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Chapter 3The Environment and Corporate Culture
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
The External Environment
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3.1 The General, Task, and Internal Environments
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• 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
General Environment: International
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Massive changes for organizations
The tool for doing business
Advances are impacting organizations and managers
Technological
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Demographic characteristics, norms, customs, and values
U.S. Population is aging
Large influx of immigrants
Generation Y is entering the workplace
Sociocultural
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• 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
Economic
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• 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
Legal-Political
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• 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
Natural
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Customers
Competitors
Suppliers
Labor Market
Task Environment
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3.2 Environmental Performance Index
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The environment creates uncertainty for managers
Managers must respond and design adaptive organizations
Uncertainty can be managed through effectiveness
Organization-Environment Relationship
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3.3 Sample External Environment
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SOURCES: “Chinese Ministry of Railways Chooses Nortel Mobile Network,” M2Presswire (January 29, 2008); Nortel Web site, http:www.nortel.com (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.
3.4 External Environment and Uncertainty
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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
Adapting to the Environment
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3.5 The Shift to a Partnership Paradigm
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The Internal Environment: Corporate Culture
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3.6 Levels of Corporate Culture
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3.7 Four Types of Corporate Cultures
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• 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
Shaping Corporate Culture for Innovative Response
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Based on solid organizational mission/purpose
Shared adaptive values that guide decisions and practices
Encourages individual employee ownership– Bottom-line results– Organization’s culture
High Performance Culture
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3.8 Combining Culture and Performance
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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
Cultural Leadership
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