Hilda Teodoro

ManDyn

Chapter 3

07/13/2013

The Environment and Corporate Culture

TRANSCRIBED BY PANGILINAN AND ROSETE

OUTLINE
The External Environment A. General Environment B. Task Environment II. The OrganizationEnvironment Relationship A. Environmental Uncertainty B. Adapting to the Environment III. The Internal Environment A. Definition of Corporate Culture B. Demonstration of Fundamental Values C. Types of Culture I. IV. V. Managing the HighPerformance Culture Cultural Leader

I.

THE EXTERNAL ENVIRONMENT

First Managers do not have sufficient information about environmental factors to understand and predict environmental needs and changes Interorganizational Partnerships Reduce boundaries and increase collaboration with other organizations Shifting from an adversarial to a partnership orientation Based on trust and the ability of partners to work out equitable solutions to conflicts so that everyone profits from the relationship Mergers and Joint Ventures Merger- when two or more organizations combine to become one (ex. Wells Fargo, Norwest and Wachovia) Joint venture strategic alliance or program by two or more organizations (ex. Harpo Inc. And Hearst Magazines, Chrysler and Nissan)
General Environment Dimension Description International Represents events in foreign countries as well as opportunities for U.S. companies in other countries Provides new competitors, customers, and suppliers and shapes social, technological and economic trends Managers must learn new rules to stay competitive

Includes all elements existing outside the boundary of the organization that have a potential to affect the organization A. GENERAL ENVIRONMENT

Affects organizations indirectly, not involved in day-to-day transactions but will affect the organization eventually Includes social, economic, legal/political, international, natural and technological factors that influence all organizations about equally B. TASK ENVIRONMENT

Examples Opportunities for growth overseas Google provides 35 languages and a translation feature to its search engine Competition is on a global basis: Emergence of China as largest auto market caused the migration of factories to China and the creation of features that appeal to the Chinese market However, factors affecting other countries must be considered Ex. The Chinese integrate personal and emotional bonds with business contracts Technology has evolved over the last two decades, allowing massive changes for organizations in all industries (Wi-Fi, cell phones, laptops, internet, video conferencing) Disney invested $80 million for their amusement parks to appeal to younger digitally savvy visitors Ageing population - Creation of seniorfriendly products and services such as a Delta faucet

Closer to the organization and includes the sectors that conduct day-to-day transactions with the organization and directly influence its basic operations and performance II. THE ORGANIZATION-ENVIRONMENT RELATIONSHIP A. ENVIRONMENTAL UNCERTAINTY

First Managers do not have sufficient information about environmental factors to understand and predict environmental needs and changes B. ADAPTING TO THE ENVIRONMENT

Technological

Includes scientific and technological advances in a specific industry as well as society at large Help innovative companies gain market share Potential to transform consumer expectations of an entire industry

First Managers do not have sufficient information about environmental factors to understand and predict environmental needs and changes First In the face of uncertainty, managers can use several strategies to adapt to these changes Boundary-Spanning Roles Link and coordinate the organization with key elements in the external environment Detect and process information about changes in the environment and they represent the organizations interests to the environment (ex. Business intelligence and Competitive intelligence)

Sociocultural

Represents the demographic characteristics as well as the norms, customs, and values of the

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general population Geographical distribution and population density, age and education levels that turns on and off when users tap it anywhere in the spout or handle Influx of immigrants Generation Y - Companies offer competitive salaries, flat hierarchies, worklife balance, etc. Small businesses - In 2009, 400,000 small businesses ceased operations eliminating a million jobs organization uses to produce its output with melamine contaminants, heightening the awareness of risk of using local suppliers Need for computer-literate workers Investment in recruitment and training because of globalization Effect of international trading blocs, automation, outsourcing, relocation

Labor Market

Represents the people available for hire by the organization

Economic

Represents the general economic health of the country or region in which the organization operates. Consumer purchasing power, unemployment rate, interest rates, etc Includes government regulations at the local, state and federal levels as well as political activities designed to influence company behaviour

III.

