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Chapter 3

Chapter 3. The Environment and Corporate Culture. The External Environment. The elements of the world constantly change All outside elements that affect the organization General environment: Affects organizations indirectly

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Chapter 3

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  1. Chapter 3 The Environment and Corporate Culture

  2. The External Environment • The elements of the world constantly change • All outside elements that affect the organization • General environment: Affects organizations indirectly • Task environment: Sectors that conduct transactions with the organization • Organizational ecosystem: Formed by the interaction among a community of organizations in the environment • Internal environment: Elements within the organization boundaries

  3. 3.1 - The General, Task, and Internal Environments

  4. General Environment: International • Globalization influences all other aspects of the external environment • New competitors, customers, suppliers • Changes in social, technological, and economic trends • All organizations must compete and think globally • Economic power has shifted to China and India • The global environment is complex and ever-changing

  5. General Environment: Technological • Massive scientific & technological advancements in a specific industry and society  Massive changes for org. & industries  Drive competition and help innovative companies gain market share • Examples: Internet access, smart phone, laptop, videoconference, etc.

  6. General Environment: Sociocultural Demographic characteristics, norms, customs, and values • Connected Generation or Generation C has woven technology into every aspect of life • U.S. population is aging • Growing diversity has implications for business

  7. General Environment :Economic • Economic health of the country/region • Extended globally with uncertainty • Consumer purchasing power • Unemployment rate  inflation • Interest rates – Discount rate, federal funds rate, prime rate

  8. General Environment:Legal Political • Government regulations; state, local, and federal government agencies • Political activities • Managers must recognize the power of pressure groups (interest groups) • Work to influence companies to behave in a socially responsible way

  9. General Environment: Natural • Organizations must be sensitive to the environment • Growing importance and pressure • Natural dimension does not have own voice • Environmental groups advocate action/policy • Reduce pollution • Develop renewable energy • Global warming • Sustainable use of scarce resources

  10. 3.2 - Environmental Performance Index

  11. Task Environment • Customers • Competitors • Suppliers • Labor Market

  12. 3.3 - Sample External Environment

  13. Organization-Environment Relationship • The environment creates uncertainty for managers • Managers must respond and design adaptive organizations • Uncertainty – managers do not have sufficient information about environmental factors to understand and predict environmental needs and changes

  14. 3.4 -External Environment & Uncertainty

  15. Adapting to the Environment • Boundary-spanning roles – link and coordinate the organization with external environment, seek: • Business intelligence • Competitive intelligence • Interorganizational partnerships – reduce boundaries and begin collaborating with other organizations • M& A (Mergers & Acquisitions) –occurs when two or more organizations combine to become one • Joint ventures – strategic alliance or program by two or more organizations

  16. 3.5 - The Shift to a Partnership Paradigm

  17. The Internal Environment: Corporate Culture Corporate culture is the set of key values, beliefs, understandings, and norms that members of an organization share • Symbols • Stories • Heroes • Slogans • Ceremonies

  18. Group Project 1 • Comparative Study b/w Korean Corporate Culture & American Corporate Culture in the Automobile Industry • Impacts of cultural differences on supply chain management (SCM). • SCM is considered a key to success of Hyundai. Is it really true? We want to investigate the real stories.

  19. 3.6 -Levelsof Corporate Culture

  20. 3.7 -Four Types of Corporate Culture

  21. Types of Culture (continued) • Adaptability C.  autonomy • Adaptability vs. Achievement= flexibility vs. stability • Involvement • Consistency

  22. Shaping Corporate Culture for Innovative Response • Corporate culture  attracting, motivating, and keeping good employees • People (employees) & how they are treated  Increasing the firm value the most • Corporate culture plays a key role in learning and innovate responsesto threats from the external environment, challenging new opportunities, or organizational crises

  23. Managing the High-Performance Culture • Bottom-line strategies are successful in the short term • Successful companies balanceculture and performance • Culture is the “glue” that holds the organization together • Based on solid organizational mission/purpose • Shared adaptive values that guide decisions and practices • Encourages individual employee ownership of: • Bottom-line results • Organization’s culture

  24. 3.8 - Combining Culture and Performance

  25. Cultural Leadership • Defines and uses signals and symbols to influence corporate culture • Articulate a vision for the organizational culture that employees can believe in • Heeds the day-to-day activities that reinforce the cultural vision • Leaders communicate through words and actions

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