1. Chapter 4: Environment and Organizational Culture
PowerPoint Presentation to Accompany Management, 9/e John R. Schermerhorn, Jr.
Chapter 4: Environment and Organizational Culture
Prepared by: Jim LoPresti
University of Colorado, Boulder
Published by: John Wiley & Sons, Inc.

2. Planning Ahead — Chapter 4 Study Questions
What is the external environment of organizations?
What is a customer-driven organization?
What is organizational culture?
How is diversity managed in a multicultural organization?
Management 9/e - Chapter 4

3. Study Question 1: What is the external environment of organizations?
Competitive advantage is a core competency that clearly sets an organization apart from competitors and gives it an advantage over them in the marketplace.
Management 9/e - Chapter 4

4. Study Question 1: What is the external environment of organizations?
Companies may achieve competitive advantage in many ways, including:
Products
Pricing
Customer service
Cost efficiency
Quality
Management 9/e - Chapter 4

5. 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
Socio-cultural
Legal-political
Technological
Natural environment
Management 9/e - Chapter 4

6. 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
Management 9/e - Chapter 4

7. Management 9/e - Chapter 4
Figure 4.1 Stakeholder analysis of value creation for key constituencies of a business firm: an open-systems approach.
Management 9/e - Chapter 4

8. Study Question 1: What is the external environment of organizations?
Environmental uncertainty is a lack of complete information regarding what exists and what developments may occur in the external environment.
Two dimensions of environmental uncertainty:
Complexity
Rate of change
Management 9/e - Chapter 4

9. Study Question 2: What is a customer-driven organization?
External customers purchase the organization’s goods or utilize its services.
Internal customers are the persons and groups within an organization who depend on the results of others' work to do their own jobs.
Management 9/e - Chapter 4

10. Study Question 2: What is a customer-driven organization?
Customers want:
High quality.
Low price.
On-time delivery.
Key customer service lessons:
Protect reputation for quality products.
Treat customers right.
Management 9/e - Chapter 4

11. Study Question 2: What is a customer-driven organization?
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 is the strategic management of all operations relating to an organization’s resource suppliers.
Management 9/e - Chapter 4

12. Study Question 3: What is organizational culture?
Organizational culture is the system of shared beliefs and values that develops within an organization and guides the behavior of its members.
Management 9/e - Chapter 4

13. Study Question 3: What is 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 9/e - Chapter 4

14. Study Question 3: What is 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 9/e - Chapter 4

15. Study Question 3: What is organizational culture?
What is observable culture?
What one sees and hears when walking around an organization.
Elements of observable culture:
Stories
Heroes
Rites and rituals
Symbols
Management 9/e - Chapter 4

16. Management 9/e - Chapter 4
Figure 4.2 Levels of organizational culture—observable culture and core culture.
Management 9/e - Chapter 4

17. Study Question 3: What is organizational culture?
What is the core culture?
Underlying assumptions and beliefs that influence behavior and contribute to the observable culture.
Core culture and values:
Strong cultures have a small but enduring set of core values.
Commitment to core values is a key to long-term success.
Management 9/e - Chapter 4

18. Study Question 3: What is organizational culture?
Important cultural values include:
Performance excellence
Innovation
Social responsibility
Integrity
Worker involvement
Customer service
Teamwork
Management 9/e - Chapter 4

19. Study Question 3: What is 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 9/e - Chapter 4

20. Study Question 3: What is 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 9/e - Chapter 4

21. Study Question 3: What is organizational culture?
S-C-O-R-E-S
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 9/e - Chapter 4

22. Management 9/e - Chapter 4
Study Question 4: How is diversity managed in a multicultural organization?
Diversity:
Describes differences among people at work.
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 9/e - Chapter 4

23. Management 9/e - Chapter 4
Study Question 4: How is diversity managed in a multicultural organization?
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 9/e - Chapter 4

24. Management 9/e - Chapter 4
Study Question 4: How is diversity managed in a multicultural organization?
Characteristics of multicultural organizations:
Pluralism
Structural integration
Informal network integration
Absence of prejudice and discrimination
Minimum intergroup conflict
Management 9/e - Chapter 4

25. Management 9/e - Chapter 4
Study Question 4: How is diversity managed in a multicultural organization?
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 9/e - Chapter 4

26. Management 9/e - Chapter 4
Study Question 4: How is diversity managed in a multicultural organization?
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.
Management 9/e - Chapter 4

27. Management 9/e - Chapter 4
Figure 4.3 Glass ceilings as barriers to women and minority cultures in traditional organizations.
Management 9/e - Chapter 4

28. Management 9/e - Chapter 4
Study Question 4: How is diversity managed in a multicultural organization?
Diversity leadership approaches:
Managing diversity commits to changing the organizational culture.
Affirmative action commits the organization to hiring and advancing minorities and women.
Valuing diversity commits the organization to education and training programs.
Management 9/e - Chapter 4

29. Management 9/e - Chapter 4
Figure 4.4 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 9/e - Chapter 4

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