1. The Environment and Corporate Culture
Chapter 3

2. Organizational Environment
All elements existing outside the boundary of the organization that have the potential to affect the organization
Manager’s Challenge: IBM, p. 77

3. External Environment General environment – affects indirectly
Task environment
Affects directly
Influences operations and performances
Internal environment – elements within the organization’s boundaries

4. Organizational Environments
Technological
General Environment
Technological
Customers
International
Socio-Cultural
Labor Market
Employees
Task Environment
Competitors
Culture
Management
Suppliers
Internal Environment
Legal/Political
Economic
Suppliers

5. International Dimension
Provides New
Customers
Competitors
Suppliers
Shapes:
Social trends
Technological trends
Economic trends

6. Technological Dimension
Scientific and technological advances
Specific industries
Society at large
Impact
Competition
Relationship with Customers
Medical advances
Nanotechnology advances

7. Socio-Cultural Dimension
Dimension of the general environment
Demographic characteristics
Norms
Customs
Values

8. Key Demographic Trends in U.S.
By 2050 non-Hispanic whites will make up only about half of the population, down from 74% in 1995; and 69% in 2004
Baby boomer generation is aging and losing interest in high-cost goods. Generation Y, rival them in size, will soon rival them in buying power.
The single father household is the fastest growing living arrangement, which rose 62% in 10 years. Two-parent and single-mother households are still much more numerous
Unprecedented demographic shift = married couple households slipped from 80% in 1950s to just over 50% in Couples with kids= 25%, with projection 20% by 2010 and 30% of homes inhabited by someone who lives alone.

9. Economic Dimension General economic health Recent Trends
Consumer purchasing power
Unemployment rate
Interest rates
Recent Trends
Frequency of mergers and acquisitions
Small business sector vitality

10. Task Environment
Sectors that have a direct working relationship with the organization
Customers
Competitors
Suppliers
Labor Market

11. Labor Market Forces 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

12. Adopting to the Environment
Boundary-spanning
Inter-organizational partnerships
Mergers or joint ventures

13. External Environment and Uncertainty
High
Adapt to
Environment
High
Uncertainty
Rate of
Change in
Factors in
Environment
Low
Uncertainty
Low
Low
High
Number of Factors in Organization Environment

14. Competitive Intelligence - CI
What - Activities to get as much information as possible about one’s rivals
Where - Web sites, commercial databases, financial reports, market activities, news clippings, trade publications, personal contacts
Why – Spot potential threats or opportunities
Ethical Dilemma: Competitive Intelligence Predicament, P. 105

15. Interorganizational Partnerships
Shift in paradigm
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 on site
Involvement in partner’s product design and production
Long-term contracts
Business assistance goes beyond the contract

16. Levels of Corporate Culture
Culture that can be seen at the surface level
Visible
1. Artifacts, such as dress, office layout, symbols, slogans, ceremonies
Invisible
Deeper values and shared understandings held by organization members
2. Expressed values, such as “The Penney Idea,” “The HP Way”
3. Underlying assumptions and deep beliefs, such as “people are lazy and can’t be trusted”

17. Visible Manifestations
Symbols
Stories
Heroes
Slogans
Ceremonies

18. Environment and Culture
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
Experiential Exercise: Working in an Adaptive Culture, p. 104

19. Corporate Culture Adaptability
Adaptive Culture
Unadaptive Culture
Visible Behavior
Managers tend to behave somewhat insularly, politically, and bureaucratically. As a result, they do not change their strategies quickly to adjust to or take advantage of changes in their business environments.
Managers pay close attention to all their constituencies, especially customers, and initiate change when needed to serve their legitimate interests, even if it entails taking some risks.
Managers care deeply about customers, stockholders, and employees. They strongly value people and processes that can create useful change (e.g., leadership initiatives up and down the management hierarchy).
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 much more highly than leadership initiatives.
Expressed Values
Source: John P. Kotter and Jmaes L. Heskett, Corporate Culture and Performance (New York, The Free Press, 1992), 51.

20. Four Types of Corporate Cultures
Needs of the Environment
Flexibility
Stability
External
Achievement Culture
Adaptability Culture
Strategic Focus
Involvement Culture
Consistency Culture
Internal

21. Cultural Leadership Articulates a vision that employees can believe in
Defines and communicates central values that employees believe in
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

22. High-Performance Culture
Creating and maintaining a high-performance culture in today’s turbulent environment and changing workplace is not easy.
Managers widely communicate their cultural values through their words and particularly their actions
Value statements that are not reinforced by management behavior are meaningless or even harmful for employees and the organization
Cultural leaders uphold their commitment to values during difficult times or crises.