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Chapter 2

The Environment & Corporate Culture


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Learning Objectives
1. 2.

3.
4.

5. 6.

Describe the general and task environments and the dimensions of each. Explain the strategies managers use to help organizations adapt to an uncertain or turbulent environment. Define corporate culture and give organizational examples. Explain organizational symbols, stories, heroes, slogans, and ceremonies and their relationship to corporate culture. Describe how corporate culture relates to the environment. Define a cultural leader and explain the tools a cultural leader uses to create a high performance culture.
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2006 by South-Western, a division of Thomson Learning. All rights reserved.

The External Organizational Environment

All elements existing outside the organization's boundaries that have the potential to affect the organization.

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External Environments Two Layers


Task environment. General environment.

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Ex. 2.1 Location of the Organizations General, Task, and Internal Environments

General Environment

Technological
Task Environment

Customers Labor Market Competitors


Internal Environment Employees Culture

Management

Suppliers

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Importance of International Dimension

Provides New:

Customers Competitors Suppliers

Shapes:

Social trends Technological trends Economic trends

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Technological Dimension

Includes scientific and technological advancements in specific industry and society at large.

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Socio-Cultural Dimension

Demographic characteristics as well as the norms, customs, and values of the general population. Important characteristics are geographical and population density, age, and education levels.

2006 by South-Western, a division of Thomson Learning. All rights reserved.

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Socio-Cultural Dimension (contd.)


Key demographic trends in the United States:


Hispanics will make up nearly a quarter of the U.S. population by the year 2050. Population and the workforce continue to age with the baby boomers. The fastest-growing living arrangement is singlefather households.
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2006 by South-Western, a division of Thomson Learning. All rights reserved.

Organizations Economic Environment

Consumer purchasing power. Unemployment rate. Interest rates. Frequency of mergers.

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Legal-Political

Government regulations

Local State Federal

Considers political activities designed to influence company behavior.

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Task (Industry) Environment Stakeholders

Stakeholder- Any person or group within or outside the organization that is impacted by firm actions and performance. Examples of stakeholders:

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Task Environment Customers

A concern is the power the Internet has given customers. This new found power enables customers to directly impact organizations in new ways. Managers are using the Internet to learn about customers.

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Task Environment Competitors

Each industry is characterized by specific competitive issues. Competitive wars are being waged worldwide in all industries.

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Task Environment Suppliers

Many companies are now using fewer suppliers while trying to build better relationships. Traditionally the role has been adversarial; many companies now are looking to cooperation.

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Task Environment Labor Market Factors


1.

2.

3.

Growing need for computer-literate information technology workers. The necessity for continuous investment in human resources in order to meet the borderless world. The effects of international trading blocks, automation, and shifting plant locations.
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High

Ex. 2.3

High Uncertainty

Adapt to Environment

Rate of Change in Factors in Environment

Low Uncertainty Low

Low

High

Number of Factors in Organization Environment


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Adapting to the Environment


Boundary-Spanning Inter-organizational Partnership Mergers & Joint Ventures
Preparing the organization for the environment.

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Ex. 2.5

Levels of Corporate Culture


Visible
1. Artifacts, such as dress, office layout, symbols, slogans, ceremonies, mission statements.

Culture that can be seen at the surface level

Invisible
2. Expressed values, such as The Penney Idea, The HP Way 3. Underlying assumptions and deep beliefs, such as people are lazy and cant be trusted Deeper values and shared understandings held by organization members
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Visible Manifestations

Symbols Stories Heroes Slogans Ceremonies Mission & Vision Statements


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Ex. 2.7

Four Types of Corporate Cultures

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Cultural Leadership Influence


1. Cultural leadership articulates a vision for the organizational culture in which employees can believe. 2. Cultural leadership heeds the day-to-day activities that reinforce the cultural vision.

2006 by South-Western, a division of Thomson Learning. All rights reserved.

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