The Environment and Corporate Culture

EnvironmentOrganizations 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 EnvironmentInternationalTechnologicalSocioculturalEconomicLegal-Political

International environment

GlobalizationGlobal competitionCross cultural dynamicsAre 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 distributionPopulation densityAgeEducation levels

Economic

Consumer purchasing powerUnemploymentInterest ratesFuel pricesCompetition from other countries

Legal political

OSHAEPALaw suitsConsumer protection lawsProduct safetyInformation and labeling

External EnvironmentDriving Forces have an impact over time

ExamplesHealth consciousnessPolitical conservatismComputerizationDemographic shifts toward Asian and

Hispanic minoritiesThe 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

– CultureTechnologyStructurePhysical facilitiesEmployeesManagement

Internal environment

Physical Structure– Plants– Sales Offices– Showrooms– Computer network– ICTSocial Structure– Formal – Informal

Internal environmentThe Social Structure

Formal Social Structure– Official documents

Org charts BilawsBudgets

– Contractual BoundariesDepartmentsSub-departments

Internal environmentThe 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 organizationIt is their shared reality

Embodied superficially by:

Visible artifacts – dress– patterns of behavior– symbols– ceremonies– layout

Embodied at a deeper level by

StoriesLanguageMythsHeroes

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 makingManagers 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 changeResults 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 inwardLess concern about the environment and more about following the rulesThrifty, orderly way of doing things

Changing demands for managing corporate culture

Culture the glue that holds the organization togetherBy definition, shared values and realities must be sharedDissemination of culture is done by – Picking the right people who will fit into

the corporate value system– Socializing people