CHAPTER 3

Management Environment

Organization’s Environments

1. 
   The Organization’s Environments
   The External Environment
   The General Environment
   The Task Environment
   
2. 
   Organizational-Environment Relationships
   How Environments Affect Organizations
   How Organization Adapt to Their Environments
   
3. The Internal Environment
   Owners
   Board of Directors
   Employees
   Physical Work Environment
4. 
   The Environment and Organizational Effectiveness
   Models of Organizational Effectiveness
   Examples of Organizational Effectiveness
   
5. 
   The Internal Environment
   Owners
   Board of Directors
   Employees
   Physical Work Environment
   
6. 
   The Environment and Organizational Effectiveness
   Models of Organizational Effectiveness
   Examples of Organizational Effectiveness
   

The Business Environment

External Environment
General environment / Indirect action is everything outside an organization’s boundaries—economic, legal, political, socio-cultural, international, and technical forces.
Task environment / Direct action is composed of specific groups and organizations that affect the firm.
Internal Environment
Conditions and forces present and at work within an organization

The External Environment

The General Environment
The set of broad dimensions and forces in an organization’s surroundings that create its overall context.
Economic dimension is the overall health and vitality of the economic system in which the organization operates.
Technological dimension refers to the methods available for converting resources into products or services.

Employees are persons who work for the firm and have a vested interest in its continued operation and existence.
Physical work environment is the actual physical environment of the organization and the work that people do.

How Environments Affect Organizations

Change and Complexity
Environmental change occurs in two ways:
1.Degree to which change in environment is occurring
2.Degree of homogeneity or complexity of the environment

Uncertainty is a driving force that influences organizational decisions

How Environments Affect Organizations

Competitive Forces
Porter’s Five Competitive Forces
1.Threat of new entrants into the market
2.Competitive rivalry among present competitors
3.Threat of substitute products
4.Power of buyers
5.Power of suppliers
Environmental Turbulence
Unexpected changes and upheavals in the environment of an organization.