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© 2012 Cengage Learning
Organizational Environments and Cultures
3
© 2012 Cengage Learning
1. discuss how changing environments affect organizations
2. describe the four components of the general environment
3. explain the five components of the specific environment
4. describe the process that companies use to make sense of their changing environments
5. explain how organizational cultures are created and how they can help companies be successful
External Environments
1.discuss how changing environments affect organizations
2.describe the four components of the general environment
3.explain the five components of the specific environment
4.describe the process that companies use to make sense of their changing environments
© 2012 Cengage Learning
Environmental Change
The rate at which a company’s general and specific environments change.
•Stable– slow rate of change
•Dynamic – fast rate of change
© 2012 Cengage Learning
Punctuated Equilibrium Theory
© 2012 Cengage Learning
Stability
Dynamic Change
Stability
Dynamic Change Dynamic
Change
Environmental Complexity
• Simple – few environmental factors that affect
organizations
• Complex– many environmental factors that affect
organizations
© 2012 Cengage Learning
Resource Scarcity
The abundance or shortage of critical resources in an organization’s external
environment.
© 2012 Cengage Learning
Uncertainty
The extent to which managers can understand or predict the external changes
and trends affecting their business.
© 2012 Cengage Learning
Environmental Change, Environmental Complexity, and Resource Scarcity
© 2012 Cengage Learning
General Environment
• General environment– the economy and the technological,
sociocultural, and political/legal trends that indirectly affect all organizations
• Specific environment– unique to a firm’s industry– directly affects the way its conducts daily
business
© 2012 Cengage Learning
General and Specific Environments
© 2012 Cengage Learning
Economy
• A growing economy provides a favorable environment for business growth.
• Business confidence indices show how confident managers are about future business growth.
© 2012 Cengage Learning
Technological Component
• Technology– an umbrella term for the knowledge, tools,
and techniques used to transform inputs into outputs
Changes in technology can help companies provide better products or produce their
products more efficiently.
© 2012 Cengage Learning
Sociocultural Component
• Demographic characteristics, general behavior, attitudes, and beliefs of people in a particular society
© 2012 Cengage Learning
Demographics: Percentage of Married Women (with Children) Who Work
© 2012 Cengage Learning
Political/Legal Component
• The legislation, regulations, and court decisions that govern and regulate business behavior
• Many managers are unaware of the potential legal risks associated with traditional managerial decisions like recruiting, hiring, and firing employees.
© 2012 Cengage Learning
Specific Environment
• Customers• Competitors• Suppliers• Industry regulations• Advocacy groups
© 2012 Cengage Learning
Customer Component
• Reactive customer monitoring– Identifying and addressing customer trends
and problems after they occur
• Proactive customer monitoring– Identifying and addressing customer needs,
trends, and issues before they occur
© 2012 Cengage Learning
Competitor Component
• Competitors– companies in the same industry that sell
similar products or services
• Competitive analysis– a process of monitoring the competition that
involves identifying competition, anticipating their moves, and determining their strengths and weaknesses
© 2012 Cengage Learning
Supplier Component
• Suppliers– companies that provide material, human,
financial, and informational resources to other companies
Supplier dependencevs.
Buyer dependence
© 2012 Cengage Learning
Behaviors
• Opportunistic behavior– when one party benefits at the expense of
another
• Relationship behavior– focuses on establishing a mutually
beneficial, long-term relationship between buyers and sellers
© 2012 Cengage Learning
Industry Regulation Component
Regulations and rules that govern the practices and procedures of specific
industries, businesses, and professions
© 2012 Cengage Learning
Federal Regulatory Agencies and Commissions
• Consumer Product Safety Commission• Department of Labor• Environmental Protection Agency• Equal Employment Opportunity Commission• Federal Communications Commission• Federal Reserve System• Federal Trade Commission• Food and Drug Administration• National Labor Relations Board• Occupational Safety and Health
Administration• Securities and Exchange Commission
© 2012 Cengage Learning
Advocacy Groups
Concerned citizens who band together to try to influence the business practices of specific
industries, businesses, and professions
•Public communication
•Media advocacy
•Product boycott
© 2012 Cengage Learning
Environmental Scanning
Searching the environment for important events or issues that might affect an
organization.
•Managers scan the environment to reduce uncertainty.•Organizational strategies affect environmental scanning.•Environmental scanning contributes to organizational performance.
© 2012 Cengage Learning
Interpreting Environmental Factors
• Threat or opportunity?
• Threat– managers typically take steps to protect the
company from further harm
• Opportunity– managers consider strategic alternatives for
taking advantage of those events to improve performance
© 2012 Cengage Learning
Acting on Threats and Opportunities: Cognitive Maps
© 2012 Cengage Learning
Internal Environments
5. explain how organizational cultures are created and how they can help companies be successful
© 2012 Cengage Learning
Creation and Maintenance of Organizational Cultures
• Primary source of organizational culture is the company founder.
• Organizational culture is sustained by…– organizational stories– organizational heroes
© 2012 Cengage Learning
Keys to an Organizational Culture that Fosters Success
© 2012 Cengage Learning
Three Levels of Organizational Culture
© 2012 Cengage Learning
Changing Organizational Cultures
• Behavioral addition
• Behavioral substitution
• Change visible artifacts
• Hiring people with values and beliefs consistent with desired culture
© 2012 Cengage Learning
<click screenshot for video>
REELTOREAL
Charlie Wilson’s War
1. This chapter discussed organizational culture as having three levels of visibility. Visible artifacts are at the first level and are the easiest to see. Which visible artifacts did you observe in this sequence?
2. Values appear at the next level of organizational culture. You can infer a culture’s values from the behavior of organizational members. Which values appear in this sequence?
3. Organizational members will unconsciously behave according to the basic assumptions of an organization’s culture. You also infer these from observed behavior. Which basic assumptions appear in this sequence?
© 2012 Cengage Learning
<click screenshot for video>
REELTOREAL
Camp Bow Wow
1. What aspects of Camp Bow Wow’s corporate culture reflect the surface level of the organizational culture? What aspects reflect the values and beliefs? What aspects reflect the unconsciously held assumptions and beliefs.
2. Why did Camp Bow Wow have to change its culture when it became a national franchise?
3. What impact does Heidi Ganahl’s personal story have on employees at Camp Bow Wow?
© 2012 Cengage Learning