Organizational Environments and Cultures

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PRINCIPLES OF MANAGEMENT
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CHAPTER 3: ORGANIZATIONAL ENVIRONMENTS AND CULTURES

1. HOW CHANGING ENVIRONMENTS AFFECT ORGANIZATIONS

* Environmental change: The rate at which a company’s general and specific environment changes * Stable environments: the rate of environmental change is slow * Dynamic environments: the rate of environmental change is fast * Punctuated equilibrium theory: companies go through long periods of stability, followed by a short complex period of dynamic change (revolutionary periods) to later return to stability

* Environmental complexity: Refers to the number and intensity of external factors in the environment that affect organizations * Simple environments: few environmental factors
* Complex environments: many environmental factors

* Resource scarcity: Refers to the abundance or shortage of critical organizational resources in an organization external environment

* Uncertainty: How well managers can understand or predict the external changes and trends affecting their business * Uncertainty is lowest when environmental change and complexity are at low levels and resource scarcity is small (if environment is not too complicated and doesn’t change much it’s easy to predict)

2. FOUR COMPONENTS OF GENERAL ENVIRONMENT:

1. Economy
* It influences basic business decisions such as whether to hire more employees, expand production, or take out loans to purchase * In a growing economy more products are bought and sold, more people work and salaries rise; and viceversa (in shrinking economy) * Business Confidence Indices: shows how confidente actual managers are about future business growth 2. Political/Legal Trends

* Includes legislation, regulations, and court decisions that govern and regulate business behaviour * New laws and regulations...
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