INTRODUCTION TO THE ERA

OF DYNAMIC ENGAGEMENT

Organizational and Natural

Environment

Subject: Advance Theories & Principles of EM

Professor: DR. EUSEBIO T. PACOLOR
Reporter: MA. SHIELA C. ADONA
 THE IMPORTANCE OF
ORGANIZATIONAL AND NATURAL
ENVIRONMENT
 Traditional way of thinking about management
pay little attention to either organizational or
natural environments.
 Today, external groups with different agenda are
often organized and powerful, and many
organizations depend on them for support.
 Today’s managers must pay attention to the
natural environment if we are to preserve the
world for the future generations.
 ORGANIZATIONAL ENVIRONMENT
Organizations are neither self-sufficient nor
self-contained, rather they exchange resources with
and are dependent upon the external environment
which is defined as all elements outside an
organizations that are relevant to its operations.
Organizations take inputs from external
environment, transform them into products or
services, and send them back as outputs to the
external environment.
 ORGANIZATIONAL ENVIRONMENT
External environment has both direct-action
and indirect-action elements.
Direct-action elements are elements that
directly influence an organization’s activities, also
called stakeholders, include shareholders, unions,
suppliers, and many others who directly influence an
organization.
Indirect-action elements are elements of the
external environment that affect the climate in
which organization’s activities take place such as
technology, economy, politics and society.
 ELEMENTS OF DIRECT-ACTION
ENVIRONMENT

Direct-action environment is made up of

stakeholders – individuals or groups that are directly
or indirectly affected by an organization’s pursuit of
its goals.

Stakeholders fall into two categories:

1. external stakeholders include such as group
unions, suppliers, competitors, customers,
special-interest groups, and the government.
2. Internal stakeholders include employees,
shareholders, and the board of directors
 EXTERNAL STAKEHOLDERS
1. Customers. They exchange resources, usually in
the form of money, for an organization’s products
and services. Selling tactics vary according to
customer and market influence.
2. Suppliers. Organizations are dependent upon
suppliers of materials to obtain lower prices,
better quality work, and faster services.
3. Consumer advocates. Announcement of
“Consumer Bill of Rights” in 1960’s during
President Kennedy gives power to customer and
other costumer movements.
 EXTERNAL STAKEHOLDERS
3. Consumer advocates.
 EXTERNAL STAKEHOLDERS
3. Consumer advocates. It is important to note that
the use of voice can be constructive rather than
adversarial. Recognizing the costs of government
intervention, consumer leaders often prefer
negotiation. At the same time, progressive managers
welcome voices as an opportunity to understand
customers needs and to learn about changes in the
marketplace.
4. Media. Economic and business activities have
always been covered by media because these topics
affect so many people.
 EXTERNAL STAKEHOLDERS
5. Labor Unions. When an organization employs
labor union members, union and management
normally engage in some forms of collective
bargaining to negotiate wages, working condition,
hours and so on.
6. Financial Institutions. Organizations depend on
a variety of financial institution including
commercial banks, investment banks, and insurance
companies, to supply funds for maintaining and
expanding their activities. Effective working
relationships with financial institutions are so vitally
important.
 EXTERNAL STAKEHOLDERS
7. Competitors. For an organization to increase it’s
share of the market, they must take advantage of one
or two opportunities (1) gain additional customers,
either by garnering a greater market share or by
finding ways to increase the size of the market itself
(2) beat its competitors in entering and winning in
an expanding market.
8. Other Stakeholder Groups. Each individual
organization has a host of different stakeholders.
Every organization has particular stakeholder map
that is in essence a picture of the direct-action
component of its external environment.
 INTERNAL STAKEHOLDERS
1. Employees. Due to declining birth rate in most
industrialized nations, the skills needed by
employees are changing. As companies find it
necessary to experiment with quality programs,
team approaches, and self-managed work groups,
they need employees who are better educated and
more flexible.
 INTERNAL STAKEHOLDERS
2. Shareholders and Board of Directors. The
governing structure of large public corporations
allows shareholders to influence a company by
exercising their voting rights. Traditionally,
shareholders have been interested primarily in the
return on their investment and have left the actual
operation of the organization to its managers.
 MANAGING MULTIPLE
STAKEHOLDER RELATIONSHIP
Individuals may need to balance conflicting
roles and values, when they work for an
organization, use its products, perhaps own stock in
the company, ad live and raise their families nearby.
Such multiple stakeholders relationships are nor
common.
Organizations devise plans, organize
themselves, lead and control ways to interact with
key stakeholder.
 AFFECTED ORGANIZATIONS WHEN
STAKEHOLDER FRAMEWORK RAISES ISSUE
 Networks and Coalition. A complex network of
relationship links stakeholders with one another
as well as with the organization. A particular
issue may unite several stakeholders in support
or in opposition to organizational policy.
 Multiple Roles. A single individual or group may
have multiple relationships with an organization.
 The Special Role of Management. Management
has its own stake in the organization, it is
responsible for the organization as a whole, a
responsibility that deals with multiple
stakeholders and balancing conflict claims.
 ELEMENTS OF INDIRECT-ACTION
ENVIRONMENT
Indirect-action component of the external
environment affects organizations in two ways.
1. Forces may dictate the formation of a group than
eventually becomes stakeholders.
2. Indirect-action elements create a climate –
rapidly changing technology, economic growth or
decline, changes in attitude toward work – in
which the organization exists and to which it may
ultimately respond.
 FACTORS THAT INFLUENCE THE
ORGANIZATION (FAHEY AND NARAYANAN
1. Social Variables
a. demographics
b. lifestyle
c. social values

