The Environment and Corporate Culture

1. 0 The Environment and Corporate Culture CHAPTER 3

2. 0 Learning Objectives • Describe the general and task environments and the dimensions of each. • Explain the strategies managers use to help organizations adapt to an uncertain or turbulent environment. • Define corporate culture and give organizational examples. • Explain organizational symbols, stories, heroes, slogans, and ceremonies and their relationship to corporate culture.

3. 0 Learning Objectives (contd.) • Describe how corporate culture relates to the environment. • Define a cultural leader and explain the tools a cultural leader uses to create a high-performance culture.

4. 0 Organizational Environment • All elements existing outside the boundary of the organization that have the potential to affect the organization

5. 0 External Environment • General environment – affects indirectly • Task environment • Affects directly • Influences operations and performances • Internal environment – elements within the organization’s boundaries

6. 0 Organizational Environments Exhibit 3.1

7. 0 International Dimension • Portion of the external environment that represents events originating in foreign countries as well as opportunities for U.S. companies in other countries.

8. 0 Technological Dimension • Scientific and technological advances • Specific industries • Society at large • Impact • Competition • Relationship with Customers • Medical advances • Nanotechnology advances

9. 0 Socio-Cultural Dimension • Dimension of the general environment • Demographic characteristics • Norms • Customs • Values

10. 0 Economic Dimension • General economic health • Consumer purchasing power • Unemployment rate • Interest rates • Recent Trends • Frequency of mergers and acquisitions • Small business sector vitality

11. 0 Legal-Political Dimension • Dimension of the general environment that includes federal, state, and local government regulations and political activities designed to influence company behavior.

12. 0 Task Environment Sectors that have a direct working relationship with the organization • Customers • Competitors • Suppliers • Labor Market

13. 0 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

14. 0 Adapting to the Environment • Boundary-spanning • Inter-organizational partnerships • Mergers and joint ventures

15. 0 External Environment and Uncertainty Exhibit 3.3 High Adapt to Environment High Uncertainty Rate of Change in Factors in Environment Low Uncertainty Low High Low Number of Factors in Organization Environment

16. 0 Interorganizational Partnerships Shift in paradigm to a partnership orientation • 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

17. 0 Culture • The set of key values, beliefs, understandings, and norms that members of an organization share.

18. 0 Levels of Corporate Culture Exhibit 3.5 Culture that can be seen at the surface level Visible 1. Artifacts, such as dress, office layout, symbols, slogans, ceremonies Invisible Deeper values and shared understandings held by organization members 2. Expressed values, such as “The Penney Idea,” “The HP Way” 3. Underlying assumptions and deep beliefs, such as “people are lazy and can’t be trusted”

19. 0 Visible Manifestations • Symbols • Stories • Heroes • Slogans • Ceremonies

20. 0 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

21. 0 Corporate Culture Adaptability Adaptive Culture Unadaptive Culture Managers tend to behave somewhat insularly, politically, and bureaucratically. As a result, they do not change their strategies quickly to adjust to or take advantage of changes in their business environments. Visible Behavior Managers pay close attention to all their constituencies, especially customers, and initiate change when needed to serve their legitimate interests, even if it entails taking some risks. Managers care mainly about themselves, their immediate work group, or some product (or technology) associated with that work group. They value the orderly and risk-reducing management process much more highly than leadership initiatives. Managers care deeply about customers, stockholders, and employees. They strongly value people and processes that can create useful change (e.g., leadership initiatives up and down the management hierarchy). Expressed Values Source: John P. Kotter and James L. Heskett, Corporate Culture and Performance (New York, The Free Press, 1992), 51.

22. 0 Four Types of Corporate Cultures Exhibit 3.7 Needs of the Environment Flexibility Stability External Achievement Culture Adaptability Culture Strategic Focus Involvement Culture Consistency Culture Internal

23. 0 High-Performance Culture A culture that • Is based on a solid organizational mission or purpose • Embodies shared adaptive values that guide decisions and business practices, and • Encourages individual employee ownership of both bottom-line results and the organization’s cultural backbone

24. 0 Cultural Leadership • Articulates a visionthat 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