Chapter 2: Organizational Environments and Cultures P a g e | 1
Effective Management 7th Edition
Chapter 2: Organizational Environments and Cultures
Pedagogy Map
This chapter begins with the learning outcome summaries and terms covered in the chapter, followed by a
set of lesson plans for you to use to deliver the content in Chapter 2.
Lesson Plan for Lecture (for large sections)
Lesson Plan for Group Work (for smaller classes)
Assignments with Teaching Tips and Solutions
Highlighted Assignments Key Points
What Would You Do? Though Waste Management leads its industry, it faces an
uncertain future as consumers and companies are looking to
reduce the amount of waste they send to landfills.
Management Decision Students must decide how to grow a business in a country
that has less than ideal infrastructure.
Practice Being a Manager Students practice recognizing cultural differences and the
challenges and opportunities that managers face as they work
Additional Assignments Key Points
Develop Your Career Potential Dealing with the press is an important skill for managers to
have. Students are confronted with a reporter doing a story
on unsanitary conditions in a fast-food restaurant.
Chapter 2: Organizational Environments and Cultures P a g e | 2
Learning Outcomes
2-1 Discuss how changing environments affect organizations.
Environmental change, complexity, and resource scarcity are the basic components of external
environments. Environmental change is the rate at which conditions or events that affect a business
2-2 Describe the four components of the general environment.
The general environment consists of economic, technological, sociocultural, and political and legal events
and trends that affect all organizations. Because the economy influences basic business decisions,
2-3 Explain the five components of the specific environment.
The specific environment is made up of five components: customers, competitors, suppliers, industry
regulation, and advocacy groups. Companies can monitor customers needs by identifying customer
2-4 Describe the process that companies use to make sense of their changing environments.
Managers use a three-step process to make sense of external environments: environmental scanning,
interpreting information, and acting on threats and opportunities. Managers scan their environments based
Chapter 2: Organizational Environments and Cultures P a g e | 3
2-5 Explain how organizational cultures are created and how they can help companies be
successful.
Organizational culture is the set of key values, beliefs, and attitudes shared by organizational members.
Organizational cultures are often created by company founders and then sustained through the telling of
organizational stories and the celebration of organizational heroes. Adaptable cultures that promote
employee involvement, make clear the organizations strategic purpose and direction, and actively define
Terms
advocacy groups
behavioral addition
behavioral substitution
business confidence indices
buyer dependence
company mission
competitive analysis
competitors
complex environment
media advocacy
opportunistic behavior
organizational culture
organizational heroes
organizational stories
product boycott
public communications
punctuated equilibrium theory
relationship behavior
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Lesson Plan for Lecture
Pre-Class Prep for You Pre-Class Prep for Your Students
Review chapter and determine what points to
cover.
Bring PPT slides.
Read Chapter 2, bring book.
Warm Up Begin Chapter 2 by asking students: How would you describe the business
environment? (If you have a blackboard, begin to write their ideas on it so that a
composite picture can be derived.) Depending on their responses, you may need to
rephrase the question into something along these lines:
Content
Delivery
Lecture slides: Make note of where you stop so you can pick up at the next class
meeting. Slides have teaching notes on them to help you as you lecture.
Topics PowerPoint Slides Activities
2-1 External
Environments and
Change
2-1a Environmental
2-1c Resource Scarcity
2-1d Uncertainty
1: Organizational
Environments and
Culture
2: What Would You Do?
Change
5: Punctuated
Equilibrium Theory
6: Punctuated
Equilibrium: U.S.
Airline Industry
7: Environmental
Complexity
2-2 General
Environment
2-2a Economy
12: General
Environment
13: Economy
Chapter 2: Organizational Environments and Cultures P a g e | 5
2-3 Specific Environment
2-3a Customer Component
2-3c Supplier Component
2-3e Advocacy Groups
17: Specific
Environment
19: Competitor
Component: Mistakes
Managers Make
21: Supplier Component
Have students discuss how
each component of the
companies in different
give them an idea of the
variability of specific
environments.
2-4 Making Sense of
Changing Environments
2-4b Interpreting
Environmental Factors
26: Making Sense of
Changing Environments
28: Interpreting
Environmental Factors
Explain the three-step
process of making sense of
2-5 Internal
Environments
2-5a Creation and
2-5c Changing
Organizational Cultures
29: Organizational
Cultures
30: Internal
Maintenance of
Organizational Cultures
33: Successful
Organizational Cultures
Define organizational
cultures.
Management Workplace
37: Camp Bow Wow
Launch video in slide 37.
