Remember the difference between a boss a leader a boss says go a leader says lets go
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“Remember the difference between a boss & a leader a boss says GO!- a leader says “Lets Go”. PART II The Environment Of Management. Chapter 3 The Environment & Corporate Culture. Organizational Environment. General Environment. Technological. Task Environment. Customers. International.

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Remember the difference between a boss a leader a boss says go a leader says lets go

“Remember the difference between a boss & a leader a boss says GO!- a leader says “Lets Go”


Part ii the environment of management

PART IIThe Environment Of Management

Chapter 3

The Environment & Corporate Culture


Organizational environment

Organizational Environment

General Environment

Technological

Task Environment

Customers

International

Internal Environment

Sociocultural

Labor Market

Employees

Culture

Competitors

Management

Suppliers

Legal/Political

Economic


Organization environment

Organization Environment

  • All elements existing outside the organizations boundaries that have the potential to affect the Organization

  • Competitors

  • Resources

  • Technology

  • Economic Conditions


The external environment

The External Environment

  • Further conceptualized having two layers

General Environment

Task Environment


General environment

General Environment

  • The layer of the external environment that affects the organization indirectly

    These events do not directly change day-to-day operations but they do affect all organizations eventually

International

Technological

Socio-Cultural

Economic

Legal-Political


Task environment

Closer to Organization & includes the sectors that conduct day-to-day transactions with the organization and directly influence its basic operations & performance

Task Environment

Competitors

Suppliers

Customers


Internal environment

Includes the elements within the Org boundaries.

Internal Environment

Employees

Management

Corporate Culture


General environment1

General Environment

International

  • The International dimension of the external environment represents events originating in foreign countries as well as opportunities for American Companies in other countries

  • The international environment provides new competitors, customers & suppliers as well as shapes social (bottled water growing consciousness for cleaner and healthier living, today's digital age of mobile phones and the internet), technological and economic trends


Remember the difference between a boss a leader a boss says go a leader says lets go

  • Today, every company must think internationally

  • Managers who used to think only about the domestic environment must learn new rules to cope with goods, services and ideas circulating around the globe

  • Industries- including automobiles, entertainment, consumer electronics will have to compete on a global basis or disappear

  • Examples: “Peace dividend: An amount of money taken from a defense budget and appropriated elsewhere in times of peace when less money is required for defense than in times of hostility or war ” brought on by the end of the cold war; forcing large Co. to convert a significant portion of their operations into nonmilitary production


Technological dimension

Technological Dimension

  • The dimension of the general environment that includes scientific & technological advancements in the industry & society at large

  • Striking advances have been in the computer industry

  • Home video cameras got more processing power than the old IBM 360

  • One can get real time information from their customers and then make faster, better informed operating decisions: Levis customized products


Socio cultural dimension continue

Socio-Cultural Dimension Continue

  • Demography also shapes society’s norms & values.

  • Examples: sociocultrual trends that affecting many companies include trend toward no smoking, greater purchasing power ofyoung children, increased diversity ofconsumers, with specializedmarkets for groups suchas Hispanics (Spanish-speaking Latin America)and women over age 30 (M&S)

  • Launching aSpanish-language newspaperin order to respond to changes in the sociocultural environment; boosted earnings of ABC


Socio cultural dimension

Socio-Cultural Dimension

  • Important characteristics are geographical and population density, age, and education levels.

  • Key demographic trends in the United States:

  • Hispanics will make up nearly a quarter of the U.S. population by the year 2050.

  • Population and the workforce continue to age with the baby boomers.

  • The single father is the fastest growing living arrangement.

  • The U.S. will continue to receive large numbers of immigrants especially from Asia and Mexico.


Economic

Economic

  • Representing the overall economic health of the country or region in which the Organization functions

    (Consumer purchasing power, Unemployment rate, interest rates, labor market,)

    are all part of Org economic environment

  • One significant recent trend in the economic environment is the frequency of mergers & acquisitions ( Disney & ABC Television)

  • The impact on employees can be overwhelming creating uncertainty about the future….

    HOW?

  • Employee anxiety & fear of losing their jobs?

