1. Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved 1 CHAPTER TWO CHAPTER TWO Organization Environments and Culture Prepared by Deborah Baker Texas Christian University Effective Management 2nd Edition Chuck Williams Effective Management 2nd Edition Chuck Williams

2. Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved 2 CHAPTER TWO Changing Environments Environmental Change Environmental Complexity Resource Scarcity Uncertainty Environmental Change Environmental Complexity Resource Scarcity Uncertainty Characteristics of Changing External Environments 1

3. Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved 3 CHAPTER TWO Environmental Change  Environmental Change is the rate at which a company’s environments change  stable environments  dynamic environments  Punctuated equilibrium theory  companies cycle through stable and dynamic environments 1.1

4. Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved 4 CHAPTER TWO Uncertainty  Uncertainty is how well managers can understand or predict the external changes and trends affecting their businesses high low 1.4

5. Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved 5 CHAPTER TWO Business B Customers Competitors Suppliers Industry Regulation Advocacy Groups Business A Customers Competitors Suppliers Industry Regulation Advocacy Groups Sociocultural Component Economy Political/Legal Component Technological Component Adapted from Exhibit 2.3 Specific Environment General Environment General & Specific Environments

6. Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved 6 CHAPTER TWO General Environment 2 Organization Specific Environment General Environment

7. Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved 7 CHAPTER TWO Making Sense of Changing Environments Acting on Threats and Opportunities Interpreting Environmental Factors Environmental Scanning EvaluatingExternalEnvironmentsEvaluatingExternalEnvironments 4

8. Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved 8 CHAPTER TWO Environmental Scanning  Environmental scanning: searching the environment for events or issues that might affect an organization  Scanning the environment:  keeps companies current on industry factors  reduces uncertainty  alters organizational strategies  contributes to organizational performance 4.1

9. Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved 9 CHAPTER TWO Internal Environments  Internal environment consists of the trends and events within an organization that affect the management, employees, and organizational culture  important because it affects what people think, feel, and do at work  organizational culture is the set of key values, beliefs, and attitudes shared by organizational members

10. Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved 10 CHAPTER TWO Successful Organizational Cultures D.R. Denison & A.K. Mishra, Organization Science 6(1995): 204-223 5.2

11. Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved 11 CHAPTER TWO Levels of Organizational Culture  Symbolic artifacts  Behaviors  Symbolic artifacts  Behaviors 1. Surface Level SEEN  What people say  How decisions are made  What people say  How decisions are made 2. Expressed Values and Beliefs HEARD  Beliefs and assumptions  Rarely discussed  Beliefs and assumptions  Rarely discussed 3. Unconsciously Held Assumptions and Beliefs BELIEVED Adapted from Exhibit 2.4 5.3

12. Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved 12 CHAPTER TWO Changing Organizational Cultures  Behavioral addition  is the process of having managers and employees perform a new behavior  Behavioral substitution  is having managers and employees perform a new behavior in place of another behavior  Change visible artifacts  such as the office design and layout, company dress codes, etc. 5.3