Difference between omnipotent and symbolic view of management

Management

Fourteenth Edition

Chapter 3

Managing the External Environment and the Organization’s Culture

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved

Learning Objectives

3.1 Contrast the actions of managers according to the omnipotent and symbolic views.

3.2 Describe the constraints and challenges facing managers in today’s external environment.

Develop your skill at scanning the environment so you can anticipate and interpret changes taking place.

3.3 Discuss the characteristics and importance of organizational culture.

Know how to read and assess an organization’s culture.

3.4 Describe current issues in organizational culture.

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2

The Manager: Omnipotent or Symbolic?

Omnipotent view: managers are directly responsible for an organization’s success or failure

Symbolic view: much of an organization’s success or failure is due to external forces outside managers’ control

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How much difference does a manager make in how an organization performs? The dominant view in management theory and society in general is that managers are directly responsible for an organization’s success or failure. We call this perspective the omnipotent view of management. In contrast, others have argued that much of an organization’s success or failure is due to external forces outside managers’ control. This perspective is called the symbolic view of management.

3

Managerial Constraints

In reality, managers are neither all-powerful nor helpless. But their decisions and actions are constrained.

External constraints come from the organization’s environment and internal constraints come from the organization’s culture

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In reality, managers are neither all-powerful nor helpless. But their decisions and actions are constrained. As you can see in Exhibit 3-1, external constraints come from the organization’s environment and internal constraints come from the organization’s culture.

4

Exhibit 3-1 Constraints on Managerial Discretion

Exhibit 3-1 shows that external constraints come from the organization’s environment and internal constraints come from the organization’s culture.

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Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved

5

The External Environment

Those factors and forces outside the organization that affect its performance

Economic

Demographic

Political/Legal

Sociocultural

Technological

Global

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The economic component encompasses factors such as interest rates, inflation, changes in disposable income, stock market fluctuations, and business cycle stages.

The demographic component is concerned with trends in population characteristics such as age, race, gender, education level, geographic location, income, and family composition.

The political/legal component looks at federal, state, and local laws as well as global laws and laws of other countries. It also includes a country’s political conditions and stability.

The sociocultural component is concerned with societal and cultural factors such as values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of behavior.

The technological component is concerned with scientific or industrial innovations.

The global component encompasses those issues associated with globalization and a world economy.

6

Exhibit 3-2 Components of External Environment

Exhibit 3-2 shows the different components that make up the external environment.

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Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved

7

The Economic Environment

Managers need to be aware of the economic context so they can make the best decisions for their organizations.

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Like many global businesses, Nestlé is facing increased commodity costs. The maker of products from Crunch chocolate bars to Nescafé coffee to Purina pet food has seen the price of chocolate, for instance, increase by nearly 30 percent in five years. Overall, Nestlé spends more than $30 billion a year on raw materials.

Rising costs are also affecting the cost of sushi. Higher global demand for fish and the Japanese and U.S. currency exchange rates are influencing prices.

Commodity (raw materials) costs are just one of the many volatile economic factors facing organizations.

8

The Global Economy and the Economic Context

The lingering global economic challenges began with the turmoil in the U.S. housing market.

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The lingering global economic challenges—once described as the “Great Recession” by some analysts—began with the turmoil in the U.S. housing market.

As credit markets collapsed, businesses were impacted. Credit was no longer readily available to fund businesses. Economic difficulties spread across the globe.

The fragile economic recovery continues to be a business constraint.

9

Economic Inequality and the Economic Context

Polls show that in many countries, people believe that the gap between the rich and poor is problematic.

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As economic growth has languished and sputtered, and as people’s belief that anyone could prosper declined, social discontent over growing income gaps has increased.

Business leaders must realize that societal attitudes in the economic context have the potential to create constraints.

The bottom line is that business leaders need to recognize how societal attitudes in the economic context also may create constraints as they make decisions and manage their businesses.