daft chapter 3

8/4/2019 Daft Chapter 3

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Chapter 3

The Environment andCorporate Culture

Presented byGroup 2, EMBA 10


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The Environment and Corporate Culture

Businesses are increasingly becoming dynamic

Must be ready to react and respond to evensubtle environmental shifts

Need to adapt their companies to newcompetition, shifting consumer interests or newtechnologies

Close System (focus on factors within

organization, leading, motivating & controllingemployees)

Open System (monitor & respond to externalenvironment) for more effective managers


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Includes all elements existing outside the

boundary of the organization that have the

potential to affect the organization

Includes competitors, resources, technology

and economic conditions that influence the

organization

External Organizational Environment


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Two Layers of

the External Environment

General environment- outer layer that is widely dispersed and affects

organizations indirectly

- includes social, economic, legal/political, international,

natural and technological factors that influence allorganizations about equally

- These events do not directly change day-to-day operations,but they do affect all organizations eventually

Task environment- closer to the organization and includes the sectors that

conduct day-to-day transactions with the organization anddirectly influence its basic operations and performance

- includes competitors, suppliers, customers and the labor

market


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Internal Environment

Includes the elements within the

organization's boundaries

Composed of

1. current employees

2. Management

3. especially corporate culture


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Organizational

Environment

Management

Employees Culture

Internal

Environment

Suppliers

Co

mpetitors

Customers

LaborM

arket

Technological

General Environment

Task Environment


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International Dimension

- Represents events originating in foreign countries

- Provides new competitors, new customers and

new suppliers

- Shapes social trends, technological trends and

economic trends

- Compared to domestic, complex & ever-changing


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Technological Dimension

Includes scientific and technologicaladvancements in a specific industry as well asin society at large

Created massive changes for organizations inall industries in recent years

Its advancement effects organizations andmanagers


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Socio-Cultural Dimension

Represents demographic characteristics,norms, customs, and values of the population

within which the organization operates

Important characteristics are geographical andpopulation density, age, and education levels.


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Economic Dimension

Represents the general economic health of

the country or region in which the

organization operates.

Consumer purchasing power

Unemployment rate

Interest rates


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Legal-Political Dimension

Includes government regulations at the local,state and federal levels, as well as politicalactivities designed to influence company

behavior

Managers must also recognize a variety of

pressure groups that work within the legal-political framework to influence companies tobehave in socially responsible ways


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Natural Dimension

Includes all elements that occur naturally on

earth, including plants, animals, rocks, and

natural resources such as air, water, an climate.

Concern about the environment has promptedcompanies to take these actions.

Eliminating non-biodegradable plastic bags from the

environment Improving efficiency of plants and factories

Investing in cleaner technology


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Task Environment

Includes those sectors that have a direct workingrelationship with the organization

Customers People and organizations in the environmentthat acquire goods or services from the organization

Competitors Other organizations in the same industry ortype of business that provide goods or services to the sameset of customers

Supplier People and organizations that provide the rawmaterials the organization uses to produce its output

Labor Market the people available for hire by theorganization


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Labor Market Forces Affecting

Organizations

Every organization needs a supply of trained,qualified personnel.

1. Growing need for computer literate knowledge workers

2. The necessity for continuous investment in humanresources through recruitment, education and training tomeet the competitive demands of the borderless world

3. The effects of international trading blocs, automation,outsourcing, and shifting facility locations on labor

dislocations, creating unused labor pools in same areasand labor shortages in others


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Environmental Uncertainty

Uncertainty means that managers do not havesufficient information about environmentalfactors to understand and predict environmentalneeds and changes

When external factors change rapidly, theorganization experiences high uncertainty

When an organization deals with only a fewexternal factors, managers experience lowuncertainty and can devote less attention toexternal issues


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External Environment and Uncertainty

High

Adapt to

Environment

High

Uncertainty

Low

Uncertainty

HighLowLow

Rate of

Change in

Factors in

Environment

Number of factors in organization environment


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Adapting to the Environment

Managers can use several strategies to adapt

to the following changes

boundary-spanning roles

inter-organizational partnerships

mergers or joint ventures.


