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Chapter 3

Chapter 3. The Environment and Corporate Culture. The External Environment. The elements of the world constantly change The external organizational environment includes 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 • Theexternal organizational environment includes all outside elements that affect the organization • General environment: • Affects organizations indirectly

  3. The External Environment • 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

  4. 3.1 - The General, Task, and Internal Environments

  5. 3.2 Sample External Environment

  6. General Environment: International • Managers must consider the international dimension • Events originating in foreign countries • New opportunities for U.S. companies in other countries • New competitors, suppliers, customers • New technological, social, and economic trends

  7. Technological • Massive advancements in a specific industry and society • Advances drive competition and help innovative companies gain market share

  8. Sociocultural Demographic characteristics, norms, customs, and values • Connected Generation or Generation Z has woven technology into every aspect of life • Widespread social equality • Growing diversity has implications for business

  9. Economic • Economic health of the country/region • Extended globally with uncertainty • Consumer purchasing power • Unemployment rate • Interest rates

  10. Legal-Political • Government regulation; state, local, and federal • Political activities • Government agencies and regulation • Managers work with lawmakers, educating them about • products and services • legislation’s impact on their business strategies

  11. Natural • Organizations must be sensitive to the environment • Growing importance and pressure • Natural dimension does not have own voice

  12. Natural • Environmental groups advocate action/policy • Reduce pollution • Develop renewable energy • Global warming • Sustainable use of scarce resources

  13. 3.3 Environmental Performance Index

  14. 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

  15. 3.4 External Environment and Uncertainty

  16. Adapting to the Environment • Boundary-spanning roles – link and coordinate the organization with external environment, seek: • Business intelligence • Big Data analytics • Interorganizational partnerships – reduce boundaries and begin collaborating with other organizations

  17. Adapting to the Environment • Mergers –occurs when two or more organizations combine to become one • Joint ventures – strategic alliance or program by two or more organizations

  18. 3.5 The Shift to a Partnership Paradigm

  19. 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

  20. 3.6 Levels of Corporate Culture

  21. 3.7 Four Types of Corporate Culture

  22. Shaping Corporate Culture for Innovative Response • Corporate culture plays a key role in learning and innovate responses to: • Threats from the external environment • Challenging new opportunities • Organizational crises

  23. Managing the High-Performance Culture • Bottom-line strategies are successful in the short term • Successful companies balance culture and business performance • Culture is the “glue” that holds the organization together

  24. High-Performance Culture • Based on solid organizational mission/purpose • Shared adaptive values that guide decisions and practices • Encourages individual employee ownership • Bottom-line results • Organization’s culture

  25. 3.8 Combining Culture and Performance

  26. 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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