organization's general environment? What are important economic factors for business?
•The overall health and vitality of the economic system in which the organization operates. •Particularly important economic factors for business are general economic growth, inflation, interest rates, and unemployment.
Who are the owners in the internal environment?
•The people who have legal property rights to that business. •Owners can be a single individual who establishes and runs a small business, partners who jointly own the business, individual investors who buy stock in a corporation, or other organizations. It could even be employees
What are the two types of organization design and flexibility that an organization may have to adapt to environmental conditions?
*"Organic design," is considerably more flexible and permits the organization to respond quickly to environmental change *A "mechanistic organization design," is characterized by formal and rigid rules and relationships
What is a merger? An acquisition? An alliance?
*A merger occurs when two or more firms combine to form a new firm. *An acquisition occurs when one firm buys another, sometimes against its will (usually called a "hostile takeover"). The firm taken over may cease to exist and becomes part of the other company. *In a partnership or alliance the firm undertakes a new venture with another firm.
What is diversity?
*Diversity exists in a community of people when its members differ from one another along one or more important dimensions. These differences can obviously reflect the multicultural composition of a community
How can an organization directly influence the environment?
*Firms can influence their suppliers by signing long-term contracts with fixed prices as a hedge against inflation *A firm might become its own supplier
What are the six basic mechanisms through which organizations adapt to their environments?
1) Information management 2) Strategic response 3) Mergers, acquisitions, and alliances 4) Organization design and flexibility 5) Direct influence 6) Social responsibility
What is competitive rivalry?
Competitive rivalry is the nature of the competitive relationship between dominant firms in the industry. Ex. Coca-Cola and PepsiCo often engage in intense price wars, comparative advertising, and new-product introductions
What is a key element in the effective management of an organization?
Determining the ideal alignment between the environment and the organization and then working to achieve that
What is the threat of new entrants?
It is the extent to which new competitors can easily enter a market or market segment. The Internet has reduced the costs and other barriers of entry in many market segments, so the threat of new entrants has increased for many firms in recent years.
What is a major way to shape culture?
One major way to shape culture is by bringing outsiders into important managerial positions. The choice of a new CEO from outside the organization is often a clear signal that things will be changing
What are the ways an organization can adapt to their environment through strategic response?
Options include maintaining the status quo (for example, if its management believes that it is doing very well with its current approach), altering strategy a bit, or adopting an entirely new strategy.
What is the political-legal dimension of the general environment? What are the three reasons it's important?
•It refers to government regulation of business and the relationship between business and government •It's important because: 1) The legal system partially defines what an organization can and cannot do. 2) Pro- or antibusiness sentiment in government influences business activity. 3) Political stability has ramifications for planning. No business wants to set up shop in another country unless trade relationships with that country are relatively well defined and stable.
What is the technological dimension of an organization?
•It refers to the methods available for converting resources into products or services. •
What is the organization culture part of the internal environment?
•It's the set of values, beliefs, behaviors, customs, and attitudes that helps the members of the organization understand what it stands for, how it does things, and what it considers important
Who elects the board of directors? What do they do?
•Stockholders elect the board of directors •The board of directors are charged with overseeing the general management of the firm to ensure that it is being run in a way that best serves the stockholders' interests
What is an organization's internal environment? What does it consist of?
•The conditions and forces within an organization •Consist of their owners, boards of directors, employees, physical work environments, and cultures.
What is the international dimension of the general environment?
•The extent to which an organization is involved in or affected by businesses in other countries •Even firms that do business in only one country may face foreign competition at home, and they may use materials or production equipment imported from abroad. Virtually every organization is affected by the international dimension of its general environment.
What are the two separate external environments for an organization?
•The general environment •The task environment
What are three techniques for information management?
1) One technique for managing information is relying on boundary spanners. A boundary spanner is an employee, such as a sales representative or a purchasing agent, who spends much of their time in contact with others outside the organization. 2) All effective managers engage in environmental scanning, the process of actively monitoring the environments through activities such as observation and reading 3) Within the organization, most firms have also established computer-based information systems to gather and organize relevant information for managers and to assist in summarizing that information in the form most pertinent to each manager's needs.
What are the four levels of uncertainty defined by different degrees of homogeneity and change?
1) The least environmental uncertainty is faced by organizations with stable and simple environments. Ex. Subway 2) Organizations with dynamic but simple environments generally face a moderate degree of uncertainty. Ex. clothing manufacturers 3) Another combination of factors is one of stability and complexity. Again, a moderate amount of uncertainty results. Ex. Ford, Nissan, and BMW 4) Finally, very dynamic and complex environmental conditions yield a high degree of uncertainty. The environment has a large number of elements, and the nature of those elements is constantly changing. Ex. Intel, Apple, Samsung, Amazon, eBay, and Sony
What are the 4 reasons why is the workforce becoming increasingly diverse and multicultural?
1) There are changing demographics in the workforce--there are more women and minorities. 2) There's an increased awareness that diversity improves the quality of the workforce. Diversity can be a source of competitive advantage 3) Legislation and legal action has forced organizations to hire more broadly 4) The globalization movement--Organizations that have opened offices and related facilities in other countries have had to learn to deal with different customs, social norms, and morals
What are the three perspectives for how the environment affects organization?
Environmental change and complexity, competitive forces, and environmental turbulence
What is an organization's general environment?
•The set of broad dimensions and forces in its surroundings that create its overall context •The general environment of most organizations has economic, technological, sociocultural, political-legal, and international dimensions.
Who are regulators? What are the two kinds of regulators?
•They are elements of the task environment that have the potential to control, legislate, or otherwise influence an organization's policies and practices •Regulatory agencies are created by the government to protect the public from certain business practices or to protect organizations from one another. Ex. the FDA plays an important part in protecting individual rights •Interest groups, are organized by their members to try to influence organizations. Ex. MAAD
Who are an organization's competitors?
•They are other organizations that compete with it for resources. The most obvious resources that competitors vie for are customer dollars. But competition also occurs between substitute products. •Competition is not limited to business firms; it can be between museums and art galleries to have the best exhibits, or universities and the military to attract good students
What are strategic partners?
•Two or more companies that work together in joint ventures or other partnerships •Strategic partnerships help companies get from other companies the expertise they lack. They also help spread risk and open new market opportunities.
What are the three reasons of why the workforce continues to age?
*The baby boom generation is growing older *Improved health and medical care helps people to stay healthy longer and continue working *Many people approaching traditional retirement ages do not have enough savings to pay for retirement and so must work longer.
What are the two dimensions that the environmental change and complexity perspective focuses on? What are these? What do they do?
*The rate of change is the extent to which the environment is relatively stable or relatively dynamic *The degree of homogeneity is the extent to which the environment is relatively simple (few elements, little segmentation) or relatively complex (many elements, much segmentation). *These two dimensions interact to determine the level of uncertainty faced by the organization
What is the external environment of an organization?
Everything outside an organization's boundaries that might affect it
