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Chapter 2
The Environment and Corporate Culture
General EnvironmentGeneral Environment
The layer of the The layer of the external external environment environment that affects the that affects the organization organization indirectly.indirectly.
General EnvironmentGeneral Environment
Task EnvironmentTask Environment
TechnologicalTechnologicalIn
tern
atio
nal
Inte
rnat
iona
l Socio
cultural
So
ciocultural
Economic
Economic
Legal/Political
Legal/Political
The layer of the external The layer of the external environment that directly environment that directly influences the influences the organization’s operations organization’s operations and performance.and performance.
General EnvironmentGeneral Environment
Task EnvironmentTask Environment
TechnologicalTechnologicalIn
tern
atio
nal
Inte
rnat
iona
l Socio
cultural
So
ciocultural
Economic
Economic
Legal/Political
Legal/Political
CustomersCustomers
SuppliersSuppliers
ManagementManagementLab
or
Mar
ket
Lab
or
Mar
ket C
om
petitio
nC
om
petitio
nEmployeesEmployees CultureCulture
Organization’s Organization’s Internal Internal
EnvironmentEnvironment
The Organization-Environment Relationship
Three Strategies for Coping with High
Uncertainty
1. Adapt the organization to the changes in the environment
2. Influence the environment to make it more compatible with organizational needs.
3. Moving from one environment to another (“Domain Shift”)
Adapting to the Environment
Boundary-spanning roles link and coordinate the organization with key elements in the external environment
Forecasting = spotting trends that enable managers to predict future events
Flexible structure---Organic (non-bureaucratic) structure
Has few rules and regulations
Decentralized Decision Making
Mergers and Joint Ventures Also Reduce
Uncertainty
Merger occurs when two or more organizations combine to become one
Joint venture is a strategic alliance by two or more organizations.
Influencing the Environment
Advertising
Public relations
Political activity
Trade associations
Domain Shifts
Acquisitions
Divestures
New Product Creation
Old Product Discontinuance
Geographical Moves
Corporate Culture
Key values, beliefs, understandings, and norms shared by members of an organization.
VisibleVisible
Artifacts such as dress, Artifacts such as dress, office layout, symbols, office layout, symbols, slogans, ceremoniesslogans, ceremonies
InvisibleInvisible
Expressed values such as “The Expressed values such as “The Penney Idea,” “The H-P Way”Penney Idea,” “The H-P Way”
Underlying assumptions and deep Underlying assumptions and deep beliefs such as “people are lazy beliefs such as “people are lazy and can’t be trusted”and can’t be trusted”
Culture that can be seen at the surface levelCulture that can be seen at the surface level
Deeper values and shared understandings held by Deeper values and shared understandings held by organization members.organization members.
Types of CulturesThere are many classification systems,
including those based on:
Risk Tolerance
Communication Patterns
Types of Control
Coordination Techniques
Reward Systems
Open-Systems Focus
Four Types of Corporate Cultures
Four Types of Corporate Cultures
Fast-Changing External EnvironmentFast-Changing External EnvironmentAdaptability CultureAdaptability Culture
Puts customers first, stressing Puts customers first, stressing innovation, risk taking, innovation, risk taking, Little stress on people, teamwork Little stress on people, teamwork
Involvement CultureInvolvement CultureEmphasizes employee participation in Emphasizes employee participation in determining changes in response determining changes in response to the environment to the environmentMuch stress on employee well-being,Much stress on employee well-being,
teamwork teamwork
Four Types of Corporate Cultures
Stable External EnvironmentStable External EnvironmentAchievement CultureAchievement Culture
Puts customers first, stressing Puts customers first, stressing competition, hard work competition, hard work
Consistency CultureConsistency CultureEmphasizes following rules, being carefulEmphasizes following rules, being careful
High-Performance Culture
Based on solid mission / clear agreed upon purpose
Fast changing environment provides opportunities
Has shared adaptive values
Employee involvement encouraged
(i.e., Balances needs of Customers and needs of Employees
Sources of Culture
Founder
Change Agents
Experience
National, Regional Culture
Why Change a Culture?
To keep up with the competition
To meet customer needs
Your company is doing poorly
Your company is growing rapidly
Maintaining/Changing Culture
Cultural LeadershipCommunicate
Reward
Set Examples