Chapter 2: The Environment and Corporate Culture Chapter 2: The Environment and Corporate Culture

Learning 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. 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. 2/25/2019

Organizational Environment Organizational Environment All elements existing outside the boundary of the organization that have the potential to affect the organization 2/25/2019

External Environment General Environment General Environment Affects the organization indirectly Task Environment Directly influences operations and performances Internal Environment elements within the organization’s boundaries 2/25/2019

Organizational Environments Exhibit 2.1 2/25/2019

International Dimension International Dimension Portion of the external environment that represents events originating in foreign countries as well as opportunities for U.S. companies in other countries. 2/25/2019

Technological Dimension Scientific and technological advances Specific industries Society at large Impact Competition Relationship with Customers Medical advances Nanotechnology advances 2/25/2019

Socio-Cultural Dimension Socio-Cultural Dimension Demographic characteristics of the general population Norms Customs Values Examples: Increased globalization/diversity Longer stay in workforce Growing number of single-father households Number of married households decreased 2/25/2019

Economic Dimension Economic health Recent Trends Economic Dimension Economic health Consumer purchasing power Unemployment rate Interest rates Recent Trends Frequency of mergers and acquisitions Small business sector vitality 2/25/2019

Legal-Political Dimension Dimension of the general environment that includes federal, state, and local government regulations and political activities designed to influence company behavior. Pressure Groups – interest group that works within the legal-political framework to influence companies to behave in socially responsible ways. 2/25/2019

Task Environment Sectors that have a direct working relationship with the organization Customers Competitors Suppliers Labor Market 2/25/2019

Labor Market Forces Labor Market Forces Affecting Organizations today Labor 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 2/25/2019

External Environment and Uncertainty External Environment and Uncertainty 2/25/2019 Exhibit 2.3

Adapting to the Environment Boundary-spanning Internet Business Intelligence Inter-organizational partnerships From Adversary to Partnerships Mergers and joint ventures Beyond Strategic Partnerships 2/25/2019

Shift to a Partnership Paradigm From Adversarial To Relationship Orientation Orientation Suspicion, competition, arm’s length Price, efficiently, own profits Information and feedback limited Lawsuits to resolve conflict Minimal involvement and up-front investment Short-term contracts Contracts limit the relationship 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 onsite Involvement in partner’s product design and production 2/25/2019

Culture The set of key values, beliefs, understandings, and norms that members of an organization share. 2/25/2019

Levels of Corporate Culture 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 2/25/2019 Exhibit 2.5

Visible Manifestations Symbols Stories Heroes Slogans Ceremonies 2/25/2019

Environment and Culture A big influence on internal corporate culture is the external environment Cultures can vary widely across organizations Organizations within same industry reveal similar cultural characteristics 2/25/2019

Corporate Culture Adaptability Corporate Culture Adaptability Adaptive Culture Unadaptive Culture Visible Behavior Managers tend to behave somewhat insularly, politically, and bureaucratically. As a result, they do not change their strategies quickly. Managers pay close attention to all their constituencies, especially customers, and initiate change when needed to serve their legitimate interests. Managers care deeply about customers, stockholders, and employees. They strongly value people and processes that can create useful change. 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. Expressed Values Source: John P. Kotter and James L. Heskett, Corporate Culture and Performance (New York, The Free Press, 1992), 51. 2/25/2019

Four Types of Corporate Cultures Four Types of Corporate Cultures Needs of the Environment Flexibility Stability External Achievement Culture Adaptability Culture Strategic Focus Involvement Culture Consistency Culture Internal 2/25/2019

High-Performance Culture Based on a solid organizational mission or purpose Embodies shared adaptive values that guide decisions and business practices Encourages individual employee ownership of both bottom-line results and the organization’s cultural backbone 2/25/2019

Combining Culture and Performance 2/25/2019 Exhibit 2.6

Cultural Leadership Articulates a vision that employees can believe in Cultural Leadership Articulates a vision that employees can believe in Communicates values Values are tied to a clear and compelling mission, or core purpose Heeds the day-to-day activities that reinforce the cultural vision Work procedures and reward systems match and reinforce the values 2/25/2019