MMM132 Lecture 3: Class 3 -The Managerial Environment
12 Jun 2018
School
Department
Course
Professor
MMM132 Management
Kieu Trang Nguyen
Study notes
TOPIC 3 - The Managerial Environment
1.Explain what the external environment is and why it is important
Factors, forces, situations, and events outside the organisation that affect its performance
* The external environment includes six components:
-The economic component encompasses factors such as interest rates, inflation, changes
in disposable income, stock market fluctuations, and business cycle stages.
-The demographic component includes trends in population characteristics such as age,
race, gender, education level, geographic location, income, and family composition.
-The technological component focuses on scientific and industrial innovations.
-The sociocultural component is concerned with societal and cultural factors such as
values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of behaviour.
-The political/legal component looks at federal, state, and local laws, as well as other
countries’ laws and global laws. It also includes a country’s political conditions and stability.
-The global component encompasses issues associated with globalisation and a world
economy.
*WHAT IS THE GENERAL ENVIRONMENT OF THE ORGANISATION?
-Factors that affect all organisations in an economy, some more than others (economic
factor impacts more on an organisation with large bank loans for example)
-These factors can have large impact (GFC) but change is usually slow and more
predictable (laws for example do not change day-to-day)
*WHAT IS THE SPECIFIC ENVIRONMENT OF THE ORGANISATION?
-External factors that impact on single organisations, or all organisations in a particular
industry
-These factors can have large impact and change quickly creating great uncertainty and
unpredictability for managers
(employees are internal, they are not an external environmental factor. Labour markets are
external)
*Managing Stakeholder Relationships
Stakeholders:
Any constituencies in an organisation’s environment that are affected by that organisation’s
decisions and actions
Managers need to develop strategies to meet the needs of these constituencies
Good Stakeholder relationships can:
Lead to desirable organisational outcomes
Affect organisational performance
Demonstrate doing the “right” thing
Organisational Stakeholders
Customers – people and organisations that acquire goods or services form the organisation
Suppliers – companies and individual who provide the inputs that organisations use to
conduct their operations
Labour market – the pool of people employable by the organisation
Strategic partners – organisations that work together for mutual benefit
Regulators – people and organisation that create and enforce rules and regulations to
protect consumer, workers and society as a whole
*IMPACT OF NATIONAL CULTURE
- Society’s cultures differ
- Managers need to measure the dimensions of national culture to ensure their management
practices align
- Practices that work in one culture may not in another
2.Discuss how the external environment affects managers
