The Environment and Corporate Culture Chapter 3 The Environment and Corporate Culture
The External Environment The elements of the world constantly change The external organizational environment includes all outside elements that affect the organization General environment: Affects organizations indirectly
The External Environment Task environment: Sectors that conduct transactions with the organization Organizational ecosystem: Formed by the interaction among a community of organizations in the environment Internal environment: Elements within the organization boundaries
3.1 - The General, Task, and Internal Environments
3.2 Sample External Environment
General Environment: International Managers must consider the international dimension Events originating in foreign countries New opportunities for U.S. companies in other countries New competitors, suppliers, customers New technological, social, and economic trends
Technological Massive advancements in a specific industry and society Advances drive competition and help innovative companies gain market share
Demographic characteristics, norms, customs, and values Sociocultural Demographic characteristics, norms, customs, and values Connected Generation or Generation Z has woven technology into every aspect of life Widespread social equality Growing diversity has implications for business
Economic Economic health of the country/region Extended globally with uncertainty Consumer purchasing power Unemployment rate Interest rates
Legal-Political Government regulation; state, local, and federal Political activities Government agencies and regulation Managers work with lawmakers, educating them about products and services legislation’s impact on their business strategies
Natural Organizations must be sensitive to the environment Growing importance and pressure Natural dimension does not have own voice
Natural Environmental groups advocate action/policy Reduce pollution Develop renewable energy Global warming Sustainable use of scarce resources
3.3 Environmental Performance Index
Organization-Environment Relationship The environment creates uncertainty for managers Managers must respond and design adaptive organizations Uncertainty – managers do not have sufficient information about environmental factors to understand and predict environmental needs and changes
3.4 External Environment and Uncertainty
Adapting to the Environment Boundary-spanning roles – link and coordinate the organization with external environment, seek: Business intelligence Big Data analytics Interorganizational partnerships – reduce boundaries and begin collaborating with other organizations
Adapting to the Environment Mergers – occurs when two or more organizations combine to become one Joint ventures – strategic alliance or program by two or more organizations
3.5 The Shift to a Partnership Paradigm
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
3.6 Levels of Corporate Culture
3.7 Four Types of Corporate Culture
Shaping Corporate Culture for Innovative Response Corporate culture plays a key role in learning and innovate responses to: Threats from the external environment Challenging new opportunities Organizational crises
Managing the High-Performance Culture Bottom-line strategies are successful in the short term Successful companies balance culture and business performance Culture is the “glue” that holds the organization together
High-Performance Culture Based on solid organizational mission/purpose Shared adaptive values that guide decisions and practices Encourages individual employee ownership Bottom-line results Organization’s culture
3.8 Combining Culture and Performance
Cultural Leadership Defines and uses signals and symbols to influence corporate culture 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