The Environment and Corporate Culture Chapter 2
Feb 25, 2016
The Environment and Corporate Culture
Chapter 2
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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
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The General Environment
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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
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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
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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
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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
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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
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2010 Environmental Index
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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
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Task Environment
Customers Competitors Suppliers Labor Market
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External Environment at Nortel
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External Environment and Uncertainty
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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
ideas
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Adapting to the Environment
Boundary-spanning roles
Interorganizational partnerships
Mergers/joint ventures
Shift from adversarial orientation to partnership orientation
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The Shift to a Partnership Paradigm
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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
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Levels of Corporate Culture
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Four Types of Corporate Cultures
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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
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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
Heeds the day-to-day activities that reinforce the cultural vision
Leaders communicate through words and actions