The Environment and Corporate Culture

Chapter 2

The External Environment• The elements of the world constantly change– Environment encompasses all elements outside the

organization• General Environment:– Outer layer that directly affects organization

• Task Environment:– Sectors that conduct transactions with the organization

• Internal Environment:– Elements within the organization boundaries

The General Environment

General Environment: International• New competitors, customers, suppliers

• Changes in social, technological and economic trends

• All organizations must compete and think globally

• Economic power has shifted to China and India

• The global environment is complex, ever-changing, and uneven playing field

General Environment: Technological • Massive changes for all organizations

• Technology has become the tool for doing business

• Technology is driving innovation and competition

• Advances are impacting organizations and managers

General Environment: Sociocultural • Demographic characteristics, norms, customs, and

values

• The Hispanic population is expected to increase 188%

• Generation Y is flooding the workplace with new demands

• Single-father households are the fastest-growing type of living arrangement

• The U.S. population is continuing to age, companies create products and services for senior market

General Environment: Economic• Economic health of the country/region– Consumer buying power

– Unemployment Rate

– Interest Rates

• The global environment has made economic environment complex and uncertain

• The recent weakened U.S. economy has had a devastating impact on small businesses

General Environment: Legal-Political

• Government regulation; state, local and federal– Political activities– Government agencies and regulation

• Managers must recognize the power of pressure groups– Work to influence companies to behave socially

responsible

2010 Environmental Index

General Environment: Natural• Organizations must be sensitive to the earth’s

diminishing resources– Plants, animals, rocks and natural resources

• Natural dimension does not have its own voice • Environmental groups advocate action/policy – Reduce pollution– Develop renewable energy– Reduction of greenhouse gases

Task Environment

Customers Competitors Suppliers Labor Market

External Environment at Nortel

External Environment and Uncertainty

Environmental Uncertainty• Uncertainty means that managers do not have

complete information• When the environment changes rapidly, there

is high uncertainty• Organizations must adapt, managers must be

mindful– Open-minded, independent thinkers– Even in certain environments, managers need new

Adapting to the Environment

Boundary-spanning roles

Interorganizational partnerships

Mergers/joint ventures

Shift from adversarial orientation to partnership orientation

The Shift to a Partnership Paradigm

The Internal Environment: Corporate Culture

Corporate culture is the set of key values, beliefs, understandings, and norms that members of an

organization share

Symbols

Stories

Heroes

Slogans

Ceremonies

Levels of Corporate Culture

Four Types of Corporate Cultures

Shaping Corporate Culture for Innovative Response

• Important to attract, motivate, and retain talented employees

• Plays a key role in organization climate toward learning and innovation

• Successful companies balance culture and business performance– Shaping and guiding employee behavior

Combining Culture and Performance

Cultural Leadership

Articulate a vision for the organizational culture that employees can believe in

Heeds the day-to-day activities that reinforce the cultural vision

Leaders communicate through words and actions

The Environment and Corporate Culture

division of cengage

general environment

organizationtask environment

economic environment

indiathe global environment

managers copyright

nortel copyright

responsible copyright

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