MGT701MG MBA503-Week 3

The Environment and

Corporate Culture

Dr Sardana Islam Khan

Learning Objectives

– Describe the nature and dimensions of the general and task environments

– Clearly explain how environmental states have been conceptualised in management theory

– Explain how organisations are able to shape and be influenced by the external environment

– Understand ‘corporate culture’ and provide relevant examples– Discuss the relationship between corporate culture and

organisational performance

Organisational Culture

• Culture: The set of values that helps an organisation’s stakeholders understand what it stands for, how it does things and what it considers important – more in later slides

• Culture defies objective measurement or observation.

• Culture plays a major role in shaping the behaviour of managers.

Importance of Culture

• Links to organisational identity, reputation and aspirations.

• Cultures are rarely uniform across an organisation.

• Culture can shape overall effectiveness and long-term success.

Organisational environments

Conceptualisations of environment:• How can the business environment be described?• Enables structured comparisons

Environmental states: • Classifying the rate of change of environments • Has implications for the way functions are

undertaken (planning, leading, organising, controlling)

Organisational environments

• All elements existing outside the organisation’s boundaries that have the potential to affect the organisation

• Levels of environment:– A general context:

• macro-level forces

– An inter-organisational network (task environment):• Also called the meso-level or specific environment

– An intra-organisational network:• Internal environment• Culture

The ‘general’ environment

• The layer of the external environment that affects the organisation indirectly:– International pressures– Political/legal factors– Economic factors– Technological advancements– Educational conditions (labour market)– The natural environment– Socio-cultural influences.

• These factors are do not directly change day-to-day operations, but do affect all organisations eventually.

The ‘task’ environment

• A layer of the external environment that directly influences the organisation’s operations and performance:– Customers– Competitors– Suppliers– Public pressure groups– Regulators (Government, at Federal, State and

Local level)– Labour markets.

• Consists of the organisation’s stakeholders.

Different environmental states

• We also need to be able to characterise the state of the environment:

The internal environment

• Organisational culture has been defined as a:– system of shared meaning – widely held amongst all employees– that determines how employees act (to a large

degree).

• Organisational culture refers to the collective beliefs, values and assumptions that:– organisational members have in common– makes the organisation different from other

organisations.

WATCH THIS

• http://www.youtube.com/watch?v=4MqiHurbexE

Culture: the iceberg metaphor

Visible

Not visible

behaviour

perceptions

attitudes

values

beliefs

Cultural Types• Work by Sonnerfeld (1988) identified 4 types of culture:

– Sporting Team:o Talent, innovation and performance are rewarded

– Club Culture:o Characterised by loyalty, commitment and adherence to group

standardso Promote from within, progressive and incremental achievement

– Academy Culture:o Career for life (long term associations)o Knowledge rewarded, technical mastery basis for advancement

– Fortress Culture:o Offers little job security, no opportunity for growth or advancement

Sub-Cultures

• Common to groups of people with similar values and beliefs

• Typically based on shared work responsibilities and personal characteristics:– Occupational sub-cultures– Functional sub-cultures– Generational sub-cultures.

How can culture be transmitted?

• Culture can be conveyed in several different ways – all by visible means:– Stories, slogans– Rituals or ceremonies– Material symbols– Language– Heroes or gurus

• But, how can managers transmit core assumptions and beliefs (the invisibles)?

Managing Organisational Culture

Managing culture is essential but difficult. Steps involved include:– First understand the determinants of culture.– Decide if the culture needs to be maintained or

changed.– If the culture is to be maintained reinforce it with

symbols, ceremonies, reward and modelling.– If it is to be changed be clear about how. External

change agents may help.

Next week

Managing in a Global Environment