Chapter 3
Organizational Environments
and Cultures
McDonalds Moscow
Walmart Supply
New Orleans Paper
FedEX
Google Work
Learning Outcomes
After reading this chapter, you should be
able to:
1. Discuss how changing environments affect
organizations.
2. Describe the four components of the general
environment.
3. Explain the five components of the specific
environment.
4. Describe the process that companies use to make
sense of their changing environments.
5. Explain how organizational cultures are created and
how they can help companies succeed.
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Changing Environments
External Environment
• ____________________ change
• Environmental complexity
• Resource
• Scarcity
• Uncertainty
1
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Complex Environments:
Newspaper Industry
• Revenues from classified ads have dropped
because of popular websites such as:
• craigslist.com
• kijiji.ca
• ebayclassifieds.com
• Digital ads bring in less revenue compared with
print ads.
• Digital content is very inexpensive to distribute
compared with print content.
• Therefore, most consumers expect Internetbased news to be free.
1.2
New Orleans Paper
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Class Activity: Newspaper Industry
Beyond the Book
• Discuss as a class what you would
do if you were newspaper owners facing
today’s ___________ age.
New Orleans Paper
External Environment
• Environmental change
• Environmental complexity
• Resource
• Scarcity
• Uncertainty
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Class Activity: Changing Environments
Real-Life Examples
Beyond the Book
• Using these real-life examples, identify
which changing environment category
they belong to:
• $1.83 billion Target takeover of Zellers
• Flooding in Australia and Pakistan
External Environment
• QR codes
•
•
•
•
•
Environmental change
Environmental complexity
Resource
Scarcity
Uncertainty
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General and Specific Environments
2
McDonalds
Moscow
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Components of the General Environment:
Economy
• Growing versus shrinking economies
• Predicting future economic activity by tracking
– Business confidence indices
– Consumer confidence indices
2.1
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Components of the General Environment:
Technology
INPUTS: raw materials and information
TECHNOLOGY: knowledge, tools, techniques
OUTPUTS: products/services
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Impact of Technology
NOW
Brian A Jackson/Shutterstock
THEN
2.2
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Components of the
General Environment:
Sociocultural Component
• Demographic changes:
o Women with children
o Growth of visible minorities
 Affects supply and demand of
staffing
• Behaviour, attitudes, belief changes:
o Work-life balance
o New products/services
2.3
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Sociocultural Component:
Entering a Foreign Market
• Organizations should do their research prior
to entering a foreign market, for widely
different social and cultural norms may exist
there.
2.3
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Components of the
General Environment:
Political/Legal Component
• Laws
• Regulations
• Court decisions
o Examples:
 Personal Information Protection and Electronic
Documents Act (PIPEDA)
 Bill C-45, Canadian Criminal Code
2.4
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Components of the
General Environment:
Political/Legal Component
• Canadian companies looking to pursue
international opportunities should carefully
consider the political and legal practices in foreign
markets.
• Look for any differences in:
o political systems
o government regulations
o laws about intellectual property
o the labour force
o financial matters
2.4
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Evaluating External Environments
Environmental
Scanning
Interpreting
Environmental Factors
Acting on Threats and
Opportunities
4
• Currency
• Reduces uncertainty
• Organizational
strategies
• Organizational
performance
• Opportunity
• Threat
• Comprehend factors
• Cognitive maps
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Class Activity:
Wal-Mart and Organic Cotton Suppliers
• Discuss the steps that Wal-Mart took when
evaluating the external environments.
• Try to incorporate the components of the
specific environment into your discussion.
Walmart Supply
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Internal Environments
Values
Beliefs
Attitudes
Organizational Culture
5
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Creation and Maintenance of
Organizational Cultures
Company Founder
Organizational Stories
5.1
Organizational Heroes
FedEX
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THREE LEVELS OF ORGANIZATIONAL CULTURE
SEEN
(Surface level)
• Symbolic artifacts such as
dress codes
• Workers’ and managers’
behaviours
HEARD
(Expressed values and beliefs)
• What people say
• How decisions are made and
explained
BELIEVED
(Unconscious assumptions and
beliefs)
• Widely shared assumptions
and beliefs
• Buried deep below surface
• Rarely discussed or thought
about
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Class Activity: Culture at Google
Google Work
The culture at Google
What is the culture really like?
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Successful Organizational Cultures
Adaptability
Consistency
Involvement
Clear Vision
Sales
Growth
Return on
Assets
Profits
Employee
Satisfaction
Quality
Source: D.R. Denison & A.K. Mishra, Organization Science 6 (1995): 204-223.
5.2
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Canada’s 10 Most Admired
Corporate Cultures (2011)
1. Agrium Inc. (Calgary)
2. CIBC (Toronto)
3. Coast Capital Savings Credit Union (Surrey)
4. ING Direct Canada (Toronto)
5. Kinross Gold Corporation (Toronto)
6. Ledcor Group of Companies (Vancouver)
7. Loblaw Companies Limited (Brampton)
8. RBC (Toronto)
9. Shoppers Drug Mart (Toronto)
10. WestJet Airlines (Calgary)
Source: Waterstone Human Capital Ltd. Reprinted by permission.
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