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Boundary-spanning Role

Roles assumed by people and/or departments

that link and coordinate the organization with

key elements in the external environment

Detect and process information about changes in

the environment

Represent the organizations interest to the

environment


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Inter-organizational Partnership Reduce boundaries and increase collaboration with other

organizationsFrom Adversarial Orientation To Partnership Orientation

Suspicion, competition, arms length Trust, value added to both sides

Price, efficiency, own profits Equity, fair dealing, everyone profit

Information and feedback limited E business links to share

information and conduct digitaltransaction

Lawsuits to resolve conflict Close coordination, virtual teams

and people onsite

Minimal involvement and up front investment Involvement in partners product

design and productionShort-term contract Long-term contract

Contracts limit the relationship Business assistance goes beyond

the contract


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Mergers and Joint Ventures

To reduce environmental uncertainty

Mergers occurs when two or more

organizations combine to become one

A Joint Venture involves a strategic alliance or

program by two or more organizations

Occurs when a project is too complex, expensive,

or uncertain for one firm to handle alone


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The Internal Environment:

Corporate Culture

A pattern of shared values and assumptions about howthings are done within the organization

Includes corporate culture, production technology,organization structure, and physical facilities

Internal culture must fit the needs of the externalenvironment and company strategy

Culture is defined as the set of key values, beliefs,understands, and norms shared by members of anorganization

Helps managers understand the hidden, complexaspects or organizational life


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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 here care

about one another like a family

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

Symbol

An object, act or event that conveys meaning to others

Story

A narrative based on true events and repeated frequentlyand shared among organizational employees

Heroes

A figure who exemplifies the deeds, character and attributesof a strong corporate culture

Slogan

A phrase or sentence that succinctly expresses a key

corporate value Ceremony

A planned activity at a special event that is conducted forthe benefit of an audience


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Corporate Cultures

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 their

legitimate interests, even if itentails 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 takeadvantage 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 that

work group. They value the orderly

and risk-reducing management

process much more highly than

leadership initiatives.


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ADAPTIVE CULTURES(how well they encourages adaptation to external environment)

Adaptive Corporate cultures have different

values and behavior from Unadaptive

Corporate cultures

Customers

Adaptive Corporate culturesInternal people and process

Unadaptive Corporate cultures themselves


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Four Types of Corporate Culture

Needs of the Environment

Adaptability

Culture

Achievement

Culture

Consistency

Culture

Involvement

Culture

External

Internal

Serve specific clients not needing

rapid changes / result oriented

Stability

S

trategicFocus

Require fast response & high risk

decision / employee autonomy

Flexibility

Get participation of employees to

rapidly adapt to changes / highly values

& caring towards employees

Internal focus & consistency oriented /

follow rules, methodical, orderly / few

companies operates this way


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Shaping Corporate Culture for

Innovative Response

Corporate culture plays a key role in creatingan organizational climate that enableslearning and innovative responses to threats

from the external environment challengingnew opportunities, or organizational crises

Companies that succeed in a turbulent worldare those that pay careful attention to bothcultural values and business performance


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Combining Culture and Performance

High

AttentiontoPerformance Goods for short term - sustainable?

C

Give results and inspiration

sustainable success through high

performance culture

D

May be going out of business

Little result / value

A

Strong culture/good for morale

can they afford without result

B

Low Low HighAttention to Value


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Cultural Leadership

A cultural leader defines and uses signals andsymbols to influence corporate culture

Influence culture in two key roles The cultural leader articulates a vision for the

organizational culture that employees can believein

The cultural leader heeds the day-to-day activitiesthat reinforce the cultural vision


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THANK YOU !

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