The Environment and Corporate Culture

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The Environment and Corporate Culture
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EnvironmentOrganizations are open systems which
import information from its environment and use
double loop learning to adapt the organization to
changes in the environment.
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External environment

• General Environment International Technological
  Sociocultural Economic Legal-Political

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International environment

• Globalization
• Global competition
• Cross cultural dynamics
• Are the theories and practices of American
  management compatible in other countries?

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Technological

• Technology is rapidly changing the business
  environment
• Information and communications
• Technology pertaining to speicific industries
• The interaction of technology and people socio
  technical systems

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Sociocultural

• Population distribution
• Population density
• Age
• Education levels

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Economic

• Consumer purchasing power
• Unemployment
• Interest rates
• Fuel prices
• Competition from other countries

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Legal political

• OSHA
• EPA
• Law suits
• Consumer protection laws
• Product safety
• Information and labeling

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External Environment

• Driving Forces have an impact over time
• Examples
• Health consciousness
• Political conservatism
• Computerization
• Demographic shifts toward Asian and Hispanic
  minorities
• The baby boom generation

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Task Environment

• The five forces Model of Porter
• Customers
• Suppliers
• Competitors
• Substitiutes
• New Entrants

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Relationship of the company to its environment

• Organic organization open system
• Mechanistic-closed system

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How organizations react to environmental changes

• Open systems maintain relationships with their
  environments and react to changes (effectiveness)
• Environmental Scanning
• Detects changes in the environment over time.

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How organizations influence environmental changes

• Advertising
• Change demand for product
• Public Relations
• Change the image of the company
• Political Activity and trade organizations
• Influence the legal and politcal environment

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Internal environment

• CultureTechnologyStructurePhysical
  facilitiesEmployeesManagement

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Internal environment

• Physical Structure
• Plants
• Sales Offices
• Showrooms
• Computer network
• ICT
• Social Structure
• Formal
• Informal

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Internal environmentThe Social Structure

• Formal Social Structure
• Official documents
• Org charts
• Bilaws
• Budgets
• Contractual Boundaries
• Departments
• Sub-departments

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Internal environmentThe Social Structure

• Informal Structure
• Rules of behavior
• Shared meaning
• Corporate culture

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Corporate Culture
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Defined as

• Key values, beliefs, understanding and norms
  shared by members of the organization
• It is their shared reality

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Embodied superficially by

• Visible artifacts
• dress
• patterns of behavior
• symbols
• ceremonies
• layout

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Embodied at a deeper level by

• Stories
• Language
• Myths
• Heroes

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There are different types of cultures but it is
crucial that the culture be adaptive to the
changes in the environment less the organization
become extinct e.g. the dinosaur
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Types of Cultures
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Adaptability Culture

• If the environment requires fast response and
  high risk decision making
• Managers encourage values that support ability to
  detect, interpret and translate signals from the
  environment into responsive behavior

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Achievement Culture

• Environment requires high level of service over a
  long time without much change
• Results oriented excellence. Achieve difficult
  ambitious targets

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Clan Culture

• If we keep our people happy, and help get their
  needs met, they will meet the needs of a changing
  environment.
• Focus on cooperation, consideration, no status
  differences

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Bureaucratic Culture

• Focus inward
• Less concern about the environment and more about
  following the rules
• Thrifty, orderly way of doing things

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Changing demands for managing corporate culture

• Culture the glue that holds the organization
  together
• By definition, shared values and realities must
  be shared
• Dissemination of culture is done by
• Picking the right people who will fit into the
  corporate value system
• Socializing people