Organizational Environments and Culture

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Organizational Environments and Culture

• Ch. 2

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Learning Objectives

• Discuss how changing environments affect
  organizations.
• Understand the components of general and specific
  business environments
• Describe the process that companies use to make
  sense of their changing environments.
• Explain how organizational cultures are created
  and changed as needed for company success.

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Lets Consider Hasbro

• Toy industry's growth prospects appear to be
  maturing
• Increasing competition from video games,
  children's changing tastes, and consolidation of
  the industry's retail customer base.
• Toy companies are increasingly dependent on
  movies and TV shows for product tie-ins

What are the major external challenges facing
Hasbro?
www.hasbro.com
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Changing Environments
Characteristics ofChanging External Environments
Environmental Change Environmental
Complexity Resource ScarcityUncertainty
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Environmental Change

• Environmental change is the rate at which a
  companys environments change
• stable environments
• dynamic environments
• Punctuated equilibrium theory
• companies cycle through stable and dynamic
  environments

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Punctuated EquilibriumU.S. Airlines
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Environmental Complexity

• Environmental complexity the number of external
  factors in the environment that affect
  organizations
• Simple environments
• have few environmental factors
• Example?
• Complex environments
• have many environmental factors
• Example?

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Resource Scarcity

• Resource scarcity is the degree to which an
  organizations external environmenthas an
  abundance or scarcity of critical organizational
  resources

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Environmental Uncertainty

• Uncertainty is how well managers can understand
  or predict the external changes and trends
  affecting their businesses

More Uncertainty
More Complexity
More Change
Scarcer Resources


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Which of the following organizations has the most
uncertain environment?

• University of Rhode Island
• Albies Place
• American Power Conversion
• Nardolillo Funeral Home

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Types of Environmental Factors
Specific factors directly impinge on particular
organization
General factors affect all companies within an
industry
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Components of the General Environment

• Economy
• Technological
• Sociocultural
• Political / Legal

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Economy

• Growing vs. shrinking economies
• Future economic activity is difficult to predict
• Economic indices
• Examples?
• Effect on Hasbro?

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Which of the following is not an economic factor
that affects the toy industry?

• Inflation rate
• Interest rates
• Changing tastes of children in desired toys
• Unemployment levels of design engineers

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Technological Component
Effect on Hasbro?
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Sociocultural Component

• Sociocultural Components
• Demographic changes
• Changes in behavior, attitudes, and beliefs
• Cross cultural issues
• Public opinion
• What socio-cultural factors affect Hasbro?

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Which of the following is a socio-cultural factor
affecting fast-food restaurants?

• A period of economic expansion
• Concern over obesity rates
• FDA regulations
• Fully automated drive-through windows

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Political / Legal Component
Managers must be educated about the laws,
regulations, and potential lawsuits that could
affect business

• Legislation
• Regulations
• Court decisions
• Government
• stability
• Effect on Hasbro?

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Specific Environment Factors

• Customers/Distributors
• Competitor
• Supplier
• Specific industry regulation
• Advocacy groups
• Unions

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Customers
Monitoring customer wants and needs is critical
for business success

• Reactive customer monitoring
• responding to problems, trends, and events
• Proactive customer monitoring
• anticipating problems, trends, and events

Who are Hasbros customers?
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Toys R Us sells most of Hasbros toys.

• True
• False

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Competitors
Who are Hasbros competitors?
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Suppliers
Who are Hasbros suppliers?
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Industry Regulation Component

• Consists of regulations and rules that govern the
  business practices and procedures of specific
  industries, businesses, and professions

Are there any specific toy industry regulations?
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Some Federal Regulation Agencies
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Advocacy Groups

• Groups of concerned citizens who band together to
  try to influence the business practices of
  specific industries, businesses, and professions
• Techniques to try to influence companies
• public communications
• media advocacy
• product boycotts

What advocacy groups would be concerned with
Hasbros operations?
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In your view, what is the most effective advocacy
strategy?

• Product boycott
• Media advocacy
• Lobbying
• None are effective

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Unions

• Organizations that collectively represent workers
  on issues of pay, working conditions, benefits,
  etc.
• Management must bargain and negotiate with unions
  on these issues
• About 10 of private sector workers are unionized

Does Hasbro bargain with any unions?
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U.S. workers no longer need unions to protect
their employment interests

• True
• False

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Making Sense of Changing Environments
Environmental Scanning
Evaluating External Environments
Interpreting Environmental Factors
Acting on Threats and Opportunities
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Internal Environments

• Internal environment consists of the trends,
  practices, events, and structures within the
  organization
• Management philosophy
• Internal labor markets and human resource
  practices
• Hierarchy and division of labor
• Coordination processes
• Organizational culture

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What is organizational culture?

• Way of life in an organization
• Collective phenomena that reflect peoples
  responses to uncertainties and chaos
• Pattern of basic assumptions that group uses to
  cope with problems of internal integration and
  external adaptation

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Levels of Organizational Culture
Set of assumptions, values, norms, and
expectations that are shared among organizational
members
Visible, but difficult to decipher
Artifacts and behaviors
Values
Some awareness
Assumptions
Taken for granted
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Which of the following values best describes
URIs organizational culture?

• Adaptable
• Inflexible
• Consistent
• Empowering
• Oppressive

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Levels of Culture
Manifest culture
Manifest
Expressed Values
Expressed Values
Basic Assumptions
water line
Basic Assumptions
Onion
Iceberg
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Creation and Maintenance of Organizational
Cultures
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Human Resource Systems and Culture

• Socialization practices
• Communication practices
• Selecting the right people
• Weeding out the wrong people
• Training
• Promotion and Reward systems
• Succession leadership

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Cultural Change Issues

• Pervasive, high magnitude changes (revolutionary)
  vs. cumulative reshaping (evolutionary)
• Political and technical changes
  (re-organizations) usually affect culture
• Top leadership changes usually bring about
  opportunities for culture change

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Cultural Change Issues

• Mergers and acquisitions
• Discontinuous events (e.g., crises, major
  technological, legal, or market changes)
• Changing human resource systems, such as
  socialization, training, selection, reward
  systems
• Identify and support culture change champions