Conclusion
and
Assignments:
1. Tell students to be ready at the next class to answer questions regarding the
Chapter 2: Organizational Environments and Cultures P a g e | 6
Lesson Plan for Group Work
Pre-Class Prep for You Pre-Class Prep for Your Students
Review material to cover and modify
the lesson plan to meet your needs.
Set the classroom up so that small
groups of four to five students can sit
together.
Read Chapter 2, bring book.
Warm Up Begin Chapter 2 by asking students to describe the business environment. If you have a
blackboard, begin to write their ideas on it so that a composite picture can be derived.
Depending on their responses, you may need to rephrase the question into something along
these lines:
What does a manager need to think about when doing business?
or
What forces determine how a company conducts its business?
Content
Delivery
Lecture on Changing Environments (Section 2-1).
Break for the following group activity:
Changing Environments
Divide the class into small groups of four to five students. Have each group propose
one to two industries that operate in each of the following environments: stable,
dynamic, simple, and complex. Students will need to justify their choices. Have
Before lecturing on the next section, refer to the composite of the business environment
that students built at the beginning of the class session. Use it to segue into your lecture on
General Environment and Specific Environment (Sections 2-2 and 2-3).
Ask students, How can managers manage in the face of ever-changing external
environments?
Lecture on Making Sense of Changing Environments (Section 2-4).
Break for the following activity:
Crisis Management
Divide the class into even-numbered groups of students. Further divide each group
evenly in to two subgroups: managers and reporters. Give students at most 3 minutes to
Segue into presenting the content on Internal Environments (Section 2-5).
Chapter 2: Organizational Environments and Cultures P a g e | 7
Conclusion
Assignments:
Assignments with Teaching Tips and Solutions
What Would You Do Case Assignment
What Really Happened? Solution
WASTE MANAGEMENT
In the case, you learned that Waste Management is the largest waste handling company in the world, with
20 million customers and 273 municipal landfills. But even as it dominates its industry, Waste
Management faces serious changes in its environment. Both corporations and consumers are reducing the
amount of waste they generate and increasing the amount of goods they recycle. These trends challenge
Waste Management, since the high cost of collecting and sorting recyclable materials means that Waste
Management loses money when it recycles them. What can the company do to meet increased customer
expectations on one hand, while still finding a way to earn a profit on high-cost recycled materials?
External environments are the forces and events outside a company that have the potential to influence or
affect it. Organizations are influenced by two kinds of external environments: the general environment,
which consists of economic, technological, sociocultural, and political/legal events and trends, and the
specific environment, which consists of customers, competitors, suppliers, industry regulators, and
advocacy groups.
The sociocultural component of the general environment refers to the demographic characteristics,
general behavior, attitudes, and beliefs of people in a particular society. Sociocultural changes and trends
influence organizations in two important ways. First, changes in demographic characteristics, such as the
number of people with particular skills or the growth/decline in particular population segments (marital
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The first step, of course, is to recognize the trend and the impact it can or will have on your business.
David Steiner, Waste Managements CEO, certainly seems to understand that societal and corporate
attitudes have changed. Says Steiner, Picking up and disposing of people’s waste is not going to be the
And, how much value is there in the sustainability side of waste handling? Steiner estimates that, not
counting collection or handling fees, there is $8 billion to $10 billion of materials in the waste that it puts
in its landfills each year. And, how can Waste Management make sure that billions of dollars of
recyclable materials dont end up as worthless landfill? By investing in materials recovery facilities that
capture valuable materials or energy in cost-efficient ways. In the end, says Steiner, If we’re a landfill
company, we’re not in a growth market.
The high cost of collecting and sorting recyclable materials means that Waste Management loses money
when it recycles them. What can the company do to meet increased customer expectations on one hand,
while still finding a way to earn a profit on high-cost recycled materials?
Managers use a three-step process to make sense of external environments: environmental scanning,
interpreting information, and acting on threats and opportunities. Managers scan their environments based
Traditionally, recycling has been a breakeven or low profit business. The challenge for Waste
Management and CEO David Steiner is to focus on sustainability services and be highly profitable. The
question, of course, is how. The answer, he believes, is technology. Says Steiner, We dont want to play
just in the picking up and delivering. We want to own conversion, too. We want to own the technology.
Consequently, Waste Management has gone on an acquisition spree, purchasing companies with the
technologies it believes can make it highly profitable in recycling.
