Chapter 2: The external and internal environments. Chapter 2 describes the external environment in which managers and their organizations operate - the context that both constrains and provides opportunities for managers. It also discusses what can be described as the organization’s internal environment: its culture. | The External and Internal Environments Chapter Two McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives LO 1 Describe how environmental forces influence organizations and how organizations can influence their environments. LO 2 Distinguish between the macroenvironment and the competitive environment. LO 3 Explain why managers and organizations should attend to economic and social developments. LO 4 Identify elements of the competitive environment. 2- Learning Objectives (cont.) LO 5 Summarize how organizations respond to environmental uncertainty. LO 6 Define elements of an organization’s culture. LO 7 Discuss how an organization’s culture and climate affects its response to its external environment. 2- Organization Inputs and Outputs 2- Figure Open Systems External environment All relevant forces outside a firm’s boundaries, such as competitors, customers, the government, and the economy. Competitive environment The immediate environment surrounding a firm; includes suppliers, customers, rivals, and the like. 2- Open Systems Macroenvironment The general environment; includes governments, economic conditions, and other fundamental factors that generally affect all organizations. 2- The Economy In publicly held companies, managers may feel required to meet Wall Street’s earnings expectations. Managers may focus on short-term results at the expense of long-term success Some managers may be tempted to engage in unethical or unlawful behavior that misleads investors 2- Demographics Demographics Measures of various characteristics of the people who make up groups or other social units 2- The Competitive Environment 2- Figure Suppliers Supply chain management managing the network of facilities and people that obtain materials from outside the organization, transform them into products, and distribute them to customers 2- The goal of effective supply chain management is to have the right product in the right quantity available at the right place at the right cost. Environmental Analysis Environmental uncertainty Lack of information needed to understand or predict the future. 2- Environmental Analysis Benchmarking The process of comparing an organization’s practices and technologies with those of other companies. 2- Independent Action 2- Table Organization Culture Organizational culture The set of important assumptions about the organization and its goals and practices that members of the company share In strong cultures, the majority of people within the organization agree on organizational goals In weak cultures, the majority of people within the organization disagree on organizational goals 2- Competing Values Model of Culture 2- Figure