  • Fear of becoming obsolete, might not be needed anymore


Legal political

Legal-Political

  • Includes federal, state, and local government regulations & political activities designed to control company behavior

  • Federal Government influences organizations through the OSHA, EPA ( environmental Protection Agency), import & export restrictions etc.. (minimum wage legislation, trade regulations)

  • Pressure groups that work within the legal-political framework to influence companies to behave in socially responsible ways

    Examples : Greenpeace, make significant changes in the whaling, tuna fishing and seal fur industries


Political factors

Political Factors.

  • The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. You must consider issues such as:

  • 1.How stable is the political environment?

  • 2.Will government policy influence laws that regulate or tax your business?


Task environment1

Task Environment

The task environment includes those sectors that have direct working relationship with the Organization, among them Customer,Competitors, Suppliers & the Labor market


Customers

Customers

  • Those people and the Organizations in the environment who acquire goods or service from the organization are Customers

  • Customers as are important because they determine the Org Success

  • Patients are the Customers of Hospital

  • Students the customers of Schools

  • Travelers the Customers of Airlines


Customers1

Customers…………….

  • To survive in competition with mass merchandisers like Wal-Mart (World's largest grocery retailer) , small retailers have been forced to come up with new ways to win & keep customers

  • Companies such as AT&T, General Foods have all designed special programs & advertising campaigns to court their older customers, who are, with the aging of baby boomers


Competitors

Competitors

  • Other organizations in the same industry or type of business that provide goods or services to the same set of customers

  • Each industry is characterized by specific competitive issues :

    Steel---Pharmaceutical Industry

  • Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.' Nike has a healthy dislike of is competitors :Reebok

  • Companies in some industries despite the competitive wars worldwide, cooperate to achieve common goals

    IBM, Apple Compaq joint venture: to break Microsoft domination


Suppliers

Suppliers

  • The raw materials the organization uses to produce its output are provided by suppliers

  • University – Utilize hundreds of suppliers for paper, pencils, cafeteria food, computers, trucks, fuel, electricity and textbooks

  • Companies are now using fewer suppliers and trying to build good relationships with them so that will receive high-quality parts at low prices


Remember the difference between a boss a leader a boss says go a leader says lets go

  • The power of suppliers tends to be a reversal of the power of buyers.

  • Where the switching costs are high e.g. Switching from one software supplier to another.

  • Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft.

  • There is a possibility of the supplier integrating forward e.g. Brewers buying bars.

  • Customers are fragmented (not in clusters) so that they have little bargaining power e.g. Gas/Petrol stations in remote places.


Labor market

Labor Market

  • The people in the environment who can be hired to work for the Organization

  • Org needs a supply of trained, qualified personnel

  • Unions, employee association can influence the Org Labor market

    Northern Telecom---Complex environment Case Study


The organization environment relationship

The Organization-Environment Relationship

  • Why do Organization Care about factors in the external environment?


Remember the difference between a boss a leader a boss says go a leader says lets go

Reason is that the environment creates uncertainty for organization managers, and they must respond by designing the organization to adapt to the environment or to influence the environment


External environment and uncertainty

External Environment and Uncertainty

High

High

Uncertainty

Adapt to

Environment

Rate of

Change in

Factors in

Environment

Low

Uncertainty

Low

Low

High

Number of Factors in Organization Environment


Environmental uncertainty

Environmental Uncertainty

  • Uncertaintymeans that managers do not have sufficient information about environmental factors to understand & predict environmental needs & changes

  • When external factors change rapidly, the organization experiences very high uncertainty: electronic industry

  • Two basic Strategies for coping with high environmental uncertainty


Adapting to the environment

Adapting To The Environment

If the Org faces increased uncertainty with respect to competitors, customers, suppliers or government regulations, managers can use several strategies to adapt to these changes

Boundary- Spanning Role

Forecast & Planning

Flexible Structure

Mergers & Joint Ventures


Influencing the environment

Influencing The Environment

The other major strategy for handling environmental uncertainty is to reach out and change those elements causing problems: Techniques used for changing environment includes:

Advertising & Public Relations

Political Activity

Trade Associations


Boundary spanning roles

Boundary-Spanning Roles

  • Departments & boundary-spanning roles link and coordinate the Org with key elements in the external environment.

