Chapter 3 The Environment and Corporate Culture. The elements of the world constantly change The...
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Transcript of Chapter 3 The Environment and Corporate Culture. The elements of the world constantly change The...
Chapter 3The Environment and Corporate Culture
The elements of the world constantly change• The external organizational environment
includes all outside elements that effect the organization
• General Environment:– Outer layer that directly affects organization
• Task Environment:– Sectors that conduct transactions with the
organization• Internal Environment:– Elements within the organization boundaries
The External Environment
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3.1 The General, Task, and Internal Environments
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• Globalization influences all other aspects of the external environment
– New competitors, customers, suppliers
– Changes in social, technological, and economic trends
• All organizations must compete and think globally
• Economic power has shifted to China and India
• The global environment is complex and ever-changing
General Environment: International
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Massive changes for organizations
The tool for doing business
Advances are impacting organizations and managers
Technological
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Demographic characteristics, norms, customs, and values
U.S. Population is aging
Large influx of immigrants
Generation Y is entering the workplace
Sociocultural
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• Economic health of the country/region
– Extended globally with uncertainty
• Consumer purchasing power
• Unemployment rate
• Economic shift impacted small business although there is still vitality in small business
Economic
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• Government regulation; state, local, and federal– Political activities– Government agencies and regulation
• Managers must recognize the power of pressure groups– Work to influence companies to behave in a socially
responsible way
Legal-Political
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• Growing importance and pressure
• Organizations must be sensitive to the environment
• Natural dimension does not have own voice
• Environmental groups advocate action/policy
– Reduce pollution
– Develop renewable energy
– Climate change/global warming
Natural
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Customers
Competitors
Suppliers
Labor Market
Task Environment
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3.2 Environmental Performance Index
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The environment creates uncertainty for managers
Managers must respond and design adaptive organizations
Uncertainty can be managed through effectiveness
Organization-Environment Relationship
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3.3 Sample External Environment
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SOURCES: “Chinese Ministry of Railways Chooses Nortel Mobile Network,” M2Presswire (January 29, 2008); Nortel Web site, http:www.nortel.com (accessed May 12, 2010); J. Weber with A. Reinhardt and P. Burrows, “Racing Ahead at Nortel,” BusinessWeek (November 8, 1999): 93–99; “Nortel’s Waffling Continues: First Job Cuts, Then Product Lines, and Now the CEO,” Telephony (May 21, 2001): 12; and M. Heinzl, “Nortel’s Profits of 499 Million Exceeds Forecast,” The Wall Street Journal, January 30, 2004.
3.4 External Environment and Uncertainty
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Boundary-spanning roles – link and coordinate the organization with external environment, seek:• Business intelligence
• Competitive intelligence
Interorganizational partnerships – reduce boundaries and begin collaborating with other organizations
Mergers/joint ventures – legal combination of operations; legal collaboration for specific project
Adapting to the Environment
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3.5 The Shift to a Partnership Paradigm
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The Internal Environment: Corporate Culture
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3.6 Levels of Corporate Culture
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3.7 Four Types of Corporate Cultures
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• Corporate culture plays a key role in learning and innovate responses
• Bottom-line strategies are successful in the short-term
• Successful companies balance culture and performance
• Culture is the “glue” that holds the organization together
Shaping Corporate Culture for Innovative Response
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Based on solid organizational mission/purpose
Shared adaptive values that guide decisions and practices
Encourages individual employee ownership– Bottom-line results– Organization’s culture
High Performance Culture
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3.8 Combining Culture and Performance
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Articulate a vision for the organizational culture that employees can believe in
Heeds the day-to-day activities that reinforce the cultural vision
Leaders communicate through words and actions
Cultural Leadership
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