fundamental of management. lecture 2

Lecture 3Corporate Culture and The Environment

The elements of the world constantly change• The external organizational environment includes

all outside elements that effect the organization• General Environment:– Outer layer that directly affects organization

• Task Environment:– Sectors that conduct transactions with the organization

• Internal Environment:– Elements within the organization boundaries

The External Environment

3.1 The General, Task, and Internal Environments

• Globalization influences all other aspects of the external environment

– New competitors, customers, suppliers

– Changes in social, technological, and economic trends

• All organizations must compete and think globally

• Economic power has shifted to China and India

• The global environment is complex and ever-changing

General Environment: International

Massive changes for organizations

The tool for doing business

Advances are impacting organizations and managers

Technological

Demographic characteristics, norms, customs, and values

U.S. Population is aging

Large influx of immigrants

Generation Y is entering the workplace

Sociocultural

• Economic health of the country/region

– Extended globally with uncertainty

• Consumer purchasing power

• Unemployment rate

• Economic shift impacted small business although there is still vitality in small business

Economic

• Government regulation; state, local, and federal– Political activities– Government agencies and regulation

• Managers must recognize the power of pressure groups– Work to influence companies to behave in a socially

responsible way

Legal-Political

• Growing importance and pressure

• Organizations must be sensitive to the environment

• Natural dimension does not have own voice

• Environmental groups advocate action/policy

– Reduce pollution

– Develop renewable energy

– Climate change/global warming

Natural

Customers

Competitors

Suppliers

Labor Market

Task Environment

3.2 Environmental Performance Index

The environment creates uncertainty for managers

Managers must respond and design adaptive organizations

Uncertainty can be managed through effectiveness

Organization-Environment Relationship

3.3 Sample External Environment

SOURCES: “Chinese Ministry of Railways Chooses Nortel Mobile Network,” M2Presswire (January 29, 2008); Nortel Web site, http:www.nortel.com (accessed May 12, 2010); J. Weber with A. Reinhardt and P. Burrows, “Racing Ahead at Nortel,” BusinessWeek (November 8, 1999): 93–99; “Nortel’s Waffling Continues: First Job Cuts, Then Product Lines, and Now the CEO,” Telephony (May 21, 2001): 12; and M. Heinzl, “Nortel’s Profits of 499 Million Exceeds Forecast,” The Wall Street Journal, January 30, 2004.

3.4 External Environment and Uncertainty

Boundary-spanning roles – link and coordinate the organization with external environment, seek:• Business intelligence

• Competitive intelligence

Interorganizational partnerships – reduce boundaries and begin collaborating with other organizations

Mergers/joint ventures – legal combination of operations; legal collaboration for specific project

Adapting to the Environment

3.5 The Shift to a Partnership Paradigm

Corporate culture is the set of key values, beliefs, understandings, and norms that members of an

organization share

Symbols

Stories

Heroes

Slogans

Ceremonies

The Internal Environment: Corporate Culture

3.6 Levels of Corporate Culture

3.7 Four Types of Corporate Cultures

• Corporate culture plays a key role in learning and innovate responses

• Bottom-line strategies are successful in the short-term

• Successful companies balance culture and performance

• Culture is the “glue” that holds the organization together

Shaping Corporate Culture for Innovative Response

Based on solid organizational mission/purpose

Shared adaptive values that guide decisions and practices

Encourages individual employee ownership– Bottom-line results– Organization’s culture

High Performance Culture

3.8 Combining Culture and Performance

Articulate a vision for the organizational culture that employees can believe in

Heeds the day-to-day activities that reinforce the cultural vision

Leaders communicate through words and actions

Cultural Leadership

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