Reference no: EM133105338
In chapter 2 we learn about Macroenvironments and Competitive Environments. A macroenvironment is the general environment that has influence on decisions. Examples of these include the economy and technology. A competitive environment is a little closer to home and is more direct. Some examples include competition, suppliers, and customers.
The economy affects managers in many ways. Some examples are interest and inflation rates. These can have a direct impact on prices, costs, and goods. Technological advances can help increase production, create new products and services, and create new niches. Laws and regulations can impact by effecting things such as workplace safety standards and creating equal employment opportunities. They can also create hurdles that may cost companies more in the end. Demographics can affect a company by making it difficult to find people with the right abilities and skill sets for certain roles. Society itself can also have an impact on what happens. An example of this is paternity leave. That wasn't always a thing to have so much time off but now some places offer weeks, months, or even a year. Lastly, the state of the natural environment and sustainability can impact a company. If you need paper, lumber, or anything else natural they may be impacted by potential shortages or increased prices.
It is important for managers to be able to identify and understand what effects come to the business for many reasons. Examples include marketing, hiring, and time management just to name a few. Environments can be complex and lead to the need for forecasting. Because of this, managers are forced to ask questions to help determine what is and isn't important, which is called Environmental Scanning. From there, managers can use that to create those predictions and then benchmark to help figure out where they stand. By doing this, they can also work backwards to figure out where they stand and why they stand there compared to other competitors.
Actively managing the environment can happen in many ways, but they discuss 3 main options. These options are: selecting a new environment, influencing an environment, and adapting to said environment.
Selecting a new environment can be obtained in different ways. Domain selection is being entered into a market or industry through another company. Diversifying happens when a company creates other products and expands into different markets. Mergers and acquisitions happen when multiple companies combine to create one single company. Divestiture happens when they sell off their businesses to strengthen their focus.
Influencing your environment can happen through independent actions and cooperative actions. The difference between the two is that independent actions are something the company does itself to differentiate it from its competitors such as cutting prices. A cooperative action is when try to change their environment through bigger actions through things like PR, legal action, political action, and so on.
Cooperative action occurs when two or more companies in different industries work together to influence their environment through cooperative strategies. This can happen through contracts, cooptation (which is absorbing new elements to help stabilize), and coalition (two+ groups joining over the same issues at the same time).
Adapting to their environment. This is pretty much becoming more flexible to the changing ways around them. One way this can be done is decentralized decision making. An example is giving lower level management the ability to make decisions that could benefit the company. To help create that flexibility, companies can create buffers. Buffering is excess resources to help meet unpredictable needs. An example of this is having extra supplies just in case or hiring seasonal help. They can also be smooth, which helps level out the playing field. This may mean cutting costs in off months and having sales.
To help figure out which approach to pick, there are 3 main ways to help determine which you should pick. First you can look at what causes the company problems, creates opportunities, and allow it to change successfully. Second, choose one that fits your interests. And lastly, choose one that offers the best return on investment by taking into consideration the long term and short term effects.
The culture of an organization is how it sets itself apart. It is their personality. It can impact how people behave and interact with each other so it is very important. Just like in people, there are strong and weak personalities. A strong one can have a heavy influence on the workers and they are more likely to believe in their mission and practices versus one with a weaker personality. That being said, issues can arise when changes need to be made in a company with a stronger culture. Some ways to diagnose culture include looking at mission statements, important business practices, and cultural assessments. It's important to nurture culture actively. This can be through communicating with employees, letting the values be known, and it takes time and effort. On the other hand, an organization's climate is the day-to-day part of its culture. This is based on how they see the company. This is seen through employees' relationships with managers and co-workers, openness, and how clearly people understand their roles at the company to name a few.
If you were to do an environmental scan on your company, what would be the first place you start and why?