MANAGING THE
ENVIRONMENT
AND THE
ORGANIZATION’S
CULTURE 3
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LEARNING OBJECTIVES
1. Contrast the actions of managers according to the omnipotent
and symbolic views.
2. Describe the constraints and challenges facing managers in
today’s external environment.
Develop your skill at scanning the environment so you can
anticipate and interpret changes taking place.
3. Discuss the characteristics and importance of organizational
culture.
Know how to read and assess an organization’s culture.
4. Describe current issues in organizational culture.
“A key to success in
READING AN ORGANIZATION’S management and in your
CULTURE: FIND ONE WHERE YOU'LL BE career is knowing how to
HAPPY
“read” an organization’s
culture so you can find one
Copyright © 2014 Pearson Education, Ltd in which you’ll be happy.”
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SCANNING THE ENVIRONMENT
Do background work. Check out the company’s Web site.
What impression do you get from it? Are corporate values
listed? Mission Statement?
Observe the physical surroundings and corporate symbols.
Notice visible symbols of organizational culture, such as,
logos, signs, posters, pictures, photos, style of dress, etc.
How would you characterize the people who work there ?
Are they formal? Casual? Serious? Jovial? Open?
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THE MANAGER:
OMNIPOTENT OR SYMBOLIC?
Omnipotent view of management: The view that
managers are directly responsible for an
organization’s success or failure.
Symbolic view of management: The view that
much of an organization’s success or failure is due
to external forces outside managers’ control.
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MANAGERIAL CONSTRAINTS
In reality, managers are neither all-powerful nor
helpless. But their decisions and actions are
constrained.
As you can see in Exhibit 3-1, external
constraints come from the organization’s
environment and internal constraints come from
the organization’s culture.
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EXHIBIT 3-1
CONSTRAINTS ON MANAGERIAL DISCRETION
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THE EXTERNAL ENVIRONMENT:
CONSTRAINTS AND CHALLENGES
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THE EXTERNAL ENVIRONMENT
The External Environment: Those factors and forces outside the
organization that affect it’s performance. The external environment
includes several different components.
Economic – Encompasses factors such as interest rates, inflation,
changes in disposable income, stock market fluctuations, and
business cycle stages.
Demographic – Concerned with trends in population characteristics
such as age, race, gender, education level, geographic location,
income and family composition.
Political/Legal – Concerned with federal, state and local laws, and
global laws.
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THE EXTERNAL ENVIRONMENT
(CONT.)
Technological – Concerned with scientific or
industrial innovations.
The Sociocultural – Concerned with societal and
cultural factors such as values, attitudes, trends,
traditions and lifestyles, beliefs, tastes, and patterns
of behavior.
Global – Encompasses issues associated with
globalization and a world economy.
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THE EXTERNAL ENVIRONMENT
(CONT.)
The demographic component is concerned with
trends in population characteristics such as age,
race, gender, education level, geographic
location, income, and family composition.
The political/legal component looks at federal,
state, and local laws, as well as global laws and
laws of other countries. It also includes a
country’s political conditions and stability.
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EXHIBIT 3-2
COMPONENTS OF THE EXTERNAL ENVIRONMENT
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FACTORS IMPACTING GLOBAL
BUSINESSES
Like many global businesses, Nestlé is facing increased
commodity (raw materials) costs.
Nestlé, the maker of products from Crunch chocolate
bars to Nescafé coffee to Purina pet foods, spends more
than $30 billion a year on raw materials.
Commodity costs are just one of the many volatile
economic factors facing organizations. Managers need
to be aware of the economic context so they can make
the best decisions for their organizations.
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THE GLOBAL ECONOMY AND THE
ECONOMIC CONTEXT
The lingering global economic challenges – once
described as the “Great Recession” by some analysts –
began with the turmoil in the United States housing
market.
As credit markets collapsed, businesses were impacted.
Credit was no longer readily available to fund businesses.
Economic difficulties spread across the globe.
The fragile economic recovery continues to be a business
constraint.
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ECONOMIC INEQUALITY AND THE
ECONOMIC CONTEXT
As economic growth has languished and sputtered,
and as people’s belief that anyone could prosper
declined, social discontent over growing income
gaps has increased.
Business leaders must realize that societal attitudes
in the economic context have the potential to create
constraints.
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The Demographic
Environment
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THE DEMOGRAPHIC ENVIRONMENT
(CONT.)
The size and characteristics of a country’s population can have a
significant effect on what it’s able to achieve in politics, economics, and
culture.
Baby Boomers – Born between 1946 and 1964, one of the largest and
most influential demographic groups in history.
Gen Y or (Millennials) – Children of Baby Boomers, born between 1978
and 1994, making an impact on technology and the workplace.
