MGT Lec 3 - Understanding Management's Context

Understanding
Management’s
Context:
Constraints and
Challenges
Copyright
Copyright © 2014 Pearson©Education,
2012 Pearson Education,
Inc. publishing as Prentice Hall 2-1
Inc. Publishing as Prentice Hall
Contrast the actions of managers according to
the omnipotent and symbolic views.
Describe the constraints and challenges facing
managers in today’s external environment.
Discuss the characteristics and importance of
organizational culture.
Describe current issues in organizational
culture.
Copyright
Copyright © 2014 © Education,
Pearson 2012 PearsonInc.Education,
publishingInc.
as Prentice Hall 2-2
Publishing as Prentice Hall
The Manager:
Omnipotent or Symbolic?
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The Manager:
Omnipotent or Symbolic?
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Constraints on Managerial Discretion
Managerial Discretion
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Exhibit 2-2
Components of External Environment
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External Environment
General
Environment
Suppliers Customers
The
Organization
Public
Pressure Competitors
Groups
Specific
Environment
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The Environment
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The Environment
• General environment: broad economic, socio-cultural, political/legal,

demographic, technological, and global conditions that may affect the
organization.
• Economic conditions - The economic component encompasses factors such
as interest rates, inflation, changes in disposable income, stock market
fluctuations, and business cycle stages.
• Legal conditions - federal, state, and local regulation
>> substantial expense entailed to meet regulations
>> limit choices available to organizations
• Political conditions - general stability of country
>> attitudes of governmental officials toward business
• Sociocultural conditions - expectations of society
>> values, attitudes, trends, traditions, lifestyles, beliefs, tastes,
and patterns of behavior.
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The Environment
General environment (contd.)
• Demographic conditions - trends in population characteristics such as
age, race, gender, education level, geographic location, income, and family
composition.
e.g., “baby boomers” influential because of their numbers
e.g., “digital” or “net” generation - immersion and acceptance
of computers
• Technological conditions - most rapidly changing aspect of the general

environment. It is concerned with scientific or industrial innovations.
>> changing the ways that organizations are structured
>> information is the basis of important competitive advantages
• Global conditions - increasing number of global competitors and consumer

markets. encompasses those issues associated with globalization and a world
economy
>> major factor affecting organizations
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How the External Environment
Affects Managers
• Jobs and employment - As any or all external environmental
conditions (economic, demographic, technological,
globalization, etc.) change, one of the most powerful
constraints managers face is the impact of such changes on
jobs and employment—both in poor conditions and in good
conditions.
• The power of this constraint became painfully obvious during
the last global recession as millions of jobs were eliminated
and unemployment rates rose to levels not seen in many
years.
• Businesses have been slow to reinstate jobs, creating
continued hardships for those individuals looking for work.
Many college grads have struggled to find jobs or ended up
taking jobs that don’t require a college degree.
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How the External Environment
Affects Managers
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Environmental Uncertainty and
Complexity
• Assessing environmental uncertainty - determined by:
• degree of unpredictable change
−dynamic - frequent change
−stable - minimal change
• environmental complexity
−the number of components in the environment
−amount of information available or required about
those components
• Managers attempt to minimize uncertainty
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Environmental Uncertainty and
Complexity
• Environmental Uncertainty - the degree
of change and complexity in an
organization’s environment.
• Environmental Complexity - the number
of components in an organization’s
environment and the extent of the
organization’s knowledge about those
components.
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ENVIRONMENTAL UNCERTAINTY
MATRIX
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Managing Stakeholder
Relationships
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Exhibit 2-4 Organizational Stakeholders
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Managing Stakeholder Relationships
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What Is Organizational Culture?
• Organizational Culture - The shared

values, principles, traditions, and ways of
doing things that influence the way
organizational members act.
• “The way we do things around here.”
− Values, symbols, rituals, myths, and
practices
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What Is Organizational Culture?
• Implications:
- Culture is a perception – employees perceive culture on the
basis of what they see, hear & experience
- Culture is shared – employees from different background and
levels of organization tend to describe organization’s culture in
similar terms
- Culture is descriptive – it is concerned with how employees
perceive the organization. It describes rather than evaluates
• Seven dimensions of organizational culture

