Principles of Management 1

Chapter Two: Understanding Management’s Context:

Constraints and Challenges

Lecturer: Dr. Mazen Rohmi

Department: Business Administration
 Learning Objectives

• 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
 The Manager:
?Omnipotent or Symbolic

 Omnipotent View of Management(Having unlimited power) - the

view that managers are directly responsible for an
organization’s success or failure.

 Symbolic view of Management - the view that much of

an organization’s success or failure is due to external
forces outside managers’ control.
 The Omnipotent View

 In this view, someone has to be held accountable when

organizations perform poorly regardless of the reasons,
and that “someone” is the manager.

 When things go well, managers also get the credit—

even if they had little to do with achieving the positive
outcomes.
 The Symbolic View

 The symbolic view says that a manager’s ability to

affect performance outcomes is influenced and
constrained by external factors.
 The Symbolic View
 Performance is influenced by factors over which managers
have little control such as the economy, customers,
governmental policies, competitors’ actions, industry
conditions, and decisions made by previous managers.

 Managers play in organizational success or failure is limited

according to this view.
 In reality, managers are neither all-powerful nor
helpless. But their decisions and actions are constrained.

 External constraints come from the organization’s

environment and internal constraints come from the
organization’s culture.
 The External Environment:
Constraints and Challenges

 The external environment includes those factors and

forces outside the organization that affect its
performance.

 The main components include economic,

demographic, political/legal, sociocultural,
technological, and global.
How the External Environment Affects
Managers
 There are three ways the environment constrains and
challenges managers:

1. through its impact on jobs and employment;

2. through the environmental uncertainty;
3. Through the various stakeholder relationships that
exist between an organization and its external
factors.
 JOBS AND EMPLOYMENT

 The power of this constraint became painfully

obvious during the recent global recession as millions
of jobs were eliminated and unemployment rates rose
to levels not seen in many years.
 Environmental Uncertainty and Complexity

 Environmental uncertainty refers to the degree of change and

complexity in an organization’s environment.

 The first dimension of uncertainty is the degree of change.

 If the components in an organization’s environment change

frequently, it’s a dynamic environment. If change is minimal,
it’s a stable one.

 A stable environment might be one with no new competitors.

 Environmental Uncertainty and
Complexity

 The other dimension of uncertainty describes the degree of

environmental complexity, which looks at the number of
components in an organization’s environment and the extent
of the knowledge that the organization has about those
components.

 An organization with fewer competitors, customers, suppliers,

government agencies, and so forth.
 Complexity is also measured in terms of the
knowledge an organization needs about its
environment.
 How does the concept of environmental uncertainty
?influence managers

 Managers have the greatest influence on organizational outcomes

in cell 1 and the least in cell 4. Because uncertainty poses a threat
to an organization’s effectiveness, managers try to minimize it.

 Given a choice, managers would prefer to operate in the least

uncertain environments. However, they rarely control that
choice.
Exhibit 2-3: Environmental Uncertainty Matrix