Open systems Show
Organizations that affect and are affected by their environments and other systems. Inputs Goods and services that organizations take in and use to create products or services. Outputs The products and services organizations create. Macroenvironment The general environment; includes governments, economic conditions, and other fundamental factors that generally affect all organizations five components of an organization's macroenvironment include laws and regulations the economy technology demographics social values Competitive environment Porters 5 forces Rivals New competitors customers Substitute services or products suppliers Internal Environment Managers, employees, resources, and organizational culture. culture Organizational culture The set of important assumptions about the organization and its goals and practices that members of the company share Corporate culture establishes and maintains the business philosophy, values, beliefs, and related behaviors among employees. Ex. Apple: The three levels of organizational culture - Visible
artifacts Visible artifacts visible signs of an organization's culture, such as the office design and layout, company dress code, and company benefits and perks, like stock options, personal parking spaces, or the private company dining room value Under the surface, desirable qualities and behaviors Unconscious assumptions the strongly held and taken-for-granted beliefs that guide behavior in the firm Ethos Spirit of the culture, innate feeling External Environment customers competitive partnerships supplier relationships The task environment consists of external factors that directly affect and are affected by the organization's operations. Regulators include agencies such as: Equal Employment Opportunity Commission Occupational Safety and Health Administration Federal Aviation Administration Food and Drug Administration National Labor Relations Board Attractive Environments Competitors: Few, high industry growth, unequal size differentiated Threat of entry: low threat, many barriers Substitutes: few Suppliers: Many, low bargaining power Customers: Many, low bargaining power Unattractive Environments Competitors: Many, low industry growth, equal size, commodity Threat of entry: high threat, few entry barriers Substitutes: many Suppliers: few, high bargaining power Customers: few, high bargaining power Examples of barriers to entry capital req, start-up cost; branding; customers; lack of economies of scale; distro channels, gov policy, patent expiration. Environmental uncertainty When management lacks information to understand or predict the future Environmental dynamism The degree of discontinuous change that occurs within an industry. High-growth industries (e.g., smartphones) with products and technologies that change rapidly are more uncertain than stable industries (e.g., utilities) where change is less dramatic and more predictable. Discontinuous change Non-incremental, sudden change that threatens existing or traditional authority or power structure. Environmental Complexity the number of issues to which a manager must attend, and the degree to which they are interconnected. Industries (e.g., the automotive industry) with many different firms that compete in vastly different ways tend to be more complex—and uncertain—than industries (e.g., airplane manufacturers) with only a few key competitors. Environmental scanning Searching for and sorting through information about changes in the environment Managers can ask questions such as these: Answers to these questions help managers develop competitive intelligence, the information necessary to decide how best to manage in the competitive environment they have identified. Porter's competitive analysis, can guide environmental scanning and help managers evaluate the competitive potential of different environments. We may wish to think of two extreme environments: an attractive environment, which gives a firm a competitive advantage, and an unattractive environment, which puts a firm at a competitive disadvantage. Competitive intelligence Information that helps managers determine how to compete better best-case scenario the occurrence of events that are favorable to the firm Benchmarking Comparing an organization's practices and technologies with those of other companies Scenarios As managers try to determine the effect of environmental forces on their organizations, they often develop different outcomes that are uncertain in the future—alternative combinations of different factors that form a total picture of the environment and the firm. The value of scenarios is that they help managers develop contingency plans for what they might do given different outcomes. They constantly update the scenarios to take into account relevant new factors that emerge, such as significant changes in the economy or actions by competitors. Also, managers try to identify strategies that are the most robust across all of the different scenarios. Whereas environmental scanning identifies important factors, and scenario development develops alternative pictures of the future, forecasting predicts exactly how some variable or variables will change in the future. worst-case scenario the occurrence of unfavorable events forecasts Method for predicting how variables will change the future The accuracy of forecasts varies from application to application. Because they extrapolate from the past to project the future, forecasts tend to be most accurate when the future ends up looking a lot like the past. Forecasts are most useful when the future will look radically different from the past. Unfortunately, that is when forecasts tend to be less accurate. The more things change, the less confidence we have