Chapter 4/ Lecture 3
Organizational environments and cultures
1. What is the external environment of organizations?
• What is competitive advantage?
o A core competency that clearly sets an organization apart from competitors and
gives it an advantage over them in the marketplace
o Allows an organization to deal with market and environmental forces better than
o Products, pricing, customer service, cost efficiency, quality…
• The general environment of an organization; all conditions in the external
environment that form a background context for managerial decision making:
o Economic (health) o Technological
o Socio-cultural o Natural environment
• The specifiic (task) environment includes important stakeholders such as:
o Customers o Regulators
o Suppliers o Investors owners
Figure 4.1 STAKEHOLDER ANALYSIS OF VALUE CREATION FOR KEY
CONSTITUENCIES OF A BUSINESS FIRM: AN OPEN-SYSTEMS
• Environmental uncertainty : a lack of complete information about the environment
o Rate of change
• Figure 4.2 dimensions of uncertainty in organizational environments
2. What is a customer-driven organization:
www.notesolution.com • External and internal customers
• What do customers want?
o High quality, low price, on time delivery and service
• What are the key customer service lessons?
o Protect reputation for quality products
o Treat customers right
• Figure 4.3
• Customer relationship management: establishes and maintains high standards of
customer service in order to strategically build lasting relationships with and add
value to customers
• Supply chain management: is the strategic management of all operations relating to
an organization’s resource suppliers.
• Case: Who makes the Apple iPod?
• The company outsources the entire manufacture of the device. They
only do final assembly
• What about the 451 parts that goes into the iPod?
Where are they made and by who?
o Hard drive(HDD): China, Philippines
o HDD: inputs: China, Philippines, Japan, Thailand, Singapore
o Flash memory: Korea, china
o Display panels and modules: Japan
• In 2006, apples stores 1,785; other retailers 3675; 3 party online sales 650
3. What is a quality-driven organization?
• Quality organizations understand and respond to customer expectations of quality
products and services
• Total quality management (TQM)
www.notesolution.com o Quality principles are integral part of organizations strategic: continuous
improvement and meeting customers’ needs (doing things right.. the first time)
• Crosby’s “four absolutes” of management for total quality control:
o Quality means conformance to standards; workers must know exactly what
conformance standards they must meet
o Quality comes from defect prevention, not defect correction; be proactive.
o Quality as a performance standard must mean defect-free work
o Quality saves money.
• Quality and continuous improvement
o W. Edwards Deming emphasized:
Use of statistical methods
Training in the fundamentals of quality assurance
o Continuous improvement: involves always searching for new ways to improve
work quality and performance.
o Quality circles: small group of workers that meet periodically to discuss ways of
improving the quality of products or services.
• Quality, technology, and design:
o Lean production: uses technologies to streamline systems and allow work to be
performed with fewer workers and smaller inventories
o Flexible manufacturing: allows processes to be changes quickly and efficiently to
produce different products or modifications to existing ones
o Agile manufacturing/mass customization: organizations are able to make