THE INTERNAL ENVIRONMENT

Legal-Political

Federal Government influences businesses through the occupational Safety and Health Administration (OSHA), Environmental Protection agency (EPA), fair trade practices, import and export restrictions, product quality control, etc. Recognize pressure groups (labour unions etc.) who influence companies to behave in socially responsible ways Environmental groups advocate action and policy groups on pollution, renewable energy, greenhouse gases, sustainable use of scarce resources, etc. Oil Spill in Gulf of Mexico, 2010

Includes the elements within the organizations boundaries Composed of current employees, management and corporate culture A. DEFINITION OF CORPORATE CULTURE

Corporate Culture Culture is the set of key values, beliefs, understandings, and norms shared by members of an organization It is a pattern that is learned as members of the corporation cope with problems It is also taught to new employees as the correct way to perceive, think, and feel It is mostly managers that truly think about culture, since it typically plays a significant role in organization success The internal culture needs to fit the needs of the external environment Levels of Corporate Culture Culture can be analyzed at two levels: visible and invisible Visible (visible artifacts) All the things one can see, hear, and observe by watching members of the organization Invisible (values and beliefs) Not observable but can be discerned from how people explain and justify what they do These values can be interpreted from stories, language, and symbols organization members use to represent themselves Some values can be held at a conscious level Others are so deeply embedded that members are no longer consciously aware of them Essence of culture that subconsciously guides behavior and decisions

Natural

All elements that occur naturally on earth, including plants, animals, rocks, and natural resources such as air, water, and climate Has no voice of its own

Task Environment Dimension Description Customers Include people and organizations that acquire goods or services from the organization Determine success

Competitors

Organizations within the same industry or type of business that compete for the same set of customers

Examples Managers of Coca-cola, Disney, Target and apple are finding ways to appeal the younger market such as advertising through social media (Twitter, Facebook, MySpace) Hulu provides free-to-watch episodes of TV series through online streaming UPS and FedEx for overnight shipping, log management, supply chain management Walmart and Amazon for book sales Blue Nile, Tiffanys, Zales, Kays for diamond rings Cadburys Beijing Plant used milk from a Chinese supplier

Suppliers

Provide the raw materials the

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C. TYPES OF CULTURE As previously mentioned, internal cultures should embody what it takes in order to succeed in a certain environment As such, the external environment has a great influence on internal corporate culture and is associated with the four types of culture (mentioned below) Organizations within the same industry often reveal similar cultural characteristics because they are operating in a similar environment While there are defined types, organizations usually have values that fall into more than one category

Figure 1. Levels of Corporate Culture B. DEMONSTRATION OF FUNDAMENTAL VALUES

Symbols A symbol is an object, act, or event that conveys to others Can be considered a rich, nonverbal language that vibrantly conveys the organizations important values Stories A story is a narrative based on true events It is repeated frequently and shared among organizational employees Stories paint pictures that help symbolize the firms vision and values Heroes A hero is a figure who exemplifies the deeds, character, and attributes of a strong culture Role models for the employees to follow Companies with strong cultures take advantage of achievements to define heroes who uphold key values Slogans A slogan is a phrase or sentence that succinctly expresses a key corporate value Other forms can be used to express cultural values such as written public statements Ceremonies A ceremony is a planned activity or a special event that is conducted for the benefit of an audience Provide dramatic examples of company values Ideally they accomplish three things: Reinforce valued accomplishments Create a bond among people by allowing them to share an important event Anoint and celebrate heroes

Figure 2. Four Types of Corporate Culture Adaptability Culture Environment requires fast response and high risk decision making Supported values Ability to rapidly detect, interpret, and translate signals from the environment into new behaviors (responsiveness) Managers encourage creativity, experimentation and risk taking Other characteristics Employees have autonomy to make decisions Achievement Culture Environment without the intense need for flexibility and rapid change Supported values Competitiveness, aggressiveness, personal initiative Willingness to work long and hard to achieve results Other characteristics Usually in organizations concerned with serving specific customers Emphasizes winning and achieving specific ambitious goals Involvement Culture Environment characterized by rapidly changing needs Supported values Meeting needs of employees Caring, family-like atmosphere Cooperation and consideration of both employees and customers

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Consistency Culture Environment stable Supported values Following the rules and being thrifty Methodical, rational, orderly way of doing things IV. MANAGING THE HIGH-PERFORMANCE CULTURE

Companies that succeed in a turbulent world are those that pay careful attention to both cultural values and business performance Cultural values Energize and motivation employees to appeal to higher ideals Unifies people around shared goals Boost performance by shaping and guiding employee behavior Everyones actions are aligned with strategic priorities Companies that succeed in a turbulent world are those that pay careful attention to both cultural values and business performance V. CULTURAL LEADERSHIP

A cultural leader defines and uses signals and symbols to influence corporate culture Influence culture in two key areas: A cultural leader articulates a vision for the organizational culture that the employees can believe in These values are tied to a clear and compelling mission or core purpose A cultural leader heeds the day-to-day activities that reinforce the cultural vision Work procedures and reward systems match and reinforce the values Leaders should walk their talk (value statements that arent reinforced by management behavior are meaningless or even harmful)

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