Chapter 3

ORGANIZATIONAL
CULTURE AND
ENVIRONMENT:
THE CONSTRAINTS
© Prentice Hall, 2002

3-1
Learning Objectives
You should learn to:
– Differentiate the symbolic from the omnipotent
view of management
– Define orga...
Learning Objectives (cont.)
You should learn to:
– Explain how culture constrains managers
– Describe the various componen...
The Manager: Omnipotent Or Symbolic?
Omnipotent View of Management
– managers are directly responsible for an organization...
Parameters of Managerial Discretion

Organizational Culture

© Prentice Hall, 2002

Managerial
Discretion

Organization’s ...
The Organization’s Culture
What is Organizational Culture?
– A system of shared meaning and beliefs held by
organizational...
EXHIBIT 3.2: DIMENTIONS OF ORGANIZATIONAL CULTURE

© Prentice Hall, 2002

3-7
The Organization’s Culture (cont.)
Strong Versus Weak Cultures
– in strong cultures, the key values are deeply held and
wi...
The Organization’s Culture (cont.)
The Source of Culture
– usually reflects the vision or mission of the founder
• founder...
The Organization’s Culture (cont.)
How Culture Affects Managers
– establishes appropriate managerial behavior
– constrains...
The External Environment
General
Environment
Suppliers

Customers

The
Organization
Public
Pressure
Groups

Competitors

S...
The Environment
Defining the External Environment
– External environment - forces and institutions outside the
organizatio...
The Environment (cont.)
– External environment (cont.)
• General environment - includes the broad conditions
that may affe...
EXHIBIT 3.6: SELECTED U.S. LEGISLATION AFFECTING BUSINESS

© Prentice Hall, 2002

3-14
The Environment (cont.)
– External environment (cont.)
• General environment (cont.)
– Sociocultural conditions - expectat...
The Environment (cont.)
– External environment (cont.)
• General environment (cont.)
– Technological conditions - most rap...
The Environment (cont.)
How the Environment Affects Managers
– Assessing environmental uncertainty - determined by:
• degr...
EXHIBIT 3.7: ENVIRONMENTAL UNCERTAINTY MATRIX

© Prentice Hall, 2002

3-18
The Environment (cont.)
Stakeholder Relationship Management
– Who are stakeholders?
• any constituencies that are affected...
The Environment (cont.)
Stakeholder Relationship Management (cont.)
– Why is stakeholder relationship management
important...
EXHIBIT 3.8: ORGANIZATIONAL STAKEHOLDERS

© Prentice Hall, 2002

3-21
The Environment (cont.)
Stakeholder Relationship Management (cont.)
– How can these relationships be managed?
• four steps...
EXHIBIT 3.9: MANAGING STAKEHOLDER RELATIONSHIPS