− composite picture of organizational culture may be derived from
seven dimensions
− organization’s personality often shaped by one of these
dimensions
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Dimensions of Organizational Culture
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Strong Versus Weak Cultures
Strong Cultures
- Are cultures in which key values are deeply held and widely shared.
- 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
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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Exhibit 2-7
Strong Versus Weak Cultures
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How Do Employees Learn Culture?
• Stories - Narratives of significant events or people, e.g.
organization founders, rule breaking, reaction to past
mistakes etc.
• Rituals - Sequences of activities that express and reinforce
the important values and goals of the organization
• Material Artifacts and Symbols - Physical assets
distinguishing the organization convey the kinds of behavior
that are expected, e.g. risk taking, participation, authority,
etc.
• Language - Acronyms and jargon of terms, phrases, and
word meanings specific to an organization. Acts as a
common denominator that bonds members.
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Exhibit 2-9
Managerial Decisions Affected by Culture
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Creating an Innovative Culture
• What does an innovative culture look like?
– Challenge and involvement
– Freedom
– Trust and openness
– Idea time
– Playfulness/humor
– Conflict resolution
– Debates
– Risk-taking
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• In a recent survey of senior executives, over half said that
the most important driver of innovation for companies was a
supportive corporate culture.
• What does an innovative culture look like? According to
Swedish researcher Goran Ekvall, it would be characterized
by the following:
 Challenge and involvement - Are employees involved in,
motivated by, and committed to the long-term goals and
success of the organization?
 Freedom - Can employees independently define their
work, exercise discretion, and take initiative in their day-
to-day activities?
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(Contd.)
 Trust and openness - Are employees supportive and
respectful of each other?
 Idea time - Do individuals have time to elaborate on new
ideas before taking action?
 Playfulness/humor - Is the workplace spontaneous and fun?
 Conflict resolution - Do individuals make decisions and
resolve issues based on the good of the organization
versus personal interest?
 Debates - Are employees allowed to express opinions and
put forth ideas for consideration and review?
 Risk taking - Do managers tolerate uncertainty and
ambiguity, and are employees rewarded for taking risks?
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Exhibit 2-10
Creating a Customer-Responsive Culture
• How Do You Create a Customer Responsive Culture?
– Hire the right type of employees (those with a
strong interest in serving customers)
– Have few rigid rules, procedures, and
regulations
– Use widespread empowerment of employees
– Have good listening skills in relating to
customers’ messages
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Exhibit 2-10
Creating a Customer-Responsive Culture
Characteristics of Suggestions for managers
Customer- responsive
Culture
Type of employee Hire people with personalities and attitudes consistent with
customer service: friendly, attentive, enthusiastic, patient,
good listening skills
Type of job environment Design jobs so employees have as much control as possible
to satisfy customers, without rigid rules and procedures
Empowerment Give service-contact employees the discretion to make day-

to-day decisions on job-related activities
Role clarity Reduce uncertainty about what service contact employees

can and cannot do by continual training on product
knowledge, listening, and other behavioral skills
Consistent desire to Clarify organization’s commitment to doing whatever it
satisfy and delight takes, even if it’s outside an employee’s normal job
customers requirements
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Understanding

• General environment: broad economic, socio-cultural, political/legal,

• Technological conditions - most rapidly changing aspect of the general

• Global conditions - increasing number of global competitors and consumer

• Managers attempt to minimize uncertainty

• Organizational Culture - The shared

• Seven dimensions of organizational culture

Factors Influencing the Strength of Culture

Benefits of a Strong Culture

Empowerment Give service-contact employees the discretion to make day-

Role clarity Reduce uncertainty about what service contact employees

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