Chapter 3 the environment and corporate culture

The Environment and Corporate Culture

Cha

pter

3

Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.

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

Management

Empl

oyee

s Culture

Internal Environment

Suppliers

Co

mp

etitors

CustomersL

abo

r M

arke

t

Legal/Political Economic

Technological

Socio-C

ulturalIn

tern

atio

nal

General Environment

Task Environment

Technological

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 2003. 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● 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 employees Inter-organizational partnerships Mergers or joint ventures


13

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


14

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


Culture

The set of key values, beliefs, understandings and norms that members of an organization share

15


16

Levels of Corporate Culture

Visible1. Artifacts, such as dress, office

layout, symbols, slogans, ceremonies

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”

Invisible

Culture that can be seen at the surface level

Deeper values and shared understandings held by organization members


17

Visible Manifestations

SymbolsStoriesHeroesSlogansCeremonies


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 AdaptabilityAdaptive Culture Unadaptive Culture

Visible Behavior

Expressed Values

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 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 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.

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

Adaptability Culture

Achievement Culture

Consistency Culture

Involvement Culture

External

Internal

Flexibility Stability

Str

ateg

ic F

ocu

s

Needs of the Environment


Cultural Leader

21

● A manager who uses signals and symbols to influence corporate culture


22

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


23

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.

Chapter 3 the environment and corporate culture

Business

Transcript of Chapter 3 the environment and corporate culture