Organizational Environments  and Cultures Prepared by Deborah Baker Texas Christian University Chapter  3 Management 4th E...
What Would You Do? <ul><li>Obesity is at epic proportions, with 66 percent of Americans overweight </li></ul><ul><li>Fast ...
External Environments After reading the next four sections,  you should be able to: <ul><li>discuss how changing environme...
Changing Environments 1 Environmental Change Environmental Complexity Resource Scarcity Uncertainty Characteristics of Cha...
Environmental Change 1.1 <ul><li>Environmental Change is the rate at which a company’s environments change  </li></ul><ul>...
Punctuated Equilibrium:  U.S. Airline Industry 1.1
Environmental Complexity 1.2 <ul><ul><li>Simple environments Complex environments </li></ul></ul><ul><li>Environmental Com...
Resource Scarcity 1.3 Resource Scarcity   The degree to which an organization’s external environment has an abundance  or ...
Natural  Resources There is general concern over the scarcity of natural resources. Companies like Weyerhauser work extra ...
Uncertainty 1.4
External Environment 2
Components of the  General Environment <ul><li>Economy </li></ul><ul><li>Technological trends </li></ul><ul><li>Sociocultu...
Economy <ul><li>Growing vs. shrinking economies </li></ul><ul><li>Predicting future economic activity </li></ul><ul><li>Bu...
Technological Component 2.2 Information Output Input Technology-- Knowledge Tools Techniques Raw  Materials Services Produ...
Impact of Technology <ul><li>Technology can be a great benefit or a daunting threat.  MP3 players have created a tremendou...
Sociocultural Component <ul><li>Sociocultural Components </li></ul><ul><ul><li>Demographic changes </li></ul></ul><ul><ul>...
Demographics Example 2.3
Political / Legal Component <ul><li>Legislation </li></ul><ul><li>Regulations </li></ul><ul><li>Court decisions  </li></ul...
Specific Environment 3 Customer Competitor Supplier Industry Regulation Advocacy Group
Customer Component <ul><li>Reactive customer monitoring </li></ul><ul><ul><li>responding to problems,  trends, and events ...
Competitor Component 3.2 Competitive Analysis Deciding who your competitors are Anticipating competitors’ moves Determinin...
Supplier Component 3.3 Opportunistic Behavior Suppliers Buyer  Dependence Supplier  Dependence Relationship Behavior
Supplier Dependence
Industry Regulation Component 3.4 Industry Regulation Consists of regulations and rules that govern the business practices...
Federal Regulation Agencies 3.4 Consumer Product  Safety Commission http://www.cpsc.gov Department of Labor http://www.dol...
Cost of Compliance <ul><li>Researchers studied U.S. manufacturers and the cost they incur complying with the 25 major fede...
Dealing with Gifts and Suppliers 3 <ul><li>Guidelines to Avoid Conflicts of Interest </li></ul><ul><li>There’s no such thi...
Advocacy Groups 3.5 <ul><li>Advocacy Groups </li></ul><ul><li>Groups of concerned citizens who band together to try to inf...
Advocacy Groups PETA is a well-known advocacy group that attempts to influence consumers and companies to pursue animal-fr...
Making Sense of  Changing Environments Acting on  Threats and Opportunities Interpreting  Environmental Factors Environmen...
Environmental Scanning <ul><li>Environmental scanning:  </li></ul><ul><ul><li>searching the environment for  events or iss...
Interpreting Environmental Factors 4.2 Environmental Scan Opportunities? Threats?
Acting on Threats  and Opportunities 4.3 <ul><li>Cognitive Maps </li></ul><ul><ul><li>simplified models of external enviro...
Cognitive Maps 4.3
Internal Environments After reading this section,  you should be able to: <ul><li>explain how organizational cultures are ...
Internal Environments 5 <ul><li>Internal Environment  </li></ul><ul><li>Consists of the trends and events  within  an orga...
Creation and Maintenance of  Organizational Cultures 5.1 Organizational Heroes Organizational Stories Company Founder
Successful Organizational Cultures Adapted from Exhibit 3.7 D.R. Denison & A.K. Mishra, Organization Science 6 (1995): 204...
Levels of Organizational Culture <ul><li>Symbolic artifacts </li></ul><ul><li>Behaviors </li></ul>1.  Surface Level SEEN <...
Changing Organizational Cultures <ul><li>Behavioral addition  </li></ul><ul><ul><li>is the process of having managers and ...