  • Boundary spanners serves two purposes

    • They detect & process information about changes in the environment

    • They represent the Org interest to the environment

      How………


Boundary spanning roles continue

People in dept’s such as marketing & purchasing span the boundary to work with customers & suppliers, both face-face & through market research

A Co. surveys customers twice a year about the desktop-publishing technology they use or planning to use within next 12 months/ blind survey to determine if the company should enter digital, short run printing which is expected to be a $15 billion industry in year2000

Competitive Intelligence, also known as snooping & spying

80% of the Fortune 1000 Companies maintain in house snoops, also known as competitor intelligence professionals

Co. hire private detectives to dig through competitors trash

Most of their work is legal, relying on commercial database, news clippings & professional contacts

Boundary Spanning RolesContinue


Forecasting planning

Forecasting & Planning

  • Forecasting & planning for environmental changes are major activities in many corporations

  • Planning departments often are created when uncertainty is high

  • Forecasting is an effort to spot trends that enable managers to predict future events

    Co. monitors 16000 newspaper & magazines and predicts future trends

  • Companies devised specific management plans for handling crises like hostile takeover attempt or product tempering


Flexible structure

Flexible Structure

  • An Organization structure should enable it to effectively respond to shifts in the environment

  • Loose flexible structure works best when Org experience uncertainty created by shifts in the external environment or by innovation within the Org

  • Tight structure is most effective in a certain environment


Remember the difference between a boss a leader a boss says go a leader says lets go

Organic Structures

Org that is free flowing, has few rules & regulations, encourages teamwork among employees & decentralize decision making to employees doing the job

Works best when the environment changes rapidly

Co. set up teams which includes members from multiple dept’s who can provide expertise in problems like plant explosion etc

Mechanistic Structures

Characterized by rigidly defined task, many rules & regulations, little teamwork & centralization of decision making

Works best when environment is stable


Mergers joint ventures

Mergers

also a way to reduce uncertainty

Occurs when two or more Organization’s combine to become one

reducing uncertainty in the customer sector

Joint Ventures

involves a strategic alliance by two or more Org’s

Occurs when the project is too complex, expensive, or uncertain for one firm to do alone

Many small business are turning into joint ventures with large firms or with international partners

Small Canadian pharmaceuticals Co. has teamed up with two giant co. to promote new campaign.

Larger partner will provide sales staff, distribution channels, financial resources or research staff

Mergers & Joint Ventures


Influencing the environment1

Influencing the Environment

Advertising & Public Relations

  • advertising is an important way to reduce uncertainty about clients

  • became a high successful way to manage demand for a company’s product

  • Companies spend large amounts of money to influence consumer tastes

  • Hospitals advertise on billboards-newspaper to promote special services


Public relations

Public Relations

  • Similar to advertising but except that its goal is to influence public opinion about the Co. itself

  • Co. do care about their public image

  • PR & good image are accomplished through advertising as well as speeches & press reports

  • Companies in the tobacco industry have launched an aggressive public relations campaign touting smokers rights & freedom of choice in an effort to survive in this antismoking era

  • Dow became infamous : attempts to change this view with an advertising campaign- “Dow Lets You Do Great Things”


Political activity

Political Activity

  • Organizational attempts, such as lobbying, to influence government legislation & regulation

  • Many corporations pay lobbyists to express their views to federal & state legislators

  • Foreign companies becoming increasingly savvy in U.S political maneuvering

  • Example: GM enlisted political bigwigs in its successful effort to settle a battle with U.S Transportation Dept over the safety of certain of its pickup trucks…… Resulted in $1billion saving


Trade associations

Trade Associations

  • An association made up of Organizations with similar interests for the purpose of influencing the environment

  • National Association of Manufacturers

  • National Rifle Association

  • NTMA( National Tooling & Machining Association) functions primarily as a center of knowledge


The internal environment corporate culture

The Internal EnvironmentCorporate Culture

  • The internal environment within managers work includes corporate culture, production technology, Org Structure & physical facilities

