Chapter 3: Organizational Environments and Cultures
48
Chapter 3: 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 3.
• Lesson Plan for Lecture (for large sections)
• Lesson Plan for Group Work (for smaller classes)
• Assignments with Teaching Tips and Solutions
What Would You Do Case Assignment – Waste Management
Self-Assessment – Check Your Tolerance for Ambiguity
Management Decision – No Paved Roads?
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.
Management Team Decision
The team must decide how to change an organization’s
culture in order to emphasize customer service.
Practice Being a Manager
This exercise gives students some practice in recognizing
cultural differences through a familiar lens, that of musical
genres.
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.
two major congressional committees that deal with foreign
Chapter 3: Organizational Environments and Cultures 49
Supplemental Resources
Where to Find Them
Course Pre-Assessment
IRCD
Course Post-Assessment
IRCD
Learning Outcomes
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 Describe the four components of the general environment.
The general environment consists of events and trends that affect all organizations. Because the economy
influences basic business decisions, managers often use economic statistics and business confidence
3 Explain the five components of the specific environment.
The specific environment is made up of the five components shown here. Companies can monitor
customers’ needs by identifying customer problems after they occur or by anticipating problems before
4 Describe the process that companies use to make sense of their changing environments.
PowerPoint slides with lecture notes
IRCD and online
Who Wants to Be a Manager game
IRCD and online
Test Bank
IRCD and online
Chapter 3: Organizational Environments and Cultures
50
Managers use a three-step process to make sense of external environments: environmental scanning,
interpreting information, and acting on it. Managers scan their environments based on their organizational
5 Explain how organizational cultures are created and how they can help companies be
successful.
An 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
Terms
advocacy groups
behavioral addition
behavioral substitution
business confidence indices
buyer dependence
cognitive maps
company vision
media advocacy
opportunistic behavior
organizational culture
organizational heroes
organizational stories
product boycott
public communications
Lesson Plan for Lecture
Pre-Class Prep for You
Pre-Class Prep for Your Students
• Review chapter and determine what points to
cover.
• Bring book.
Chapter 3: Organizational Environments and Cultures 51
• Bring PPT slides.
Warm Up
Content
Delivery
Topics
PowerPoint Slides
Activities
External Environments
1 Changing
Environments
1.1 Environmental
Change
1: Organizational
Environ. & Cultures
2: What Would You Do?
3: External
Environments
9: Uncertainty
2 General Environment
2.1 Economy
2.2 Technology
10: External
Environment
11: Components of the
General Environment
3 Specific Environment
3.1 Customer
3.2 Competitor
3.3 Supplier
3.4 Industry
17: Specific
Environment
18: Customer
Component
19: Competitor
Have students discuss how
each component of the
specific environment might
affect Wendy’s. Then select
companies in different
Chapter 3: Organizational Environments and Cultures
52
4 Making Sense of
Changing
Environments
25: Making Sense of
Changing Environments
26: Environmental
Scanning
Explain the three-step
process of “making sense of
changing environments.”
Internal Environment
5 Organizational
Cultures: Creation,
Success, and Change
5.1 Creation and
Maintenance
30: Internal
Environments
31: Internal
Environments
32: Creation and
Maintenance of
Define organizational
cultures.
Ask students to describe the
culture of the places where
they work (or have worked).
Conclusion
and
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.
• Bring book.
Warm Up
Begin Chapter 3 by asking students to describe the business environment. If you have a
Chapter 3: Organizational Environments and Cultures 53
Content
Delivery
Lecture on Changing Environments (Section 1)
Break for group activity:
“Changing Environments”
Divide the class into small groups of 4 to 5 students. Have each group propose one to
two industries that operate in each of the following environments: stable, dynamic,
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 and 3).
Ask students, “How can managers manage in the face of ever-changing external
environments?”
Lecture on Making Sense of Changing Environments (Section 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 5).
Have students work as individuals or as groups to complete the Management Team
Conclusion
Assignments:
Additional Activity
Out-of-Class Activity: “Environmental Scanning.” Have students research the most recent annual
report of a well-known company and list all the factors in the external environment that have affected the
Chapter 3: Organizational Environments and Cultures
54
Assignment Teaching Tips and Solutions
Case Assignment – What Would You Do?
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
Like at Subaru and Wal-Mart, corporate leaders worldwide are committed to reducing the waste
produced by their companies. Since that represents a direct threat to Waste Management’s landfill
business, what steps could it take to take advantage of the trend toward zero waste that might allow it to
continue growing company revenues?
External environments are the forces and events outside a company that have the potential to
status, age, gender, ethnicity), affect how companies staff their businesses. Second, sociocultural changes
in behavior, attitudes, and beliefs also affect the demand for a business’s products and services. With
Subaru and Wal-Mart striving to become “zero–waste” or “zero landfill” companies, it’s clear that
corporate attitudes have mirrored society’s and swung dramatically toward “going green.” In so doing,
that changes represents a direct threat to Waste Management’s landfill business. The question, of course,
is what can it do to take advantage of the trend toward zero waste that might allow it to continue growing
company revenues?