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Chapter 3 Organizational Environments and Cultures

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Management 4th Edition written by Chuck Williams

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Chapter 3 Organizational Environments and Cultures

  1. 1. Organizational Environments and Cultures Prepared by Deborah Baker Texas Christian University Chapter 3 Management 4th Edition Chuck Williams
  2. 2. What Would You Do? <ul><li>Obesity is at epic proportions, with 66 percent of Americans overweight </li></ul><ul><li>Fast food restaurants are faced with lawsuits, regulation, and complaints </li></ul><ul><li>Healthier cooking techniques costs more with less tasty results </li></ul>Wendy’s International Headquarters Should Wendy’s pay attention to activists— or give customers what they want?
  3. 3. External Environments After reading the next four sections, you should be able to: <ul><li>discuss how changing environments affect organizations. </li></ul><ul><li>describe the four components of the general environment. </li></ul><ul><li>explain the five components of the specific environment </li></ul><ul><li>describe the process that companies use to make sense of their changing environments. </li></ul>
  4. 4. Changing Environments 1 Environmental Change Environmental Complexity Resource Scarcity Uncertainty Characteristics of Changing External Environments
  5. 5. Environmental Change 1.1 <ul><li>Environmental Change is the rate at which a company’s environments change </li></ul><ul><ul><li>stable environments </li></ul></ul><ul><ul><li>dynamic environments </li></ul></ul>Punctuated equilibrium theory Companies cycle through stable and dynamic environments.
  6. 6. Punctuated Equilibrium: U.S. Airline Industry 1.1
  7. 7. Environmental Complexity 1.2 <ul><ul><li>Simple environments Complex environments </li></ul></ul><ul><li>Environmental Complexity: the number of external factors in the environment that affect organizations </li></ul>
  8. 8. Resource Scarcity 1.3 Resource Scarcity The degree to which an organization’s external environment has an abundance or scarcity of critical organizational resources
  9. 9. Natural Resources There is general concern over the scarcity of natural resources. Companies like Weyerhauser work extra hard to correct the misperception that they are &quot;using up&quot; valuable resources. In fact, through careful planning and good management, Weyerhauser is able to both guarantee its lumber resources and be a good environmental steward.
  10. 10. Uncertainty 1.4
  11. 11. External Environment 2
  12. 12. Components of the General Environment <ul><li>Economy </li></ul><ul><li>Technological trends </li></ul><ul><li>Sociocultural trends </li></ul><ul><li>Political / Legal trends </li></ul>2
  13. 13. Economy <ul><li>Growing vs. shrinking economies </li></ul><ul><li>Predicting future economic activity </li></ul><ul><li>Business confidence indices </li></ul>2.1
  14. 14. Technological Component 2.2 Information Output Input Technology-- Knowledge Tools Techniques Raw Materials Services Products
  15. 15. Impact of Technology <ul><li>Technology can be a great benefit or a daunting threat. MP3 players have created a tremendous new business </li></ul>opportunity for some, like Apple, Creative, and other manufacturers. But record labels have suffered from the rapid acceptance of digital music and persistent file swapping.
  16. 16. Sociocultural Component <ul><li>Sociocultural Components </li></ul><ul><ul><li>Demographic changes </li></ul></ul><ul><ul><li>Changes in behavior, attitudes, and beliefs </li></ul></ul>2.3
  17. 17. Demographics Example 2.3
  18. 18. Political / Legal Component <ul><li>Legislation </li></ul><ul><li>Regulations </li></ul><ul><li>Court decisions </li></ul>Managers must be educated about the laws, regulations, and potential lawsuits that could affect business 2.3 http://www.eeoc.gov/laws/cra91.html http://www.dol.gov/esa/whd/fmla/ Web Link
  19. 19. Specific Environment 3 Customer Competitor Supplier Industry Regulation Advocacy Group
  20. 20. Customer Component <ul><li>Reactive customer monitoring </li></ul><ul><ul><li>responding to problems, trends, and events </li></ul></ul><ul><li>Proactive customer monitoring </li></ul><ul><ul><li>anticipating problems, trends, and events </li></ul></ul>3.1 Monitoring customer wants and needs is critical for business success
  21. 21. Competitor Component 3.2 Competitive Analysis Deciding who your competitors are Anticipating competitors’ moves Determining competitors’ strengths and weaknesses
  22. 22. Supplier Component 3.3 Opportunistic Behavior Suppliers Buyer Dependence Supplier Dependence Relationship Behavior
  23. 23. Supplier Dependence
  24. 24. Industry Regulation Component 3.4 Industry Regulation Consists of regulations and rules that govern the business practices and procedures of specific industries, businesses, and professions
  25. 25. Federal Regulation Agencies 3.4 Consumer Product Safety Commission http://www.cpsc.gov Department of Labor http://www.dol.gov Environmental Protection Agency http://www.epa.gov Equal Employment Opportunity Commission http://www.eeoc.gov Federal Communications Commission http://www.fcc.gov Federal Reserve System http://www.federalreserve.gov Federal Trade Commission http://www.ftc.gov Food and Drug Administration http://www.fda.gov National Labor Relations Board http://www. nlrb.gov Occupational Safety and Health Administration http://www.osha.gov Securities and Exchange Commission http://www.sec.gov
  26. 26. Cost of Compliance <ul><li>Researchers studied U.S. manufacturers and the cost they incur complying with the 25 major federal regulations. Researchers found: </li></ul><ul><li>There are about 300,000 manufacturing companies in the U.S. </li></ul><ul><li>Each company spends roughly $2.2 million </li></ul>So, the aggregate cost of complying with federal regulations is roughly $660 billion And that’s just for manufacturing.