  • Of these, corporate culture has surfaced as extremely important to competitive advantage

  • The internal culture must fit the needs of the external environment & company strategy

  • When this fit occurs, highly committed employees create a high-performance org that is tough to beat


Levels of corporate culture

Levels of Corporate Culture

Culture that can be seen at the surface level

Visible

1. Artifacts, such as dress, office layout, symbols, slogans, ceremonies

Invisible

2. Expressed values, such as “The Penney Idea,” “The HP Way”

3. Underlying assumptions and deep beliefs, such as “people are lazy and can’t be trusted”

Deeper values and shared understandings held by organization members


Culture

Culture

  • The set of key values, beliefs, understandings, and norms that members of an Org share

  • Culture is a pattern of shared values and assumptions about how things are done within the org

  • Culture can be analyzed at three levels

Visible artifacts

Dress, office layout, symbols

Slogans, ceremonies

Invisible

Expressed values & beliefs

Which are not observable

Underlying assumptions

&

Deep beliefs


Remember the difference between a boss a leader a boss says go a leader says lets go

  • Visible artifacts are the things one can see, hear and observe by watching members of the Org

  • At a deeper level are the expressed values & beliefs which are not observable but can be discerned from how people explain & justify what they do : values that members of the Org hold at conscious level

  • Underlying assumptions and beliefs are the essence of Culture and subconsciously guide behavior & decisions

    In some Org basic assumption might be that people are essentially lazy & shirk their duties whenever possible: thus employees are closely supervised and given little freedom and colleagues are frequently suspicious of one another


Remember the difference between a boss a leader a boss says go a leader says lets go

  • The key determining factor in successful companies to be a culture in which employees share such a strong vision that they know in their hearts what is right for the company ( HP, Walt Disney, Proctor & Gamble)

  • Some companies put values in writing so they can be passed on to new generations of employees : HP created a list of cultural concepts called “ The HP Way”


Any co culture can be interpreted by observing these factors

Any Co. culture can be interpreted by observing these factors…….

Symbols

  • An object, act, or event that conveys meaning to others

  • President of a Co. symbolizing his commitment to a true open-door policy, ripped his office door from its hinges & suspended it from the lobby ceiling for all employees to see

  • Another president wanted to break down the vertical walls that isolated departments & develop a team culture


Stories

STORIES

  • Stories communicates Org culture

  • Such stories can reveal the kinds of behaviors that are valued by the Org

  • Stories told to new employees to keep the Organization’s primary values alive

  • McDonalds’s QSC&V

  • CEO, tells how he gave a woman a new washing machine because she complained about needing a broken belt replace

    “story reinforces the store’s no-questions-asked return policy”


Heroes

HEROES

  • A figure who exemplifies the deeds, character, and attributes of a corporate culture

  • Heroes are role models for employees to follow

  • The deeds of heroes are out of the ordinary but not so far out as to be unattainable by other employees

  • Heroes know how to do the right thing in the Org

  • VP fired earlier in his career for persisting with a new product ……….

  • Lee proved the courage to work for $1 a year when first came to Chrysler


Slogans

SLOGANS

  • Phrase or sentence that in brief expresses a key corporate value

  • Pepsi- describe the value of turning a bright young people into strong managers is “ We take eagles and teach them to fly in formation”

  • “ You do not have to please the boss; you have to please the customer” embroidered in Spanish on the pockets of workers jackets: Sequins Intel where 80 % of the employees are Hispanics


Ceremonies

Ceremonies

  • A planned activity that makes up a special event and is conducted for the benefit of an audience

  • Ceremonies are special occasions that reinforce valued accomplishments, create a bond among people by allowing them to share an important event & celebrate heroes

  • They setting is typically an auditorium, infront of a large, cheering audience, and everyone dresses in glamorous evening clothes

  • The most successful consultants are introduced by film clips.


Summary

Summary

  • Many managers help define important symbols, stories, and heroes to shape the culture


Environment culture

Environment & Culture

  • A big influence on internal corporate culture is the external environment.

