Chapter 3

Chapter 3 the environment and corporate culture
Organizational Environment: All elements existing outside the boundary of the organization that have
the potential to affect the organization Manager’s Challenge.
The environment includes competitors, resources, technology, and economic conditions that influence
the organization.
two layers of the organization’s external environment:
a- general environment: the outer layer that is widely dispersed and affects organizations
indirectly including social, economic, legal/political, international, natural, and technological
factors that influence all organizations about equally.
b- Task environment: closer to the organization and includes the sectors that conduct day-to-day
transactions with the organization and directly influence its basic operations and performance.
It is generally considered to include competitors, suppliers, customers, and the labor market.
internal environment: includes the elements within the organization’s boundaries, composed
of current employees, management, and especially corporate culture.
dimensions of the general environment:

a) International Dimension: represents events originating in foreign countries as well as
opportunities. It provides new competitors, customers, and suppliers and shapes social,
technological, and economic trends.
b) technological Dimension: includes scientific and technological advancements in a specific
industry as well as in society at large
c) sociocultural dimension: represents the demographic characteristics as well as the norms,
customs, and values of the general population.
d) economic dimension: represents the general economic health of the country or region in
which the organization operates.
e) legal-political dimension: includes government regulations at the local, state, and federal
levels.
f) legal-political dimension: includes government regulations at the local, state, and federal
levels.
pressure group: an interest group that works within the legal-political framework to influence
companies to behave in socially responsible ways.
The Organization–Environment Relationship
The environment creates uncertainty for managers to adapt to or influence the environment.
Environmental characteristics that influence uncertainty are the number of factors that affect the
organization and the extent to which those factors change. When external factors change rapidly, the
organization experiences high uncertainty.
Adapting to the Environment: If an organization faces uncertainty with respect to competition,

The Environment of Management customers, suppliers, or government regulation managers can use
several strategies. These strategies are:
a) Boundary-spanning roles link and coordinate the organization with key elements in the external
environment.
b) Interorganizational Partnerships: focused on reducing boundaries and increasing collaboration
with other organizations.
c) Mergers and joint ventures: it reduces uncertainty.
A merger occurs when two or more organizations combine to become one.
A joint venture is a strategic alliance by two or more organizations which occurs when the
project is too complex or risky for one firm alone.
The Internal Environment: Corporate Culture
The internal environment includes: corporate culture, production technology, organization structure,
and physical facilities. Corporate culture is extremely important in an organization attempting to achieve
a competitive advantage.
Culture can be analyzed at three levels,
a) visible artifacts: all the things one can see, hear, and observe by watching members of the
organization.
b) Invisible Expressed values: such as “The Penney Idea,” “The HP Way.
c) Invisible Underlying assumptions and deep beliefs: such as “people here care about one another
like a family”.
Environment and Culture: there is a large influence on internal corporate culture is the external
environment.
Adaptive Cultures: managers are concerned about customers and those internal people and
processes that bring about useful change. unhealthy culture may encourage the organization
to march resolutely in the wrong direction.
Types of Cultures: four types of culture, based on two dimensions

a) the extent to which the external environment requires flexibility or stability.
b) the extent to which a company’s strategic focus is internal or external.
1- The adaptability culture : values that support the company’s ability to interpret
and translate signals from the environment into new behavior responses.
2- The achievement culture is a results-oriented culture that values competitiveness,
aggressiveness, personal initiative, and willingness to work long and hard to
achieve results.
3- The involvement culture places high value on meeting the needs of employees and
values cooperation and equality.
4- The consistency culture values and rewards a methodical, rational orderly way of
doing things.
Shaping Corporate Culture for Innovative Response
Corporate culture has become increasingly important to managers as they recognize its
importance in attracting, motivating, and keeping good employees.
four organization outcomes based on the relative attention managers pay to cultural values
and business performance.
a) Quadrant A
companies pays little attention to either values or business results and is unlikely to survive
for long.
b) Quadrant B
companies are highly focused on creating a strong culture, but they don’t tie organizational
values directly to goals and desired business results.
c) Quadrant C
companies are focused primarily on the bottom-line results and pay little attention to
organizational values.
d) Quadrant D
companies put high emphasis on both culture and solid business performance as drivers of
organizational success.
Cultural Leadership
A cultural leader defines and uses signals and symbols to influence corporate culture.
Cultural managers influence culture by:
1) Articulating a vision for the organizational culture that generates excitement and that
employees can believe in.
2) Heeding the day-to-day activities that reinforce the cultural vision.

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Chapter 3 the environment and corporate culture

two layers of the organization’s external environment:

dimensions of the general environment:

The Organization–Environment Relationship

Adapting to the Environment: If an organization faces uncertainty with respect to competition,

The Internal Environment: Corporate Culture

Types of Cultures: four types of culture, based on two dimensions

2) Heeding the day-to-day activities that reinforce the cultural vision.

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