Chapter 4 - Composition of the management environment Flashcards Preview

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The 3 Management Theories


Process Approach
The performance of planning, leading, organising and controlling is circular and continuous.

Systems Approach
A system is a set of interrelated and interdependent parts arranged in a manner that produces a unified whole.

This is where the application of management principles depends on the specific situation that managers face at a given point in time. Every organisation and departments therein are unique.


The Organisational Environment

Process entails inputs from external environment, the subsequent conversion of these inputs and the outcomes that follow. Inputs are capital, technology, human resources and information.

Transformation process turns these into finished goods/services and the success of it all depends on the effectiveness and efficiency of its management by performing planning, organising, leading and controlling functions.

Systems success also depends on the successful interactions of its Environment. These are sub-environments such as suppliers, labour unions, financial institutions and customers and so on.


The Structure and Dynamics of the Management Environment

The Environment can be divided up into the micro, market and remote environment.


The Micro Environment

The Micro Environment Consists of the organisations
- functions
- policies
- Strategies
- Goals
- Objectives
- Available resources

Examples would be

Successful skills development programs
Successful staff retention programs
Commitment to transformation
Changes in ownership of organisation


The Macro Environment

The area outside of the organisation of which the manager has no control .

Consists of Market Environment where the manager has limited influence and Remote environment where the manager has no influence.


The Market Environment

Surrounds the organisation and lies between remote and micro environment and forms a buffer between them. Here competition with a specific industry takes place.

Comprises of the following sub-environments:

Customers - the people that buy g/s from other people/org

Competition - A situation where a different organisations with more or less the same p/s compete for the business patronage of the same consumers.

Suppliers- provide regular supplies of necessary inputs to produce outputs

+ Value Chain - the chain of activities that an organisation, operating in a specific industry performs in order to deliver a valuable p/s for the market it serves.

Intermediaries - The middlemen between manufacturers and final consumers.

Labour Market and Labour unions -
comprised of many different markets, such as those for various skills levels, occupations, sexes and geographical regions.


The Remote Environment

The broader environment within which the organisation must function. Includes all the external influences that the organisation cannot influence itself. The organisation will need to analyse the changes that uncontrollable variables in this Environment have and the strategic implications it holds on the organisation.

Consists of

Ecological/Physical Environment


Analysis of the Management environment

4 Phases

---- Phase 1

In effective management it is key to find the ideal alignment between the environment and the organisation and to maintain this alignment. In order to do so an analysis of 4 phases must take place

Contingency approach is applicable

Phase 1 : Identify Key Variables - The task of top management. Managers need to take in account the unique nature and characteristics of the organisation and to identify key variable that will specifically apply to the organisation.


Analysis of the Management environment

---- Phase 2

Phase 2: Evaluate and Select and technique for analysing environment.


Criteria in Environment Technique Selection Process
---- Phase 2

Criteria in Selection Process

Explicitness: A completely specified technique, components can be taken apart and examined for plausibility.

Comprehensiveness: The degree of inclusion and integration of the interactions between all dimensions within the internal and external environment. Overview of the maximum number of factors relevant to the problem.

Simplicity: 3 factors
1st Complicated methods are difficult to employ.
2nd: Simplicity eases the understanding of the method

Sensitivity to Subtle Differences: A technique that allows for the recognition of nuances that will ensure misinformed decisions are not made.

Timeliness: The methodology of the technique must give the manager access to the right information in the right time frame.

Cost Effectiveness: Aspects of the technique that related to cost effectiveness such as Time and equipment like computer hardware and software must be considered.


Two Environment Evaluation Techniques

Linear Trend Technique
Uses regression to project future trends in the external environment.

Swot Analysis: uses internal and external strength and weaknesses to counteract possible threats and take advantage of opportunities.


Phase 3:

Develop an Environmental Profile - This means summarizing the results of the analysis of the management environment in a useful and user-friendly way. In terms of swot, its an analysis of the external opportunities and threats and their impact as well as the internal strength and weaknesses of the business.


Phase 4

MONITOR the variables, trends and environment continuously to ensure they are still valid so that management can provide timeous warning as to a change so plans can be proactively implemented to minimise negative impact.