Chapter 3 the environment and corporate culture

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Chapter 3 the environment and corporate culture

  1. 1. The Environment and Corporate Culture Chapter 3
  2. 2. Organizational Environment  All elements existing outside the boundary of the organization that have the potential to affect the organization Manager’s Challenge: IBM, p. 77 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.2
  3. 3. External Environment ● General environment – affects indirectly ● Task environment - Affects directly - Influences operations and performances ● Internal environment – elements within the organization’s boundaries Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.3
  4. 4. Technological Organizational Environments Technological General Environment Soc al Customers io-C ation Labor Market Competitors ultu n es Inter Task ral Cu e oy ltu Environment pl re Em Management Le ga Suppliers l /P ic Internal ol om iti ca on Environment l Ec Suppliers Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.4
  5. 5. International Dimension ● Provides New • Customers • Competitors • Suppliers ● Shapes: • Social trends • Technological trends • Economic trends Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.5
  6. 6. Technological Dimension  Scientific and technological advances – Specific industries – Society at large  Impact – Competition – Relationship with Customers – Medical advances – Nanotechnology advances Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.6
  7. 7. Socio-Cultural Dimension  Dimension of the general environment – Demographic characteristics – Norms – Customs – Values Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.7
  8. 8. Key Demographic Trends in U.S. ● By 2050 non-Hispanic whites will make up only about half of the population, down from 74% in 1995; and 69% in 2004 ● Baby boomer generation is aging and losing interest in high- cost goods. Generation Y, rival them in size, will soon rival them in buying power. ● The single father household is the fastest growing living arrangement, which rose 62% in 10 years. Two-parent and single-mother households are still much more numerous ● Unprecedented demographic shift = married couple households slipped from 80% in 1950s to just over 50% in 2003. Couples with kids= 25%, with projection 20% by 2010 and 30% of homes inhabited by someone who lives alone. Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.8
  9. 9. Economic Dimension ● General economic health ● Consumer purchasing power ● Unemployment rate ● Interest rates ● Recent Trends ● Frequency of mergers and acquisitions ● Small business sector vitality Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.9
  10. 10. Task Environment Sectors that have a direct working relationship with the organization ● Customers ● Competitors ● Suppliers ● Labor Market Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.10
  11. 11. Labor 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 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.11
  12. 12. Adopting to the Environment  Boundary-spanning employees  Inter-organizational partnerships  Mergers or joint ventures Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.12
  13. 13. Competitive Intelligence - CI  What - Activities to get as much information as possible about one’s rivals  Where - Web sites, commercial databases, financial reports, market activities, news clippings, trade publications, personal contacts  Why – Spot potential threats or opportunities Ethical Dilemma: Competitive Intelligence Predicament, P. 105 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.13
  14. 14. Interorganizational Partnerships Shift in paradigm ● 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 partner’s product design and production ● Long-term contracts ● Business assistance goes beyond the contract Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.14
  15. 15. Culture  The set of key values, beliefs, understandings and norms that members of an organization share Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.15
  16. 16. Levels of Corporate Culture Culture that can be Visible seen at the 1. Artifacts, such as dress, office surface layout, symbols, slogans, level ceremonies Invisible 2. Expressed values, such as “The Deeper values Penney Idea,” “The HP Way” and shared understandings 3. Underlying assumptions and deep held by beliefs, such as “people are lazy organization and can’t be trusted” members Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.16
  17. 17. Visible Manifestations  Symbols  Stories  Heroes  Slogans  Ceremonies Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.17
  18. 18. Environment and Culture  A big influence on internal corporate culture is the external environment  Cultures can vary widely across organizations  Organizations within same industry reveal similar cultural characteristics Experiential Exercise: Working in an Adaptive Culture, p. 104 Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.18
  19. 19. Corporate Culture Adaptability Adaptive Culture Unadaptive Culture Visible Behavior Managers pay close attention to Managers tend to behave all their constituencies, especially somewhat insularly, politically, and customers, and initiate change bureaucratically. As a result, they when needed to serve their do not change their strategies legitimate interests, even if it quickly to adjust to or take entails taking some risks. advantage of changes in their business environments. Managers care deeply about Managers care mainly about Expressed Values customers, stockholders, and themselves, their immediate work employees. They strongly value group, or some product (or people and processes that can technology) associated with that create useful change (e.g., work group. They value the orderly leadership initiatives up and down and risk-reducing management the management hierarchy). process much more highly than leadership initiatives. Source: John P. Kotter and Jmaes L. Heskett, Corporate Culture and Performance (New York, The Free Press, 1992), 51. Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.19
  20. 20. Four Types of Corporate Cultures Needs of the Environment Flexibility Stability External Achievement Adaptability Culture Strategic Focus Culture Involvement Consistency Culture Culture Internal Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.20
  21. 21. Cultural Leader ● A manager who uses signals and symbols to influence corporate culture Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.21
  22. 22. Cultural Leadership ● Articulates a vision that employees can believe in ● Defines and communicates central values that employees believe in ● Values are tied to a clear and compelling mission, or core purpose ● Heeds the day-to-day activities that reinforce the cultural vision – work procedures and reward systems match and reinforce the values Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.22
  23. 23. High-Performance Culture Creating and maintaining a high-performance culture in today’s turbulent environment and changing workplace is not easy. – Managers widely communicate their cultural values through their words and particularly their actions – Value statements that are not reinforced by management behavior are meaningless or even harmful for employees and the organization – Cultural leaders uphold their commitment to values during difficult times or crises. Copyright © 2005 by South-Western, a division of Thomson Learning. All rights reserved.23

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