Chapter 3: Environmental and Organizational Culture PowerPoint Presentation to Accompany Management, 10/e John R. Schermerhorn, Jr. Chapter 3: Environmental and Organizational Culture Prepared by: Jim LoPresti University of Colorado, Boulder Published by: John Wiley & Sons, Inc.

Planning Ahead — Chapter 3 Study Questions What is the external environment of organizations? What are key issues in organization-environment relationships? What is the internal environment and organizational culture? What are multicultural organizations? Management 10/e - Chapter 3

Study Question 1: What is the external environment of organizations? Successful companies in the new economy will need to focus on: Knowledge customer behavior markets economies technology Learning Speed Management 10/e - Chapter 3

Figure 3.1 Starbucks general environment. Management 10/e - Chapter 3

Study Question 1: What is the external environment of organizations? The general environment — all of the background conditions in the external environment of the organization including: Economic – health of the economy Legal-political – norms, customs, social values Socio-cultural – philosophy/objectives of political party running the government Technological – development and availability og technology Natural environment – nature and conditions of environment Management 10/e - Chapter 3

Study Question 1: What is the external environment of organizations? The specific (task) environment actual organizations, groups, and persons with whom an organization interacts and conducts business. Includes important stakeholders such as: Customers Suppliers Competitors Regulators Investors/owners Value creation is creating value for and satisfying the needs of constituencies Management 10/e - Chapter 3

Management 10/e - Chapter 3 Figure 3.2 Multiple stakeholders in the environment of an organization. Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 2: What are key issues in organization-environment relationships? Competitive advantage a core competency that clearly sets an organization apart from competitors and gives it an advantage over them in the marketplace. Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 2: What are key issues in organization-environment relationships? Companies may achieve competitive advantage in many ways, including: Products Pricing Customer service Cost efficiency Quality Knowledge Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 2: What are key issues in organization-environment relationships? Environmental uncertainty a lack of complete information regarding what exists and what developments may occur in the external environment. Two dimensions of environmental uncertainty: Degree of complexity Rate of change Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 2: What are key issues in organization-environment relationships? Customers want: High quality. Low price. On-time delivery. Great service. Key customer service lessons: Protect reputation for quality products. Treat customers right. Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 2: What are key issues in organization-environment relationships? Organizational Effectiveness – sustainable high performance in using resources to accomplish mission and objectives. Systems resource approach focuses on resource acquisition Internal process approach focuses on operations efficiency Goal approach focuses on accomplishing key objectives Strategic Constituencies focuses on stakeholder impact Management 10/e - Chapter 3

Figure 3.3 Dimensions of uncertainty Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 2: What are key issues in organization-environment relationships? Customer relationship management establishes and maintains high standards of customer service in order to strategically build lasting relationships with and add value to customers. Supply chain management strategic management of all operations relating to an organization’s resource suppliers. Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 3: What is the internal environment and organizational culture? Organizational culture the system of shared beliefs and values that develops within an organization and guides the behavior of its members. Socialization to the culture. builds strong cultures by acclimating new members Management 10/e - Chapter 3

Management 10/e - Chapter 3 Figure 3.4 Levels of organizational culture—observable culture and core culture in the organizational “iceberg.” Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 3: What is the internal environment and organizational culture? Strong cultures: Commit members to do things that are in the best interests of the organization. Discourage dysfunctional work behavior. Encourage functional work behavior. The best organizations have strong cultures that: Are performance-oriented. Emphasize teamwork. Allow for risk taking. Encourage innovation. Value the well being of people. Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 3: What is the internal environment and organizational culture? What is observable culture? What one sees and hears when walking around an organization. Elements of observable culture: Heroes Stories Rites and rituals Symbols Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 3: What is the internal environment and organizational culture? What is the core culture? Underlying assumptions and beliefs that influence behavior and contribute to the observable culture. Core culture and values: Core values are beliefs and values shared by organization members Strong cultures have a small but enduring set of core values. Commitment to core values is a key to long-term success. Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 3: What is the internal environment and organizational culture? Diagnostic questions for assessing cultural differences: How tight or loose is the structure? Are decisions change oriented or driven by the status quo? What outcomes or results are most highly valued? What is the climate for risk taking, innovation? How widespread is empowerment, worker involvement? What is the competitive style, internal and external? Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 3: What is the internal environment and organizational culture? Important cultural values include: Performance excellence Innovation Social responsibility Integrity Worker involvement Customer service Teamwork Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 3: What is the internal environment and organizational culture? Value-based management: Describes managers who actively help to develop, communicate, and enact shared values. Criteria for evaluating core values: Relevance Integrity Pervasiveness Strength Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 3: What is the internal environment and organizational culture? Workplace spirituality: Practices that create meaning and shared community among organizational members. Sample values include: Meaningful purpose Trust and respect Honesty and openness Personal growth and development Worker friendly practices Ethics and social responsibility Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 3: What is the internal environment and organizational culture? Symbolic leadership Symbolic leaders use symbols well to establish and maintain a desired organizational culture. Symbolic leaders behave in ways that espouse organization’s values. Symbolic leaders: Use language metaphors. Highlight and dramatize core values and observable culture. Use rites and rituals to glorify performance. Management 10/e - Chapter 3

Study Question 4: What are multicultural organizations? Diversity: Describes differences among people at work, such as; age, gender, race. How diversity is handled in the workplace reflects the organization’s culture. Respect and inclusion. Disrespect and exclusion. A potential source of competitive advantage. Management 10/e - Chapter 3

Study Question 4: What are multicultural organizations? Diversity trends in the sociocultural environment: People of colors are an increasing percentage of the workforce. More women are working. People with disabilities are gaining more access to the workplace. Average age of workers is increasing. Religious diversity of workers is increasing. Management 10/e - Chapter 3

Study Question 4: What are multicultural organizations? Based on pluralism, operating with inclusion and respect for diversity Multiculturalism involves pluralism and respect for diversity Management 10/e - Chapter 3

Study Question 4: What are multicultural organizations? Characteristics of multicultural organizations: Pluralism Structural integration Informal network integration Absence of prejudice and discrimination Minimum intergroup conflict Management 10/e - Chapter 3

Study Question 4: What are multicultural organizations? Organizational subcultures Cultures based on shared work responsibilities and/or personal characteristics. Ethnocentrism is the belief that one’s subculture is superior to all others Common subcultures include: Occupational Functional Ethnic or national Racial Generational Gender Management 10/e - Chapter 3

Study Question 4: What are multicultural organizations? Challenges faced by minorities and women: Glass ceiling Misunderstanding and lack of sensitivity Sexual harassment Pay discrimination Job discrimination Minorities may adapt by exhibiting biculturalism - adopting characteristics of the majority culture Management 10/e - Chapter 3

Management 10/e - Chapter 3 Figure 3.5 Glass ceilings as barriers to women and minority cultures in traditional organizations. Management 10/e - Chapter 3

Management 10/e - Chapter 3 Study Question 4: How is diversity managed in a multicultural organization? Diversity leadership approaches: Managing diversity commits to building an organizational culture that allows all members to reach their full potential. Affirmative action commits the organization to hiring and advancing minorities and women. Valuing diversity commits the organization to education and training programs. Management 10/e - Chapter 3

Management 10/e - Chapter 3 Figure 3.6 Leadership approaches to diversity—from affirmative action to managing diversity. Source: Developed from R. Roosevelt Thomas, Jr., Beyond Race and Gender (New York: AMACOM, 1991), p. 28. Management 10/e - Chapter 3

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