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The Environment and Corporate Culture

CHAPTER 3

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Copyright ©2010 by South-Western, a division of Cengage Learning. All rights reserved.

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Learning Outcomes

• 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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External Environment

● General environment – affects indirectly

● Task environment- Affects directly- Influences operations and performances

● Internal environment – elements within the organization’s boundaries

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International Dimension

• Events originating in foreign countries

• Impacts all aspects of the external environment

– New competitors

– New customers

– New suppliers

• Today, all companies globally

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Technological Dimension

• Scientific and technological advances– Specific industries– Society at large

• Impact:– Organizations– Managers– Customers

• Desktop computers• Networks• Internet Access• Handheld devices• Videoconferencing• Cell phones• Laptop• WiFi• Medical advances

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Socio-Cultural Dimension

• Today’s demographics are the foundation of the future workforce

• Demographic trends affect organizations globally

– Norms– Customs– Values of population– Geographical Distribution– Population Density– Age– Education Levels

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Economic Dimension

● General economic health● Consumer purchasing power● Unemployment rate● Interest rates

● Recent Trends● Frequency of mergers and

acquisitions● Small business sector vitality

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Legal-Political Dimension

• Federal, state, and local government regulations

• Political activities designed to influence company behavior

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Natural Dimension

• Concern for the environment

• The natural dimension has no voice

• Pressure comes from advocacy and managers

– Eliminate nonbiodegradable plastic bags from the environment

– Improving efficiency of plants and factories

– Investing in cleaner technologies

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Task Environment

Sectors that have a direct working relationship with the organization:

Customers

Competitors

Suppliers

Labor Market

Changes in these various sectors can

create tremendous challenges…

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Environmental Uncertainty

Management Management must adapt to must adapt to

changeschanges

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Adapting to the Environment

• Boundary-Spanning Roles: coordinating the organization with key elements in the external environment

• Interorganizational Partnerships: collaborating with other organizations

• Mergers: combination of two organizations

• Joint Ventures: an alliance of organizations for a specific project

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Partnership Paradigm

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The Internal Environment: Corporate

Culture• Corporate culture should match the needs

of the external environment

• The importance of corporate culture has been growing

• Culture is a pattern of shared values

• “how things are done”

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Culture

• Symbols• Stories• Heroes• Slogans• Ceremonies

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Environment and Culture

• The external environment influences culture

• The internal environment should embody the requirements for success

• Manager’s must pay attention to culture– Recognize the ways culture can help or hurt

your department

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Adaptive vs. Unadaptive Corporate Culture

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Four Types of Corporate Culture

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Shaping Corporate Culture for Innovative

Response

How people are treated increases a company’s value

Culture attracts, motivates and retains talent

Corporate culture enables learning and innovation

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Combining Culture and Performance

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Cultural Leadership

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

• The cultural leader heeds the day-to-day activities that reinforce the cultural vision

• Managers communicate the cultural values through words and actions

• Cultural leaders uphold their commitment to values during difficult times

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Education

division ofcengage learning

external environment

learning outcomes

department copyright

turbulent environment

environment boundary

ways culture

task environment sectors