MGMT5
3
Organizational
Environments and
Cultures
© 2012 Cengage Learning
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
be successful
© 2012 Cengage Learning
External Environments
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
© 2012 Cengage Learning
Environmental Change
The rate at which a company’s general and specific
environments change.
•Stable
– slow rate of change
•Dynamic
– fast rate of change
© 2012 Cengage Learning
Punctuated Equilibrium
Theory
Stability
Dynamic
Change
Dynamic
Change
Dynamic
Change
Stability
© 2012 Cengage Learning
Environmental Complexity
• Simple
– few environmental factors that affect organizations
• Complex
– many environmental factors that affect organizations
© 2012 Cengage Learning
Resource Scarcity
The abundance or shortage of critical resources in
an organization’s external environment.
© 2012 Cengage Learning
Uncertainty
The extent to which managers can understand or
predict the external changes and trends affecting
their business.
© 2012 Cengage Learning
Environmental Change,
Environmental Complexity,
and Resource Scarcity
© 2012 Cengage Learning
General Environment
• General environment
– the economy and the technological, sociocultural, and
political/legal trends that indirectly affect all
organizations
• Specific environment
– unique to a firm’s industry
– directly affects the way its conducts daily business
© 2012 Cengage Learning
General and Specific
Environments
© 2012 Cengage Learning
Economy
• A growing economy provides a favorable
environment for business growth.
• Business confidence indices show how
confident managers are about future business
growth.
© 2012 Cengage Learning
Technological Component
• Technology
– an umbrella term for the knowledge, tools, and
techniques used to transform inputs into outputs
Changes in technology can help companies provide
better products or produce their products more
efficiently.
© 2012 Cengage Learning
Sociocultural Component
• Demographic characteristics, general behavior,
attitudes, and beliefs of people in a particular
society
© 2012 Cengage Learning
Demographics: Percentage of
Married Women (with Children)
Who Work
© 2012 Cengage Learning
Political/Legal Component
• The legislation, regulations, and court decisions
that govern and regulate business behavior
• Many managers are unaware of the potential
legal risks associated with traditional
managerial decisions like recruiting, hiring, and
firing employees.
© 2012 Cengage Learning
Specific Environment
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•
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Customers
Competitors
Suppliers
Industry regulations
Advocacy groups
© 2012 Cengage Learning
Customer Component
• Reactive customer monitoring
– Identifying and addressing customer trends and
problems after they occur
• Proactive customer monitoring
– Identifying and addressing customer needs, trends,
and issues before they occur
© 2012 Cengage Learning
Competitor Component
• Competitors
– companies in the same industry that sell similar
products or services
• Competitive analysis
– a process of monitoring the competition that involves
identifying competition, anticipating their moves, and
determining their strengths and weaknesses
© 2012 Cengage Learning
Supplier Component
• Suppliers
– companies that provide material, human, financial,
and informational resources to other companies
Supplier dependence
vs.
Buyer dependence
© 2012 Cengage Learning
Behaviors
• Opportunistic behavior
– when one party benefits at the expense of another
• Relationship behavior
– focuses on establishing a mutually beneficial, longterm relationship between buyers and sellers
© 2012 Cengage Learning
Industry Regulation Component
Regulations and rules that govern the practices
and procedures of specific industries, businesses,
and professions
© 2012 Cengage Learning
Federal Regulatory
Agencies and Commissions
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•
•
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Consumer Product Safety Commission
Department of Labor
Environmental Protection Agency
Equal Employment Opportunity Commission
Federal Communications Commission
Federal Reserve System
Federal Trade Commission
Food and Drug Administration
National Labor Relations Board
Occupational Safety and Health Administration
Securities and Exchange Commission
© 2012 Cengage Learning
Advocacy Groups
Concerned citizens who band together to try to
influence the business practices of specific
industries, businesses, and professions
•Public communication
•Media advocacy
•Product boycott
© 2012 Cengage Learning
Environmental Scanning
Searching the environment for important events or
issues that might affect an organization.
•Managers scan the environment to reduce
uncertainty.
•Organizational strategies affect environmental
scanning.
•Environmental scanning contributes to
organizational performance.
© 2012 Cengage Learning
Interpreting Environmental Factors
• Threat or opportunity?
• Threat
– managers typically take steps to protect the company
from further harm
• Opportunity
– managers consider strategic alternatives for taking
advantage of those events to improve performance
© 2012 Cengage Learning
Acting on Threats and
Opportunities: Cognitive
Maps
© 2012 Cengage Learning
Internal Environments
5. explain how organizational cultures
are created and how they can help
companies be successful
© 2012 Cengage Learning
Creation and Maintenance of
Organizational Cultures
• Primary source of organizational culture is the
company founder.
• Organizational culture is sustained by…
– organizational stories
– organizational heroes
© 2012 Cengage Learning
Keys to an Organizational
Culture that Fosters Success
© 2012 Cengage Learning
Three Levels of
Organizational Culture
© 2012 Cengage Learning
Changing Organizational Cultures
• Behavioral addition
• Behavioral substitution
• Change visible artifacts
• Hiring people with values and beliefs consistent
with desired culture
© 2012 Cengage Learning
REELTOREAL
Charlie Wilson’s War
1.
2.
3.
<click screenshot for video>
© 2012 Cengage Learning
This chapter discussed
organizational culture as having
three levels of visibility. Visible
artifacts are at the first level and
are the easiest to see. Which visible
artifacts did you observe in this
sequence?
Values appear at the next level of
organizational culture. You can
infer a culture’s values from the
behavior of organizational
members. Which values appear in
this sequence?
Organizational members will
unconsciously behave according to
the basic assumptions of an
organization’s culture. You also
infer these from observed behavior.
Which basic assumptions appear
in this sequence?
REELTOREAL
Camp Bow Wow
1.
2.
<click screenshot for video>
3.
© 2012 Cengage Learning
What aspects of Camp Bow
Wow’s corporate culture reflect
the surface level of the
organizational culture? What
aspects reflect the values and
beliefs? What aspects reflect the
unconsciously held assumptions
and beliefs.
Why did Camp Bow Wow have
to change its culture when it
became a national franchise?
What impact does Heidi
Ganahl’s personal story have on
employees at Camp Bow Wow?