© Prentice Hall, 2002

3-23
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  1. 1. Chapter 3 ORGANIZATIONAL CULTURE AND ENVIRONMENT: THE CONSTRAINTS © Prentice Hall, 2002 3-1
  2. 2. Learning Objectives You should learn to: – Differentiate the symbolic from the omnipotent view of management – Define organizational culture – Identify the seven dimensions that make up an organization’s culture and how these dimensions reflect the organization’s personality – Explain how cultures can be strong or weak – Describe the various ways that employees learn culture © Prentice Hall, 2002 3-2
  3. 3. Learning Objectives (cont.) You should learn to: – Explain how culture constrains managers – Describe the various components in an organization’s specific and general environments – Contrast certain and uncertain environments – Identify the various stakeholders with whom managers have to deal – Clarify how managers manage relationships with external stakeholders © Prentice Hall, 2002 3-3
  4. 4. The Manager: Omnipotent Or Symbolic? Omnipotent View of Management – managers are directly responsible for an organization’s success • if the organization performs poorly, managers will be held accountable Symbolic View of Management – the actual part that managers play in organizational success or failure is minimal – managers must create meaning out of randomness, confusion, and ambiguity Reality Suggests a Synthesis – managers are neither helpless nor all powerful © Prentice Hall, 2002 3-4
  5. 5. Parameters of Managerial Discretion Organizational Culture © Prentice Hall, 2002 Managerial Discretion Organization’s Environment 3-5
  6. 6. The Organization’s Culture What is Organizational Culture? – A system of shared meaning and beliefs held by organizational members that determines, in large degree, how they act • a common perception • individuals describe organizational culture in similar terms • a descriptive term – composite picture of organizational culture may be derived from seven dimensions • organization’s personality often shaped by one of these dimensions © Prentice Hall, 2002 3-6
  7. 7. EXHIBIT 3.2: DIMENTIONS OF ORGANIZATIONAL CULTURE © Prentice Hall, 2002 3-7
  8. 8. The Organization’s Culture (cont.) Strong Versus Weak Cultures – in strong cultures, the key values are deeply held and widely shared – strong cultures have greater influence on employees than do weak cultures – employees more committed to organizations with strong cultures – strong cultures are associated with high organizational performance – most organizations have moderate to strong cultures © Prentice Hall, 2002 3-8
  9. 9. The Organization’s Culture (cont.) The Source of Culture – usually reflects the vision or mission of the founder • founders project image of what the organization should be How Employees Learn Culture – Stories - a narrative of significant events or people – Rituals - repetitive sequences of activities – Material symbols – essential in creating an organization’s personality. – Language - identifies members of a culture • organizations develop unique terminology or jargon © Prentice Hall, 2002 3-9
  10. 10. The Organization’s Culture (cont.) How Culture Affects Managers – establishes appropriate managerial behavior – constrains decision making in all management functions • Planning - degree of risk that plans should contain – how much environmental scanning is necessary • Organizing - degree of autonomy given to employees – degree of interdepartmental interaction • Leading - degree of concern for job satisfaction – what leadership styles are appropriate • Controlling - reliance on external or internal controls – what performance criteria to use © Prentice Hall, 2002 3-10
  11. 11. The External Environment General Environment Suppliers Customers The Organization Public Pressure Groups Competitors Specific Environment © Prentice Hall, 2002 3-11
  12. 12. The Environment Defining the External Environment – External environment - forces and institutions outside the organization that may affect organizational performance • Specific environment - includes those constituencies that have a direct and immediate impact on managers’ decisions and actions – directly relevant to goal achievement – is unique to each organization, including: » customers - absorb organization’s output » suppliers - provide material and equipment » competitors - influence of Internet » pressure groups - special-interest groups © Prentice Hall, 2002 3-12
  13. 13. The Environment (cont.) – External environment (cont.) • General environment - includes the broad conditions that may affect organizations – Economic conditions - interest rates, changes in disposable income, and stage of the business cycle – Legal conditions - federal, state, and local regulation » substantial expense entailed to meet regulations » limit choices available to organizations – Political conditions - general stability of country » attitudes of governmental officials toward business © Prentice Hall, 2002 3-13
  14. 14. EXHIBIT 3.6: SELECTED U.S. LEGISLATION AFFECTING BUSINESS © Prentice Hall, 2002 3-14
  15. 15. The Environment (cont.) – External environment (cont.) • General environment (cont.) – Sociocultural conditions - expectations of society » values, customs, and tastes – Demographic conditions - trends in the physical characteristics of a population » e.g., “baby boomers” influential because of their numbers » e.g., “digital” or “net” generation - immersion and acceptance of computers © Prentice Hall, 2002 3-15
  16. 16. The Environment (cont.) – External environment (cont.) • General environment (cont.) – Technological conditions - most rapidly changing aspect of the general environment » changing the ways that organizations are structured » information is the basis of important competitive advantages – Global conditions - increasing number of global competitors and consumer markets » major factor affecting organizations © Prentice Hall, 2002 3-16
  17. 17. The Environment (cont.) How the Environment Affects Managers – Assessing environmental uncertainty - determined by: • degree of unpredictable change – dynamic - frequent change – stable - minimal change • environmental complexity – the number of components in the environment – amount of information available or required about those components • managers attempt to minimize uncertainty © Prentice Hall, 2002 3-17
  18. 18. EXHIBIT 3.7: ENVIRONMENTAL UNCERTAINTY MATRIX © Prentice Hall, 2002 3-18
  19. 19. The Environment (cont.) Stakeholder Relationship Management – Who are stakeholders? • any constituencies that are affected by the organization’s decisions and actions –include internal and external groups –can influence the organization © Prentice Hall, 2002 3-19
  20. 20. The Environment (cont.) Stakeholder Relationship Management (cont.) – Why is stakeholder relationship management important? • the more secure the relationship, the more influence managers will have over organizational outcomes • it’s the “right” thing to do © Prentice Hall, 2002 3-20
  21. 21. EXHIBIT 3.8: ORGANIZATIONAL STAKEHOLDERS © Prentice Hall, 2002 3-21
  22. 22. The Environment (cont.) Stakeholder Relationship Management (cont.) – How can these relationships be managed? • four steps – identify the stakeholders – determine real and potential concerns of each stakeholder group – determine whether stakeholder is critical – determine specific approach to manage the relationship • approach to a stakeholder group based on the importance of the group and the degree of environmental uncertainty © Prentice Hall, 2002 3-22
  23. 23. EXHIBIT 3.9: MANAGING STAKEHOLDER RELATIONSHIPS © Prentice Hall, 2002 3-23
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