Chapter 3 – The Environment and Culture of OrganizationsThe Organizations Environments –The organization needs to understand conditions within the environment;a key element in the effective management of an organization is determining the ideal alignment between the environment and the organization and then working to achieve and maintain that alignment.EXTERNAL ENVIRONMENT – everything outside an organizations boundaries that might affect it.TWO SEPARATE EXTERNAL ENVIRONMENTS –1) General Environment2) Task EnvironmentINTERNAL ENVIRONMENT – consists of conditions and forces within the organization.Internal Environment consists of Owners, Board of Directors, Employees, Physical Environment, CultureThe External Environment – (General, Task Environment)General Environment – the set of broad dimensions and forces in an organizations surroundings that create its overall context.The general environment of most organizations has economic, technological, sociocultural, political-legal, and international dimensions.Task Environment – specific organizations or groups that influence an organization.The task environment consists of regulators, competitors, customers, suppliers, & strategic partners.The General Environment : Economic Dimension, Technological Dimension, Socio-Cultural Dimension, Political-Legal Dimension, International DimensionThe Economic Dimension – is the overall health and vitality of the economic system in which the organization operates.Particularly important economic factors for business are general economic growth, inflation, interest rates, and unemploymentFigure 3.2 – since late 2008, McDonalds U.S. Operation has been functioning in an economy characterized by weak growth, high unemployment, and low inflation.Higher employment means fewer people eat out, but those who do are looking for cheaper options, like McDonalds.The Technological Dimension – refers to the methods available for converting resources into products or services.For example – computer assisted manufacturing & design techniquesMore efficient operating systemsThe Socio-Cultural Dimension – the customs, mores, values, and demographic characteristics of the society in which the organization functions.Socio-Cultural processes are important because they determine the products, services, and standards of conduct that the society is likely to value.Socio-cultural factors influence how workers in a society feel about their jobs and organizations.For example – In the United States, accepting bribes and bestowing political favors in return are considered unethical (as well as illegal) ; However – payments to local politicians may be expected in return for a favorable response to such common business transactions as applications for zoning and operating permits.Socio-Cultural concern for McDonalds – Growing concern about health and nutrition.The Political-Legal Dimension – refers to the government regulation of business and the relationship between business and governmentThis Dimension is important for 3 basic reasons1) the legal system partially defines what an organization can and cannot dothere are major regulation of business activity despite the U.S. being a free market economy; McDonalds for example, is subject to a variety of political and legal forces, including food preparation standards and local zoning requirements.2) Pro/Anti-Business Sentiment in government influences business activityfor example – during periods of probusiness sentiment, firms find it easier to compete and have fewer concerns about anti-trust issuesHowever – during a period of anti-business sentiment, firms may find their competitive strategies more restricted and have fewer opportunities for mergers and acquisitions because of anti-trust concerns.3) Political Stability has ramifications for planningno business wants to set up shop in another country unless trade relationships with that country are relatively well defined and stable.The International Dimension – the extent to which an organization is involved in or affected by businesses in other countriesMcDonalds operates restaurants in 118 different countriesThe Task Environment – most organizations tend to focus their attention on their task environments; THESE TASK ENVIRONMENTS INCLUDE:Competitors – other organizations that compete with it for resourcesReebok, Nike, Adidas are competitorsUniversities compete with trade schools, the military, other universities, and the external labor market to attract good students;Organizations might also compete for resources, besides consumer dollarsTwo retailers might compete for the right to purchase a prime piece of real estate in a growing community.Customers – whoever pays money to acquire an organizations products or servicesCustomers are not just individuals ; Customers are also, schools, hospitals, government agencies, wholesalers, retailers, and manufacturersSuppliers – are organizations that provide resources for other organizationsMcDonald’s buys soft-drink products from Coca-Cola; individually packaged servings of ketchup from Heinz;Common Wisdom in the United States used to be that a business should try to avoid depending exclusively on particular suppliers because a firm that buys all of a certain resource from one supplier may be vulnerable if the supplier raises its prices, goes out of business, or is shut down by labor strike;This practice can also help maintain a competitive relationship among suppliers, keeping costs down.Honda picked Donnelly Corporation to make all of the mirrors for its U.S. Manufactured.Strategic Partners – (strategic allies) an organization working together with one or more other organizations in a joint venture or similar arrangementFor example – Disney and Steven Spielberg’s Dreamworks Films studio recently formed a partnership that calls for Disney to provide investment capital to Dreamworks and to distribute four to six Dreamworks films each year.In return Disney gets 10% of the box office revenue from each film, as well as additional revenue from the distribution of DVDSMcDonalds has several strategic partners - walmarts where small McDonalds are built, long term deal with Disney promoting Disney movies in McDonalds stores;Strategic Partnerships helps companies get from other companies the expertise they lack.They also help spread risk and open new market opportunities.Regulators – are elements of the task environment that have the