MANAGEMENT A PACIFICRIM FOCUS

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MANAGEMENTA PACIFIC-RIM FOCUS

• Lecture 3
• 10 August, 2005
• UNDERSTANDING INTERNAL AND EXTERNAL ENVIRONMENTS

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Review lectures 1 and 2

• Overview of management
• What managers actually do (Mintzberg) -
  Interpersonal, informational, decisional,
  negotiator)
• Managerial knowledge, skills, performance
• The nature of 21st century management

• Preclassical contributors to management theory
• Classical theorists
• Behavioural theorists
• Quantitative management
• Contemporary ideas
• Implications for managing innovation

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This week -
Types of external environment Mega and task
environments Analysing environmental
conditions Perspectives Characteristics Managing
elements of the environment Adaptation Favourabil
ity Domain (product/service) shift
The internal environment Organisational
culture Organisational culture Organisational
culture in practice Encouraging innovative and
adaptive cultures Changing organisational
cultures How leaders can influence cultural change
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THE MEGA-ENVIRONMENT
Economic element
Technological element
Legal-political element
The organisation
Sociocultural element
International element
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Exercise

• Consider these mega environmental elements with
  regard to
• Telstra
• Qantas

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The Technological Element

• The technological element is the part of the
  mega-environment reflecting the current state of
  knowledge regarding the production of goods and
  services.
• Research indicates technology tends to evolve
  through periods of incremental change punctuated
  by technological breakthroughs that either
  enhance or destroy the competence of firms in an
  industry.

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The Economic Element

• Is the part of the mega-environment encompassing
  systems of producing, distributing, and consuming
  wealth.
• In a capitalist economy, economic activity is
  governed by market forces and the means of
  production are privately owned by individuals,
  either directly or through corporations.
• In a socialist economy, the means of production
  are owned by the state and economic activity is
  co-ordinated by plan.
• In practice, countries tend to have hybrid
  economies, incorporating elements of capitalism
  and socialism.
• Organisations are influenced by a variety of
  economic conditions over which they have little
  control, such as inflation and interest rates.

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The Legal-Political Element

• The legal-political element is the part of the
  mega-environment that includes the legal and
  governmental systems within which an organisation
  must function.
• Organisations must operate within the general
  legal framework of the countries in which they do
  business.
• Organisations are currently being subjected to an
  increase in lawsuits filed by customers or
  employees.
• The political issues affecting organisations
  include those which influence the extent of
  government regulation.

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The Sociocultural Element

• Is the element of the mega-environment including
  the attitudes, values, norms, beliefs, behaviour,
  and associated demographic trends characteristic
  of a given geographical area.
• The sociocultural element is of particular
  importance to multinational corporations.
• Current changes include the delay of marriage to
  a later age, the emergence of the single head of
  household, the ageing of the baby-boomer group,
  and increasing influence of minorities.
• Sociocultural trends result in important shifts
  in product demand

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The International Element

• Is the mega-environment element which includes
  developments in countries outside an
  organisation's home country with the potential of
  having an impact on the organisation.
• Fluctuations of the dollar against foreign
  currencies influence an organisation's ability to
  compete in international markets.
• Free trade agreements offer vast possibilities
  for long-term market growth within the free-trade
  region.
• New global competitors can gain a significant
  share of the domestic market.

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THE TASK ENVIRONMENT
Competitors
Government regulators
Customers/clients
The Organisation
The employment market
Suppliers
Public pressure groups
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Exercise

• Consider these task environmental elements with
  regard to -
• Telstra
• Qantas

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Analysing Environmental Conditions

• Perspectives
• Population ecology model
• Resource dependence model
• Characteristics
• Environmental uncertainty
• Environmental complexity
• Environmental dynamism

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Managing Elements of the Environment

• Adaptation
• Buffering
• Smoothing
• Forecasting
• Rationing
• Favourability influence
• Advertising PR
• Boundary spanning
• Recruiting

• Favourability influence (cont.)
• Negotiating contracts
• Co-opting
• Strategic alliances
• Trade associations
• Political activity
• Domain shifting

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The Internal Environment Organisational Culture

• Definition a system of shared values,
  assumption, beliefs and norms uniting
  organisational members (Smircich 1983 Kilman et
  al 1986)
• The way we do things around here
• The glue binding the disparate parts (or the
  oil that keeps them moving)
• The interpretive part of organisational
  behaviour It explains, gives direction, sustains
  energy, commitment, and cohesion

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Organisational Culture Manifestations

• Symbols
• What matters is not what happens, but the meaning
  of what happens (sometimes, perception is
  reality).
• Stories
• Organisations abound with heroes, villains, moral
  tales.
• Rites and ceremonies
• These promote feelings of inclusion.

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Encouraging Innovative and Adaptive Cultures

• Strategic focus - are opportunities seen?
• Commitment to seizing opportunities - readiness
  to make major, fast change
• Commitment of resources - many stages, with risk
  assessed at each point of commitment
• Control of resources - out-sourcing, if necessary
• Management structure - few levels, maximum
  flexible communication

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Changing Organisational Culture

• Surfacing actual norms
• Articulating new directions
• Establishing new norms
• Identifying culture gaps
• Closing culture gaps

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How Leaders can Influence Cultural Change ?

