TOPIC 3 - CHAPTER 2

1. Explain what the external environment is

and why its important.
2. Discuss how the external environment
affects managers.
3. Define what organizational culture is and
why its important.
4. Describe how organizational culture affects
managers.

2
Explain what the external
environment is and why its
important.
Factors, forces, situations, and events outside
the organization that affect its performance.
4
5
6
The economic component encompasses
factors such as interest rates, inflation,
changes in disposable income, stock market
fluctuations, and business cycle stages.
The demographic component includes trends
in population characteristics such as age,
race, gender, education level, geographic
location, income, and family composition.
The technological component focuses on
scientific and industrial innovations.

7
The sociocultural component is concerned with
societal and cultural factors such as values,
attitudes, trends, traditions, lifestyles, beliefs,
tastes, and patterns of behavior.
The political/legal component looks at federal,
state, and local laws, as well as other countries
laws and global laws. It also includes a countrys
political conditions and stability.
The global component encompasses issues
associated with globalization and a world
economy.

8
Turmoil in mortgage markets
Spread to businesses
Great Recession
Foreclosures, unemployment, public debt,
and social problems

9
Harris Interactive Poll:
Only 10 percent of adults think economic inequality
is not a problem at all.

10
Managers:
All powerful OR helpless?
In reality, managers are neither all-powerful
nor helpless. But their decisions and actions
are constrained. External constraints come
from the organizations external environment
and internal constraints come from the
organizations culture.

11
Demographics refers to the characteristics of a
population used for purposes of social studies.
It has a significant impact on how managers manage and
include such factors as age, income, sex, race, education
level, ethnic makeup, employment status, geographic
location, and more.
Age is a particularly important demographic for
managers because the workplace often
encompasses different age groups.
Age Cohorts: Baby Boomers; Gen X; Gen Y; Post-
Millenials
12
Baby Boomers are those individuals born between
1946 and 1964.
The sheer numbers of people in that cohort means
theyve had a significant impact on every aspect of the
external environment as theyve gone through various
life cycle stages.
Gen X is used to describe those individuals born
between 1965 and 1977.
Gen Y (or the Millennials) encompasses those
individuals born between 1978 and 1994.
From technology to clothing styles to work attitudes,
Gen Y is impacting organizational workplaces.
13
Post-Millennialsthe youngest identified age
group, basically teens and middle-
schoolers.8
This group also has been called the iGeneration,
primarily because theyve grown up with technology
that customizes everything to the individual.
Another name given to this age group is Generation
C, since its a group thats always been digitally
connected.
14
Studying demographics involves looking at
current statistics and future trends.
For instance, recent analysis of birth rates shows
that
More than 80 percent of babies being born worldwide
are from Africa and Asia.
India has one of the worlds youngest populations with
more males under the age of 5 than the entire
population of France.
And by 2050, its predicted that China will have more
people age 65 and older than the rest of the world
combined.

Discuss how the external environment
affects managers.
16
Jobs and employment
Assessing environmental uncertainty
Managing stakeholder relationships

17
Jobs and employment
Assessing environmental uncertainty
Managing stakeholder relationships

18
As external environmental conditions change,
managers face the impact of these changes
on jobs and employment
Economists predict that about one quarter of the
8.4 million U.S. jobs eliminated during the most
recent economic downturn wont be reinstated.
Such readjustments create challenges for
managers who must balance work demands
with having enough people with the right
skills to do the organizations work.

19
Changes in external conditions not only affect
the types of jobs available but they also affect
how the jobs are created and managed.
For example, many employers use flexible work
arrangements and contract freelancers or
temporary workers.
20
21
Stakeholders:
any constituencies in an organizations environment
that are affected by that organizations decisions
and actions.
These groups have a stake in, or are
significantly influenced by, what the
organization does.
In turn, these groups can influence the
organization.
22
23
Can lead to desirable organizational
outcomes
Can affect organizational performance
Demonstrate doing the right thing

Define what organizational culture is
and explain why its important
25
Organizational Culture
Shared values, principles, traditions, and ways of
doing things that influence the way an
organizations members act.


26
Perceived
Its not something that can be physically touched or
seen, but employees perceive it on the basis of what
they experience within the organization.
Descriptive
Its concerned with how members perceive or describe
the culture, not with whether they like it.
Shared
Even though individuals may have different
backgrounds or work at different organizational levels,
they tend to describe the organizations culture in
similar terms.

27
28
Describe how organizational culture
affects managers
30
Effect on what employees do and how they
behave
Effect on what managers do

31
Strong cultures:
cultures in which the key values are deeply held and
widely shared.

32
Substitute for formal rules and regulations
Create predictability, orderliness, and
consistency

33
The stronger an organizations culture, the
less managers need to be concerned with
developing formal rules and regulations.
Instead, those guides will be internalized in
employees when they accept the
organizations culture
34
Because an organizations culture constrains
what they can and cannot do and how they
manage, its particularly relevant to
managers.
Such constraints are rarely explicit.
Theyre not written down.
Its unlikely theyll even be spoken.
But theyre there, and all managers quickly
learn what to do and not do in their
organization.
35
For instance, you wont find the following
values written down, but each comes from a
real organization:
Look busy even if youre not.
If you take risks and fail around here, youll pay
dearly for it.
Before you make a decision, run it by your boss so
that he or she is never surprised.
If you want to get to the top here, you have to be a
team player
36
Ready-aim-fire versus Ready-fire-aim
ready-aim-fire culture
managers will study and analyze proposed projects
endlessly before committing to them.
ready-fire-aim culture
managers take action and then analyze what has
been done.