Organizational Culture & Environment

THE ENVIRONMENT

Principle elements of a business organization’s environment

Macroenviroment

Microenvironment

1. Internal environment

2. External environment

Types of Business Environment

1. Internal environment => all functions within a firm

2. External environment => all forces and events outside organization affect on its activitiesMacro environment: not immediately

affect firm’s activitiesMicro environment: directly affect the

firm’s activities

External Environment

Factors and forces outside the organization that affect the organization’s performance

There are 2 main components: › Specific Environment› General Environment

Specific Environment (Direct or Micro Environment)

Includes external forces that directly impact managers’ decision and actions and are directly relevant to the achievement of organization’s goals

Main Forces of Specific Environment

Customers Suppliers Competitors Pressure Groups

General Environment (Macro Environment)

Includes broad factors affect not only one specific organization but they also affect other organizations involve with those environment, thus managers must take these environment into consideration when they do planning, organizing, leading, and controlling

General Environment Factors

Economic Conditions Political/Legal Conditions Sociocultural Conditions Demographic Conditions Technological Conditions Global Conditions

General Environment Factors

Economic Conditions: GDP growth rate, interest rate, inflation rate, exchange rate, minimum wage rate, etc.

Political/Legal Conditions Sociocultural Conditions Demographic Conditions Technological Conditions Global Conditions

General Environment Factors

Economic Conditions

Political/Legal Conditions: political stability, corruption, government policy, labor law, tax law, environment law, etc.

Sociocultural Conditions Demographic Conditions Technological Conditions Global Conditions

General Environment Factors

Economic Conditions Political/Legal Conditions

Sociocultural Conditions: social value, life style, educational standard, language literacy, health concern, social problems, etc.

Demographic Conditions Technological Conditions Global Conditions

General Environment Factors

Economic Conditions Political/Legal Conditions Sociocultural Conditions

Demographic Conditions: gender, age, educational level, geographic location, income, etc.

Technological Conditions Global Conditions

General Environment Factors

Economic Conditions Political/Legal Conditions Sociocultural Conditions Demographic Conditions

Technological Conditions: telecommunication technology, alternative energy technology, technology development and transfer, etc.

Global Conditions

General Environment Factors

Economic Conditions Political/Legal Conditions Sociocultural Conditions Demographic Conditions Technological Conditions

Global Conditions: WTO, IMF, international conflict, FTA, trading blocs, etc.

Internal Environment

Includes internal factors drive organization to its goals which consist of:

1. System2. Internal stakeholders3. Facility4. Organizational culture

Internal Environment Factors

1. System: functions or departments within organization i.e. system of marketing, operation, human resources, accounting, finance, and information

Manager must concern: goal and plan of each system within org. thoroughly, resources are needed for each system, and how well each system coordinate to each other.

Internal Environment Factors (Con’t)

2. Internal stakeholders: shareholders, board of directors, employees

Manager must clearly understand: role, responsibility, and expectation of each stakeholder within organization

[*Board of directors is a group of people elected by the owners of a business entity who have decision-making authority, voting authority, and specific responsibilities which in each case is separate and distinct from the authority and responsibilities of owners and managers of the business entity]

Source: http://en.wikipedia.org/

Internal Environment Factors (Con’t)

3. Facility: equipments, tools, building, plant, location

Manager need to provide proper facilities are needed for employees and also need to concern with the budget are provided by organization

4. Organizational culture

ORGANIZATIONAL CULTURE

What is organizational culture?

The shared values, principles, traditions, and ways of doing things that influence the way organizational member act.

The specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization.*

*Source: http://en.wikipedia.org/wiki/Organizational_culture

Organizational Culture Sample

Symbols

Organizational Culture Sample

Stories

It was first established in the King Chulalongkorn (Rama V) period and was established to be the higher education institution in the King Vajiravudh (Rama VI) period.

Organizational Culture Sample

Rites & Ceremonies

WaiKru Ceremony & New Students Welcoming Activities

Organizational Culture Sample

Values

Seniority system among students and staff.

Organizational Culture Sample

Beliefs

Members in CU believe in virtues of the King Chulalongkorn (Rama V) and Thai royal families.

Organizational Culture Sample

Norms

First year student uniform:Male: CU NecktieFemale: White shoes & socks

7 Dimensions of Organizational Culture

1. Attention to detail: need to provide detailed data to support the decision making ?

2. Outcome orientation: focus on results (ends) or processes or methods (means) ?

3. People orientation: all decision making concerns effect on people in organization ?

4. Team orientation: work teams or individuals ?

5. Aggressiveness: competitive working environment or cooperative ?

6. Stability: focus on maintaining the current org. status ?

7. Innovation and risk taking: encourage creative decision and adapt to change ?

Strong Versus Weak Cultures

Strong Cultures Weak CulturesValues widely shared Values limited to a few people—

usually top management

Culture conveys consistent messages about what’s important

Culture sends contradictory messages about what’s important

Most employees can tell stories about company history/heroes

Employees have little knowledge of company history or heroes

Employees strongly identify with culture

Employees have little identification with culture

Strong connection between shared values and behaviors

Little connection between shared values and behaviors

Importance of Strong Culture

Employee are more loyal.

High organizational performance. (If values are clear and widely accepted, employees know what they’re supposed to do & what’s expected of them they can act quickly to take care of problems.)

However,…

Strong culture might prevent employees from trying new approaches, especially when conditions are changing rapidly.

Managerial Decisions Affected by Culture

Planning

› The degree of risk plan should contain› Whether plans should be developed by

individuals or teams

Managerial Decisions Affected by Culture (Con’t)

Organizing

› How much autonomy should be designed into employees’ jobs

› Whether tasks should be done by individuals or in teams

› The degree to which department managers interact with each other

Managerial Decisions Affected by Culture (Con’t)

Leading

› The degree to which managers are concerned with increasing employee job satisfaction

› What leadership styles are appropriate

Managerial Decisions Affected by Culture (Con’t)

Controlling

› Whether to impose external controls or to allow employees to control their own actions

› What criteria should be emphasized in employee performance evaluations

Social Responsibility and Managerial Ethics

External Stakeholders and Corporate Responsibilities

Source: Based on the Caux Round Table’s Principles for Business. The principles are printed in Business Ethics magazine, 52 S. 10th St. #110, Minneapolis, MN 55403.

What could be the impact of not being a social responsible organization?