Hellriegel, Jackson, and SlocumMANAGEMENT, 8ESouth-Western College PublishingCopyright © 1999

Mia MichelleMia Michelle

EnvironmentalEnvironmental ForcesForces

Business Environment Task Environment Competitive Forces in the Task

Environment Technological Forces Political and Legal Forces

Adapted from Figure 3.1

The General EnvironmentCultural Forces

Political - Legal Forces

Technological ForcesCompetitive Forces

Organization

Ecos

yste

m Political System

Demographics Economic System

3.2

Sometimes called the macro-environment.

Are external factors, such as inflation and demographics, that usually affect indirectly all or most organizations.

Type of economic system and economic conditions

Type of political system Condition of the ecosystem Demographics Cultural Background

In the US, the government acts as a watchdog over business

Provides direction in areas such as: antitrust, monetary policy, defense, human rights environmental matters

The US has an economic system in which there are:

privately controlled markets based on supply and demand free market competition private contracts profit incentives technological advancement

There is a renewed commitment to the environment in the US

1981 - 4% wanted environmental improvements

1997 - 80% want improvements

Cut back on environmentally unsafe operations

Compensate for environmentally risky endeavors

Avoid confrontation with state and federal pollution control agencies

Comply early with government regulations Promote new manufacturing technologies Recycle wastes

3.3

Characteristics of a population such as age, race, gender, ethnic origin, and social class

determine the characteristics of work groups, organizations, specific markets, or nations population.

Demographics influence marketing, advertising, and human resources decisions.

Such as the number of individuals the ages of 18 to 25

They change all the time.

Culture is the shared characteristics, values, and beliefs of a group that distinguishes them from another group

Such as religion, language, and heritage

Power distance Degree to which influence/control are unequally distributed

among individuals within a particular culturesalary differentiation from CEO to front line employees

Uncertainty avoidance Degree to which members of a society attempt

to avoid ambiguity, riskiness, and indefinitenessof future

Individualism Extent to which society expects people to take

care of themselves and their immediate families And/or the degree to which individuals believe

they are masters of their own destiny

3.5

Collectivism Measures tendency of group members to focus on the

common welfare and feel loyalty toward one another Masculinity

Degree to which acquisition of moneyand things is valued and high quality of life for others is not

Confucian dynamism Stability of society is based on unequal relationships Family is the prototype of all organizations People should treat others as they would like to be treated

3.6

Adapted from Figure 3.3

Factors in environment are

few quite similar to each other basically the same over time

Example: Soft-drink distributors

Factors in environment are

few somewhat similar to each other continually changing

Example: Fast-food outlets

Factors in environment are

numerous not similar to each other basically the same over time

Example: Basic food production firms

Factors in environment are

numerous not similar to each other continually changing

Example: Computer firms

STABLESTABLE CHANGINGCHANGING

SSIIMM

PPLLEE

CCOOMM

PPLLEEXX

3.8

Ambiguity or unpredictability of certain factors external to an organization governmental regulations competition stability of inputs demand characteristics

e.g. Customer bargaining power

3.6

Complex, constantly changing Both ambiguous and unpredictable

Adapted from Figure 3.4

Suppliersbargaining

power

Threatof new

competitors

Buyersbargaining

power

Threat ofsubstitute

goods/services

Rivalry amongexisting firms in industry

3.9

Importance and Effect of Competitors◦ competitors are an important day-to-day

environmental force facing organizations◦ rivalry among competitors leads to

price cutting advertising promotions enhanced customer service or warranties improvements in product or service quality

Barriers to Entry: economies of scale

◦ decrease in per unit costs as volume of goods/services produced increases

product differentiation◦ uniqueness in quality, price, design,

brand image, or customer service that gives a product an edge over the competition

Potential Effects of Customers◦ they may drive down prices◦ push for more or higher-quality products◦ increase competition among sellers by

playing one against each other