2. Economics Variables

3. Political Variables

4. Technological Variables
MANAGING THE INDIRECT-ACTION
ENVIRONMENT
Managers monitor the indirect-action
environment for early-warning signs of changes that
will later affect their organization’s activities.
Information about the indirect-action
environment comes from many sources: an
industry’s grapevine, managers on other
organizations, data generated by an organizations
own activities, government reports and statistics,
trade journals, general financial and business
publication, on-line computer data bank services
and other.
MANAGING THE INDIRECT-ACTION
ENVIRONMENT
Hints, predictions, statistics, gossip may alert a
manager to a trend that should be monitored. By
using statistical forecasting techniques, managers
can anticipate change in social, economic, political
and technological variables and so prepare alternate
plans for the future.
 NATURAL ENVIRONMENTS

The increase focus on environment issues is

having a profound impact on many organizations
which must deal not only with changes required by
specific laws and regulations. Many organizations
today are involved in developing new processes and
new products that either do no environmental
damage or clean up environmental damage that has
already occurred.
THE RISE OF ENVIRONMENTAL MOVEMENT
1896 – the Sierra Club, a well-known activist
organization spawned a host of groups who were
concerned with conservation of the land and natural
resources.

1960 – a renewed sense of importance to the

environmental movement happened. The Silent
Spring of Rachel Carson argued that the continued
use of toxic chemicals and pesticides was damaging
to the land and humans who lived off the land.
THE RISE OF ENVIRONMENTAL MOVEMENT
Late 1960s and early 1970s – the United States
government lead an effort for industry to develop a
supersonic transport airplane that flew at three
times the speed of sound and used the very latest
technology.

1970s – President Richard Nixon and the Congress

passed the Clean Air Act, The Clean Water Act, and
began the Environmental Protection Agency.

1980s – the government looked more to free market

solution to pollution, waste disposal, and other
issues. The Green Party was formed.
CURRENT ENVIRONMENTAL CONCERNS
1. Pollution
2. Climate Changes
3. Ozone Depletion
4. Other Global Issues
 FRAMEWORKS FOR RETHINKING ABOUT
THE NATURAL ENVIRONMENT
1. The Cost-Benefit Framework
If the benefit of the proposed environmental
regulation outweigh its costs , then the regulation
should be implemented. But if the costs of a
particular environment rule outweigh its perceived
benefits then the rule should not be enforced.
2. The Sustainable Development Framework
Engage organizational activities that can be
sustained for a long period of time or renew
themselves automatically.
THE GREENING OF ORGANIZATIONS
1. The Legal Posture – organizations can adopt a
posture that they will obey any laws, rules, and
regulations about the environment willingly and
without legal challenges.
2. The Market Posture – organizations adopt a
posture that will respond to the environmental
preferences of their costumers.
3. The Stakeholder Posture – organization pays
attention to recyclable material on consumer
packaging, educating employees on
environmental issues, participating in
community efforts to clean up the environment,
and appealing to investors in green companies.
THE GREENING OF ORGANIZATIONS
4. The Dark Green Posture – organizations are
beginning to experiment with adopting
environmental values that tell us we should live in a
manner that is more in harmony with the earth.
 MANAGING ORGANIZATIONAL AND
NATURAL ENVIRONMENT

External forces and pressures that managers

face today are unprecedented.
Environmental pressure groups have given the
signal that they will use any available means, from
legal challenges to civic protests such as ”tree
spiking” to get organizations to pay attention to how
they may be damaging the environment. Increased
concern about the natural environment means that
new human relations must enter the organizational
equation,