© 2006 by South-Western, a division of Thomson Learning. All rights reserved. 2-1 The Environment & Corporate Culture Chapter 2

© 2006 by South-Western, a division of Thomson Learning. All rights reserved. 2-2 Learning Objectives 1. Describe the general and task environments and the dimensions of each. 2. Explain the strategies managers use to help organizations adapt to an uncertain or turbulent environment. 3. Define corporate culture and give organizational examples. 4. Explain organizational symbols, stories, heroes, slogans, and ceremonies and their relationship to corporate culture. 5. Describe how corporate culture relates to the environment. 6. Define a cultural leader and explain the tools a cultural leader uses to create a high performance culture.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved. 2-3 The External Organizational Environment All elements existing outside the organization's boundaries that have the potential to affect the organization.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved. 2-4 External Environment’s Two Layers  Task environment.  General environment.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved. 2-5 EmployeesCulture Management Internal Environment Technological Economic Legal/Political International Sociocultural General Environment Customers Competitors Labor Market Suppliers Task Environment Ex. 2.1 Location of the Organization’s General, Task, and Internal Environments

© 2006 by South-Western, a division of Thomson Learning. All rights reserved. 2-6 Importance of International Dimension  Provides New: Customers Competitors Suppliers  Shapes: Social trends Technological trends Economic trends

© 2006 by South-Western, a division of Thomson Learning. All rights reserved. 2-7 Technological Dimension Includes scientific and technological advancements in specific industry and society at large.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved. 2-8 Socio-Cultural Dimension Demographic characteristics as well as the norms, customs, and values of the general population. Important characteristics are geographical and population density, age, and education levels.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved. 2-9 Socio-Cultural Dimension (contd.) Key demographic trends in the United States:  Hispanics will make up nearly a quarter of the U.S. population by the year  Population and the workforce continue to age with the baby boomers.  The fastest-growing living arrangement is single- father households.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved Organization’s Economic Environment Consumer purchasing power. Unemployment rate. Interest rates. Frequency of mergers.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved Legal-Political Government regulations Local State Federal Considers political activities designed to influence company behavior.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved Task Environment Customers A concern is the power the Internet has given customers. This new found power enables customers to directly impact organizations in new ways. Managers are using the Internet to learn about customers.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved Task Environment Competitors Each industry is characterized by specific competitive issues. Competitive wars are being waged worldwide in all industries.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved Task Environment Suppliers Many companies are now using fewer suppliers while trying to build better relationships. Traditionally the role has been adversarial; many companies now are looking to cooperation.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved Task Environment Labor Market Factors 1. Growing need for computer-literate information technology workers. 2. The necessity for continuous investment in human resources in order to meet the borderless world. 3. The effects of international trading blocks, automation, and shifting plant locations.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved Ex. 2.3 Adapt to Environment High Uncertainty Low Uncertainty HighLow High Number of Factors in Organization Environment Rate of Change in Factors in Environment

© 2006 by South-Western, a division of Thomson Learning. All rights reserved Adapting to the Environment Boundary-Spanning Inter-organizational Partnership Mergers & Joint Ventures Preparing the organization for the environment.

© 2006 by South-Western, a division of Thomson Learning. All rights reserved Ex. 2.5 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 are lazy and can’t be trusted” Invisible Culture that can be seen at the surface level Deeper values and shared understandings held by organization members

© 2006 by South-Western, a division of Thomson Learning. All rights reserved Visible Manifestations Symbols Stories Heroes Slogans Ceremonies

© 2006 by South-Western, a division of Thomson Learning. All rights reserved Ex. 2.7 Four Types of Corporate Cultures

© 2006 by South-Western, a division of Thomson Learning. All rights reserved Cultural Leadership Influence 1. Cultural leadership articulates a vision for the organizational culture in which employees can believe. 2. Cultural leadership heeds the day-to-day activities that reinforce the cultural vision.