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The Environment andCorporate Culture
The Environment andCorporate Culture
CHAPTER 3CHAPTER 3
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2 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.
Learning ObjectivesLearning Objectives
Describe the general and task environments
and the dimensions of each.
Explain the strategies managers use to help
organizations adapt to an uncertain or turbulent
environment.
Define corporate culture and give organizational
examples.
Explain organizational symbols, stories, heroes,
slogans, and ceremonies and their relationship
to corporate culture.
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3 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.
Learning Objectives (contd.)Learning Objectives (contd.)
Describe how corporate culture relates to the
environment.
Define a cultural leader and explain the tools a
cultural leader uses to create a high-
performance culture.
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4 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.
Organizational EnvironmentOrganizational Environment
All elements existing outside the
boundary of the organization that have
the potential to affect the organization
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5 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.
External EnvironmentExternal Environment
General environment affects indirectly
Task environment- Affects directly
- Influences operations and performances
Internal environment elements within theorganizations boundaries
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6 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.
Organizational EnvironmentsOrganizational Environments
Exhibit 3.1
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International DimensionInternational Dimension
Portion of the external
environment that represents
events originating in foreign
countries as well as opportunities
for U.S. companies in other
countries.
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Technological DimensionTechnological Dimension
Scientific and technological advances Specific industries
Society at large Impact
Competition
Relationship with Customers
Medical advances
Nanotechnology advances
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Socio-Cultural DimensionSocio-Cultural Dimension
Dimension of the generalenvironment Demographic characteristics Norms
Customs Values
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Economic DimensionEconomic Dimension
General economic health Consumer purchasing power
Unemployment rate Interest rates
Recent Trends Frequency of mergers and
acquisitions
Small business sector vitality
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Legal-Political DimensionLegal-Political Dimension
Dimension of the general environment
that includes federal, state, and local
government regulations and politicalactivities designed to influence company
behavior.
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Task EnvironmentTask Environment
Sectors that have a direct working
relationship with the organization
Customers Competitors
Suppliers
Labor Market
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Labor Market ForcesLabor 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
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Adapting to the EnvironmentAdapting to the Environment
Boundary-spanning
Inter-organizational partnerships
Mergers and joint ventures
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15 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.
External Environment and UncertaintyExternal Environment and Uncertainty
Number of Factors in Organization Environment
Adapt to
EnvironmentHighUncertainty
Low
Uncertainty
HighLowLow
High
Rate of
Change in
Factors in
Environment
Exhibit 3.3
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16 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.
Interorganizational PartnershipsInterorganizational Partnerships
Shift in paradigm to a partnership orientation 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 partners product design and production
Long-term contracts
Business assistance goes beyond the contract
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17 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.
CultureCulture
The set of key values, beliefs,
understandings, and norms that
members of an organization share.
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18 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.
Levels of Corporate CultureLevels of Corporate Culture
Visible
1. Artifacts, such as dress, office
layout, symbols, slogans,
ceremonies
2. Expressed values, such as The
Penney Idea, The HP Way3. Underlying assumptions and deep
beliefs, such as people are lazy
and cant be trusted
Invisible
Culture
that can be
seen at the
surface
level
Deeper values
and shared
understandings
held by
organization
members
Exhibit 3.5
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19 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.
Visible ManifestationsVisible Manifestations
Symbols
Stories
Heroes
Slogans
Ceremonies
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21 Copyright 2008 by South-Western, a division of Thomson Learning. All rights reserved.
Corporate Culture AdaptabilityCorporate Culture Adaptability
Adaptive Culture Unadaptive Culture
Visible Behavior
Expressed Values
Managers pay close attention to
all their constituencies, especially
customers, and initiate change
when needed to serve theirlegitimate 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 thatwork group. They value the orderly
and risk-reducing management
process much more highly than
leadership initiatives.
Source: John P. Kotter and James L. Heskett, Corporate Culture and Performance (New York, The Free Press, 1992), 51.
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Four Types of Corporate CulturesFour Types of Corporate Cultures
Adaptability
Culture
Achievement
Culture
Consistency
Culture
Involvement
Culture
External
Internal
Flexibility Stability
Str
ategi c
Focus
Needs of the Environment
Exhibit 3.7
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24 Copyright 2008 by South Western a division of Thomson Learning All rights reserved
Cultural LeadershipCultural Leadership
Articulates a visionthat employees canbelieve in Defines and communicates central values
that employees believe in
Values are tied to a clear and compellingmission, or core purpose
Heeds the day-to-day activities thatreinforce the cultural vision workprocedures and reward systems match and reinforce thevalues
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