Transcript Slide 1

“Remember the difference between a
boss & a leader a boss says GO!- a
leader says “Lets Go”
PART II
The Environment Of Management
Chapter 3
The Environment & Corporate Culture
Organizational
Environment
General Environment
Technological
Task Environment
Internal
Environment
Employees
Culture
Management
Suppliers
Competitors
Labor Market
Customers
Organization Environment
• All elements existing outside the
organizations boundaries that have the
potential to affect the Organization
• Competitors
• Resources
• Technology
• Economic Conditions
The External Environment
• Further conceptualized having two layers
General Environment
Task Environment
General Environment
• The layer of the external environment that
affects the organization indirectly
International
Technological
Socio-Cultural
Economic
Legal-Political
These events do not directly
change day-to-day operations but they
do affect all organizations
eventually
Task Environment
Competitors
Suppliers
Customers
• Closer to Organization &
includes the sectors that
conduct day-to-day
transactions with the
organization and directly
influence its basic
operations & performance
Internal Environment
Employees
Management
Corporate Culture
Includes the elements
within the Org
boundaries.
General Environment
International
• The International dimension of the external
environment represents events originating in
foreign countries as well as opportunities for
American Companies in other countries
• The international environment provides new
competitors, customers & suppliers as well as
shapes social (bottled water growing consciousness for
cleaner and healthier living, today's digital age of mobile phones and
the internet ),
technological and economic trends
• Today, every company must think internationally
• Managers who used to think only about the domestic
environment must learn new rules to cope with goods,
services and ideas circulating around the globe
• Industries- including automobiles, entertainment,
consumer electronics will have to compete on a global
basis or disappear
• Examples: “Peace dividend: An amount of money taken from a
defense budget and appropriated elsewhere in times of peace when less money is
” brought on by the
end of the cold war; forcing large Co. to convert a
significant portion of their operations into nonmilitary
production
required for defense than in times of hostility or war
Technological Dimension
• The dimension of the general environment that
includes scientific & technological advancements
in the industry & society at large
• Striking advances have been in the computer
industry
• Home video cameras got more processing power
than the old IBM 360
• One can get real time information from their
customers and then make faster, better informed
operating decisions: Levis customized products
Socio-Cultural Dimension
Continue
• Demography also shapes society’s norms &
values.
• Examples: sociocultrual trends that affecting
many companies include trend toward no
smoking, greater purchasing power of young
children, increased diversity of consumers, with
specialized markets for groups such as
Hispanics (Spanish-speaking Latin America) and women
over age 30 (M&S)
• Launching a Spanish-language newspaper in
order to respond to changes in the sociocultural
environment; boosted earnings of ABC
Socio-Cultural Dimension
• Important characteristics are geographical
and population density, age, and education
levels.
• Key demographic trends in the United States:
Hispanics will make up nearly a quarter of the
U.S. population by the year 2050.
Population and the workforce continue to age
with the baby boomers.
The single father is the fastest growing living
arrangement.
The U.S. will continue to receive large
numbers of immigrants especially from Asia
and Mexico.
Economic
• Representing the overall economic health of the
country or region in which the Organization
functions
(Consumer purchasing power, Unemployment rate, interest rates, labor
market,)
are all part of Org economic environment
• One significant recent trend in the economic
environment is the frequency of mergers &
acquisitions ( Disney & ABC Television)
• The impact on employees can be overwhelming
creating uncertainty about the future….
HOW?
• Employee anxiety & fear of losing their jobs?
• Fear of becoming obsolete, might not be needed anymore
Legal-Political
• Includes federal, state, and local government regulations
& political activities designed to control company
behavior
• Federal Government influences organizations through
the OSHA, EPA ( environmental Protection Agency),
import & export restrictions etc.. (minimum wage legislation,
trade regulations)
•
Pressure groups that work within the legal-political
framework to influence companies to behave in socially
responsible ways
Examples : Greenpeace, make significant changes in the
whaling, tuna fishing and seal fur industries
Political Factors.
• The political arena has a huge influence
upon the regulation of businesses, and the
spending power of consumers and other
businesses. You must consider issues
such as:
• 1.How stable is the political environment?
• 2.Will government policy influence laws that
regulate or tax your business?
Task Environment
The task environment includes those sectors
that have direct working relationship with
the Organization, among them Customer,
Competitors, Suppliers & the Labor market
Customers
• Those people and the Organizations in the
environment who acquire goods or service
from the organization are Customers
• Customers as are important because they
determine the Org Success
• Patients are the Customers of Hospital
• Students the customers of Schools
• Travelers the Customers of Airlines
Customers…………….
