Chapter 3 The Environment and Culture of Organizations The Organization s Environments External environment a General environment i Economic legal political socio culture international and technical forces b Task environment i Specific groups and organizations that affect the firm Internal environment a Conditions and forces present and at work within an organization The External Environment The general environment a The set of board dimensions and forces in an organization s surroundings that create its overall context i Economic dimension 1 The overall health and vitality of the economic system in which the organization operates ii Technological dimension 1 The methods available for converting resources into products or services iii Sociocultural dimension 1 The customs mores values and demographic characteristics of the society in which the organization functions iv Political legal dimension 1 The extent of government regulation of business and the general relationship between business and government v International dimension 1 Interacting with global economy Dimensions of the Task Environment a Specific groups affecting the organization i Competitors seeking the same resources as the organization ii Customers who acquire an organization s products or resources iii Suppliers that provide resources for the organization iv Regulators control legislate or influence the organization s policies or practices 1 Regulatory agencies 2 Interest groups v Strategic partners allies who are in a joint venture or partnership with the organization The Internal Environment Conditions and stakeholder forces within an organization a Owners are persons with legal property rights to a business b Board of directors are elected by the stockholders and are charged with overseeing the general management of the firm to ensure that it is run in a way that best serves the stockholders interest c Employees are persons who work for the firm and have vested interest in its continued operation and existence d Physical work environment is the actual physical environment of the organization and the work that people do The Organization s Culture The importance of Organization Culture a Culture determines the overall feel of the organization although it may vary across different segments of the organization b Culture is a powerful force that can shape the firm s overall effectiveness and long term success Determinants of Organizational Culture a Organization s founder personal values and beliefs b Symbols stories heroes slogans and ceremonies that embody and personify the spirit of the organization c Shared experiences that bond organizational members together d Corporate success that strengthens the culture e Why would someone want to be in one organization over another Culture i Culture A M ii Subculture A M Galveston iii Culture can also push people away not integrated Organizational Culture Managing Organizational culture a Understand the current culture to understand whether to maintain or change it b Articulate the culture through slogans ceremonies and shared experiences c Reward and promote people whose behaviors are consistent with desired cultural values Changing Organizational Culture a Develop a clear idea of what kind of culture you want to create b Adopt new slogan stories ceremonies and purposely break with tradition c Bring outsider to important management position i I e Coach Sumlin d The bigger the company the harder it is to change its culture e Mergers or acquisitions i Movie clip Chinese company takes over and wants company to exercise etc 1 Merged with a French company 2 Culture shifted How Environments Affect Organizations Change and Complexity a Environmental change occurs in two ways i Degree to which change in environment is occurring ii Degree of homogeneity or complexity of the environment b Uncertainty i A driving force that influences organizational decisions ii Stable easier to make Environmental Turbulence a Unexpected changes and upheavals in the environment of an organization b Crisis is the most common form of turbulence i I e all of data has been destroyed Environmental Change Complexity an Uncertainty Simple Degree of Homogeneity Least Uncertainty Moderate Uncertainty Subway Clothing Manufacturers Moderate Uncertainty Most Uncertainty GM AT T Complex Stable Dynamic Degree of Change A lot of technology places are in most uncertainty Moderate uncertainty clothing a lot of change but can still only wear so much Porter s Five Competitive Forces a a b c b a b c a d a e a b Threat of new entrants Extent to and erase with which competitors can enter market B N vs Amazon Easy for new thing to pop up Competitive rivalry Competitive rivalry between firms in an industry What their offering or not offering Threat of substitute products Extent to which alternative products services may replace the need for existing products services Power of buyers Extent to which buyers influence market rivals Power of Suppliers Extent to which suppliers influence market rivals When there s more product availability your prices drop i Monitor brings in info ii Disseminator shares it A n would come under the heading of the economic element of the general environment a Increase in unemployment Make sure we know this aspect
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