in our forecasts. Accuracy decreases as you go further into the future. "You have power over your mind - not outside events, realize this, and you will find strength Marcus Aurelius Buffering Creating supplies of excess resources in case of unpredictable needs Independent strategies Strategies that an organization acting on its own uses to change (or manage, shape) some aspect of its current environment In addition to adapting or reacting to the environment, managers and organizations can develop proactive responses aimed at influencing stakeholders or changing the environment. Two general types of proactive responses are independent action and cooperative action. A company uses independent strategies when it acts on its own to influence stakeholders or change some aspect of its current environment. Cooperative Action to influence the external environment Cooperative strategies Strategies used by two or more organizations working together to manage the external environment Contracts, Cooptation, and Coalition Smoothing Leveling normal fluctuations. Example- reduce prices to move jacket inventory at end of winter. Cooperative strategies Contracts negotiating an agreement between the organization and another group to exchange goods, services, information, patents, and so on. Suppliers and customers, or managers and labor unions, may sign formal agreements about the terms and conditions of their future relationships. These contracts are explicit attempts to make their future relationships predictable. Cooperative strategies Coalition groups that act jointly with respect to a set of political initiatives for some period Change the Boundaries of the Environment Strategic maneuvering Domain selection AKA adjacent market Entrance to a new market or industry with an existing expertise. Ex. Raytheon using flight control radar expertise to enter the tolling business. Cooperative strategies Cooptation absorbing new elements into the organization's leadership structure to avert threats to its stability or existence. Many universities invite wealthy alumni to join their boards of directors. Mergers One or more companies combine with another Mergers and acquisitions can offer greater efficiency from combined operations or can give companies relatively quick access to new markets or industries. Acquisitions One firm buys another Mergers and acquisitions can offer greater efficiency from combined operations or can give companies relatively quick access to new markets or industries. Divestiture A firm selling one or more businesses Strategic maneuvering organizations can redefine or change which environment they are in. An organization's conscious efforts to change the boundaries of its task environment. By making a conscious effort to change the boundaries of its competitive environment, a firm can maneuver around potential threats and capitalize on opportunities. Managers can use several strategic maneuvers, including Prospectors Continuously change the boundaries of their task environment by seeking new products and markets, diversifying and merging, or acquiring new enterprises Aggressive companies like Amazon, Google, and Apple continuously change the boundaries of their competitive environments by seeking new products and markets, diversifying, and merging or acquiring new enterprises. In these and other ways, corporations put their competitors on the defensive and force them to react. Defenders Stay within a stable product domain as a strategic maneuver stay within a more limited, stable product domain. Diversification A firm's investment in a different product, business, or geographic area. occurs when a firm invests in different types of businesses or products or when it expands geographically to reduce its dependence on a single market or technology. Ex. Starbucks selling mugs in Australia etc. Weak culture different people hold different values, there is confusion about corporate goals, and it is not clear from one day to the next what principles should guide decisions. Fosters confusion, conflict, and poor performance. Most managers would agree that they want to create a strong culture that encourages and supports goals and useful behaviors that will make the company more effective. In other words, they want to create a culture that is appropriately aligned with the organization's competitive environment Alignment missing between speech and action. True or false: In a slow-growing, mature industry, competition intensifies and profits fall. TRUE Stock Market affects on individual managers - May feel required to meet Wall Streets earnings expectations and is likely you will be asked to improve budget or sales numbers - Such external pressures usually have a positive effect helping firms become more profitable and efficient - But failure to meet expectations causes the company stock to drop making it difficult for the firm to raise additional capital for investment - Compensation can also be affected, particularly if they have been issued stock - These pressures sometimes leads managers to focus on short term results at the expense of the long term success of their organizations or engage in unlawful or unethical behavior that misleads investors When will competition be more intense within an industry? When there are many direct competitors. When the product or service cannot be differentiated. When a company uses an employment agency to hire part-time workers during periods of unpredictable needs, the company is buffering independent strategies when it acts on its own to influence stakeholders or change some aspect of its current environment - Competitive aggression Strong culture Alignment, Authenticity. one in which everyone understands and believes in the firm's goals, priorities, and