Chapter_2_-_Environment - Chapter 2: The External...

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Chapter 2: The External Environment and Organizational Culture MNGT 215 Dr. Haitham Khoury hk51@aub.edu.lb Ext 3778 Room 369 - OSB
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“the essence of a business is outside itself” Peter Drucker
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The External Environment
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The Macroenvironment Demographics Regulations Social Issues/ Natural Environment Technology The Economy
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Laws and regulations Policies impose strategic constraints but could provide opportunity Government can affect business opportunities through tax laws, economic policies and international trade rulings Regulators are government bodies with the right to investigate company practices and take legal action (health and safety, employment, food and drugs etc. .) Lebanese examples: Telecommunications regulatory authority (TRA) Lebanese civil aviation authority, and Central bank
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The Economy Growth and recession occur worldwide and domestically Complex interconnections among economies of different countries External pressure of stock markets Periods of growth and recession Interest and inflation rates affect : Availability Cost of capital Growth opportunity Prices Consumer demand
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Technology Creates new products (teleconferencing) advanced production techniques (robots) better ways of communicating and managing (MISs) entering new markets
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Demographics Measures of various characteristics of people who make up groups or other social units Demographic trends Growth of the labor force Increasing education and skill levels Immigration Increased numbers of women in the workforce Increasingly diverse workforce Important to consider in HRM policy Education and training
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Social issues and natural environment Trends regarding how people think and behave affect management Changes in policies to support these trends New business as a result i.e. Nintendo Wii Social trends include Delaying having children to focus on careers Domestic partners covered under employee benefit programs Protecting the natural environment Natural environmental issues affect organizations reputations; reputations in turn can affect competitiveness
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The External Environment
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The Competitive Environment
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Who is the competition? Small domestic firms Strong regional competitors Big new domestic companies in new markets Overseas firms looking for a niche market Newer entries (web-based typically) How do they compete? For example: Price reductions New products Advertising campaigns Competition is most intense when
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Chapter_2_-_Environment - Chapter 2: The External...

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