Management, 7e
Schermerhorn
Prepared by
Michael K. McCuddy
Valparaiso University
John Wiley & Sons, Inc
Schermerhorn - Chapter 2
1
Chapter 2
Environment and Diversity
 Planning ahead—study questions
– What is the external environment of
organizations?
– What is a customer-driven organization?
– What is a quality-driven organization?
– What is the internal environment and
organizational culture?
– How is diversity managed in a multicultural
organization?
Schermerhorn - Chapter 2
2
What is the external environment of
organizations?
 Competitive advantage involves utilization
of a core competency that clearly sets an
organization apart from competitors and
gives it an advantage over them in the
marketplace.
Schermerhorn - Chapter 2
3
What is the external environment of
organizations?
 Companies may achieve competitive
advantage in many ways, including:
• Products
• Pricing
• Customer service
• Cost efficiency
• Quality
Schermerhorn - Chapter 2
4
What is the external environment of
organizations?
 The general environment—all of the
background conditions in the external
environment of the organization including:
–
–
–
–
–
Economic
Social-cultural
Legal-political
Technological
Natural environment
Schermerhorn - Chapter 2
5
What is the external environment of
organizations?
 The specific environment (a.k.a task env.)
—actual organizations, groups, and persons
with whom an organization must interact in
order to survive and prosper.
Schermerhorn - Chapter 2
6
What is the external environment of
organizations?
 Stakeholders in the specific environment
broadly include:
• Customers
• Suppliers
• Competitors
• Regulators
Schermerhorn - Chapter 2
7
What is the external environment of
organizations?
 Environmental uncertainty is a lack of complete
information regarding what developments will occur in the
external environment.
 Two dimensions of environmental uncertainty:
– Complexity
– Rate of change
 The greater the uncertainty, the greater the need for
monitoring, flexibility, and adaptability.
“In today’s business world, the only constant, is change”
Schermerhorn - Chapter 2
8
What is a customer-driven organization?
External customers purchase the
organization’s goods or utilize its services.
Internal customers are the persons and
groups within an organization who depend
on the results of others' work to do their
own jobs.
Schermerhorn - Chapter 2
9
What is a customer-driven organization?
 Customer service lessons:
– Protect reputation for quality products.
– Treat customers right.
 Assessing customer needs—what, where, and
when.
 In the upside-down pyramid, customers are at the top.
They want three things when purchasing goods and
services -high quality, low cost, and on-time delivery.
Schermerhorn - Chapter 2
10
What is a customer-driven organization?
 Customer relationship management involves taking a
strategic customer-centered focus in building relationships
and adding value.
 Marriott International uses special CRM software to record
and track information regarding customer preferences ie:
floor level, bed size, special requests, newspapers, etc
 Supply chain management involves strategic management of all
operations relating to suppliers of resources – including
purchasing, manufacturing, transportation and distribution.
 “The customer is Captain of the supply chain” – Michael Dell”
Schermerhorn - Chapter 2
11
What is a quality-driven organization?
 Total quality management (TQM)
– Quality principles are an integral part of
organization's strategic objectives.
• Applying them to all aspects of operations
• Committing to continuous improvement
• Striving to meet customers’ needs correctly the first
time
Schermerhorn - Chapter 2
12
What is a quality-driven organization?
 Quality and continuous improvement
– Continuous improvement
• Always looking for new ways to improve upon
current performance - must become a way of life
Quality circles - In Search of Excellence 1982
–A group of workers who meet regularly to discuss ways of
improving quality of their products or services.
–Can result in cost savings from improved quality, increased customer
satisfaction, and employee empowerment.
Schermerhorn - Chapter 2
13
What is a quality-driven organization?
 Quality and manufacturing technology:
– Lean production
• Uses new technologies to streamline systems
– Flexible manufacturing
• Processes can be changed quickly to produce different products
– Agile manufacturing/mass customization
• Permits quick production of individualized products
–
–
–
–
–
Nike iD Lab
Bagdaddy
Levi’s
M&M’s
Porsche before, now everyone
Schermerhorn - Chapter 2
14
What is the internal environment and
organizational culture?
 Organizational culture is the system of
shared beliefs and values that develops
within an organization and guides the
behavior of its members.
Schermerhorn - Chapter 2
15
What is the internal environment and
organizational culture?
 Corporate Culture examples
Nike – internal branding/heritage
Southwest Airlines – liberty and freedom
Westjet airlines – a passion to serve
Royal Bank – personal accountability
Google – the challenge should be fun
Starbucks – sense of community
Schermerhorn - Chapter 2
16
What is the internal environment and
organizational culture?
 Strong cultures
– Commit members to do things that are in the best interests
of the organization – and ultimately the customer.
– Reinforce these habits.
 The best organizations have strong cultures that:
– Are performance-oriented
– Emphasize teamwork
– Allow for risk taking
– Encourage innovation
– Value the well being of people
Schermerhorn - Chapter 2
17
What is the internal environment and
organizational culture?
 Levels of Organizational Culture
– Observable culture
• What one sees and hears when walking around an
organization.
– Core culture
• Core values that influence behavior and give rise to
observable culture.
Schermerhorn - Chapter 2
18
What is the internal environment and
organizational culture?
 Leadership and organizational culture:
– Leaders should establish and maintain appropriate core
values.
– Criteria for evaluating core values:
• Relevance
• Pervasiveness
• Strength
– Symbolic leaders use symbols to establish and maintain
a desired culture – Nike heritage stories
Schermerhorn - Chapter 2
19
How is diversity managed in a
multicultural organization?
 Characteristics of multicultural organizations:
– Pluralism – minority AND majority cultures are
influential in setting policies
– Structural integration – minority cultures are well
represented in all types of positions in the organization
– Informal network integration – mentoring and support
groups assist in minority career development
– Absence of prejudice and discrimination – task force and
sensitivity training
– Minimum intergroup (subculture) conflict
Schermerhorn - Chapter 2
20
How is diversity managed in a
multicultural organization?
 Organizational subcultures
– Cultures based on shared work responsibilities and/or
personal characteristics.
 Common subcultures include:
– Occupational
– Functional
– Ethnic
– Racial
– Generational
– Gender
Schermerhorn - Chapter 2
21
How is diversity managed in a
multicultural organization?
 Diversity can be a source of competitive advantage.
 Diversity leadership approaches:
– Affirmative action
– Valuing diversity
– Managing diversity
Schermerhorn - Chapter 2
22
How is diversity managed in a
multicultural organization?
 Organizational challenge of managing
diversity:
– Changing organizational culture
– Changing organizational mission and practices
Schermerhorn - Chapter 2
23