Post-Millennials – The youngest group identified age group—basically
teens and middle-schoolers. They have also been called the iGeneration
because advances in technology have customized everything to the
individual.
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ASSESSING ENVIRONMENTAL
UNCERTAINTY
Environmental uncertainty refers to the degree of
change and complexity in an organization’s environment.
The first dimension of uncertainty is change.
1. Organizations are stable, minimal change
2. Organizations are dynamic, frequent change
Organizational Complexity refers to the number of
components in an organization’s environment and the
extent of the organization’s knowledge about those
components.
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EXHIBIT 3-3
ENVIRONMENTAL UNCERTAINTY MATRIX
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MANAGING STAKEHOLDER
RELATIONSHIPS
The nature of stakeholder relationships is another way in
which the environment influences managers. The more
obvious and secure these relationships, the more influence
managers will have over organizational outcomes.
Stakeholders – Any constituencies in an organization’s
decisions and actions.
Exhibit 3 - 4 identifies some of the organization’s most
common stakeholders which includes both internal and
external constituent groups.
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EXHIBIT 3-4
ORGANIZATIONAL STAKEHOLDERS
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THE BENEFITS OF GOOD
STAKEHOLDER RELATIONSHIPS
Improved predictability of environmental
changes
Increased successful innovations
Increased trust among stakeholders
Greater organizational flexibility to reduce
the impact of change
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ORGANIZATIONAL CULTURE:
CONSTRAINTS AND CHALLENGES
Just as each individual has a unique personality —
traits and characteristics influence the way we act
and interact with others. An organization, too, has a
personality, which is referred to as organizational
culture.
An organization’s culture can make employees feel
included, empowered, and supported or it can make
them feel the opposite.
Because culture can be a very powerful agent in
organizations, therefore, it is very important for
managers to Pearson
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attention
Ltd to it.
ORGANIZATIONAL CULTURE
Organizational Culture —The shared values, principles, traditions, and
ways of doing things that influence the way organizational members act
and that distinguish the organization from other organizations.
Cultural Values and practices evolve over time.
Organizational Culture is:
Perception — based on employee experience within the
organization.
Descriptive — how members describe it.
Shared — employees share perception and experiences.
Research suggests seven dimensions of culture that seem to capture the
essence of an organization’s culture. These dimensions are shown in
Exhibit 3-5 and range from low to high.
Describing an organization using these seven dimensions gives a composite
picture of the organization’s culture. In many organizations, one cultural
dimension often is emphasized more than the others and essentially shapes the
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organization’s personality and the way the organization works. 3 -24
EXHIBIT 3–5
DIMENSIONS OF ORGANIZATIONAL CULTURE
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CONTRASTING ORGANIZATIONAL CULTURE
In many organizations, one cultural dimension is often
emphasized more than others and essentially shapes the
organization’s personality and the way the organization
works.
For example, Sony Corporation focuses on product
innovation and risk-taking. The company “lives and
breaths” innovations, and employees’ behaviors support that
goal. (Product Orientation).
Conversely, Southwest Airlines focuses on it’s employees
and has made them a central focus of it’s culture. (People
Orientation).
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EXHIBIT 3-6
CONTRASTING ORGANIZATIONAL CULTURE
Risk-taking and change Risk-taking and change
discouraged rewarded
Creativity discouraged Creativity and innovation
Close managerial supervision rewarded
Work activities designed around Management trusts employees
the individual employee Work designed around teams
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CONTRASTING CULTURAL VALUES
(CONT.)
Exhibit 3-6 illustrates how the dimensions of
culture can create significantly different
cultures.
Both Organization A and Organization B are
manufacturing firms, but each company
emphasizes a different dimension that have
shaped organizational culture.
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EXHIBIT 3-7
STRONG VERSUS WEAK CULTURES
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STRONG CULTURES
All organizations have cultures, but not all cultures equally
influence employees’ behaviors and actions.
Strong Cultures—Organizational cultures in which the key
values are intensely held and widely shared.
The more employees accept the organization's key values
and greater their commitment to those values, the stronger
the culture. .
The stronger the culture becomes, the more it affects the
way managers plan, organize, lead, and control.
Strong Cultures are associated with high organizational
performance.
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Strong Cultures
Apple’s strong culture of
product innovation and
customer-service reflects the
core values of it’s visionary
cofounder, Steve Jobs. Jobs
instilled these core values in
all employees, from top
executives to sales associates,
such as the Genius Bar
employee shown here training
a customer at the Apple Store
in Manhattan.
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WHERE CULTURE COMES FROM
AND HOW IT CONTINUES
Exhibit 3-8 illustrates how an organization’s culture
is established and maintained.
