3-1 王青 - 管理学院 - 上海交通大学 2000-1 3 3 the organizational environment *...

3-1 王青 - 管理学院 - 上海交通大学 2000-1

33The Organizational EnvironmentThe Organizational Environment

* Organization-Environment Theory

* Organizational Environment


Organization-Environment Theory

Organization-Environment Theory

Considers relationships inside and outside the organization.

An open system interacts with the environment.

A closed system is self-contained.


The Organization as an Open SystemThe Organization as an Open System

InputInput StageStage ConversionConversionStageStage

OutputOutputStageStage

Sales of outputsSales of outputsFirm can then buy inputsFirm can then buy inputs

Figure 2.4


Systems between org. n env.Inputs Transformation Outputs

Raw materials

Human resources

Capital

Technology

Information

Products & services

Financial results

Information

Human results

Employees` work activities

Management activities

Technology and operations methods

System


Organizational EnvironmentOrganizational EnvironmentThose forces outside its boundaries that can

impact it with :

Opportunities: openings for managers to enhance revenues or open markets.

Threats: issues that can harm an organization.

Managers must seek opportunities and avoid threats.


Environment Range

Task Environment: forces from suppliers, distributors, customers, and competitors.

General Environment: Consists of the wide economic, technological, demographic and similar issues.


Chart of environmentChart of environment

Figure 3.1

Distributors

FirmFirmSuppliers

Competitors

CustomersEconomicForces

GlobalForces

Socio-culturalForces

DemographicForces

TechnologicalForces

Political &Legal Forces


SuppliersSuppliers provide raw materials, components, and even labor.

Working with suppliers can be hard due to : shortages, unions, lack of substitutes.

Managers need to secure reliable input sources. So managers prefer to have many, similar suppliers of each item.


DistributorsOrganizations that help others to sell goods.

Some distributors like Wall-Mart have strong bargaining power.


Customers people who buy the goods.Usually, there are several groups of customers. Business buyers, Home buyers, government buyers.


CompetitorsOrganizations that produce similar goods.High levels of rivalry often means lower prices.Barriers to entry keep new competitors out and result from: Economies of scale Brand loyalty Capital need


Economic forcesAffect the national economy and the organization.

Includes: interest rates, unemployment rates, economic growth.


Skills & equipment used in design, production and distribution.

Result in new opportunities or threats to managers.

Often make products obsolete very quickly.

Technological forces


The Industry Life CycleThe Industry Life CycleFigure 3.3

Birth Growth Shakeout Maturity Decline


In the stage firms seek to develop a winning technology.

Birth stage


Growth stageProduct gains customer acceptance and grows rapidly.

New firms enter industry, production improves, distributors emerge.


At end of growth, there is a slowing customer demand. Competitor rivalry increases, prices fall. Least efficient firms fail and leave industry.

Shakeout stage


Maturity stageMost customers have bought the product, growth is slow.

Relationships between suppliers, distributors more stable.

Usually, industry dominated by a few, large firms.


Decline stageFalling demand for the product.

Prices fall, weaker firms leave the industry.


Result from changes in the social or national culture of society. values, norms, knowledge, beliefs, practices that unite a country.

Social-cultural forces


Result from changes in the nature, composition and diversity of a population. gender age ethnic origin

Currently, most industrial countries are aging.

Demographic forcesDemographic forces


Political-legal forces: result from changes in the political arena. These are often seen in the laws of a society. Today, there is increasing deregulation of many

state-run firms.

Political-legal forcesPolitical-legal forces


Global forcesResult from changes in international relationships between countries. Tariff Barriers Economic Systems Distance barriers culture barriers International Expansion


Economic SystemsEconomic SystemsFree market economy: production of goods and services is in private ownership.

Command economy: decisions on what to produce, how much, done by the government.

Mixed economy: certain economic sectors controlled by private business, others are government controlled.


*Changing Political and Economic Forces

*Changing Political and Economic Forces

Russia1985

Russia1995

Democratic

PoliticalFreedom

TotalitarianChina1985

China1995

Command MarketMixedEconomic Freedom

Britain1985

Britain1995

Hungary1985

Hungary1995

Figure 4.4


* Free-trade agreementsGATT: General Agreement on Tariff and Trade

NAFTA: North American Free Trade Agreement. No tariffs on goods traded between Mexico, Canada

and the U.S. Allows unrestricted cross-border flows of resources.

EU:European Union


* International Expansion* International Expansion

ImportingExporting

LicensingFranchising

Joint VenturesJoint VenturesStrat. AlliancesStrat. Alliances

Wholly-owned For. Subsidiary

Low HighLevel of Foreign involvement and investment needed by a global organization

Figure 4.6


Importing and ExportingImporting and Exporting

the least complex method of expansion.

Exporting: firm makes products and sells abroad. Importing: firm sells products made abroad.


LicensingFirm allows foreign organization to make and distribute goods for a fee.

Helps the home firm since it does not have to set up a complete production and distribution network.


FranchisingCompany sells a foreign organization the rights to use brand name and know-how in return for payment and profit percentage.


Strategic AlliancesStrategic AlliancesManagers pool resources with a foreign firm and both organizations share the rewards and risks.

Allows firm to maintain control which is a problem with exporting, licensing, and franchising.


Wholly-owned foreign subsidiaryFirm invests in production operations in a foreign country.

This is very expensive but can yield high returns.

3-1 王青 - 管理学院 - 上海交通大学 2000-1 3 3 the organizational environment *...

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