Management 12e richard draft chapter 03
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Chapter 3
The Environment and Corporate Culture
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The External Environment
The elements of the world constantly change
The external organizational environment includes all outside
elements that affect the organization
General environment:
Affects organizations indirectly
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The External Environment
Task environment:
Sectors that conduct transactions with the organization
Organizational ecosystem:
Formed by the interaction among a community of organizations in the
environment
Internal environment:
Elements within the organization boundaries
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3.1 - The General, Task, and Internal
Environments
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3.2 Sample
External
Environment
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General Environment: International
Managers must consider the international dimension
Events originating in foreign countries
New opportunities for U.S. companies in other countries
New competitors, suppliers, customers
New technological, social, and economic trends
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Technological
Massive advancements in a specific industry and society
Advances drive competition and help innovative companies gain market
share
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Sociocultural
Demographic characteristics, norms,
customs, and values
Connected Generation or Generation Z has woven technology into
every aspect of life
Widespread social equality
Growing diversity has implications for business
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Economic
Economic health of the country/region
Extended globally with uncertainty
Consumer purchasing power
Unemployment rate
Interest rates
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Legal-Political
Government regulation; state, local, and federal
Political activities
Government agencies and regulation
Managers work with lawmakers, educating them about
products and services
legislation’s impact on their business strategies
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Natural
Organizations must be sensitive to the environment
Growing importance and pressure
Natural dimension does not have own voice
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Natural
Environmental groups advocate action/policy
Reduce pollution
Develop renewable energy
Global warming
Sustainable use of scarce resources
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3.3 Environmental
Performance Index
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Organization-Environment Relationship
The environment creates uncertainty for managers
Managers must respond and design adaptive organizations
Uncertainty – managers do not have sufficient information about
environmental factors to understand and predict environmental needs
and changes
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3.4 External Environment
and Uncertainty
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Adapting to the Environment
Boundary-spanning roles – link and coordinate the organization with
external environment, seek:
Business intelligence
Big Data analytics
Interorganizational partnerships – reduce boundaries and begin
collaborating with other organizations
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Adapting to the Environment
Mergers – occurs when two or more organizations combine to become
one
Joint ventures – strategic alliance or program by two or more
organizations
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3.5 The Shift to a
Partnership Paradigm
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The Internal Environment: Corporate Culture
Corporate culture is the set of key values, beliefs, understandings, and
norms that members of an organization share
Symbols
Stories
Heroes
Slogans
Ceremonies
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3.6 Levels of Corporate Culture
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3.7 Four Types of
Corporate Culture
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Shaping Corporate Culture for Innovative
Response
Corporate culture plays a key role in learning and innovate responses to:
Threats from the external environment
Challenging new opportunities
Organizational crises
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Managing the High-Performance Culture
Bottom-line strategies are successful in the short term
Successful companies balance culture and business performance
Culture is the “glue” that holds the organization together
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High-Performance Culture
Based on solid organizational mission/purpose
Shared adaptive values that guide decisions and practices
Encourages individual employee ownership
Bottom-line results
Organization’s culture
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3.8 Combining Culture
and Performance
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