The Environment of Business in Business Communication

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BASIC MANAGEMENT - Course

Recommended Text Book:

Management A Functional Approach by Joseph M. Putti, McGraw

Hill Book Company Chapters:

The Environment of Business

The Nature and Meaning of Management

The Planning Function The Organizing Function

The Controlling Function

The Staffing Function

Motivating Employees

Participation in Organizations1


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Marks Distribution

Metric

Assignments/Project

Quizzes

Class Participation & Attendance Mid-Term Exam

Final Exam

Marks

10

10

5 25

50

2

Final Evaluation 100


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The Environment ofBusiness


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Introduction to Management &

Organization

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What is Management?- Formal Definitions:

The attainment of organizational goals in an effective andefficient manner through planning, organizing, leading and

controlling organizational resources(Daft & Marcic)

the process of coordinating work activities so that they are

completed efficiently and effectively with and through other

people(Robbins) Aset of activities directed at an organizationsresources with

the aim of achieving organizational goals in an efficient and

effectivemanner(Griffin)

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What is an Organization?

- Formal Definitions:

A social entity that is goal directed and deliberatelystructured (Daft & Marcic)

A deliberate arrangement of people to accomplish some

specific purpose (Robbins)

A group of people working together in a structured and

coordinated fashion to achieve a set of goals (Griffin)

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What is a Business Environment?

Business environment encompasses all those factors that affect a

company's operations; including customers, competitors, suppliers,

distributors, industry trends, substitutes, regulations, governmentactivities, the economy, demographics, social and cultural factors,

innovations, and technological developments. It may also be referred

to as Operating environment.

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What is a System?

A system is one which has interrelated parts and functions as a whole.

There are several departments or units in a business organization which

are all interrelated and the organization functions as one system.

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SYSTEMS MODEL OF

ORGANIZATION


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Types of System

Open System

An open system is one that interacts with its environment and thus

exchanges information, material, or energy with the environment,including random and undefined inputs. Open systems are adaptive

in nature as they tend to react with the environment in such a way

organizing', in the sense that they change their continued existence.

Such systems are self organizing, because they change their

organization in response to changing conditions.

Closed System

A closed system is one, which doesntinteract with its environment.

Such systems, in business world, are rare. Thus the systems that are

relatively isolated from the environment but not completely closed

are termed closed systems.9


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EMERY & TRISTs Classification of

Environments

They offer a model that identifies four kinds of environments that

organizations might confront:

1. Placid-randomized: resources unchanging, random distribution

2. Placid-clustered: resources unchanging, but location becomes

important for survival

3. Disturbed-reactive: org. strategy is to get resources important for

survival)

4. Turbulent-field: all actors are interconnected, and overall field

becomes an important force

Placid-randomized is least complex, turbulent-field is

the most complex.

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PLACID-RANDOMIZED ENVIRONMENTS

This environment is relatively unchanging. Therefore, environmental

uncertainty is low. Environmental demands are distributed randomly, and

change slowly.

Managerial decision making does not give much attention to the

environment.

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PLACID-CLUSTERED ENVIRONMENT

Environment changes slowly, but threats are clustered, not random. The

forces in the environment are linked, and pose a higher threat than

randomized changes.

These organizations use long-range planning and forecasting to learn as

much as possible about their environments. Structures will tend to be

centralized.

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DISTURBED-REACTIVE ENVIRONMENTS

A more complex environment than either placid one. Many similar

organizations seeking similar ends. One or more may be large and have

ability to influence the environment. Two or three large companies candominate an industry.

Organizations in this type of environment used planned tactical initiatives,

calculate reactions by other, and develop counteractions. This requires

flexibility and a structure with some decentralization.

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TURBULENT-FIELD ENVIRONMENTS

The most dynamic of the environments and has the highest level of

uncertainty associated with it. Environmental elements are increasingly

organized and interrelated.

Major, dynamic shifts can occur in the environment as one, or a small

group of large companies change the rules of competition. Thus,

planning is not as useful here.

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Nature of Environment

Stable Environment

In-between Environment

Dynamic Environment

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UNCERTAINTY IN THE ENVIRONMENT

Stable DynamicDEGREE OF CHANGE

DEGREE OF

HOMOGENEITY

Simple

Complex

Small number of

external elements.Elements remain the

same or change

slowly

Small number of

external elements.Elements are in

continuous change

Large number of

external elements.Element remain the

same or change

slowly

Large number of

external elements.Elements are in

continuous change.

