8e Daft Chapter 03

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The Environment andCorporate Culture

The Environment andCorporate Culture

CHAPTER 3CHAPTER 3

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2 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.

Learning ObjectivesLearning Objectives

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.

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Learning Objectives (contd.)Learning Objectives (contd.)

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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Organizational EnvironmentOrganizational Environment

All elements existing outside the

boundary of the organization that have

the potential to affect the organization

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External EnvironmentExternal Environment

General environment affects indirectly

Task environment- Affects directly

- Influences operations and performances

Internal environment elements within theorganizations boundaries

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Organizational EnvironmentsOrganizational Environments

Exhibit 3.1

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7/247 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.

International DimensionInternational Dimension

Portion of the external

environment that represents

events originating in foreign

countries as well as opportunities

for U.S. companies in other

countries.

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Technological DimensionTechnological Dimension

Scientific and technological advances Specific industries

Society at large Impact

Competition

Relationship with Customers

Medical advances

Nanotechnology advances

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Socio-Cultural DimensionSocio-Cultural Dimension

Dimension of the generalenvironment Demographic characteristics Norms

Customs Values

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Economic DimensionEconomic 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 DimensionLegal-Political Dimension

Dimension of the general environment

that includes federal, state, and local

government regulations and politicalactivities designed to influence company

behavior.

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Task EnvironmentTask Environment

Sectors that have a direct working

relationship with the organization

Customers Competitors

Suppliers

Labor Market

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Labor Market ForcesLabor Market Forces

Labor Market Forces Affecting Organizations

today

Growing need for computer literate

information technology workers

Necessity for ongoing investment in human

resources recruitment, education, training

Effects of international trading blocks,

automation, outsourcing, shifting facility

locations upon labor dislocations

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Adapting to the EnvironmentAdapting to the Environment

Boundary-spanning

Inter-organizational partnerships

Mergers and joint ventures

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External Environment and UncertaintyExternal Environment and Uncertainty

Number of Factors in Organization Environment

Adapt to

EnvironmentHighUncertainty

Low

Uncertainty

HighLowLow

High

Rate of

Change in

Factors in

Environment

Exhibit 3.3

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Interorganizational PartnershipsInterorganizational Partnerships

Shift in paradigm to a partnership orientation Trust, value added to both sides

Equity, fair dealing, everyone profits

E-business links to share information and conduct digital

transactions

Close coordination; virtual teams and people on site

Involvement in partners product design and production

Long-term contracts

Business assistance goes beyond the contract

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CultureCulture

The set of key values, beliefs,

understandings, and norms that

members of an organization share.

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Levels of Corporate CultureLevels of Corporate Culture

Visible

1. Artifacts, such as dress, office

layout, symbols, slogans,

ceremonies

2. Expressed values, such as The

Penney Idea, The HP Way3. Underlying assumptions and deep

beliefs, such as people are lazy

and cant be trusted

Invisible

Culture

that can be

seen at the

surface

level

Deeper values

and shared

understandings

held by

organization

members

Exhibit 3.5

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Visible ManifestationsVisible Manifestations

Symbols

Stories

Heroes

Slogans

Ceremonies

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Corporate Culture AdaptabilityCorporate Culture Adaptability

Adaptive Culture Unadaptive Culture

Visible Behavior

Expressed Values

Managers pay close attention to

all their constituencies, especially

customers, and initiate change

when needed to serve theirlegitimate interests, even if it

entails taking some risks.

Managers tend to behave

somewhat insularly, politically, and

bureaucratically. As a result, they

do not change their strategies

quickly to adjust to or take

advantage of changes in their

business environments.

Managers care deeply about

customers, stockholders, and

employees. They strongly value

people and processes that can

create useful change (e.g.,

leadership initiatives up and down

the management hierarchy).

Managers care mainly about

themselves, their immediate work

group, or some product (or

technology) associated with thatwork group. They value the orderly

and risk-reducing management

process much more highly than

leadership initiatives.

Source: John P. Kotter and James L. Heskett, Corporate Culture and Performance (New York, The Free Press, 1992), 51.

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Four Types of Corporate CulturesFour Types of Corporate Cultures

Adaptability

Culture

Achievement

Culture

Consistency

Culture

Involvement

Culture

External

Internal

Flexibility Stability

Str

ategi c

Focus

Needs of the Environment

Exhibit 3.7

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24 Copyright 2008 by South Western a division of Thomson Learning All rights reserved

Cultural LeadershipCultural Leadership

Articulates a visionthat employees canbelieve in Defines and communicates central values

that employees believe in

Values are tied to a clear and compellingmission, or core purpose

Heeds the day-to-day activities thatreinforce the cultural vision workprocedures and reward systems match and reinforce thevalues

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