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The Environment and
Corporate Culture
CHAPTER 3
Are You Fit for Managerial
chapter3
Uncertainty?
• The environment in which businesses operate
is increasingly dynamic
• Some managers cannot respond to
environmental surprises
• In an uncertain environment, managers need
to facilitate new thinking, new ideas and new
ways of working
2
chapter3 External Environment
Factors external to
the organizations
have been primarily
the focus of
management as a
discipline.
Press A for True
Press B for False
3
chapter3 International Dimension
• 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
4
chapter3 Technological Dimension
• Scientific and technological advances
– Specific industries
• Desktop computers
– Society at large
• Networks
• Impact: • Internet Access
– Organizations • Handheld devices
• Videoconferencing
– Managers
• Cell phones
– Customers • Laptop
• WiFi
• Medical advances
5
chapter3 Socio-Cultural Dimension
• Today’s demographics Anyone considering doing
business in China, according to
are the foundation of Manager's Shoptalk in Chapter
the future workforce 3, should keep in mind all of
the following rules except:
• Demographic trends a. Business is always
affect organizations personal
b. Don't skip the small talk
globally Norms
Customs
c. Remember that
relationships are not short-
Values of population
Geographical
term
Distribution d. Be efficient with use of time
Population Density e. Make contact frequently
Age 6
Education Levels
chapter3 Economic Dimension
● General economic health
● Consumer purchasing power
Customers and
● Unemployment rate competitors are two
● Interest rates important sectors of
the economic
dimension of a firm's
● Recent Trends general environment.
● Frequency of mergers and Press A for True
acquisitions Press B for False
● Small business sector vitality
7
chapter3 Legal-Political Dimension
• 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
8
chapter3 Natural Dimension
• Growing importance and pressure
• Concern for the environment
• The natural dimension has no voice
• Pressure comes from advocacy groups and
managers
– Eliminate non-biodegradable plastic bags from the
environment
– Improving efficiency of plants and factories
– Investing in cleaner technologies 9
Environmental
chapter3
Performance Index
2010Yale
Center for
Environmental
Law and Policy
Covering
environmental
public health
and eco system
vitality
10
chapter3 Task Environment
Sectors that have a direct working relationship with
the organization:
Customers Changes in
these various
Competitors sectors can
create
Suppliers tremendous
challenges…
Labor Market
11
chapter3 External Environment
Integrated Computers,
Inc. wants to compile a
profile of the customer it
will target in its next
promotional mailing.
What environment
would this be found in?
a. Internal
environment
b. Task environment
c. Work environment
d. General
environment
e. None of these 12
chapter3 Environmental Uncertainty
13
Adapting to the
chapter3
Environment
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 14
chapter3 Partnership Paradigm
15
The Internal Environment:
chapter3
Corporate Culture
• Corporate culture should match the needs of the external
environment
• The importance of corporate culture has been growing
• Culture is the set of key values, beliefs, understandings, and
norms that members of an organization share
• “how things are done”
Symbols, stories, heroes, slogans, and ceremonies
combine to create an organization's culture.
Press A for True
Press B for False
16
chapter3 Culture
• Symbols
• Stories
• Heroes
• Slogans
• Ceremonies
17
Four Types of
chapter3
Corporate Culture
18
Shaping Corporate Culture
chapter3
for Innovative Response
• 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 19
Combining Culture and
chapter3
Performance
What is likely to happen
to organizations that pay
little attention to cultural
values and instead
stress business results?
a. Unlikely to survive
for long
b. No help for
performance during
hard times
c. Profitable in short
run but difficult to
sustain over long
term
d. High performance
e. None of these 20
chapter3 Cultural Leadership
• Articulate a vision for the organizational culture
that employees can believe in
• The cultural leader heeds the day-to-day
activities that reinforce the cultural vision
• Managers communicate the cultural values
through words and actions
• Cultural leaders uphold their commitment to
values during difficult times
21
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