For instance, it bought Garick, a Texas-based company that can turn a ton of food waste, which
traditionally had no value, into $40 of $50 of compost and mulch. It also invested in Harvest Power, a
Finally, advocacy groups, such as the Sierra Club, regularly protest Waste Management’s landfill
practices, deeming them irresponsible and harmful to the environment. Should Waste Management take
on its critics and fight back, or should it focus on its business and let the results speak for themselves?
Should it view environmental advocates as a threat or an opportunity for the company?
Advocacy groups are groups of concerned citizens who band together to try to influence the business
practices of specific industries, businesses, and professions. The members of a group generally share the
The most common technique for responding to the criticisms of advocacy groups is to assertively and
quickly counter their claims with factual evidence that demonstrates that your company is not acting
To address that criticism, it began working with the Wildlife Habitat Council (WHC), a non-profit
organization, which works with corporations and other landowners to create tailored voluntary wildlife
habitat enhancement and conservation education programs on corporate facilities and in the communities
where they operate. The WHC works with corporations to independently certify that their recovered
Management Decision
NO PAVED ROADS?
Purpose
Though an organization might have a disciplined strategy, ample resources, and strong management, it
may still be ineffective because of external factors that it cannot control. This case assignment gives
students an opportunity to consider how changes in the external environment affect an organization, and
what steps an organization might take to deal with those changes.
Setting It Up
You can introduce this case by asking students to identify various governmental policies and actions that
a company takes advantage of when doing business. Some examples include (but are certainly not limited
to) tax requirements, financial regulations, or import/export guidelines.
Scenario
After just two short years at your global shipping firm, youve been offered a great promotion, a chance to
head up your companys sorting and shipping facility in India. Youre thrilled at the chance to produce
stunning results for your company by tapping into a rising technological titan that has some of the best
minds in the world.
Chapter 2: Organizational Environments and Cultures P a g e | 10
The Indian government is certainly aware of the problems with the countrys infrastructure. In
fact, the government has pledged to spend $1 trillion by 2017 to improve the countrys roads, bridges,
Source:
Questions
1. Given the external environmental conditions presented by the state of Indian infrastructure, would
you choose to open a new facility there? Why or why not?
2. Should your company take action to help improve infrastructure? Or, should it just look for
another place to do business?
Though students responses will vary, their answers should reflect awareness of the fact that
every company is affected by elements of the general environment, which include the economy,
the technological component, the sociocultural component, and the political/legal trends. A
Practice Being a Manager
NAVIGATING DIFFERENT ORGANIZATIONAL CULTURES
Exercise Overview and Objective
This exercise gives students some practice in recognizing cultural differences through a familiar lens, that
of musical genres. Your class has been chosen as a representative college class, and executives at music
Preparation
You should survey your class at least two sessions prior to the session in which you plan to conduct the
exercise. You may use the form below for this survey (see Step 1):
Chapter 2: Organizational Environments and Cultures P a g e | 11
———-—————————————–———-——————–———-——–
Musical Preferences Survey
Your Name: _________________________________
Class/Time: _________________________________
Identify yourself with one of the following musical genres based on:
(a) preference or affinity (I prefer this music); and (b) knowledge and understanding (Of all types of
music, I know the most about _________ music/musicians):
___ 1. Rock ___ 5. Rap ___ 9. Folk and Bluegrass
___ 2. Country ___ 6. Jazz and R&B
___ 3. Religious/Spiritual ___ 7. Pop/Mainstream
___ 4. Urban and Hip-Hop ___ 8. Classical
Other: __________________ (please identify)
———-—————————————–———-——————–———-——–
Examine the results of the survey, sorting student responses by genre. The exercise will work best if you
have at least three or four groups with significant representation. If your students are heavily represented
in only one or two genres, it will be best to conduct a follow-up survey by sub-genres (i.e., sub-
categories of preference within Urban/Hip-Hop). To develop a sub-genre survey form, enlist a few
student volunteers who seem particularly interested in and savvy about music.
In-Class Use
Encourage students to tackle the exercise as representatives of their favorite musical genre. They are the
ones who must argue for the future of the genre. This is also a rare opportunity to speak directly to the
movers and shakers in a major music company. The exercise will be more productive and more fun to the
extent that students take up the cause for their musical tribe.
Debrief by discussing these questions, which also appear in Step 6:
Did you sense some cultural affinity with others who shared your musical tastes? Why, or why
not?
What expectations might be associated with choosing someone to represent a group on a team
such as the TWT?
What tensions and challenges might face each member of the TWT in a real-life setting of serving
on a group that represents various cultures?
You might close the debriefing session with a summation discussion of the opportunities and challenges