• Identification of a crisis
• Communication of a new vision
• Build motivation to implement the vision, induce
  cultural change

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SUMMARY OF UNDERSTANDING INTERNAL AND EXTERNAL
ENVIRONMENTS

• Types of external environment
• Mega technological, economic,
  legal/political/sociocultural, international
  elements
• Task environments Government regulators,
  competitors, customers/clients, suppliers, public
  pressure groups, the employment market
• Analysing environmental conditions
• Perspectives Population ecology, resource
  dependence
• Characteristics Environmental uncertainty -
  complexity dynamism

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SUMMARY OF UNDERSTANDING INTERNAL AND EXTERNAL
ENVIRONMENTS - Cont.

• Managing elements of the environment
• Adaptation - buffering, smoothing, forecasting,
  rationing
• Favourability Advertising PR, boundary
  spanning, etc.
• Domain (product/service) shift - e.g. mining to
  net businesses
• The internal environment Organisational culture
• Organisational culture - The way we do things
  around here
• Organisational culture Manifestations Symbols,
  stories, rites ceremonies
• Encouraging innovative and adaptive cultures
• Changing organisational cultures - 5 step process
• How leaders can influence cultural change

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Our bosses encourage a culture of blame and blind
conformity, study finds (The Age
24.7.03)   Leon Gettler   Australian managers
running business and government organisations are
below international benchmarks, a study has
found. The global organisational development
specialist Human Synergistics found Australians
were short on crucial peoplemanagement
skills. These included use of rewards, setting
goals, conducting fair appraisals, providing
feedback and encouraging employees to make a
difference. The damning study found Australian
managers lagged behind in 27 of 31 "causal
factors" that help shape the culture of
organisations. It found 87 per cent of Australian
organisations had a culture of blame, indecision
and mindless conformity. According to the study,
which covered 51 organisations and 8385
individuals, the culture of the average
Australian and New Zealand organisation
encouraged convention, compliance, avoidance of
blame, dependence and need for approval. These
were classified as passive defensive
behaviours. Worse still, it found that the
cultures, were different from the values managers
and organisations purportedly embraced. Executives
, for example, claimed they wanted the kind of
place that encouraged people to think ahead and
plan, pursue a standard of excellence, enjoy
their work and take on moderate risks and
challenging tasks. In reality, executive
behaviour prompted a culture that encouraged
people to treat rules as more important than
ideas, switch priorities to please others, avoid
taking blame, follow orders even when they were
wrong, defer decisions to people up and avoid
rocking the boat Senior managers claimed they
wanted a culture that encouraged people to
maintain personal integrity, be open, help others
grow and develop and show concern for the needs
of those around them. Instead, they created a
system that encouraged people to play politics,
pander to authority that went unquestioned, never
seem to lose and compete instead of
co-operate. Human Synergystics managing director
Shaun McCarthy said Australian executives failed
when it came to setting goals and rewarding
people appropriately. And when it came to setting
the company vision, they were big on rhetoric but
there was little action to back it up. Top
executives in Australia want a culture that
supports excellence and strategic
implementation," Mr McCarthy said. "However,
their actions reinforce behaviours that are often
more consistent with coping and survival than
excellence and achievement.    
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Australian managers running business and
government organisations are below international
benchmarks, a study has found.    
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The global organisational development
specialist Human Synergistics found Australians
were short on crucial peoplemanagement
skills. These included use of rewards, setting
goals, conducting fair appraisals, providing
feedback and encouraging employees to make a
difference.    
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The damning study found Australian managers
lagged behind in 27 of 31 "causal factors" that
help shape the culture of organisations. It found
87 per cent of Australian organisations had a
culture of blame, indecision and mindless
conformity. According to the study, which
covered 51 organisations and 8385 individuals,
the culture of the average Australian and New
Zealand organisation encouraged convention,
compliance, avoidance of blame, dependence and
need for approval. These were classified as
passive defensive behaviours.    
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  Worse still, it found that the cultures, were
different from the values managers and
organisations purportedly embraced. Executives,
for example, claimed they wanted the kind of
place that encouraged people to think ahead and
plan, pursue a standard of excellence, enjoy
their work and take on moderate risks and
challenging tasks. In reality, executive
behaviour prompted a culture that encouraged
people to treat rules as more important than
ideas, switch priorities to please others, avoid
taking blame, follow orders even when they were
wrong, defer decisions to people up and avoid
rocking the boat    
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Senior managers claimed they wanted a culture
that encouraged people to maintain personal
integrity, be open, help others grow and develop
and show concern for the needs of those around
them. Instead, they created a system that
encouraged people to play politics, pander to
authority that went unquestioned, never seem to
lose and compete instead of co-operate.    
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Human Synergystics managing director Shaun
McCarthy said Australian executives failed when
it came to setting goals and rewarding people
appropriately. And when it came to setting the
company vision, they were big on rhetoric but
there was little action to back it up. Top
executives in Australia want a culture that
supports excellence and strategic
implementation," Mr McCarthy said. "However,
their actions reinforce behaviours that are often
more consistent with coping and survival than
excellence and achievement.    
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• Refer also discussion from AIM Management
  journal re
• ROGER CORBETT LEADS BY EXAMPLE

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Thanks for your attention