The Environment and Corporate Culture

Environment Organizations are open systems which import information from its environment and use double loop learning to adapt the organization to changes in the environment.

External environment –General Environment International Technological Sociocultural Economic Legal-Political

International environment Globalization Global competition Cross cultural dynamics Are the theories and practices of American management compatible in other countries?

Technological Technology is rapidly changing the business environment –Information and communications –Technology pertaining to speicific industries –The interaction of technology and people – socio technical systems

Sociocultural Population distribution Population density Age Education levels

Economic Consumer purchasing power Unemployment Interest rates Fuel prices Competition from other countries

Legal political OSHAEPA Law suits Consumer protection laws Product safety Information and labeling

External Environment Driving Forces have an impact over time Examples Health consciousness Political conservatism Computerization Demographic shifts toward Asian and Hispanic minorities The baby boom generation

Task Environment The five forces Model of Porter –Customers –Suppliers –Competitors –Substitiutes –New Entrants

Relationship of the company to its environment Organic organization – open system Mechanistic-closed system

How organizations react to environmental changes Open systems maintain relationships with their environments and react to changes (effectiveness) Environmental Scanning –Detects changes in the environment over time.

How organizations influence environmental changes Advertising –Change demand for product Public Relations –Change the image of the company Political Activity and trade organizations –Influence the legal and politcal environment

Internal environment –Culture Technology Structure Physical facilities Employees –Culture Technology Structure Physical facilities Employees Management

Internal environment Physical Structure –Plants –Sales Offices –Showrooms –Computer network –ICT Social Structure –Formal –Informal

Internal environment The Social Structure Formal Social Structure –Official documents Org charts BilawsBudgets –Contractual Boundaries DepartmentsSub-departments

Internal environment The Social Structure Informal Structure –Rules of behavior –Shared meaning –Corporate culture

Corporate Culture

Defined as: Key values, beliefs, understanding and norms shared by members of the organization It is their shared reality

Embodied superficially by: Visible artifacts –dress –patterns of behavior –symbols –ceremonies –layout

Embodied at a deeper level by StoriesLanguageMyths Heroes

There are different types of cultures but it is crucial that the culture be adaptive to the changes in the environment less the organization become extinct e.g. the dinosaur

Types of Cultures

Adaptability Culture If the environment requires fast response and high risk decision making Managers encourage values that support ability to detect, interpret and translate signals from the environment into responsive behavior

Achievement Culture Environment requires high level of service over a long time without much change Results oriented excellence. Achieve difficult ambitious targets

Clan Culture If we keep our people happy, and help get their needs met, they will meet the needs of a changing environment. Focus on cooperation, consideration, no status differences

Bureaucratic Culture Focus inward Less concern about the environment and more about following the rules Thrifty, orderly way of doing things

Changing demands for managing corporate culture Culture the glue that holds the organization together By definition, shared values and realities must be shared Dissemination of culture is done by –Picking the right people who will fit into the corporate value system –Socializing people