The Environment and Corporate Culture

1
Chapter 2

• The Environment and Corporate Culture

2
General Environment
The layer of the external environment that
affects the organization indirectly.
3
General Environment
Technological
Task Environment
International
The layer of the external environment that
directly influences the organizations operations
and performance.
Sociocultural
Legal/Political
Economic
4
General Environment
Technological
Task Environment
International
Customers
Sociocultural
Organizations Internal Environment
Labor Market
Competition
Employees
Culture
Management
Suppliers
Legal/Political
Economic
5
The Organization-Environment Relationship
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Three Strategies for Coping with High Uncertainty

• 1. Adapt the organization to the changes in the
  environment
• 2. Influence the environment to make it more
  compatible with organizational needs.
• 3. Moving from one environment to another
  (Domain Shift)

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Adapting to the Environment

• Boundary-spanning roles link and coordinate the
  organization with key elements in the external
  environment
• Forecasting spotting trends that enable
  managers to predict future events
• Flexible structure---
• Organic (non-bureaucratic) structure
• Has few rules and regulations
• Decentralized Decision Making

8
Mergers and Joint Ventures Also Reduce Uncertainty

• Merger occurs when two or more organizations
  combine to become one
• Joint venture is a strategic alliance by two or
  more organizations.

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Influencing the Environment

• Advertising
• Public relations
• Political activity
• Trade associations

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Domain Shifts

• Acquisitions
• Divestures
• New Product Creation
• Old Product Discontinuance
• Geographical Moves

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Corporate Culture

• Key values, beliefs, understandings, and norms
  shared by members of an organization.

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Culture that can be seen at the surface level
Visible
Artifacts such as dress, office layout, symbols,
slogans, ceremonies
Invisible
Expressed values such as The Penney Idea, The
H-P Way Underlying assumptions and deep beliefs
such as people are lazy and cant be trusted
Deeper values and shared understandings held by
organization members.
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Types of Cultures

• There are many classification systems, including
  those based on
• Risk Tolerance
• Communication Patterns
• Types of Control
• Coordination Techniques
• Reward Systems
• Open-Systems Focus

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Adaptive vs. Unadaptive Cultures

• Adaptive
• Managers care about customers, stockholders, and
  employees.
• They value people and processes that can bring
  about useful change.

• Unadaptive
• Managers care mainly about themselves, their
  immediate work group, or some product or
  technology.
• They value stability and risk-reduction.

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Sources of Culture

• Founder
• Change Agents
• Experience
• National, Regional Culture

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Why Change a Culture?

• To keep up with the competition
• To meet customer needs
• Your company is doing poorly
• Your company is growing rapidly

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Maintaining/Changing Culture

• Cultural Leadership
• Communicate
• Reward
• Set Examples