The first step, of course, is to recognize the trend and the impact it can or will have on your business.
David Steiner, Waste Management’s CEO, certainly seems to understand that societal and corporate
Chapter 3: Organizational Environments and Cultures 55
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
on their organizational strategies, their need for up-to-date information, and their need to reduce
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
same point of view on a particular issue. For example, environmental advocacy groups might try to get
manufacturers to reduce smokestack pollution emissions. Unlike the industry regulation component of the
Chapter 3: Organizational Environments and Cultures
56
Nonetheless, today, just three years after setting its goal, Waste Management has 100 WHC sites
protecting more than 25,000 acres. And, of those 100 sites, 97 are former landfills. Waste Management’s
Kirby Canyon site, for example, has 600 acres for wildlife use that includes grasslands where two
threatened species, the bay checkerspot butterfly and the California red-legged frog, are now thriving.
Sources: “2010 Sustainability Report,” Waste Management,
February 2011]; J. Ball, “Currents — Power Shift: Climate Change: Garbage Gets Fresh Look as Source of Energy,”
Wall Street Journal, 15 May 2009, A9; J. Fahey, “Waste Not,” Forbes Asia, July 2010, 46; M. Gunther, “Waste
Management’s New Direction,” Fortune 6 December 2010, 103–108; J. Johnson, “Refuge among the Refuse,”
Waste & Recycling News, 24 January 2011, 1; A. Robinson & D. Schroeder, “Greener and Cheaper: The
conventional wisdom is that a company’s costs rise as its environmental impact falls; Think again.” The Wall Street
Journal, 23 March 2009, R4.
Self-Assessment
CHECK YOUR TOLERANCE FOR AMBIGUITY
This assessment is meant to establish your students’ tolerance for ambiguity. Even though many strategists
liken business to chess, in that game, both players can see all the pieces and anticipate an opponent’s moves.
In-Class Use
Have students open their books to page 109 of the text and give them 5 to 7 minutes to complete the inventory.
Use the Self-Assessment PowerPoint slides and have students raise their hands as you read off the scoring
ranges. Tell students to keep their hand up until you have counted the responses for each item and entered the
count into the spreadsheet embedded in the PowerPoint presentation. Display the distribution to the class so
students can see where they fit.
Remind your students that the business environment is complex and uncertain, and managers must
Scoring
There are three ways to understand your tolerance of ambiguity. First, think of ambiguity as novelty, or
the extent to which you are tolerant of new, unfamiliar information or situations. You can also think of
your response to ambiguity as a function of complexity, or the extent to which you are tolerant of
multiple, distinctive, or unrelated information. Lastly, ambiguity can be thought of as insolubility, or the
Chapter 3: Organizational Environments and Cultures 57
Management Decision
NO PAVED ROADS?
Purpose
Though an organization might have a disciplined strategy, ample resources, and strong management, it
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.
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,
Management Team Decision
MAKING A NEW CULTURE
Purpose
Chapter 3: Organizational Environments and Cultures
58
The purpose of this exercise is for students to consider what is involved in changing an organization’s
culture from one that was focused on maximizing revenues to one that is focused on delivering excellent
customer service.
Setting It Up
Ask students to form groups of 3 or 4 members. As a preliminary exercise, you can ask them to think
about how they would train people to be nice to someone else. Would they only try to hire nice people?
Questions
1. What kind of training and evaluation program would you institute to change Home Depot’s culture?
As discussed in the chapter, there are a number of ways that organizations can change their culture.
While student responses will vary on the level of detail, they should include awareness of the various
ways of bringing about organizational change. Organizational members can tell organizational stories
2. Recall from the text that there are three levels of organizational culture. What kinds of changes would
you make to address each level?
Student responses will vary in terms of specific details, but they should include the recognition that
there are three levels of organizational culture and that the three levels are manifest in different ways.
On the first, or surface, level are the reflections of an organization’s culture that can be seen and
observed, such as symbolic artifacts (such as dress codes and office layouts) and workers’ and
Chapter 3: Organizational Environments and Cultures 59
3. How could an analysis of the company’s external environment help in establishing a new customer–
based culture?
The management team in this case should consider two elements of the company’s environment, the
customer component and the competitor component. The company can analyze the customer
component either through reactive customer monitoring, which involves identifying and addressing
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):
————————–—————————————————–——————–
Musical Preferences Survey
Your Name: _________________________________
Class/Time: _________________________________
Identify yourself with one of the following musical genres based on:
a) preference/affinity (i.e., “This is my favorite type of music”); and b) knowledge/understanding (i.e., “of
all types of music, I know the most about this type of music”):
————————–—————————————————–——————–