Management BBA & MBA Lec 101112 - Environment

Skill Development at it’s Best
Principles of Management
Lecture 101112
(The Constraints – Organizational Culture
& Environment)
By: Farhan Mir
Copyright 2022@MIRS
Topics
• Introduction
– Management
• Overview and key components
• Management as a Field
– What are Organizations?
– Management Functions & Roles & Importance
• History and Evolution of Management
– Important Contributions
– Trends and Issues
• Organizational & Environmental Constraints
– Environmental Effects
– Important Environmental Elements
– Internal Vs. External Environment
– Global Environment & Management
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Management and Constraints
• Management’s task becomes more difficult in

the context of open system theory (as it has
to manage internal as well as external
factors)
• The Organizational Environment is classified
into two major categories
– Internal (commonly known as “Culture”
– External Environment (simply called
“Environment”)
• Specific
• General
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The Constraints
Two Perspectives on
Management
Omnipotent View Vs. Symbolic View
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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
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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
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Organizational Culture
– Internal Environment (Heavily effected by the norms and
values shared by members of the organization)
• What is Organizational Culture?
• The 7 Dimensions of Organizational Culture
– Risk, Attention to Detail, Outcome Orientation,
People Orientation, Team Orientation,
Aggressiveness & Stability
• Types (Strong Vs. Weak Culture)
• Sources of Culture
• How employees learn organizational culture
– Stories, Rituals, Material Symbols & Language
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The Organization’s Culture

• Organizational Culture
– A system of shared meanings and common
beliefs held by organizational members that
determines, in a large degree, how they act
towards 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 descriptive.
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Dimensions of Organizational Culture
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Visible Elements- How new employees

learn culture
Rituals and
Symbols
ceremonies
Language &
Slogans
Heroes Stories
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Strong versus Weak Cultures
• Strong Cultures
– Are cultures in which key values are deeply held
and widely held.
– Have a 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
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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.
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Contrasting Organizational Cultures
Organization A Organization B
• Managers must fully document all • Management encourages and rewards risk-
decisions taking and change.
• Creative decisions, change, and risks • Employees are encouraged to “run with”
are not encouraged. ideas, and failures are treated as “learning
experiences.”
• Extensive rules and regulations exist • Employees have few rules and regulations
for all employees. to follow.
• Productivity is valued over employee • Productivity is balanced with treating its

morale. people right.
• Employees are encouraged to stay • Team members are encouraged to interact
within their own department. with people at all levels and functions.
• Individual effort is encouraged. • Many rewards are team based.
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Organization Culture Issues

• Creating an Ethical • Creating an
Culture Innovative Culture
– High in risk tolerance – Challenge and
– Low to moderate involvement
aggressiveness – Freedom
– Focus on means as well – Trust and openness
as outcomes – Idea time
– Playfulness/humor
– Conflict resolution
– Debates
– Risk-taking
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A Case Study on Organizational Culture:

Excellence at Xerox
• Xerox
– Introduction
• Digital solution provider and world’s top computer hardware
manufacturer (Especially Copiers) and helps develop smarter
document management
• Helps Analyzing how employees can most efficiently share documents
and knowledge in the office
• Among the Fortune 500 with 55,200 employees worldwide, including
29,700 in the United States (December 31, 2005)
• The company's operations are guided by customer-focused and
employee-centered core values
• such as social responsibility, diversity and quality
• passion for innovation, speed and adaptability
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Excellence
– Xerox Strategy
at Xerox
• They are committed towards quality products for their
customers and for providing a world-class working
environment for their employees
• To do so they need to attract and retain world-class
people
• Xerox Employment Trademark “eXpress yourself” yields
for them innovation and leading working environment
due to:
– Passion
– Diversity
– Ideas
– Contribution from everyone
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Xerox: Excellence
• The Problem Era
– Just few years back the company was fighting for it’s survival and no focus on
improving it’s HR practices
– In year 2000 the company was facing $17 billion in debt and it’s stock price
dropped from $63 to about $4
– Company suffered loses for 7 consecutive quarters and investigations were
called against the accounting matters
• The Comeback
– Shifted it’s product mix and offered desktop copiers for offices and quality
printers for publishers
– Company had an increased income to $222 million from just $19 million
– The reasons behind this turnaround
• Focus on Customers
• Thinking about employees as a core (People Orientation)
• With strong values of social responsibility, diversity, quality and
innovation
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Diversity for Success: Case Study on UPS
• UPS
– Introduction
• Founded in 1907 as a messenger company in the United
States
• the world's largest package delivery company and a
leading global provider of specialized transportation and
logistics services
• Manage the flow of goods, funds, and information in
more than 200 countries and territories worldwide.
• The Company has got a global posture
• UPS´s workforce is multicultural, multidimensional, and
reflective of the broad attributes of our global
communities
• FORTUNE® magazine as one of the "50 Best Companies
for Minorities
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UPS and Diversity

