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

2. 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.
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3. Organizational Environment
Organizational Environment
All elements existing outside the boundary of the organization that have the potential to affect the organization
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4. 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
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5. Organizational Environments
Exhibit 2.1
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6. 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.
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7. Technological Dimension
Scientific and technological advances
Specific industries
Society at large
Impact
Competition
Relationship with Customers
Medical advances
Nanotechnology advances
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8. 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
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9. 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
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10. 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.
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11. Task Environment
Sectors that have a direct working relationship with the organization
Customers
Competitors
Suppliers
Labor Market
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12. 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
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13. External Environment and Uncertainty
External Environment and Uncertainty
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Exhibit 2.3

14. Adapting to the Environment
Boundary-spanning
Internet
Business Intelligence
Inter-organizational partnerships
From Adversary to Partnerships
Mergers and joint ventures
Beyond Strategic Partnerships
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15. 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
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16. Culture
The set of key values, beliefs, understandings, and norms that members of an organization share.
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17. 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
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Exhibit 2.5

18. Visible Manifestations
Symbols
Stories
Heroes
Slogans
Ceremonies
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19. 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
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20. 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.
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21. 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
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22. 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
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23. Combining Culture and Performance
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Exhibit 2.6

24. 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
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