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Unformatted text preview: AEM1200, Introduction to Business Management. AEM1200,
Wednesday 10/15 The Environments of Business The General Environment The Specific Environment Organizational Culture Characteristics of External Environments Characteristics
Environmental change The rate at which a company’s environment changes; Punctuated equilibrium theory: Companies cycle through stable and dynamic environments. Number of external factors in the environment that affect organizations; Degree to which an organization’s external environment has an abundance or scarcity of critical organizational resources. Environmental Complexity Resource Scarcity Uncertainty Uncertainty External Environment External Components of the General Environment Components
Economy Growing vs. shrinking economies Predicting future economic activity Business confidence indices See next slide Demographic changes Changes in behavior, attitudes, and beliefs Legislation Regulations Court decisions Technological trends Sociocultural trends Political / Legal trends Political Technological Component Technological Technology-- Input
Raw Materials Knowledge Tools Techniques Output
Products Information Services 2.2 Specific Environment Components Specific
Customers Reactive customer monitoring: responding to problems, Reactive trends, and events trends, Proactive customer monitoring: anticipating problems, Proactive trends, and events trends, Who are your competitors? What are their likely courses of action? What are their strengths and weaknesses? Relative independence Opportunistic vs. relationship behavior Competition Suppliers Industry regulation Advocacy groups Federal Regulation Agencies Federal
Consumer Product Safety Commission Department of Labor Environmental Protection Agency Equal Employment Opportunity Commission Federal Communications Commission Federal Reserve System Federal Trade Commission Food and Drug Administration National Labor Relations Board Occupational Safety and Health Administration Securities and Exchange Commission http://www.cpsc.gov http://www.dol.gov http://www.epa.gov http://www.eeoc.gov http://www.fcc.gov http://www.federalreserve.gov http://www.ftc.gov http://www.fda.gov http://www. nlrb.gov http://www.osha.gov http://www.sec.gov Cost of Compliance Cost
Researchers studied U.S. manufacturers and the cost they Researchers incur complying with the 25 major federal regulations. Researchers found: Researchers There are about 300,000 manufacturing companies in the There U.S. U.S. Each company spends roughly $2.2 million So, the aggregate cost of complying with federal regulations is roughly $660 billion
And that’s just for manufacturing. Advocacy Groups Advocacy Groups of concerned citizens who band
together to try to influence the business practices of specific industries, businesses, and professions Techniques to try to influence companies public communications media advocacy product boycotts Making Sense of Changing Environments Changing
Environmental Scanning Evaluating External Environments Interpreting Environmental Factors Acting on Threats and Opportunities How does top management keep track of the environment? How Environmental scanning Environmental Searching the environment for events or issues that might Searching affect an organization affect
keeps companies current on industry factors reduces uncertainty alters organizational strategies contributes to organizational performance Looking for threats and opportunities Simplified models of external environments Depicts how managers believe environmental factors relate to Depicts possible organizational actions possible Cognitive Maps The Danger: To see only what we know how to see and The to find only what we are looking for. to Cognitive Maps Cognitive Internal Environments Internal
Consist of the trends and events within an organization that affect the management, employees, and organizational culture important because it affects what people think, feel, and do at work organizational culture is the set of key values, beliefs, and attitudes shared by organizational members Creation and Maintenance of Organizational Cultures Organizational Company Founder Organizational Stories Organizational Heroes Successful Organizational Cultures Successful
Adaptability Consistency Involvement Clear Vision Sales Growth Return on Assets Profits Employee Satisfaction Quality Source: D.R. Denison & A.K. Mishra, Organization Science 6 (1995): 204-223 Levels of Organizational Culture Levels
Symbolic artifacts 1. Surface E Behaviors Level What people say E How decisions 2. Expressed Values and Beliefs are made Beliefs and 3. Unconsciously assumptions Held Assumptions E Rarely discussed and Beliefs SEEN HEARD BELIEVED Changing Organizational Cultures Changing
Behavioral addition Behavioral is the process of having managers and employees perform is a new behavior new Behavioral substitution Behavioral is having managers and employees perform a new is behavior in place of another behavior behavior Change visible artifacts Change such as the office design and layout, company dress such codes, etc. codes, ...
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This note was uploaded on 11/12/2009 for the course AEM 1200 at Cornell University (Engineering School).