– Views about workforce
• It is not about race or gender or background rather the
focus is about how much employees care about the
company or good at their jobs
• 1/3 of the employees are from minorities
• Representation of minorities is also at each level of the
organization
• Has a supplier diversity Program encouraging small and
minority group suppliers
– Diversity driving UPS towards success (may be other
factors but diversified workforce with new ideas and
flavors is a strong contributing factor
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UPS and Diversity

• African-Americans, Hispanics, Asian-Pacific Americans and other
minorities make up 35 percent of the company´s 348,400 employees in
the United States.
• Minorities accounted for half of UPS´s new employees in 2005.
• Women represent 28 percent of the U.S. management team and 20

percent of the overall workforce, holding jobs from package handlers, to
drivers, to senior management and to the UPS Board of Directors.
• Among the company´s 63,000 U.S. managers, minorities hold nearly 30

percent of those executive positions. Positions held include district
managers, the UPS Management Committee, and UPS´s Board of
Directors.
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The External
Environment
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Task Environment
• Task Environment: forces from suppliers,
distributors, customers, and competitors.
• Suppliers: provide organization with inputs
– Managers need to secure reliable input sources.
– Suppliers provide raw materials, components, and even
labor.
• Working with suppliers can be hard due to shortages,
unions, and lack of substitutes.
• Suppliers with scarce items can raise the price and are
in a good bargaining position.
– Managers often prefer to have many, similar suppliers of
each item.
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Task Environment
• Distributors: organizations that help others to
sell goods.
– Compaq Computer first used special computer stores to sell
their computers but later sold through discount stores to
reduce costs.
– Some distributors like Wal-Mart have strong bargaining
power.
• They can threaten not to carry your product.
• Customers: people who buy the goods.

– Usually, there are several groups of customers.
• For Compaq, there are business, home, & government
buyers.
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Task Environment
• Competitors: other organizations that produce
similar goods.
– Rivalry between competitors is usually the most serious
force facing managers.
– High levels of rivalry often means lower prices.
• Profits become hard to find.
– Barriers to entry keep new competitors out and result

from:
• Economies of scale: cost advantages due to large scale
production.
• Brand loyalty: customers prefer a given product.
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Organizational Environment
• Organizational Environment: those forces outside its
boundaries that can impact it.
– Forces can change over time and are made up of Opportunities and
Threats.
• Opportunities: openings for managers to enhance
revenues or open markets.
– New technologies, new markets and ideas.
• Threats: issues that can harm an organization.
– economic recessions, oil shortages.
• Managers must seek opportunities and avoid
threats.
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The General Environment
• Consists of the wide economic,

technological, demographic and similar
issues.
– Managers usually cannot impact or control these.
– Forces have profound impact on the firm.
• Economic forces: affect the national
economy and the organization.
– Includes interest rate changes, unemployment rates,
economic growth.
– When there is a strong economy, people have more
money to spend on goods and services.
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• Technological forces: skills & equipment used in design,

production and distribution.
– Result in new opportunities or threats to managers.
– Often make products obsolete very quickly.
– Can change how we manage.
• Socialcultural forces: result from changes in the social

or national culture of society.
– Social structure refers to the relationships between people and groups.
• Different societies have vastly different social structures.
– National culture includes the values that characterize a society.
• Values and norms differ widely throughout the world.
– These forces differ between cultures and over time.
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• Demographic forces: result from changes in

the nature, composition and diversity of a
population.
– These include gender, age, ethnic origin, etc.
• For example, during the past 20 years, women have
entered the workforce in increasing numbers.
– Currently, most industrial countries are aging.
• This will change the opportunities for firms competing
in these areas.
• New demand for health care, assisting living can be
forecast.
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• Political-legal forces: result from changes in

the political arena.
– These are often seen in the laws of a society.
– Today, there is increasing deregulation of many state-run firms.
• Global forces: result from changes in

international relationships between countries.
– Perhaps the most important is the increase in economic integration
of countries.
– Free-trade agreements (GATT, NAFTA, EU) decreases former barriers
to trade.
– Provide new opportunities and threats to managers.
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How the Environment Affects