• To survive in competition with mass
merchandisers like Wal-Mart (World's largest grocery
retailer) , small retailers have been forced to come
up with new ways to win & keep customers
• Companies such as AT&T, General Foods have
all designed special programs & advertising
campaigns to court their older customers, who
are, with the aging of baby boomers
Competitors
• Other organizations in the same industry or type of
business that provide goods or services to the same set
of customers
• Each industry is characterized by specific competitive
issues :
Steel---Pharmaceutical Industry
• Nike is a very competitive organization. Phil Knight
(Founder and CEO) is often quoted as saying that
'Business is war without bullets.' Nike has a healthy
dislike of is competitors :Reebok
• Companies in some industries despite the competitive
wars worldwide, cooperate to achieve common goals
IBM, Apple Compaq joint venture: to break Microsoft domination
Suppliers
• The raw materials the organization uses to
produce its output are provided by suppliers
• University – Utilize hundreds of suppliers for
paper, pencils, cafeteria food, computers,
trucks, fuel, electricity and textbooks
• Companies are now using fewer suppliers
and trying to build good relationships with
them so that will receive high-quality parts at
low prices
• The power of suppliers tends to be a reversal of
the power of buyers.
• Where the switching costs are high e.g.
Switching from one software supplier to another.
• Power is high where the brand is powerful e.g.
Cadillac, Pizza Hut, Microsoft.
• There is a possibility of the supplier integrating
forward e.g. Brewers buying bars.
• Customers are fragmented (not in clusters) so
that they have little bargaining power e.g.
Gas/Petrol stations in remote places.
Labor Market
• The people in the environment who can be
hired to work for the Organization
• Org needs a supply of trained, qualified
personnel
• Unions, employee association can
influence the Org Labor market
Northern Telecom---Complex environment Case Study
The Organization-Environment
Relationship
• Why do Organization Care about factors in
the external environment?
Reason is that the environment
creates uncertainty for
organization managers, and they
must respond by designing the
organization to adapt to the
environment or to influence the
environment
External Environment and Uncertainty
High
High
Uncertainty
Adapt to
Environment
Rate of
Change in
Factors in
Environment
Low
Uncertainty
Low
Low
High
Number of Factors in Organization Environment
Environmental Uncertainty
• Uncertainty means that managers do not
have sufficient information about
environmental factors to understand &
predict environmental needs & changes
• When external factors change rapidly, the
organization experiences very high
uncertainty: electronic industry
• Two basic Strategies for coping with high
environmental uncertainty
Adapting To The Environment
Boundary- Spanning Role
Forecast & Planning
Flexible Structure
Mergers & Joint Ventures
If the Org faces increased
uncertainty with respect to
competitors, customers, suppliers or
government regulations, managers can
use several strategies to adapt to these
changes
Influencing The Environment
Advertising & Public Relations
Political Activity
Trade Associations
The other major strategy for handling
environmental uncertainty is to reach out
and change those elements causing
problems: Techniques used for changing
environment includes:
Boundary-Spanning Roles
 Departments & boundary-spanning roles link
and coordinate the Org with key elements in
the external environment.
Boundary spanners serves two purposes
They detect & process information about changes in the
environment
They represent the Org interest to the environment
How………
Boundary Spanning Roles
• People in dept’s such as
marketing & purchasing
span the boundary to
work with customers &
suppliers, both face-face
& through market
research
A Co. surveys customers twice
a year about the desktoppublishing technology they use
or planning to use within next
12 months/ blind survey to
determine if the company
should enter digital, short run
printing which is expected to be
a $15 billion industry in
year2000
Continue
• Competitive Intelligence,
also known as snooping &
spying
• 80% of the Fortune 1000
Companies maintain in
house snoops, also
known as competitor
intelligence professionals
• Co. hire private detectives to
dig through competitors trash
• Most of their work is legal,
relying on commercial
database, news clippings &
professional contacts
Forecasting & Planning
• Forecasting & planning for environmental
changes are major activities in many corporations
• Planning departments often are created when
uncertainty is high
• Forecasting is an effort to spot trends that enable
managers to predict future events
Co. monitors 16000 newspaper & magazines and predicts future trends
• Companies devised specific management plans for
handling crises like hostile takeover attempt or product
tempering
Flexible Structure
• An Organization structure should enable it
to effectively respond to shifts in the
environment
• Loose flexible structure works best when
Org experience uncertainty created by
shifts in the external environment or by
innovation within the Org
• Tight structure is most effective in a
certain environment
Organic Structures
Mechanistic Structures
• Org that is free flowing,
has few rules &
•
Characterized
by
rigidly
regulations, encourages
defined task, many rules &
teamwork among
regulations, little teamwork
employees & decentralize
& centralization of decision
decision making to
making
employees doing the job
• Works best when the
environment changes
• Works best when
rapidly
environment is stable
• Co. set up teams which
includes members from
multiple dept’s who can
provide expertise in problems
like plant explosion etc
Mergers & Joint Ventures
Mergers
 also a way to reduce
uncertainty
 Occurs when two or more
Organization’s combine
to become one
 reducing uncertainty in
the customer sector
Joint Ventures
 involves a strategic alliance by
two or more Org’s
 Occurs when the project is too
complex, expensive, or
uncertain for one firm to do
alone
 Many small business are turning
into joint ventures with large
firms or with international
partners
 Small Canadian
pharmaceuticals Co. has
teamed up with two giant co. to
promote new campaign.
