MANAGEMENT CHAPTER 3

Types of Approach Advocacy Groups Use to Try to Influence companies

- Public Communications - Media Advocacy - Product Boycott

5 components that make up Specific Environment

1. Customers 2. Competitor 3. Suppliers 4. Industry Regulations 6. Advocacy Groups

4 Components of the general environment

1. Economy 2. Technological Component 3. Sociocultural Component 4. Political/Legal Component

3 Basic Characteristics of Changing External Environments

1. Environmental Change 2. Environmental Complexity 3. Resource Scarcity

3 Step Process to Make Sense of The Changes in External Environment

1. Environmental Scanning 2. Interpreting Environmental Factors 3. Acting on Threats and Opportunities

Consistent Organizational Cultures

A company culture in which the company actively defines and teaches organizational values, beliefs, and attitudes

-Competitive Analysis

A process for monitoring the competition that involves identifying competition, anticipating their moves , and determining their strengths and weaknesses

Advocacy Groups

Advocacy groups cannot force organizations to change their practices. However, they can use a number of techniques to try to influence companies

Interpreting Environmental Factors

After scanning the environment for information, managers must make sense of the data they have gathered. Threats mean potential harm to an organization and managers take steps to protect the company from further damage. By contrast, when managers interpret environmental events as opportunities, they will consider strategic alternatives for taking advantage of the event to improve company performance.

Acting on Threats and Opportunities

Managers have to decide how to respond to these environmental factors. However, deciding what to do under conditions of uncertainty is difficult. Managers are never completely confident that they have all the information they need, or that they correctly understand the information they have.

- Competitors

Companies in the same industry tht sell similar products or services to customers

- Suppliers

Companies that provide materials, human, financial, and informational resources to other companies

- Relationship Behavior

Focuses on establishing a mutually beneficial, long-term relationship between buyers and suppliers

- Cognitive Maps

Graphic depictions that summarize the perceived relationships between environmental factors and possible organizational actions

- Advocacy Groups

Groups of concerned citizens who band together to try to influence the business practices of specific industries, business, and profession

- Simple Environment

Have few environmental factors

- Complex Environment

Have many environmental factors

Uncertainty?

How well managers can understand or predict the external changes and trends affecting their businesses

Proactive Monitoring of Customers

Identifying and addressing customer needs, trends, and issues BEFORE they occur.

- Opportunistic Behavior

In which one party benefits at the expense of the other

Reactive Customer Monitoring

Involves identifying and addressing customer trends and problems AFTER they occur.

Product Boycott

Involves protesting a company's actions by persuading consumers not to purchase its product or service

Competitor Component

Often, the differences between business success and failure comes down to whether your company is doing a better job of satisfying customer wants and needs than is the competition. Consequently, companies need to keep close track of what their competitors are doing.

Organization Heroes

Organizational people celebrated for their qualities and achievements within an organization

Industry Regulation

Regulations and rules that govern the business practices and procedures of specific industries, businesses, and professions

Industry Regulation Component

Regulatory agencies affect businesses by creating and enforcing rules and regulations to protect consumers, workers, or society as a whole. Surveys indicate that managers rank government regulation as one of the most demanding and frustrating parts of their jobs.

Public Communications

Relies on voluntary participation by the news media and the advertising industry to send out an advocacy group's message out Example: A public service campaign

Environmental Scanning

Searching the environment for important events or issues that might affect an organization

Business Confidence Indices

Shows how confident actual managers are about future business growth

Organizational Stories

Stories told by organizational members to make sense of organizational events and changes and to emphasize culturally consistent assumptions, decisions, and actions

Resource Scarcity

The abundance or shortage of critical organizational resources in an organization's external environment

Company Mission

The business' purpose or reason for existing

Economy

The current state of a country's economy affects most organizations operating in it. In a growing economy, more people are working and have more money to spend. A growing economy provides an environment favorable to business growth. In contrast, in a shrinking economy, consumers have less money to spend, and relatively fewer products, making growth for individual businesses more difficult.

Specific Environment

The customers, competitors, suppliers, industry regulations, and advocacy groups that are unique to an industry and directly affect how a company does business

-Supplier Dependence

The degree to which a company relies on that supplier because of the importance of the supplier's product to the company and the difficulty of finding other sources for that product.

-Buyer Dependence

The degree to which a supplier relies on a buyer because of the importance of that buyer to the supplier's sales and the difficulty of finding other buyers of its products

General Environment

The economic and the technological, sociocultural, and political/legal trends that indirectly affect ALL organizations

External Environments

The forces and events outside a company that have the potential to influence or affect it.

Technology

The knowledge, tools, and techniques used to transform inputs (raw materials, information, and so on) into outputs (products and services)

Environmental Complexity

The number and the intensity of external factors in the environment that affect organization

Media Advocacy

Typically involves framing the group's concerns as public issues (affecting everyone); exposing questionable, exploitative, or unethical practices; and creating controversy that is likely to receive extensive news coverage Example: PETA

Political/ Legal Component

The political/legal component includes the legislation, regulations, and court decisions that govern and regulate business behavior. In recent years, news laws and regulations have imposed additional responsibilities on companies. Unfortunately, many managers are unaware of these new responsibilities. Managers must be educated about the laws, regulations, and potential lawsuits that could affect business

Behavioral Addition

The process of having managers and employees per- form new behaviors that are central to and symbolic of the new organizational culture that a company wants to create

Behavioral Substitution

The process of having managers and employees perform new behaviors central to the "new" organizational culture in place of behaviors that were central to the "old" organizational culture

Environmental Change

The rate at which a company's general and specific environments change

- Dynamic environment

The rate of environmental change is fast

- Stable Environments

The rate of environmental change is slow

Organizational Culture

The set of key values, beliefs, and attitudes shared by members of the organization

Sociocultural Component

The sociocultural component of the general environment refers to the demographic characteristics and general behavior, attitudes, and beliefs of people in a particular society.

- Punctuated Equilibrium Theory

The theory that companies go through long periods pf stability (equilibrium) followed by short periods of dynamic, fundamental change (revolution), and finishing with a return to stability (new equilibrium)

Internal Environment

The trends and events within an organization that affect the management, employees, and organizational culture

Customer Component

There are two basic strategies for monitoring customers: reactive and proactive.

Visible Artifacts

Visible signs of an organization's culture, such as the office design and layout, company dress code, and company benefits and perks, like stock options, personal parking spaces, or the private company dining room