Managers
• Environmental Uncertainty
– The extent 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.
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Reducing Environmental Impact
• Managers can counter environmental threats by

reducing the number of forces.
– Many firms have sought to reduce the number of suppliers it
deals with which reduces uncertainty.
• All levels of managers should work to minimize
the potential impact of environmental forces.
– Examples include reduction of waste by first line managers,
determining competitor’s moves by middle managers, or the
creation of a new strategy by top managers.
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Environmental Uncertainty Matrix
Exhibit 3.10
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Responding To The Environment

• Adapting to the environment
– company adjusts its structures and work processes
– in uncertain environment caused by complexity, companies tend to
decentralize decision making
• empowerment - process of sharing power with employees
– enhances their confidence in their ability to perform their
jobs
– engenders beliefs that they are influential contributors to the
firm
– in uncertain environments caused by dynamism, companies tend to
establish more flexible structures
• bureaucracy - suited for stable environments (low dynamism)
• organic - provides flexibility required for changing environments
(high dynamism)
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Boundary Spanning
• Managers must gain access to information
needed to forecast future issues.
• Boundary spanning is the practice of relating to
people outside the organization.
– Seek ways to respond and influence stakeholder perception.
– By gaining information outside, managers can make better
decisions about change.
• More management levels involved in spanning, yields
better overall decision making.
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Boundary Spanning Roles
Managers in boundary
spanning roles feedback
information to other managers
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Scanning and Monitoring

• Environmental scanning is an important
boundary spanning activity.
– Includes reading trade journals, attending trade
shows, and the like.
• Gatekeeping: the boundary spanner decides
what information to allow into organization
and what to keep out.
– Must be careful not to let bias decide what comes in.
• Interorganizational Relations: firms need
alliances globally to best utilize resources.
– Managers can become agents of change and impact
the environment.
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Stakeholder Relationships
• Stakeholders
– Any constituencies in the organization’s external
environment that are affected by the organization’s
decisions and actions
• Why Manage Stakeholder Relationships?
– It can lead to improved organizational performance.
– It’s the “right” thing to do given the
interdependence of the organization and its
external stakeholders.
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Managing Stakeholder Relationships

1. Identify the organization’s external
stakeholders.
2. Determine the particular interests and
concerns of the external stakeholders.
3. Decide how critical each external stakeholder
is to the organization.
4. Determine how to manage each individual
external stakeholder relationship.
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Organizational Stakeholders
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Managers Must
 Remain alert to internal and external
environments.
 Must forecast and plan for the changes they
suspect will come.
 Must cultivate a sensible and controlled reactive
behavior toward changes.
 Provide an imaginative program to manage and
capitalize on changes.
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Influencing Environments
Influence legislation.
Use the power of the media

to influence public opinion
and public policy.
Build alliances and raise

funds to push their
agendas.
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Skill Development at it’s Best

By: Farhan Mir

• Management’s task becomes more difficult in

The Manager: How Much Control?

The Manager: How Much Control?

The Organization’s Culture

Dimensions of Organizational Culture

Visible Elements- How new employees

Benefits of a Strong Culture

Contrasting Organizational Cultures

• Productivity is valued over employee • Productivity is balanced with treating its

Organization Culture Issues

A Case Study on Organizational Culture:

Diversity for Success: Case Study on UPS

UPS and Diversity

UPS and Diversity

• Minorities accounted for half of UPS´s new employees in 2005.

• Women represent 28 percent of the U.S. management team and 20

• Among the company´s 63,000 U.S. managers, minorities hold nearly 30

• Customers: people who buy the goods.

– Barriers to entry keep new competitors out and result

The General Environment

• Consists of the wide economic,

• Technological forces: skills & equipment used in design,

• Socialcultural forces: result from changes in the social

– These forces differ between cultures and over time.

• Demographic forces: result from changes in

• Political-legal forces: result from changes in

• Global forces: result from changes in

How the Environment Affects

Reducing Environmental Impact

• Managers can counter environmental threats by

Environmental Uncertainty Matrix

Responding To The Environment

Boundary Spanning Roles

Scanning and Monitoring

Managing Stakeholder Relationships

Use the power of the media

Build alliances and raise

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Management BBA & MBA Lec 101112 - Environment

Management BBA & MBA Lec 101112 - Environment