  • Strong corporate culture alone can not ensure business success unless the culture encouraged healthy adaptation to the external environment

  • If the external environment requires extraordinary customer service, the culture should encourage good service; if it calls for careful technical decision making, cultural values should reinforce managerial decision making


Adaptive cultures

Adaptive Cultures

Baseball team Culture

Club Culture

Academy Culture

Fortress Culture


Baseball team culture

Baseball team culture

  • Emerges in an environmental situation with high-risk decision making & fast feedback from the environment

  • Talent, innovation & performance are valued and rewarded

  • Toper performers see themselves as “free agents

  • Performers with “low batting averages” are quickly dropped from line up

  • BTC are found in fast-paced, high risk companies involved in areas such as movie production, advertising, and software development where futures are bet on new product or project


Club culture

Club Culture

  • Characterized by loyalty, commitment and fitting into the group

  • This stable, secure environment values age & experience and rewards seniority

  • Individuals start young & stay( military)

  • promote from within & members are expected to progress slowly, proving competence at each level

  • Individuals tend to be generalists & may have vast experience in a number of Org Functions

  • Reluctant to change


Academy culture

Academy culture

  • Hires young recruits interested in long-term association & slow steady climb up the Org

  • Unlike club culture, employees rarely cross one division to another

  • Person enters a specific “track” and gains a high level of expertise in that area

  • Technical mastery are the bases for reward and advancement ( coca-cola, Ford, GM)

  • Limit interdepartmental collaboration but works very well in stable environment


Fortress culture

Fortress Culture

  • May emerge in an environmental survival situation

  • Textile firms & savings & loan Org are examples of former dominant industries that are now retrenching for survival

  • This culture offers little job security or opportunity for professional growth while companies restructure & downsize to fit the new environment

  • Also offers tremendous turn around opportunities for managers with confidence and love of challenge


Shaping corporate culture for the twenty first century

Shaping Corporate Culture For The Twenty-First Century

  • Changing And Merging Corporate Cultures

  • Symbolic Leadership


Changing and merging corporate cultures

Changing And Merging Corporate Cultures

  • A corporation’s culture may not always be alignment with its needs & environment

  • The difference between desired culture norms and values and actual norms & values is called the Culture Gap

  • Culture gaps can be immense, especially in mergers & acquisitions

    HOW?


Remember the difference between a boss a leader a boss says go a leader says lets go

  • 90% mergers never live up to expectations

  • One reason is that managers are able to integrate the acquired firm’s financial systems & production technologies, they typically unable to integrate the unwritten norms and values that have an ever greater impact on a Co. success

    (global companies & cross-cultural mergers & acquisitions)


Pre press graphics harty press

Pre-Press Graphics/ Harty Press

  • Trying to put two cultures together can be a killer

  • At harty workers wear smudged aprons, have ink under their fingernails and carry union cards- loose & flexible style

  • At Pre-Press people in running shoes & jeans sit before computer screens- everything precisely measured, employees forbidden to make person phone calls, 30 minutes lunch break

  • Two cultures clashed from the beginning, but the most damaging tensions were related to employee anxiety and fear of losing their jobs


Remember the difference between a boss a leader a boss says go a leader says lets go

  • Pre-Press employees were reluctant to share knowledge for fear that once Harty employees learned new skills, they might no longer be needed

  • Harty employees with conventional printing skills saw a digital future and worried that they were about to become obsolete

    “Managers often forget that human systems of a company are what make or break any change initiative”


Symbolic leadership

Symbolic Leadership

  • They way managers change norms and values toward what is adaptive to the external environment is through symbolic leadership

  • Managers use Symbols, stories, slogans and ceremonies to change the corporate culture

  • Mangers should over communicate to ensure that employees understand the new culture values, and they must signal these values in actions as well as words………………


Symbolic leader continues

Symbolic leader continues

  • Symbolic leader influence culture in the following manner and to adapt it external environment:

  • Use of artifacts such as public statements, ceremonies, stories, heroes, symbols and slogans

  • Changing culture is not easy, but through their words-and particularly their actions symbolic leaders let employees know what really counts in the company


Remember the difference between a boss a leader a boss says go a leader says lets go

  • Read Examples of symbolic leaders


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