MGMT10002 Lecture Notes - Lecture 2: Smart Criteria, Natural Environment, Mnemonic
19 Jun 2018
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WEEK 2 PRINCIPLES OF MANAGEMENT
The external environment
The organisations external environment includes all the elements existing outside the boundary of the organisation which have the
potential to affect the organisation.
Some external factors will have a huge impact on an industry (e.g. music industry with the introduction of the internet), these also
include factors which have an impact on a businesses consumers (e.g. health article being released and now less people buy
alcohol).
The organisations environments can be separated into distinct regions: the task environment which includes the organisations
competitors’, transaction partners’ and stake holders’ interests, power, etc. These have a more direct impact on the organisations’
operations and performance. The second region is the general environment which includes the political, technological, socio-
cultural, etc. issues & trends. These are indirect and do not impact the organisation daily.
General environment mnemonic
Political-legal: political activities and legislation regarding behaviour, the political regime and stability of the region.
Economic: Overall economic health of the region in which the organisation operates. Affected by interest rates and monetary
policies, costs of raw materials etc.
Social-Cultural: demographics, customs and values, lifestyle trends of the population
Technological: advances in technology and scientific knowledge
Natural environment is now needing to be considered with the operation of firms activities which must be with sensitivity
towards the natural environment. Regulations are in place to protect environment and promote sustainable operations.
Environmental uncertainty
To cope with uncertainty you need to adapt the organisation to changes in the environment and shape the environment to the
organisations needs.
Porters 5 forces
Competitive Force High Profitability Low Profitability
Competitive Rivalry Little rivalry Intense Rivalry
Threat of potential entrants High entry barriers Low entry barriers
Threat of substitutes Few potential substitutes Many potential substitutes
Suppliers’ bargaining power Weak suppliers Strong suppliers
Buyers’ bargaining power Weak buyers Strong buyers
The labour market
The people available for hire by the organisation. Labour market forces include the scarcity of new people with the skills for
emerging jobs an d the globalisation of competition for talent.
Goal setting and planning
Benefits include stimulating effort and persistence and eliminating resource/energy/time waste.
Goal: a desired future state that the organisation attempts to realise
Plan: a blueprint specifying the resource allocations, schedules and other actions necessary for attaining goals
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
The organisations external environment includes all the elements existing outside the boundary of the organisation which have the potential to affect the organisation. The organisations environments can be separated into distinct regions: the task environment which includes the organisations competitors", transaction partners" and stake holders" interests, power, etc. These have a more direct impact on the organisations" operations and performance. The second region is the general environment which includes the political, technological, socio- cultural, etc. issues & trends. These are indirect and do not impact the organisation daily. Political-legal: political activities and legislation regarding behaviour, the political regime and stability of the region. Economic: overall economic health of the region in which the organisation operates. Affected by interest rates and monetary policies, costs of raw materials etc. Social-cultural: demographics, customs and values, lifestyle trends of the population. Natural environment is now needing to be considered with the operation of firms activities which must be with sensitivity towards the natural environment.
