Management Chapter 2 Homework China Have Actually Turned Profit One Reason

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CHAPTER 2

THE ENVIRONMENT AND CORPORATE CULTURE

CHAPTER OUTLINE

Are You Ready to Be a Manager?

I. The External Environment

A. General Environment

B. Task Environment

II. The Organization–Environment Relationship

A. Environmental Uncertainty

B. Adapting to the Environment

ANNOTATED LEARNING OBJECTIVES

After studying this chapter, students should be able to:

1. Describe the general and task environments and the dimensions of each.

The organizational environment consists of all elements existing outside the boundary of the

organization that have the potential to affect and influence the organization. This environment

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2. Explain the strategies managers use to help organizations adapt to an uncertain or turbulent

environment.

The environment creates uncertainty for organization members. Uncertainty means that

managers do not have sufficient information about environmental factors to understand and

predict environmental needs and changes. Two basic factors that influence uncertainty are the

3. Define corporate culture and give organizational examples.

Culture can be defined as the set of key values, beliefs, understandings, and norms shared by

members of an organization. It can be analyzed at three levels. At the surface are visible items,

4. Explain organizational symbols, stories, heroes, slogans, and ceremonies and their

relationships to corporate culture.

Fundamental values and corporate culture cannot be observed directly, but they can be

understood through the visible manifestations of symbols, stories, heroes, slogans, and

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5. Describe four types of cultures and how corporate culture relates to the environment.

The adaptability culture is characterized by values that support the company’s ability to rapidly

detect, interpret, and translate signals from the environment into new behavior responses. This

culture emerges in an environment that requires fast response and high-risk decision making.

Employees have autonomy to make decisions and act freely to meet new needs, and

responsiveness to customers is highly valued.

The achievement culture is a results-oriented culture that values competitiveness,

aggressiveness, personal initiative, and willingness to work long and hard to achieve results. It is

suited to organizations concerned with serving specific customers in the external environment

but without the intense need for flexibility and rapid change. An emphasis on winning and

achieving specific ambitious goals is the glue that holds this organization together.

6. Define a cultural leader and explain the tools a cultural leader uses to create a high-

performance culture.

A cultural leader is a manager who uses signals and symbols to influence corporate culture.

Cultural leaders influence culture by articulating a vision for the organizational culture that

exemplify high-performance in his or her own work activities.

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LECTURE OUTLINE

Are You Ready to Be a Manager?

This questionnaire helps students determine in which types of organizations they might be most

comfortable.

INTRODUCTION

A dominant market position is never guaranteed, even for a company like Blockbuster. Video

rentals were a key aspect of home entertainment for many years and not very long ago

Blockbuster was king of the market. However, mail-order and video-on-demand have

I. THE EXTERNAL ENVIRONMENT

INSTRUCTOR’S NOTES___________________________________________________________

______________________________________________________________________________

The external organizational environment includes all elements existing outside the boundary of

the organization that have the potential to affect the organization. The environment includes

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Business Blooper: British Petroleum Oil Spill

After the worst oil spill in U.S. history, then-CEO of British Petroleum (BP) Tony Hayward

didn’t win any friends on Capitol Hill two months later when he refused to provide details of the

Exhibit 2.1: Dimensions of the Organization’s General, Task, and Internal Environments

A. General Environment

1. The general environment represents the outer layer of the environment and will

influence the organization over time, but often is not involved in day-to-day

operations. The dimensions of the general environment include international,

technological, sociocultural, economic, legal-political, and natural.

a. The international dimension represents events originating in foreign countries

and opportunities for American companies in other countries. This dimension

U.S. have been slow to understand issues and competition in foreign countries.

b. The technological dimension includes scientific and technological advancements

in a specific industry as well as society at large. Technology has created massive

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Spotlight on Skills: Creating Guanxi in China

With its low labor costs and huge potential market, China is luring thousands of U.S. companies

in search of growth opportunities. However, only one-third of multinationals doing business in

China have actually turned a profit. One reason Western businesses fall short of expectations is

that they fail to grasp the centuries-old concept of guanxi that lies at the heart of Chinese culture.

Guanxi is a supportive, mutually beneficial connection between two people that eventually

grows into a network, and it is through these networks that business gets done. People doing

business in China should remember the following things: business is always personal; don’t skip

the small talk; relationships are not short-term, and; make contact frequently.

c. The sociocultural dimension represents the demographic characteristics, norms,

customs, and values of the general population. Important sociocultural

d. The economic dimension represents the general economic health of the country

or region in which the organization operates. Components of the economic

dimension include consumer purchasing power, the unemployment rate, and

interest rates. The frequency of mergers and acquisitions represents a recent trend

in the economic environment, but there is vitality in the small business sector.

