Management 11e
John Schermerhorn
Chapter 4
Environment, Sustainability
and Innovation
Planning Ahead — Chapter 4 Study Questions
1. What is the external environment of
organizations?
2. What are key issues in organizationenvironment relationships?
3. What are the emerging challenges of
sustainability and the environment?
4. How do organizations accomplish innovation?
Study Question 1: What is the external environment of organizations?
The general or macroenvironment — all of the background
conditions in the external environment of the organization
including:
Economic
health of the economy
Legal-political
norms, customs, social values
Socio-cultural
philosophy/objectives of political party running the government
Technological
development and availability of technology
Natural environment
nature and conditions of environment
Figure 4.1 Starbucks general environment
Study Question 1: What is the external environment of organizations?
The specific (task) environment - actual
organizations, groups, and persons with
whom an organization interacts and
conducts business
 Includes important stakeholders such as:
Customers
Suppliers
Competitors
Regulators
Owners
Study Question 2: What are key issues in organization-environment
relationships?
 Customer relationship management
 establishes and maintains high standards of
customer service in order to strategically build lasting
relationships with and add value to customers
 Supply chain management
 strategic management of all
operations relating to an
organization’s resource
suppliers
Figure 4.2 Multiple stakeholders in the environment of an
organization
Study Question 2: What are key issues in organization-environment
relationships?
 Competitive advantage
 a core competency that clearly sets an
organization apart from competitors and
gives it an advantage over them in the
marketplace
Study Question 2: What are key issues in organization-environment
relationships?
 Companies may achieve competitive
advantage in many ways, including:
 Products
 Pricing
 Customer service
 Cost efficiency
 Quality
 Knowledge
Study Question 2: What are key issues in organization-environment
relationships?
 Customers want:




High quality
Low price
On-time delivery
Great service
Study Question 2: What are key issues in organization-environment
relationships?
 Key customer service lessons:
 Protect reputation for quality products
 Treat customers right
Study Question 2: What are key issues in organization-environment
relationships?
 Environmental uncertainty
 a lack of complete information regarding
what exists and what developments may
occur in the external environment
 Two dimensions of environmental
uncertainty:
 Degree of complexity
 Rate of change
Figure 4.3 Dimensions of uncertainty
Study Question 2: What are key issues in organization-environment
relationships?
Organizational Effectiveness
sustainable high performance in using
resources to accomplish mission and
objectives
Systems resource approach focuses on
resource acquisition
Internal process approach focuses on
operations efficiency
Goal approach focuses on accomplishing key
objectives
Strategic Constituencies focuses on
stakeholder impact
Study Question 3: What are the emerging challenges of
sustainability and the environment?
 Sustainable development
 makes use of environmental resources to
support societal needs today while also
preserving and protecting them for future
generations
Study Question 3: What are the emerging challenges of
sustainability and the environment?
Three P’s of organizational performance
Profit
Planet
People
Study Question 3: What are the emerging challenges of
sustainability and the environment?
 Environmental capital – natural resources
used to sustain life and produce goods
and services for society
 Land
 Water
 Minerals
Study Question 3: What are the emerging challenges of
sustainability and the environment?
 Green management – managing people
and organizations in ways that preserve
the natural environment
 Reducing energy consumption
 Minimizing environmental impact
Study Question 3: What are the emerging challenges of
sustainability and the environment?
 Human sustainability – concern for the
effect of management practices on
employee physical and psychological
well-being





Health and wellness programs
Stress management
Minimizing work-family conflict
Control over work
Fair wages and opportunities
Study Question 4: How do organizations accomplish innovation?
 Innovation - process of putting new ideas
into practice
 Business innovations
 Product innovation
 Process innovation
 Business model innovation
Study Question 4: How do organizations accomplish innovation?
 Sustainable innovations – reduce carbon
footprints and environmental impacts of
organizations, their practices and
products
Study Question 4: How do organizations accomplish innovation?
 Social business innovations – find ways
to use business models to address
important social problems
Study Question 4: How do organizations accomplish innovation?
 The innovation process
Step 1
Step 2
Step 3
Step 4
• Imagining
• Designing
• Experimenting
• Assessing
Reverse innovation – innovation can come from
any level in the organization or location
Study Question 4: How do organizations accomplish innovation?
 Commercializing Innovation - turning new
ideas into products services or processes
to increase profits through
 Greater sales
 Reduced costs
 3M’s process to
develop Post-It Notes
is a good example
Study Question 4: How do organizations accomplish innovation?
Idea creation
Example of
commercializing
innovation
Final
application
process
External
environment
and market
sensitivity
Internal
organizational
sensitivity
Feasibility
determination
Initial
experimentation
Study Question 4: How do organizations accomplish innovation?
 Characteristics of innovative
organizations




Strategy and culture
Structures
Systems
Staffing and management
Chapter 4 Case
 Global Green USA: Greener cities for a
cooler planet
27
For activities and assessments, please visit…
 www.wiley.com/college/schermerhorn