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2006 by South-Western, a division of Thomson Learning. All rights reserved. 2-1

The Environment &

Corporate Culture

Chapter 2

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Learning Objectives1. Describe the general and task environments and the

dimensions of each.

2. Explain the strategies managers use to help organizations

adapt to an uncertain or turbulent environment.

3. Define corporate culture and give organizational examples.

4. Explain organizational symbols, stories, heroes, slogans, and

ceremonies and their relationship to corporate culture.

5. Describe how corporate culture relates to the environment.

6. Define a cultural leader and explain the tools a cultural

leader uses to create a high performance culture.

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The External Organizational Environment

All elements existing outside the

organization's boundaries that have thepotential to affect the organization.

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External Environments

Two Layers

Task environment.

General environment.

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Employees Culture

Management

Internal

Environment

TechnologicalGeneral Environment

Customers

Com

petitors

LaborMarket

Suppliers

Task Environment

Ex. 2.1Location of theOrganizations General,

Task, and Internal

Environments

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Importance of

International Dimension Provides New:

Customers

Competitors Suppliers

Shapes:

Social trends

Technological trends

Economic trends

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Technological Dimension

Includes scientific and

technological advancementsin specific industry andsociety at large.

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Socio-Cultural Dimension

Demographic characteristics as well as the

norms, customs, and values of the general

population. Important characteristics are geographical

and population density, age, and education

levels.

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Socio-Cultural Dimension (contd.)

Key demographic trends in the United States:

Hispanics will make up nearly a quarter of the U.S.population by the year 2050.

Population and the workforce continue to age with

the baby boomers.

The fastest-growing living arrangement is single-

father households.

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Organizations

Economic Environment

Consumer purchasing

power.

Unemployment rate.

Interest rates.

Frequency of mergers.

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Legal-Political

Government regulations

Local

State Federal

Considers political activities designed to

influence company behavior.

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Task (Industry) Environment

Stakeholders Stakeholder- Any person or group within or

outside the organization that is impacted by firm

actions and performance. Examples of stakeholders:

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Task Environment

Customers A concern is the power the Internet has given

customers.

This new found power enables customers todirectly impact organizations in new ways.

Managers are using the Internet to learn about

customers.

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Task Environment

Competitors

Each industry is characterized by specific

competitive issues.

Competitive wars are being waged

worldwide in all industries.

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Task Environment

Suppliers

Many companies are now using fewer

suppliers while trying to build betterrelationships.

Traditionally the role has been adversarial;

many companies now are looking tocooperation.

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Task Environment

Labor Market Factors

1. Growing need for computer-literateinformation technology workers.

2. The necessity for continuous investment inhuman resources in order to meet theborderless world.

3. The effects of international trading blocks,automation, and shifting plant locations.

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Ex. 2.3 Adapt to

Environment

High

Uncertainty

Low

Uncertainty

HighLowLow

High

Number of Factors in Organization Environment

Rate of

Change inFactors in

Environment

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Adapting to the Environment

Boundary-Spanning

Inter-organizationalPartnership

Mergers & Joint Ventures

Preparing the organizationfor the environment.

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Ex. 2.5 Levels of Corporate Culture

Visible

1. Artifacts, such as dress, office

layout, symbols, slogans,

ceremonies, mission statements.

2. Expressed values, such as The

Penney Idea, The HP Way

3. Underlying assumptions and deep

beliefs, such as people are lazyand cant be trusted

Invisible

Culture that can be

seen at the surface

level

Deeper values and shared

understandings held by

organization members

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Visible Manifestations

Symbols

Stories Heroes

Slogans

Ceremonies

Mission & Vision Statements

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Ex. 2.7 Four Types of Corporate Cultures

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Cultural Leadership Influence

1. Cultural leadership articulates a vision for the

organizational culture in which employees

can believe.

2. Cultural leadership heeds the day-to-day

activities that reinforce the cultural vision.

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