Chapter 2: The Environment and Corporate Culture

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Chapter 2The Environment and Corporate Culture
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Learning Objectives
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• 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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Organizational Environment
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• All elements existing outside the boundary of the
  organization that have the potential to affect
  the organization

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External Environment
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• General Environment
• Affects the organization indirectly
• Task Environment
• Directly influences operations and performances
• Internal Environment
• elements within the organizations boundaries

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Organizational Environments
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Exhibit 2.1
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International Dimension
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• 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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Technological Dimension
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• Scientific and technological advances
• Specific industries
• Society at large

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

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Socio-Cultural Dimension
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• 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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Economic Dimension
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• Economic health
• Consumer purchasing power
• Unemployment rate
• Interest rates
• Recent Trends
• Frequency of mergers and acquisitions
• Small business sector vitality

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Legal-Political Dimension
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• 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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Task Environment
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• Sectors that have a direct working relationship
  with the organization
• Customers
• Competitors
• Suppliers
• Labor Market

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Labor Market Forces
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• 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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External Environment and Uncertainty
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Exhibit 2.3
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Adapting to the Environment
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• Boundary-spanning
• Internet
• Business Intelligence
• Inter-organizational partnerships
• From Adversary to Partnerships
• Mergers and joint ventures
• Beyond Strategic Partnerships

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Shift to a Partnership Paradigm
From Adversarial To Relationship Orientation
Orientation

• Suspicion, competition, arms 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 partners product design and
  production

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

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Levels of Corporate Culture
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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 cant be
trusted
Deeper values and shared understandings held by
organization members
Exhibit 2.5
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Visible Manifestations
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• Symbols
• Stories
• Heroes
• Slogans
• Ceremonies

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Environment and Culture
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• 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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Corporate Culture Adaptability
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Adaptive Culture
Unadaptive Culture
Managers tend to behave somewhat insularly,
politically, and bureaucratically. As a result,
they do not change their strategies quickly.
Visible Behavior
Managers pay close attention to all their
constituencies, especially customers, and
initiate change when needed to serve their
legitimate interests.
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.
Managers care deeply about customers,
stockholders, and employees. They strongly value
people and processes that can create useful
change.
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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Four Types of Corporate Cultures
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Needs of the Environment
Flexibility
Stability
External
Achievement Culture
Adaptability Culture
Strategic Focus
Involvement Culture
Consistency Culture
Internal
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High-Performance Culture
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• 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 organizations
  cultural backbone

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Combining Culture and Performance
Exhibit 2.6
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Cultural Leadership
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• 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