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© 2006 by South-Western, a division of Thomson Learning. All rights reserved. 2-1
The Environment &Corporate Culture
Chapter 2
© 2006 by South-Western, a division of Thomson Learning. All rights reserved.
2-2
Learning Objectives1. Describe the general and task environments and the
dimensions of each.
2. Explain the strategies managers use to help organizations adapt to an uncertain or turbulent environment.
3. Define corporate culture and give organizational examples.
4. Explain organizational symbols, stories, heroes, slogans, and ceremonies and their relationship to corporate culture.
5. Describe how corporate culture relates to the environment.
6. Define a cultural leader and explain the tools a cultural leader uses to create a high performance culture.
© 2006 by South-Western, a division of Thomson Learning. All rights reserved.
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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 Environment’s Two Layers
Task environment. General environment.
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Employees Culture
Management
InternalEnvironment
Technological
Econom
icLegal/Political
Inte
rnat
iona
l
Sociocultural
General Environment
CustomersC
omp
etitors
Lab
or M
ark
et
Suppliers
Task Environment
Ex. 2.1 Location of the Organization’s General, Task, and Internal Environments
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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.
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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 single-
father households.
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Organization’s 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 EnvironmentCustomers
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.
© 2006 by South-Western, a division of Thomson Learning. All rights reserved.
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Task EnvironmentCompetitors
Each industry is characterized by specific competitive issues.
Competitive wars are being waged worldwide in all industries.
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Task EnvironmentSuppliers
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.
© 2006 by South-Western, a division of Thomson Learning. All rights reserved.
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Task Environment Labor Market Factors
1. Growing need for computer-literate information technology workers.
2. The necessity for continuous investment in human resources in order to meet the borderless world.
3. The effects of international trading blocks, automation, and shifting plant locations.
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Ex. 2.3 Adapt toEnvironment
HighUncertainty
LowUncertainty
HighLowLow
High
Number of Factors in Organization Environment
Rate ofChange inFactors in
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
2. Expressed values, such as “The Penney Idea,” “The HP Way”
3. Underlying assumptions and deep beliefs, such as “people are lazy and can’t be trusted”
Invisible
Culture that can be seen at the surface level
Deeper values and shared understandings held by organization members
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Visible Manifestations
Symbols Stories Heroes Slogans Ceremonies
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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.