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DEGREE OF

HOMOGENEITY

Simple

Complex

LEAST

UNCERTAINTY

MODERATE

UNCERTAINTY

MODERATE

UNCERTAINTY

MOST

UNCERTAINTY

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DEGREE OF

HOMOGENEITY

Simple

Complex

Soft drink bottlers,

beer distributors,container manuf.,

local utilities

Personal computers,

fashion clothing,music industry, toy

manufacturers

Universities,

hospitals,Insurance companies

American Airlines,

oil companies,

electronic firms,

aerospace firms

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BURNS & STALKER

Used interviews with managers and their own observations to evaluate

the impact of environment on organizational structure and management

practice.

The type of structure that existed in rapidly changing and dynamic

environments was different from that in organizations with stable

environments.

B & S labeled the two types organic and mechanistic, respectively

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ORGANIC ORGANIZATION

Organic organizations are relatively flexible and adaptable. They rely on

lateral communication rather than vertical communication. Influence is

based upon expertise and knowledge rather than on authority of position.

Responsibilities are defined loosely rather than rigid job definitions.

Emphasis is on exchanging information rather than on giving direction.

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MECHANISTIC ORGANIZATION

Mechanistic structures are characterized by high complexity, formalization

and centralization. They perform routine tasks, rely heavily on

programmed behaviors, and are relatively slow in responding to

the unexpected.

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BURNS & STALKER

CHARACTERISTIC MECHANISTIC ORGANIC

Task Definition Rigid Flexible

Communication Vertical Lateral

Formalization High Low

Control Centralized Diverse

Influence Authority Expertise

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Environmental Forces Supplier supply materials, machine, service and information used to

produce its products and services

Financial institutionthe capital resources that available for the firm Customerstargets for the firm to market its products and services

Competitor - all of the entities that compete with the firm in

marketplace

Stockholders/ownerspersons who are invest money in the firm and

represent the high level of management labor unionorganization of skilled and unskilled workers

The community people in the area where the firm perform itsoperation

Government federal, state and local level government that providesnot only constraints in the form of law, regulation, and taxes taking but

also provides assistance in form of purchases, information and funds.23


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Environmental Management

Environmental management how to manage the environmentalelements by executing strategies that alter uncertainly environment toa certain extent

Environmental Management Strategy:

Independent Strategycarry out its own resources to make better itsenvironment

Cooperative Strategy involve working with other environmental

element for the same purpose Strategic Maneuveringtry to alter its environment

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Environmental Management

Basic Strategy Specific Strategy Example

Independent

Strategy

Competitive

aggression

Legal Action

Political Action

Product differentiation

Aggressive Pricing and

Advertising Suits brought

against competitors

Lobbying

Cooperative

Strategy

Co-optation

Coalition

Consumer representatives

Industry Association

StrategicManeuvering Domain SelectionDiversification

Merger and

Acquisition

Entry in specific marketWide product mix

Merger with competitors

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Social Responsibility

Social Responsibility the awareness that business activities have an

impact on its environment so it should try to balance its commitment in

its environment

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Responsibility to consumers, such as:

the right to safety,

the right to be informed

the right to choose,

the right to be heard

Responsibility to employees, such as:

The right to safety

The right to equality in the workplace, The right to improve its capability

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Responsibility to investors, such as:

The right to be proper management of funds

The right to access information

Responsibility to the environment, such as

Preventing to water and air pollution,

Safe to the land and Forest

natural resources

Social responsibility, such as Community support

Social audit

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Business Challenges/Environmental

Variables

Challenges in the Economic Environment

Challenges in the Competitive Environment

Challenges in the Social and Culture Environment

Challenges in the Political-Legal Environment

Challenges in the Technological Environment

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Challenges in the Economic

Environment

Macroeconomics

Microeconomics

The Forces of Supply and Demand The Business Cycle

State Budget

International Trade

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Challenges in the Competitive

Environment

Types of Market Structure

Global Competition

Dealing with Competitors

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Challenges in the Social and Culture

Environment

Changing Population

Cultural Values

Social Responsibility Consumerism and Ecology

Business Ethics

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Challenges in the Political-Legal

Environment

Government Role

Business and Politics

Law enforcement

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Challenges in the Technological

Environment

Technology Development

Applying Technology

Technology Transfer

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Thanks Qs. If any?

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The Environment of Business in Business Communication

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