Organizational Culture usually reflects the vision of
the founder.
The small size of most new organizations makes it
easier to establish organizational culture.
Once culture is established, organizational practices
help to maintain it.
The actions of top managers also have a major impact on the organization’s
culture. Former IBM CEO, Sam Palmisano, wanted employees to value
teamwork so he chose to take several million dollars from his yearly bonus and
give it to his top ©executives
Copyright based on
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EXHIBIT 3-8
ESTABLISHING AND MAINTAINING
CULTURE
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HOW EMPLOYEES LEARN CULTURE
Employees “learn” an organization’s culture in a
number of ways. The most common are stories,
rituals, material symbols, and language.
Stories — organizational stories abut significant
events in the life of the company help keep culture
alive.
Rituals — repetitive sequences of activities that
express and reinforce important organizational
values and goals.
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HOW EMPLOYEES LEARN CULTURE
(CONT.)
Material Artifacts and Symbols — convey to
employees what is important and the kinds of
expected behaviors, ex. Risk-taking, etc.
Language — many organizations or units of an
organization use language to identify and unite
members of a culture. New employees are
frequently overwhelmed with acronyms and jargon
that quickly becomes a part of their language.
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EXHIBIT 3-9
TYPES OF MANAGERIAL DECISIONS AFFECTED BY CULTURE
As shown in Exhibit 3-9, a manager’s decisions are influenced by the culture in which
he or she operates. An organization’s culture, especially a strong one, influences and
constrains the way managers plan, organize, organize, lead, and control.
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Creating an Innovative Culture
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EXHIBIT 3-10
CREATING A CUSTOMER-RESPONSIVE CULTURE
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CREATING A CUSTOMER-RESPONSIVE
CULTURE (CONT.)
Research shows that customer satisfaction is
directly related to customer spending and
consumption.
Satisfied customers will be repeat customers
for businesses.
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SPIRITUALLY AND ORGANIZATIONAL
CULTURE
Workplace Spiritually — A culture where organizational
values promote a sense of purpose through meaningful work
that takes place in the context of community.
Organizations with a spiritual culture recognize that people:
Have a mind and spirit.
Seek to find meaning and purpose in their work.
Desire to connect with others and be a part of a
community.
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FIVE CULTURAL CHARACTERISTICS
OF SPIRITUAL ORGANIZATIONS
Research indicates that Spiritual Organizations have five
characteristics:
1. Strong sense of purpose, culture built around meaningful
purpose.
2. Focus on individual development, recognize worth and value of
individuals.
3. Trust and openness, characterized by mutual trust, honesty, and
openness.
4. Employee empowerment, managers trust employees to make
good decisions.
5. Tolerance of employee expression, employees free to express
emotions.
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REVIEW OF LEARNING OBJECTIVE 3.1
Contrast the actions of managers according to
the omnipotent and symbolic views.
1. Omnipotent View — Managers are directly responsible for
the organization’s success or failure.
2. Symbolic View — Much of the organization’s success or
failure is due to external forces outside of the manager’s
control.
3. The two constraints on managers' discretion are
organizational culture (internal) and the environment
(external).
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REVIEW OF LEARNING OBJECTIVE 3.2
Describe the constraints and challenges facing
managers in today’s external environment.
1. The external environment includes those factors and forces
outside the organization that affect its performance.
2. The main components of the external environment are,
economic, demographic, political/legal, Sociocultural,
technological, and global.
3. Managers face constraints and challenges from these
components because they have an impact on jobs,
environmental uncertainty, and stakeholder relationships.
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REVIEW OF LEARNING OBJECTIVE 3.3
Discuss the characteristics and importance of
organizational culture.
1. The seven dimensions of culture are: attention to detail,
outcome orientation, people orientation, team orientation,
aggressiveness, stability, innovation and risk taking.
2. The stronger the culture, the greater the impact on the way
managers plan, organize, lead, and control.
3. The original source of the organizational culture reflects the
founder’s vision.
4. Culture is transmitted through stories, rituals, material symbols,
and language.
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REVIEW OF LEARNING OBJECTIVE 3.4
Describe current issues in organizational culture.
1. The characteristics of an innovative culture are challenge and
involvement, freedom, trust and openness, idea time,
playfulness/humor, conflict resolution, debates, and risk taking.
2. A customer responsive culture has five characteristics: outgoing
and friendly employees; jobs with few rigid rules, procedures,
and regulations; empowerment; clear roles and expectations;
and employees who are conscientious in their desire to please
the customer.
3. Spiritual organizations have five characteristics: strong sense of
purpose, focus on individual development, trust and openness,
employment, and toleration of employee expression.
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