the environment and corporate culture

The Environment and Corporate Culture

The Environment and Corporate Culture

CHAPTER 3CHAPTER 3

Copyright © 2008 by South-Western, a division of Thomson Learning. All rights reserved.2

Learning ObjectivesLearning 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.


Learning Objectives (contd.)Learning Objectives (contd.)

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.


Organizational EnvironmentOrganizational Environment

All elements existing outside the boundary of the organization that have the potential to affect the organization


External EnvironmentExternal Environment

● General environment – affects indirectly

● Task environment- Affects directly- Influences operations and

performances

● Internal environment – elements within the organization’s boundaries


Organizational EnvironmentsOrganizational Environments

Exhibit 3.1


International DimensionInternational Dimension

● Portion of the external environment that represents events originating in foreign countries as well as opportunities for U.S. companies in other countries.


Technological DimensionTechnological Dimension

Scientific and technological advances– Specific industries– Society at large

Impact– Competition– Relationship with Customers– Medical advances– Nanotechnology advances


Socio-Cultural DimensionSocio-Cultural Dimension

Dimension of the general environment– Demographic characteristics– Norms– Customs– Values


Economic DimensionEconomic Dimension

● General economic health● Consumer purchasing power● Unemployment rate● Interest rates

● Recent Trends● Frequency of mergers and

acquisitions● Small business sector vitality


Legal-Political DimensionLegal-Political Dimension

Dimension of the general environment that includes federal, state, and local government regulations and political activities designed to influence company behavior.


Task EnvironmentTask Environment

Sectors that have a direct working relationship with the organization

● Customers● Competitors● Suppliers● Labor Market


Labor Market ForcesLabor 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


Adapting to the EnvironmentAdapting to the Environment

Boundary-spanning Inter-organizational partnerships Mergers and joint ventures


External Environment and UncertaintyExternal Environment and Uncertainty

Number of Factors in Organization Environment

Adapt toEnvironmentHigh

Uncertainty

LowUncertainty

HighLowLow

High

Rate ofChange inFactors in

Environment

Exhibit 3.3


Interorganizational PartnershipsInterorganizational Partnerships

Shift in paradigm to a partnership orientation● 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 on site● Involvement in partner’s product design and

production● Long-term contracts● Business assistance goes beyond the contract


CultureCulture

The set of key values, beliefs, understandings, and norms that members of an organization share.


Levels of Corporate CultureLevels of Corporate Culture

Visible1. 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

Exhibit 3.5


Visible ManifestationsVisible Manifestations

SymbolsStoriesHeroesSlogansCeremonies


Environment and CultureEnvironment 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


Corporate Culture AdaptabilityCorporate Culture Adaptability

Adaptive Culture Unadaptive Culture

Visible Behavior

Expressed Values

Managers pay close attention to all their constituencies, especially customers, and initiate change when needed to serve their legitimate interests, even if it entails taking some risks.

Managers tend to behave somewhat insularly, politically, and bureaucratically. As a result, they do not change their strategies quickly to adjust to or take advantage of changes in their business environments.

Managers care deeply about customers, stockholders, and employees. They strongly value people and processes that can create useful change (e.g., leadership initiatives up and down the management hierarchy).

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 much more highly than leadership initiatives.

Source: John P. Kotter and James L. Heskett, Corporate Culture and Performance (New York, The Free Press, 1992), 51.


Four Types of Corporate CulturesFour Types of Corporate Cultures

Adaptability Culture

Achievement Culture

Consistency Culture

Involvement Culture

External

Internal

Flexibility Stability

Str

ateg

ic F

ocu

sNeeds of the Environment

Exhibit 3.7


High-Performance CultureHigh-Performance Culture

A culture that Is based on a solid organizational mission or

purpose Embodies shared adaptive values that guide

decisions and business practices, and Encourages individual employee ownership of

both bottom-line results and the organization’s cultural backbone


Cultural LeadershipCultural Leadership

● Articulates a vision that employees can believe in ● Defines and communicates central values

that employees believe in● 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

the environment and corporate culture

Technology

organization environment

environment exhibit

environment boundary

turbulent environment

internal corporate culture

highperformance culture

invisible culture

external environment