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Organizational Environment Includes all elements existing outside the boundary of the organization that have the potential to affect the organization

Two Layers of the External Environment Task environment General environment

Organizational Environment General Environment Technological Task Environment Customers International Internal Environment Sociocultural Labor Market Employees Culture Competitors Management Suppliers Legal/Political Economic

Importance of International Dimension Provides New: Customers Competitors Suppliers Shapes: Social trends Technological trends Economic trends

Socio-Cultural Dimension Important characteristics are demographical and population density, age, and education levels,norms,values and customs of the population within which the organization exists.

Organization’s Economic Environment Consumer purchasing power Unemployment rate Interest rates

Legal/Political Includes forms of government and laws and regulations of the country in which the company operates.

Technological Represents scientific and technological advancements in the industry.

Task environment Customers Competitors Suppliers Labour Market

Labor Market Forces Affecting Organizations Growing need for computer literate information technology workers The necessity for ongoing investment in human resources International trading blocks European Union: “European integration has delivered half a century of stability, peace and economic prosperity. It has helped to raise standards of living, built an internal market, launched the euro and strengthened the Union's voice in the world.”

Environmental Uncertainty Managers don’t have sufficient information about environmental factors to understand and predict environmental needs and changes.

External Environment and Uncertainty High High Uncertainty Adapt to Environment Rate of Change in Factors in Environment Low Uncertainty Low Low High Number of Factors in Organization Environment

Adopting to the Environment Boundary-spanning Inter-organizational partnerships Mergers or joint ventures

Levels of Corporate Culture Culture that can be seen at the surface level Visible 1. Artifacts, such as dress, office layout, symbols, slogans, ceremonies Invisible 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” Deeper values and shared understandings held by organization members

Visible Manifestations Symbols Stories Heroes Slogans Ceremonies

Corporate Cultures Adaptive Culture Unadaptive Culture Visible Behavior Managers pay close attention to all their constituencies, especially customers, and initiate change when needed to serve their legitimate 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. Expressed Values 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. Source: John P. Kotter and Jmaes L. Heskett, Corporate Culture and Performance (New York, The Free Press, 1992), 51.

Four Types of Corporate Culture Needs of the Environment Flexibility Stability Adaptability Culture Achievement Culture External Strategic Focus Clan Culture Bureaucratic Culture Internal

Cultural Leadership A cultural leader defines and uses signals and symbols to influence corporate culture. Cultural leaders influence culture in two key areas: Need to articulate a vision that employees can believe in and get excited about Heeds the day to day activities that reinforce the cultural vision