1. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–1 Organizational Culture and Environment Chapter 3 Management Stephen P. Robbins Mary Coulter tenth edition

2. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–2 The Manager: Omnipotent or Symbolic? Omnipotent View of ManagementOmnipotent View of Management  Managers are directly responsible for an organization’s success or failure.  The quality of the organization is determined by the quality of its managers.  Managers are held accountable for an organization’s performance, yet it is difficult to attribute good or poor performance directly to their influence on the organization.

3. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–3 The Manager: Omnipotent or Symbolic? Symbolic View of ManagementSymbolic View of Management  Much of an organization’s success or failure is due to external forces outside of managers’ control.  The ability of managers to affect outcomes is influenced and constrained by external factors.  The economy, customers, governmental policies, competitors, industry conditions, technology, and the actions of previous managers  Managers symbolize control and influence through their action.

4. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–4 The Organization’s Culture Organizational CultureOrganizational Culture  A system of shared meanings and common beliefs held by organizational members that determines, in a large degree, how they act towards each other.  “The way we do things around here.”  Values, symbols, rituals, myths, and practices  Implications:  Culture is a perception.  Culture is shared.  Culture is descriptive.

5. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–5 Strong Versus Weak Cultures Strong CulturesStrong Cultures  Are cultures in which key values are deeply and widely held.  Have a strong influence on organizational members. Factors Influencing the Strength of CultureFactors Influencing the Strength of Culture  Size of the organization  Age of the organization  Rate of employee turnover  Strength of the original culture  Clarity of cultural values and beliefs

6. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–6 Benefits of a Strong Culture Creates a stronger employee commitment to the organization.Creates a stronger employee commitment to the organization. Aids in the recruitment and socialization of new employees.Aids in the recruitment and socialization of new employees. Fosters higher organizational performance by instilling and promoting employee initiative.Fosters higher organizational performance by instilling and promoting employee initiative.

7. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–7 Organizational Culture Sources of Organizational CultureSources of Organizational Culture  The organization’s founder  Vision and mission  Past practices of the organization  The way things have been done  The behavior of top management Continuation of the Organizational CultureContinuation of the Organizational Culture  Recruitment of like-minded employees who “fit”  Socialization of new employees to help them adapt to the culture

8. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–8 How Employees Learn Culture StoriesStories  Narratives of significant events or actions of people that convey the spirit of the organization RitualsRituals  Repetitive sequences of activities that express and reinforce the values of the organization Material SymbolsMaterial Symbols  Physical assets distinguishing the organization LanguageLanguage  Acronyms and jargon of terms, phrases, and word meanings specific to an organization

9. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–9 How Culture Affects Managers Cultural Constraints on ManagersCultural Constraints on Managers  Whatever managerial actions the organization recognizes as proper or improper on its behalf  Whatever organizational activities the organization values and encourages  The overall strength or weakness of the organizational culture Simple rule for getting ahead in an organization: Find out what the organization rewards and act accordingly.

10. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–10 Organization Culture Issues Creating an Ethical CultureCreating an Ethical Culture  High in risk tolerance  Low to moderate aggressiveness  Focus on means as well as outcomes Creating an Innovative CultureCreating an Innovative Culture  Challenge and involvement  Freedom  Trust and openness  Idea time  Playfulness/humor  Conflict resolution  Debates  Risk-taking

11. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–11 Exhibit 3–7 Creating a More Ethical Culture Be a visible role model. Communicate ethical expectations. Provide ethics training. Visibly reward ethical acts and punish unethical ones. Provide protective mechanisms so employees can discuss ethical dilemmas and report unethical behavior without fear.

12. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–12 Organization Culture Issues (cont’d) Creating a Customer-Responsive CultureCreating a Customer-Responsive Culture  Hiring the right type of employees (those with a strong interest in serving customers)  Having few rigid rules, procedures, and regulations  Using widespread empowerment of employees  Having good listening skills in relating to customers’ messages  Providing role clarity to employees to reduce ambiguity and conflict and increase job satisfaction  Having conscientious, caring employees willing to take initiative

13. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–13 Spirituality and Organizational Culture Workplace SpiritualityWorkplace Spirituality  The recognition that people have an inner life that nourishes and is nourished by meaningful work that takes place in the context of community. Characteristics of a Spiritual OrganizationCharacteristics of a Spiritual Organization  Strong sense of purpose  Focus on individual development  Trust and openness  Employee empowerment  Toleration of employees’ expression

14. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–14 Benefits of Spirituality Improved employee productivityImproved employee productivity Reduction of employee turnoverReduction of employee turnover Stronger organizational performanceStronger organizational performance Increased creativityIncreased creativity Increased employee satisfactionIncreased employee satisfaction Increased team performanceIncreased team performance Increased organizational performanceIncreased organizational performance

15. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–15 Defining the External Environment External EnvironmentExternal Environment  Those factors and forces outside the organization that affect the organization’s performance. Components of the External EnvironmentComponents of the External Environment  Specific environment: external forces that have a direct and immediate impact on the organization.  General environment: broad economic, socio- cultural, political/legal, demographic, technological, and global conditions that may affect the organization.

16. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–16 Exhibit 3–9The External Environment

17. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–17 How the Environment Affects Managers Environmental UncertaintyEnvironmental Uncertainty  The extent to which managers have knowledge of and are able to predict change their organization’s external environment is affected by:  Complexity of the environment: the number of components in an organization’s external environment.  Degree of change in environmental components: how dynamic or stable the external environment is.

18. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–18 Stakeholder Relationships StakeholdersStakeholders  Any constituencies in the organization’s environment that are affected by the organization’s decisions and actions Why Manage Stakeholder Relationships?Why Manage Stakeholder Relationships?  It can lead to improved organizational performance.  It’s the “right” thing to do, given the interdependence of the organization and its external stakeholders.

19. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 3–19 Managing Stakeholder Relationships 1.Identify the organization’s external stakeholders. 2.Determine the particular interests and concerns of the external stakeholders. 3.Decide how critical each external stakeholder is to the organization. 4.Determine how to manage each individual external stakeholder relationship.

20. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–20 Managing in a Global Environment Chapter 4 Management Stephen P. Robbins Mary Coulter tenth edition

21. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–21 The Global Marketplace Opportunities and ChallengesOpportunities and Challenges  Coping with the sudden appearance of new competitors  Acknowledging cultural, political, and economic differences  Dealing with increased uncertainty, fear, and anxiety  Adapting to changes in the global environment  Avoiding parochialism

22. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–22 What’s Your Global Perspective? ParochialismParochialism  Is viewing the world solely through one’s own eyes and perspectives.  Is not recognizing that others have different ways of living and working.  Is a significant obstacle for managers working in a global business world.  Is falling into the trap of ignoring others’ values and customs and rigidly applying an attitude of “ours is better than theirs” to foreign cultures.

23. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–23 Adopting a Global Perspective Ethnocentric AttitudeEthnocentric Attitude  The parochialistic belief that the best work approaches and practices are those of the home country. Polycentric AttitudePolycentric Attitude  The view that the managers in the host country know the best work approaches and practices for running their business. Geocentric AttitudeGeocentric Attitude  A world-oriented view that focuses on using the best approaches and people from around the globe.

24. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–24 Regional Trading Agreements The European Union (EU)The European Union (EU)  A unified economic and trade entity  Belgium, Denmark, France, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom, Germany, Austria, Finland, and Sweden North American Free Trade Agreement (NAFTA)North American Free Trade Agreement (NAFTA)  Eliminated barriers to free trade (tariffs, import licensing requirements, and customs user fees)  United States, Canada, and Mexico

25. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–25 Regional Trading Agreements U.S.-Central America Free Trade Agreement (CAFTA)U.S.-Central America Free Trade Agreement (CAFTA) Free Trade Area of the AmericasFree Trade Area of the Americas Southern Cone Common Market (Mercosur)Southern Cone Common Market (Mercosur) Association of Southeast Asian Nations (ASEAN)Association of Southeast Asian Nations (ASEAN)  Trading alliance of 10 Southeast Asian nations African UnionAfrican Union South Asian Association for Regional Cooperation (SARRC)South Asian Association for Regional Cooperation (SARRC)

26. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–26 The World Trade Organization (WTO) Evolved from the General Agreement on Tariffs and Trade (GATT) in 1995.Evolved from the General Agreement on Tariffs and Trade (GATT) in 1995. Functions as the only global organization dealing with the rules of trade among nations.Functions as the only global organization dealing with the rules of trade among nations. Has 149 member nations and 32 observer governments.Has 149 member nations and 32 observer governments. Monitors and promotes world trade.Monitors and promotes world trade.

27. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–27 Different Types of International Organizations Multinational Corporation (MNC)Multinational Corporation (MNC)  Maintains operations in multiple countries. Multidomestic CorporationMultidomestic Corporation  Is an MNC that decentralizes management and other decisions to the local country. Global CompanyGlobal Company  Is an MNC that centralizes its management and other decisions in the home country.

28. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–28 Different Types of International Organizations (cont’d) Transnational Corporation (Borderless Organization)Transnational Corporation (Borderless Organization)  Is an MNC that has eliminated structural divisions that impose artificial geographic barriers and is organized along business lines that reflect a geocentric attitude.

29. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–29 Exhibit 4–3How Organizations Go Global

30. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–30 Other Forms of Globalization Strategic AlliancesStrategic Alliances  Partnerships between and organization and a foreign company in which both share resources and knowledge in developing new products or building new production facilities. Joint VentureJoint Venture  A specific type of strategic alliance in which the partners agree to form a separate, independent organization for some business purpose. Foreign SubsidiaryForeign Subsidiary  Directly investing in a foreign country by setting up a separate and independent production facility or office.

31. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–31 Managing in A Global Environment The Legal EnvironmentThe Legal Environment  Stability or instability of legal and political systems  Legal procedures are established and followed  Fair and honest elections held on a regular basis  Differences in the laws of various nations  Effects on business activities  Effects on delivery of products and services

32. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–32 The Economic Environment Economic SystemsEconomic Systems  Free market economy  An economy in which resources are primarily owned and controlled by the private sector.  Planned economy  An economy in which all economic decisions are planned by a central government. Monetary and Financial FactorsMonetary and Financial Factors  Currency exchange rates  Inflation rates  Diverse tax policies

33. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–33 The Cultural Environment National CultureNational Culture  Is the values and attitudes shared by individuals from a specific country that shape their behavior and their beliefs about what is important.  May have more influence on an organization than the organization culture.

34. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–34 Hofstede’s Framework for Assessing Cultures Culture Individualism versus Collectivism Power Distance Uncertainty Avoidance Achievement versus Nurturing Long-Term versus Short-Term Orientation

35. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–35 Exhibit 4–5 Hofstede’s Five Dimensions of National Culture (1) Individualistic — people look after their own and family interests Collectivistic — people expect group to look after and protect them Individualistic Collectivistic United States, Canada Japan Mexico, Thailand Australia (2) High power distance—Accepts wide differences in power, great deal of respect for those in authority Low power distance—Plays down inequalities: employees are not afraid to approach nor are in awe of the boss High power distance Low power distance Mexico, Singapore, Italy, Japan United States, Sweden

36. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–36 Exhibit 4–5 Hofstede’s Five Dimensions of National Culture (3) High uncertainty avoidance—Threatened with ambiguity and experience high levels of anxiety Low uncertainty avoidance— Comfortable with risks; tolerant of different behavior and opinions High uncertainty avoidanceLow uncertainty avoidance Italy, Mexico, France United Kingdom Canada, United States, Singapore (4) Achievement—Values such as assertiveness, acquiring money and goods, and competition prevail Nurturing—Values such as relationships and concern for others prevail Achievement Nurturing United States, Japan, Canada, Greece France, Sweden Mexico

37. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–37 Exhibit 4–5 Hofstede’s Five Dimensions of National Culture (5) Long-term orientation—People look to the future and value thrift and persistence Short-term orientation — People value tradition and the past Short-term thinking Long-term thinking Germany, Australia, China, Taiwan, Japan United States, Canada

38. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 4–38 Global Management in Today’s World ChallengesChallenges  Openness associated with globalization  Significant cultural differences (e.g., Americanization)  Adjusting leadership styles and management approaches RisksRisks  Loss of investments in unstable countries  Increased terrorism  Economic interdependence