Entrepreneurial start-ups are a significant aspect of the U.S. economy today.

e. The legal-political dimension includes federal, state, and local government

f. The natural dimension includes all elements that occur naturally on earth,

including plants, animals, rocks, and natural resources such as air, water, and

Discussion Question #5: Why do you think that many managers are surprised by environmental

changes and hence are less able to help their organizations adapt?

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Exhibit 2.2: 2010 Environmental Performance Index

B. Task Environment

1. The task environment is the layer closest to the organization and includes those

sectors that have a direct working relationship with it. The task environment includes

customers, competitors, suppliers, and the labor market.

a. Customers are those people and organizations in the environment who acquire

goods or services from the organization. Customers are important because they

determine the organization’ success.

Discussion Question #4: Contemporary best-selling management books often argue that

customers are the most important element in the external environment. Do you agree? In what

company situations might this statement be untrue?

b. Competitors are organizations in the same industry or type of business that

c. Suppliers are people and organizations that provide the raw materials that the

organization uses to produce its output. Many companies are using fewer

d. The labor market represents people in the environment available for hire by the

organization. Labor market factors that impact organizations include:

• the growing need for computer-literate information technology workers;

Discussion Question #2: Would the task environment for a cellular phone company contain the

same elements as that for a government welfare agency? Discuss.

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INSTRUCTOR’S NOTES___________________________________________________________

______________________________________________________________________________

Exhibit 2.3: The External Environment of Nortel

Exhibit 2.4: The External Environment and Uncertainty

A. Environmental Uncertainty

1. Environmental uncertainty must be managed to make the organization more effective.

Uncertainty means managers do not have sufficient information about environmental

Discussion Question #3: What do you think are the most important forces in the external

environment creating uncertainty for organizations today? Do the forces you identified typically

arise in the task environment or the general environment?

New Manager Self-Test: Are You Fit for Managerial Uncertainty?

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B. Adapting to the Environment

1. Boundary spanning is an increasingly important task in organizations because

Exhibit 2.5: The Shift to a Partnership Paradigm

2. Managers in partnering organizations are shifting from an adversarial orientation to a

3. Mergers and joint ventures also reduce uncertainty. A merger occurs when two or

Discussion Question #6: Why are interorganizational partnerships so important for today’s

III. THE INTERNAL ENVIRONMENT: CORPORATE CULTURE

INSTRUCTOR’S NOTES___________________________________________________________

______________________________________________________________________________

Exhibit 2.5: Levels of Corporate Culture

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Spotlight on Skills: Zappos Shoes

Zappos.com, an online retail site best known for its wide selection of shoes and its free shipping,

boldly proclaims its unique culture in an offbeat set of ten core values, including “Create fun and

a little weirdness.” CEO Tony Hsieh believes these core values illustrate the company’s

innovative culture and demonstrate its ultimate business goal—cultivating happiness. Hsieh’s

management theory is that if you create a work culture that fosters well-being, good practices

and (eventually) good profits will naturally flow out of the operation. One way the Zappos

Family of companies perpetuates its unique culture is by hiring employees who will fit into the

slightly wacky, drama-club atmosphere.

The internal environment includes: corporate culture, production technology, organization

Culture is defined as the set of key values, beliefs, understandings, and norms shared by

members of an organization. Culture is a pattern of shared values and assumptions about how

things are done within the organization. It can be analyzed at two levels. At the surface level are

A. Symbols

1. A symbol is an object, act, or event that conveys meaning to others. Symbols

B. Stories

1. A story is a narrative based on true events that is repeated and shared among

C. Heroes

D. Slogans

E. Ceremonies

1. A ceremony is a planned affair that makes up a special event and is conducted for the

benefit of an audience.

Discussion Question #8: Cultural symbols are usually noticed through sight, sound, touch, and

IV. TYPES OF CULTURE

INSTRUCTOR’S NOTES___________________________________________________________

______________________________________________________________________________

The external environment has a major influence on internal organizational culture. The internal

culture should embody what it takes to succeed in the environment.

Exhibit 2.7: Four Types of Corporate Cultures

A. The adaptability culture is characterized by values that support the company’s ability to

rapidly detect, interpret, and translate signals from the environment into new behavior

B. The achievement culture is a results-oriented culture that values competitiveness,