  27. 27. Dealing with Gifts and Suppliers 3 <ul><li>Guidelines to Avoid Conflicts of Interest </li></ul><ul><li>There’s no such thing as a free lunch </li></ul><ul><li>Meals and entertaining are valid business </li></ul><ul><li>No gifts worth more than $25 in value </li></ul><ul><li>No cash or cash equivalents </li></ul><ul><li>No discount on goods and services </li></ul><ul><li>No stock in suppliers’ companies </li></ul><ul><li>Don’t allow personal friendship to influence decisions </li></ul>DOING THE RIGHT THING
  28. 28. Advocacy Groups 3.5 <ul><li>Advocacy Groups </li></ul><ul><li>Groups of concerned citizens who band together to try to influence the business practices of specific industries, businesses, and professions </li></ul><ul><li>Techniques to try to influence companies </li></ul><ul><ul><li>public communications </li></ul></ul><ul><ul><li>media advocacy </li></ul></ul><ul><ul><li>product boycotts </li></ul></ul>
  29. 29. Advocacy Groups PETA is a well-known advocacy group that attempts to influence consumers and companies to pursue animal-friendly practices.
  30. 30. Making Sense of Changing Environments Acting on Threats and Opportunities Interpreting Environmental Factors Environmental Scanning Evaluating External Environments 4
  31. 31. Environmental Scanning <ul><li>Environmental scanning: </li></ul><ul><ul><li>searching the environment for events or issues that might affect an organization </li></ul></ul><ul><ul><li>keeps companies current on industry factors </li></ul></ul><ul><ul><li>reduces uncertainty </li></ul></ul><ul><ul><li>alters organizational strategies </li></ul></ul><ul><ul><li>contributes to organizational performance </li></ul></ul>4.1
  32. 32. Interpreting Environmental Factors 4.2 Environmental Scan Opportunities? Threats?
  33. 33. Acting on Threats and Opportunities 4.3 <ul><li>Cognitive Maps </li></ul><ul><ul><li>simplified models of external environments </li></ul></ul><ul><ul><li>depicts how managers believe environmental factors relate to possible organizational actions </li></ul></ul>
  34. 34. Cognitive Maps 4.3
  35. 35. Internal Environments After reading this section, you should be able to: <ul><li>explain how organizational cultures are created and how they can help companies be successful. </li></ul>
  36. 36. Internal Environments 5 <ul><li>Internal Environment </li></ul><ul><li>Consists of the trends and events within an organization that affect the management, employees, and organizational culture </li></ul><ul><ul><li>important because it affects what people think, feel, and do at work </li></ul></ul><ul><ul><li>organizational culture is the set of key values, beliefs, and attitudes shared by organizational members </li></ul></ul>
  37. 37. Creation and Maintenance of Organizational Cultures 5.1 Organizational Heroes Organizational Stories Company Founder
  38. 38. Successful Organizational Cultures Adapted from Exhibit 3.7 D.R. Denison & A.K. Mishra, Organization Science 6 (1995): 204-223 5.2 Employee Satisfaction Quality Consistency Adaptability Involvement Clear Vision Sales Growth Return on Assets Profits
  39. 39. Levels of Organizational Culture <ul><li>Symbolic artifacts </li></ul><ul><li>Behaviors </li></ul>1. Surface Level SEEN <ul><li>What people say </li></ul><ul><li>How decisions are made </li></ul>2. Expressed Values and Beliefs HEARD <ul><li>Beliefs and assumptions </li></ul><ul><li>Rarely discussed </li></ul>3. Unconsciously Held Assumptions and Beliefs BELIEVED Adapted from Exhibit 3.8 5.3
  40. 40. Changing Organizational Cultures <ul><li>Behavioral addition </li></ul><ul><ul><li>is the process of having managers and employees perform a new behavior </li></ul></ul><ul><li>Behavioral substitution </li></ul><ul><ul><li>is having managers and employees perform a new behavior in place of another behavior </li></ul></ul><ul><li>Change visible artifacts </li></ul><ul><ul><li>such as the office design and layout, company dress codes, etc. </li></ul></ul>5.3
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