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Understanding Management’s Context:
Constraints and Challenges
3
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Contrast the actions of managers according to
the omnipotent and symbolic views.
Describe the constraints and challenges facing
managers in today’s external environment.
Discuss the characteristics and importance of
organizational culture.
Describe current issues in organizational
culture.
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3.1. The Managers’ View
• Omnipotent View of Management - the
view that managers are directly
responsible for an organization’s success
or failure.
• Symbolic view of Management - the
view that much of an organization’s
success or failure is due to external forces
outside managers’ control.
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What happens…
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Exhibit 3-2
Components of External Environment
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3.2. External Environment
3.2.1. Political
v Government type and stability
v Freedom of the press, rule of law and levels of
bureaucracy and corruption
v Regulation and de-regulation trends
v Social and employment legislation
v Tax policy, and trade and tariff controls
v Environmental & consumer-protection legislation
v Likely changes in the political environment
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3.2. External Environment
3.2.2. Economic
v Stage of a business cycle
v Current and projected economic growth, inflation and
interest rates
v Unemployment and supply of labor, labor costs
v Levels of disposable income and income distribution
v Impact of globalization
v Likely impact of technological or other changes on the
economy
v Likely changes in the economic environment
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3.2. External Environment
3.2.3. Sociocutural
v Cultural aspects, health consciousness, population growth
rate, age distribution.
v Organizational culture, attitudes to work, management style,
staff attitudes.
v Education, occupations, earning capacity, living standards.
v Ethical issues, diversity, immigration/emigration,
ethnic/religious factors.
v Media views, law changes affecting social factors, trends,
advertisements, publicity.
v Demographics: age, gender, race, family size.
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3.2. External Environment
3.2.4. Technological
v Maturity of technology, competing technological
developments, research funding, technology legislation.
v Information technology, internet, global and local
communications.
v Technology access, licensing, patents, potential innovation,
replacement technology/solutions, inventions, research,
intellectual property issues, advances in manufacturing.
v Transportation, energy uses/sources/fuels,
associated/dependent technologies, rates of obsolescence,
waste removal/recycling.
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3.2. External Environment
3.2.5. Demographic
v Population growth rate
v Age distribution.
v Gender
v Race
v Family size.
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3.2. External Environment
3.2.6. Global
v Economic recession
v Economic integration
v War, terrorism
v Tensions between countries
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Industry environment
Threats Of New Entrants
Bargaining Rivalry Among Bargaining
Power Of Existing Power Of
Competitors
Suppliers Buyers
Threats Of Substitutes
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Managing Stakeholder Relationships
• Stakeholders - any constituencies in the
organization’s environment that are
affected by an organization’s decisions
and actions.
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Exhibit 3-4 Organizational Stakeholders
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