practices. It can be a real advantage to the organization if the behaviors it encourages and facilitates are appropriate. In contrast, a strong culture that encourages inappropriate behaviors can severely hinder an organization's ability to deal effectively with its external environment particularly if the environment is undergoing change, as is almost always the case today. A culture that was suitable and even advantageous in a prior era may become counterproductive in a new environment. Competitive aggression exploiting a distinctive competence or improving internal efficiency for competitive advantage Competitive Pacification independent action to improve relations with competitors Public Relations establishing and maintaining a relationship between an organization and the public Voluntary Action voluntary commitment to various interest groups, causes, and social problems Legal Action engaging company in private legal battle Political Action efforts to influence elected representatives to create a more favorable business environment or limit competition Three general considerations that helps guide management's response to the environment 1. mManagers need to change what matters and can be changed 2. Managers should use the most appropriate response 3. Managers should choose responses that offer the most benefit at the lowest cost components of the competitive environment - Rivalry among existing competitors - Threat of new entrants - Threat of substitute and Complementary products - Bargaining power of suppliers and buyers Actions and attitudes that provide excellent customer service include - Speed of filling and delivering orders - Willingness to meet emergency needs - Merchandise delivered in good condition - Readiness to take back defective goods and resupply quickly - Availability of installation and repair services and parts - Service charges switching costs fixed costs buyers face when they change suppliers The macroenvironment includes which of the following? The economy Technology Demographics regulators The specific government organizations in a firm's more immediate task environment are known as Which of the following is NOT a regulatory agency with the power to investigate company practices and take legal action to ensure compliance with laws? U.S. Chamber of Commerce (USCC) How does immigration affect the U.S. workforce? Some immigrants have different educational and occupational backgrounds from the rest of the labor force. It will make the labor force more ethnically diverse in the future. According to Porter's model of the competitive environment, successful managers do more than simply react to the environment; they act in ways that actually shape or change the organization's environment A barrier to entry a company might encounter is capital requirements Supply Chain Management the managing of the network of facilities and people that obtain materials from outside the organization, transform them into products, and distribute them to customers The goal of supply chain management is to have the right product in the right quantity available at the right place at the right cost organizational cultures clan, adhocracy, market, hierarchy clan culture internal focused, values flexibility rather than stability, encourages collaboration among employees directives flow from trust, tradition, and long term commitment leaders tend to act as mentors and facilitators adhocracy culture external focus and values flexibility emphasizes growth, change, and innovation leaders tend to be entrepreneurial market culture "rational" focused on external environment, values stability and control, driven by competition and a strong desire to deliver results hierarchy culture internally oriented by more focus on control and stability values and norms associated with bureaucracy Managers can take several approaches to managing culture. Which of the following is one of these approaches? Celebrate and reward members who behave in ways that exemplify the desired culture A company might decide to develop scenarios for which of the following purposes? To list initiatives it can eliminate if necessary in an economic downturn To identify possible new investments in an economic upturn To have contingency plans in the case of a serious accident Methods that permit the technical core to adapt to changes in the environment are called ______ processes. flexible Are approaches used by an organization that acts on its own to influence stakeholders or change some aspect of its current environment?a company uses independent strategies when it acts on its own to influence stakeholders or change some aspect of its current environment.
When a company acts on its own to change some aspect of its current environment it is using strategies?A company uses independent strategies when it acts on its own to change some aspect of its current environment.
Are organizations that are affected by and in turn affect their external environments?Organizations are open systems that are affected by, and in turn affect, their external environments. Organizations receive financial, human, material, and information resources from the environment; transform those resources into finished goods and services; and then send those outputs back into the environment.
What is an organizations conscious efforts to change the boundaries of its competitive environment?Strategic maneuvering is the organization's conscious efforts to change the boundaries of its task environment.
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Are approaches used by an organization that acts on its own to influence stakeholders or change some aspect of its current environment quizlet?
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