Corporate Culture and The Environment Corporate Culture and The Environment

Chapter 3
Corporate Culture and

the Environment
Learning Outcomes
1. Define an organizational ecosystem and how the general and task environments
affect an organization’s ability to thrive
2. Explain the strategies that managers use to help organizations adopt to an
uncertain or turbulent environment
3. Define corporate culture and give organizational examples
4. Explain organizational symbols, stories, heroes, slogans, and ceremonies and
their relationship to corporate culture
5. Describe four types of cultures and how corporate cultures relates to the
environment
6. Define a cultural leader and explain the tools that a cultural leader uses to
create a high-performance culture
The External Environment
 The organizational environment consisting of both general and

task environments, includes all elements existing outside the
boundary of the organization that have the potential to affect
the organization.
 The general environment indirectly influences all organizations
within an industry and it includes social, economic, legal
political, international, natural, and technological.
The External Environment
 The task environment includes the sectors that conduct day-to-day

transactions with the organization and directly influence its basic
operations and performance.
 An organization ecosystem includes organizations in all the sectors of
the task and general environments that provide the resource and
information transactions, flows and linkages necessary for an
organization to thrive.
 The internal environment includes elements within the organization’s
boundaries, such as employee, management and corporate culture.
Dimensions of the Organization’s General,
Task, and Internal Environment
General Environment
 The international dimension of the external environment

represents events originating in foreign countries, as well as
opportunities for U.S. companies in to other countries.
 The technological dimension of the general environment
includes scientific and technological advances in society.
 The sociocultural dimension includes demographic
characteristics, norms, customs and values of a population
within which the organization operates.
General Environment
 The economic dimension represents the general economic

health of the country or region in which the organization
operates.
 The legal-political dimension includes government
regulations at the local, state, and federal levels, as well as
political activities designed to influence company behavior.
 The natural dimension includes all elements that occur
naturally on Earth, including plants, animals, rocks, and
natural resources such as air, water and climate.
Task Environment
• Sectors that have a direct working relationship with the

organization
- Customers
- Competitors
- Suppliers
- Labor market
Task Environment
 Customers are part of the task environment and include people

and organizations that acquire goods or services from the
organization.
 Competitors are organizations within the same industry or type
of business that vie for the same set of customers.
 Suppliers provide the raw materials the organization uses to
produce its output.
 The labor market represents the people available for hire by the
organization.
The Organization- Environment
Relationship
 When external factors change rapidly, the organization

experience high uncertainty.
 Uncertainty means that managers do not have sufficient
information about environmental factors to understand and
predict environmental needs and changes.
The External Environment and Uncertainty
Adapting To The Environment
 Strategic issues are evens and forces that alter an

organization’s ability to achieve its goals. As environmental
turbulence increases, strategic issues emerge more
frequently.
- Boundary-spanning roles
- Interorganizational partnerships
- Merger and joint ventures
 Boundary-spanning roles link to and coordinate the
organization with key elements in the external environment.
Adapting To The Environment
 Interorganizational partnerships reduce boundaries and

increase collaboration with other organization.
 A merger occurs when two or more organizations combine to
become one.
 A joint venture is a strategic alliance or program by two or
more organizations.
The shift to a Partnership Paradigm
The Internal Environment:
Corporate Culture
• Organizational culture is the set of key values, beliefs,
understandings, and norms shared by members of an
organization. Fundamental values are demonstrated in
organizations through;
Symbols
Stories
Heroes
Slogans, and
Ceremonies
Levels of Corporate Culture
 A symbol is an object, act, or event that conveys meaning to others
 A story is a narrative based on true events and is repeated
frequently and shared among organizational employees.
 A hero is a figure who exemplifies the deeds, character, and
attributes of a strong culture.
 A slogan, such as Disney’s “The happiest place on earth,” succinctly
expresses a key corporate value.
 A ceremony is a planned activity at a special event that is
conducted for the benefit of an audience.
Types of Culture
 A big influence on internal corporate culture is the external environment.
 Cultures can vary widely across organizations
 Organizations within same industry reveal similar cultural characteristics.
 The four categories associated with these differences are
- Adaptability
- Achievement
- Involvement, and
- Consistency
Types of Culture
 The adaptability culture is characterized by values that support the

company’s ability to interpret and translate signals from the
environment into new behavior responses.
 An achievement culture is results-oriented culture that values
competitiveness, personal initiative, and achievement.
 An involvement culture is a culture that places high value on meeting
the need of employees and values cooperation and equality.
 A consistency culture values and rewards a methodical, rational,
orderly way of doing things.
Four Types of Corporate Culture
Management The High-performance
Cultural
 Managers emphasize both values and business results to create a

high-performance culture.
 Culture enables solid business performance through the alignment
of motivated employees with the mission and goals of the company.
 Managers create and sustain adaptive high-performance cultures
through cultural leadership.
 Culture leaders define and articulate important values that are tied
to a clear and compelling mission, which they communicate widely
and uphold through their actions.
Combining Culture and Performance

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Chapter 3

Corporate Culture and

 The organizational environment consisting of both general and

 The task environment includes the sectors that conduct day-to-day

 The international dimension of the external environment

 The economic dimension represents the general economic

• Sectors that have a direct working relationship with the

 Customers are part of the task environment and include people

 When external factors change rapidly, the organization

 Strategic issues are evens and forces that alter an

 Interorganizational partnerships reduce boundaries and

 The adaptability culture is characterized by values that support the

 Managers emphasize both values and business results to create a

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