Chapter 3 Organizational Environments and Cultures New Orleans Paper Google Work Walmart Supply FedEX McDonalds Moscow Learning Outcomes After reading this chapter, you should be able to: 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 succeed. Copyright 2015 by Nelson Education Ltd.3-2 Changing Environments External Environment ____________________ change Environmental complexity Resource Scarcity Uncertainty Copyright 2015 by Nelson Education Ltd Complex Environments: Newspaper Industry Copyright 2015 by Nelson Education Ltd.3-4 Revenues from classified ads have dropped because of popular websites such as: craigslist.com kijiji.ca ebayclassifieds.com Digital ads bring in less revenue compared with print ads. Digital content is very inexpensive to distribute compared with print content. Therefore, most consumers expect Internet- based news to be free. 1.2 New Orleans Paper Class Activity: Newspaper Industry Discuss as a class what you would do if you were newspaper owners facing todays ___________ age. Copyright 2015 by Nelson Education Ltd.3-5 Beyond the Book New Orleans Paper External Environment Environmental change Environmental complexity Resource Scarcity Uncertainty Environmental Change, Environmental Complexity, and Resource Scarcity Copyright 2015 by Nelson Education Ltd.3-6 Class Activity: Changing Environments Real-Life Examples Using these real-life examples, identify which changing environment category they belong to: $1.83 billion Target takeover of Zellers Flooding in Australia and Pakistan QR codes Copyright 2015 by Nelson Education Ltd.3-7 Beyond the Book External Environment Environmental change Environmental complexity Resource Scarcity Uncertainty General and Specific Environments Copyright 2015 by Nelson Education Ltd McDonalds Moscow Components of the General Environment: Economy Growing versus shrinking economies Predicting future economic activity by tracking Business confidence indices Consumer confidence indices Copyright 2015 by Nelson Education Ltd Components of the General Environment: Technology INPUTS: raw materials and information TECHNOLOGY: knowledge, tools, techniques OUTPUTS: products/services Copyright 2015 by Nelson Education Ltd.3-10 Impact of Technology THENNOW Copyright 2015 by Nelson Education Ltd Brian A Jackson/Shutterstock 2.3 Components of the General Environment: Sociocultural Component Demographic changes: o Women with children o Growth of visible minorities Affects supply and demand of staffing Behaviour, attitudes, belief changes: o Work-life balance o New products/services Copyright 2015 by Nelson Education Ltd.3-12 Sociocultural Component: Entering a Foreign Market Organizations should do their research prior to entering a foreign market, for widely different social and cultural norms may exist there. Copyright 2015 by Nelson Education Ltd Laws Regulations Court decisions o Examples: Personal Information Protection and Electronic Documents Act (PIPEDA) Bill C-45, Canadian Criminal Code Copyright 2015 by Nelson Education Ltd Components of the General Environment: Political/Legal Component Canadian companies looking to pursue international opportunities should carefully consider the political and legal practices in foreign markets. Look for any differences in: o political systems o government regulations o laws about intellectual property o the labour force o financial matters Copyright 2015 by Nelson Education Ltd Components of the General Environment: Political/Legal Component Evaluating External Environments Environmental Scanning Currency Reduces uncertainty Organizational strategies Organizational performance Interpreting Environmental Factors Opportunity Threat Acting on Threats and Opportunities Comprehend factors Cognitive maps Copyright 2015 by Nelson Education Ltd Cognitive Maps Copyright 2015 by Nelson Education Ltd.3-17 Class Activity: Wal-Mart and Organic Cotton Suppliers Discuss the steps that Wal-Mart took when evaluating the external environments. Try to incorporate the components of the specific environment into your discussion. Copyright 2015 by Nelson Education Ltd.3-18 Walmart Supply Internal Environments Copyright 2015 by Nelson Education Ltd.3-19 Organizational Culture Attitudes ValuesBeliefs 5 5 Creation and Maintenance of Organizational Cultures Copyright 2015 by Nelson Education Ltd.3-20 Organizational Heroes Organizational Stories Company Founder 5.1 FedEX Copyright 2015 by Nelson Education Ltd.3-21 THREE LEVELS OF ORGANIZATIONAL CULTURE SEEN (Surface level) Symbolic artifacts such as dress codes Workers and managers behaviours HEARD (Expressed values and beliefs) What people say How decisions are made and explained BELIEVED (Unconscious assumptions and beliefs) Widely shared assumptions and beliefs Buried deep below surface Rarely discussed or thought about Class Activity: Culture at Google The culture at Google What is the culture really like? Copyright 2015 by Nelson Education Ltd.3-22 Google Work Successful Organizational Cultures Copyright 2015 by Nelson Education Ltd.3-23 Employee Satisfaction Employee Satisfaction Quality Consistency Adaptability Involvement Clear Vision Sales Growth Sales Growth Return on Assets Return on Assets Profits Source: D.R. Denison & A.K. Mishra, Organization Science 6 (1995): Copyright 2015 by Nelson Education Ltd.3-24 Canadas 10 Most Admired Corporate Cultures (2011) 1. Agrium Inc. (Calgary) 2. CIBC (Toronto) 3. Coast Capital Savings Credit Union (Surrey) 4. ING Direct Canada (Toronto) 5. Kinross Gold Corporation (Toronto) 6. Ledcor Group of Companies (Vancouver) 7. Loblaw Companies Limited (Brampton) 8. RBC (Toronto) 9. Shoppers Drug Mart (Toronto) 10. WestJet Airlines (Calgary) Source: Waterstone Human Capital Ltd. Reprinted by permission.