Post on 16-Dec-2015
Chapter 3Organizational Environments and Culture
MGMT6© 2014 Cengage Learning
© 2014 Cengage Learning
3-1 discuss how changing environments affect organizations
3-2 describe the four components of the general environment
3-3 explain the five components of the specific environment
3-4 describe the process that companies use to make sense of their changing environments
3-5 explain how organizational cultures are created and how they can help companies be successful
Characteristics of External Environments
• Environmental change• Environmental complexity• Resource scarcity• Uncertainty
3-1© 2014 Cengage Learning
Environmental Change
The rate at which a company’s general and specific environments change.
•Stable– slow rate of change
•Dynamic – fast rate of change
© 2014 Cengage Learning 3-1
Punctuated Equilibrium Theory
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Stability
Dynamic Change
Stability
Dynamic Change Dynamic
Change
3-1
Environmental Complexity
• Simple – few environmental factors that
affect organizations
• Complex– many environmental factors that
affect organizations
© 2014 Cengage Learning3-1
Resource Scarcity
The abundance or shortage of critical resources in an organization’s external
environment.
© 2014 Cengage Learning 3-1
Uncertainty
The extent to which managers can understand or predict the external changes and trends affecting their
business.
© 2014 Cengage Learning 3-1
© 2014 Cengage Learning 3-1
© 2014 Cengage Learning 3-2
Economy
• A growing economy provides a favorable environment for business growth.
• Business confidence indices show how confident managers are about future business growth.
© 2014 Cengage Learning 3-2
Technological Component
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• Technology– an umbrella term for the knowledge, tools, and
techniques used to transform inputs into outputs
Changes in technology can help companies provide better products or produce their products more
efficiently.
3-2
Sociocultural Component
• Demographic characteristics, general behavior, attitudes, and beliefs of people in a particular society
© 2014 Cengage Learning 3-2
Political/Legal Component
• The legislation, regulations, and court decisions that govern and regulate business behavior
• Many managers are unaware of the potential legal risks associated with traditional managerial decisions like recruiting, hiring, and firing employees.
© 2014 Cengage Learning3-2
Specific Environment
• Customers• Competitors• Suppliers• Industry regulations• Advocacy groups
© 2014 Cengage Learning 3-3
Customer Component
• Reactive customer monitoring– Identifying and addressing customer
trends and problems after they occur
• Proactive customer monitoring– Identifying and addressing customer
needs, trends, and issues before they occur
© 2014 Cengage Learning 3-3
Competitor Component
• Competitors– companies in the same industry that sell
similar products or services
• Competitive analysis– a process of monitoring the competition
that involves identifying competition, anticipating their moves, and determining their strengths and weaknesses
© 2014 Cengage Learning 3-3
Supplier Component
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• Suppliers– companies that provide material, human,
financial, and informational resources to other companies
Supplier dependencevs.
Buyer dependence
3-3
Behaviors
• Opportunistic behavior– when one party benefits at the expense
of another
• Relationship behavior– focuses on establishing a mutually
beneficial, long-term relationship between buyers and sellers
© 2014 Cengage Learning 3-3
Industry Regulation Component
Regulations and rules that govern the practices and procedures of specific
industries, businesses, and professions
© 2014 Cengage Learning 3-3
Federal Regulatory Agencies and Commissions
• Consumer Product Safety Commission• Department of Labor• Environmental Protection Agency• Equal Employment Opportunity
Commission• Federal Communications Commission• Federal Reserve System• Federal Trade Commission• Food and Drug Administration• National Labor Relations Board• Occupational Safety and Health
Administration• Securities and Exchange Commission
© 2014 Cengage Learning3-3
Advocacy Groups
Concerned citizens who band together to try to influence the business practices of specific
industries, businesses, and professions
•Public communication
•Media advocacy
•Product boycott
© 2014 Cengage Learning 3-3
Making Sense of Changing Environments
• Environmental scanning• Interpreting environmental factors• Acting on threats and opportunities
© 2014 Cengage Learning 3-4
Environmental Scanning
Searching the environment for important events or issues that might affect an
organization.
•Managers scan the environment to reduce uncertainty.•Organizational strategies affect environmental scanning.•Environmental scanning contributes to organizational performance.
© 2014 Cengage Learning 3-4
Interpreting Environmental Factors
• Threat or opportunity?
• Threat– managers typically take steps to protect the
company from further harm
• Opportunity– managers consider strategic alternatives for
taking advantage of those events to improve performance
© 2014 Cengage Learning 3-4
© 2014 Cengage Learning 3-4
Creation and Maintenance of Organizational Cultures
• Primary source of organizational culture is the company founder.
• Organizational culture is sustained by…– organizational stories– organizational heroes
© 2014 Cengage Learning 3-5
© 2014 Cengage Learning 3-5
© 2014 Cengage Learning 3-5
Changing Organizational Cultures
• Behavioral addition
• Behavioral substitution
• Change visible artifacts
• Hiring people with values and beliefs consistent with desired culture
© 2014 Cengage Learning 3-5
<click screenshot for video>
Camp Bow Wow
1. What aspects of Camp Bow Wow’s corporate culture reflect the surface level of the organizational culture? What aspects reflect the values and beliefs? What aspects reflect the unconsciously held assumptions and beliefs.
2. Why did Camp Bow Wow have to change its culture when it became a national franchise?
3. What impact does Heidi Ganahl’s personal story have on employees at Camp Bow Wow?
© 2014 Cengage Learning