1. The Environment and Corporate Culture
Chapter 3
The Environment and Corporate Culture

2. The External 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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

3. 3.1 The General, Task, and Internal Environments
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

4. General Environment: International
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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

5. Technological Massive changes for organizations
The tool for doing business
Advances are impacting organizations and managers
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

6. Demographic characteristics, norms, customs, and values
Sociocultural
Demographic characteristics, norms, customs, and values
U.S. Population is aging
Large influx of immigrants
Generation Y is entering the workplace
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

7. Economic 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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

8. Legal-Political 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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

9. Natural 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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

10. Task Environment Customers Competitors Suppliers Labor Market
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

11. 3.2 Environmental Performance Index
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

12. Organization-Environment Relationship
The environment creates uncertainty for managers
Managers must respond and design adaptive organizations
Uncertainty can be managed through effectiveness
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

13. 3.3 Sample External Environment
SOURCES: “Chinese Ministry of Railways Chooses Nortel Mobile Network,” M2Presswire 
(January 29, 2008); Nortel Web site, (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.
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

14. 3.4 External Environment and Uncertainty
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

15. Adapting to the Environment
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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

16. 3.5 The Shift to a Partnership Paradigm
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

17. 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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

18. 3.6 Levels of Corporate Culture
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

19. 3.7 Four Types of Corporate Cultures
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

20. Shaping Corporate Culture for Innovative Response
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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

21. 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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

22. 3.8 Combining Culture and Performance
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.

23. Leaders communicate through words and actions
Cultural Leadership
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
Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved.