12/05/09 RMK252 ENVIRONMENT 1

External
Environment

Define International
Information Dimension

ENVIRONMENT
OF
ORGANISATION

Uncertainty &
Dependence Management

12/05/09 RMK252 ENVIRONMENT 2

 ORGANISATIONAL
ENVIRONMENT

The Rise of Classical Theory

The Challenge of Change
External Environment

12/05/09 RMK252 ENVIRONMENT 3

 The Rise of Classical Theory

The Neo-Human
Relation Movement
The Contingency
Approach
The System Approach

The Quantitative
School
The Behavioral Sc
School
Classical Management
Theories

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990

t
n on
n

)
Pr in J ctu 45

en

ed
ge

io
8)

y Le 19

(6 ote apa re
ss

P C s) m
91

uc
ta

M 70 ove
re

1-
or

od
-1

ep

ua in 94
Sh

14

tr
M
D

Q em ( 1

In
19
ur

0s s
lit g
at

D 11
1(
bo

–
re

W
La

12/05/09 RMK252 ENVIRONMENT 4

W

IB
e
Th
 ORGANIZATION AND MANAGEMENT

The Challenge of Change

Preparing for the Future

Major Changes Includes:

•Paradigm Shifts
•Chaos Theory
•Workplace Diversity
•Merger & Acquisition
•Not-for-profit Organization
•Globalization

12/05/09 RMK252 ENVIRONMENT 5

 EXTERNAL ENVIRONMENT

Definition:
“All elements outside an organisation that are
relevant to its operation”
Stoner (92:63)

specific (direct impact)

2 types
general (indirect impact)

12/05/09 RMK252 ENVIRONMENT 6

 ORGANISATION AS A SYSTEM AND
ITS ENVIRONMENT
Greatest
uncertainty
Strategic Level
Mediator Economic and
technical
Coordinative Level rationality

Operating
Level
Input from Close Output to
environment environment

En
vi
r on
m Activity
en
ta process
lF
or Open
12/05/09 c es RMK252 ENVIRONMENT 7
Boundaries
 THE GENERAL
THE GENERAL &
& SPECIFIC
SPECIFIC ENVIRONMENTS
ENVIRONMENTS
OF AN
OF AN ORGANISATION
ORGANISATION

Social Variables Technological Variables

Competitors Customers

Financial Supplies
Institution THE
ORGANISATION
Labour Govern-
Union ment
Special
The Media
Interest Group

Economic Variables Political Variables

12/05/09 RMK252 ENVIRONMENT 8

 SPECIFIC (DIRECTION-ACTION)
ENVIRONMENT
Customers
Supplier - General
- Specific (vendors)
Government - Regulative Law
Special Interest Group – NGO’s
Media - wide coverage and immediate
- ‘Fishbowl effect’
Labour Unions – collective bargaining power
Financial institution – loans
Competitors - to increase market share (i) gain
additional customers, (ii) beat other
competitors.
Technological Components - meeting new techniques
requirements of own industry.

12/05/09 RMK252 ENVIRONMENT 9

 GENERAL ENVIRONMENT
(INDIRECT ACTION)

SOCIAL VARIABLES

Demographic (i) race segment

(ii) age group
(iii) birth rate
(iv) sex
Lifestyle (i) inc. in single parent
(ii) inc. women in labour force
(iii) towards better education
Social value (i) work value
(ii) Japan – lifetime
(iii) US – participative
(iv) French – rigid/formal

12/05/09 RMK252 ENVIRONMENT 10

 GENERAL ENVIRONMENT
(INDIRECT ACTION)

ECONOMIC VARIABLES

General Economic Conditions

Indicator (i) GDP, income percapita expenditure;
(ii) Saving, investment;
(iii) Prices, wages and productivity;
(iv) Labour force;
(v) Government activities; &
(vi) International transaction.

12/05/09 RMK252 ENVIRONMENT 11

 GENERAL ENVIRONMENT
(INDIRECT ACTION)

POLITICAL VARIABLES

Political climate that affects organisations

Regulations
Policies

TECHNOLOGICAL VARIABLES
Technological Development
- Computer technology
- Aviation technology
- Automobile technology
- Construction technology
12/05/09 RMK252 ENVIRONMENT 12
 THE INTERNATIONAL DIMENSION
Globalization – borderless world.
Multinational companies

Uncertainty and Dependence Environment

Factors Affecting an Organisation’s Uncertainty and
Dependence
Uncertainty
More differentiated
Changing
Numerous interconnection among its various elements
Dependent
Required resources are not widely availabled
Resources not evenly distributed
Increasing connectedness
12/05/09 RMK252 ENVIRONMENT 13
 MANAGERS’ PERCEPTION OF THE
ENVIRONMENT
Manager Action
Influence specific environment
Monitoring general environment
Increasing connectedness

General
Environment Goals and values
Technology
Decision
Managerial that Structure
Perception influence
Human Relationships
Specific Managerial Processes
Environment
12/05/09 RMK252 ENVIRONMENT 14
 CONSTRUCTION ENVIRONMENT
CONSTRUCTION ENVIRONMENT

SUPP- SUBCONT-
LIERS RACTORS INTERNATIONAL
MANAGE-
MENT
NATIONAL
LABOUR
LOCAL
CLIENTS
PLANT ORGANISATION
CONSULTANTS
FINANCE PROJECT
INPUTS OUTPUTS
CONVERSION

POLITICS TECHNOLOGY
& LAW

ECONOMICS SOCIOLOGY

THE
ENVIRONMENT
12/05/09 RMK252 ENVIRONMENT 15
 ECONOMICS
Environmental SOCIETY
Levels REGULATORY
AGENCIES GENERAL
GOALS ENVIRONMENT

CREDIT Dept 1
-ORS Dept 2

OUTPUTS
INPUTS
INTERNAL
SUPPLIERS ENVIRONMENT COMPETITION

EFFICIENCY FEEDBACK

TRADE LOCAL
UNIONS COMMUNITY
FINANCIERS ETC. GROUPS SHAREHOLDERS

LAW
OPERATING
ENVIRONMENT
POLITICS TECHNOLOGY
12/05/09 RMK252 ENVIRONMENT 16
 THE END

12/05/09 RMK252 ENVIRONMENT 17

 THANK YOU

12/05/09 RMK252 ENVIRONMENT 18