 Larger partner will provide sales
staff, distribution channels,
financial resources or research
staff
Influencing the Environment
Advertising & Public Relations
 advertising is an important way to reduce
uncertainty about clients
 became a high successful way to manage
demand for a company’s product
Companies spend large amounts of
money to influence consumer tastes
 Hospitals advertise on billboards-newspaper to
promote special services
Public Relations
 Similar to advertising but except that its goal is to influence
public opinion about the Co. itself
 Co. do care about their public image
 PR & good image are accomplished through advertising as
well as speeches & press reports
 Companies in the tobacco industry have launched an
aggressive public relations campaign touting smokers rights
& freedom of choice in an effort to survive in this
antismoking era
 Dow became infamous : attempts to change this view with
an advertising campaign- “Dow Lets You Do Great Things”
Political Activity
 Organizational attempts, such as lobbying, to
influence government legislation & regulation
 Many corporations pay lobbyists to express their
views to federal & state legislators
 Foreign companies becoming increasingly savvy in
U.S political maneuvering
 Example: GM enlisted political bigwigs in its
successful effort to settle a battle with U.S
Transportation Dept over the safety of certain of its
pickup trucks…… Resulted in $1billion saving
Trade Associations
• An association made up of Organizations
with similar interests for the purpose of
influencing the environment
• National Association of Manufacturers
• National Rifle Association
• NTMA( National Tooling & Machining
Association) functions primarily as a
center of knowledge
The Internal Environment
Corporate Culture
• The internal environment within managers work
includes corporate culture, production technology,
Org Structure & physical facilities
• Of these, corporate culture has surfaced as
extremely important to competitive advantage
• The internal culture must fit the needs of the
external environment & company strategy
• When this fit occurs, highly committed employees
create a high-performance org that is tough to beat
Levels of Corporate Culture
Culture that can be
seen at the surface
level
Visible
1. Artifacts, such as dress, office
layout, symbols, slogans,
ceremonies
Invisible
2. Expressed values, such as “The
Penney Idea,” “The HP Way”
3. Underlying assumptions and deep
beliefs, such as “people are lazy
and can’t be trusted”
Deeper values and shared
understandings held by
organization members
Culture
• The set of key values, beliefs,
understandings, and norms that members
of an Org share
• Culture is a pattern of shared values and
assumptions about how things are done
within the org
• Culture can be analyzed at three levels
Visible artifacts
Invisible
Dress, office layout, symbols Expressed values & beliefs
Slogans, ceremonies
Which are not observable
Underlying assumptions
&
Deep beliefs
• Visible artifacts are the things one can see, hear
and observe by watching members of the Org
• At a deeper level are the expressed values &
beliefs which are not observable but can be
discerned from how people explain & justify what
they do : values that members of the Org hold at
conscious level
• Underlying assumptions and beliefs are the
essence of Culture and subconsciously guide
behavior & decisions
In some Org basic assumption might be that people are essentially
lazy & shirk their duties whenever possible: thus employees are
closely supervised and given little freedom and colleagues are
frequently suspicious of one another
• The key determining factor in successful
companies to be a culture in which employees
share such a strong vision that they know in their
hearts what is right for the company ( HP, Walt
Disney, Proctor & Gamble)
• Some companies put values in writing so they
can be passed on to new generations of
employees : HP created a list of cultural
concepts called “ The HP Way”
Any Co. culture can be interpreted
by observing these factors…….
Symbols
• An object, act, or event that conveys meaning to
others
• President of a Co. symbolizing his commitment to
a true open-door policy, ripped his office door from
its hinges & suspended it from the lobby ceiling for
all employees to see
• Another president wanted to break down the
vertical walls that isolated departments & develop a
team culture
STORIES
• Stories communicates Org culture
• Such stories can reveal the kinds of behaviors
that are valued by the Org
• Stories told to new employees to keep the
Organization’s primary values alive
• McDonalds’s QSC&V
• CEO, tells how he gave a woman a new washing
machine because she complained about needing
a broken belt replace
“story reinforces the store’s no-questions-asked
return policy”
HEROES
• A figure who exemplifies the deeds, character,
and attributes of a corporate culture
• Heroes are role models for employees to follow
• The deeds of heroes are out of the ordinary but
not so far out as to be unattainable by other
employees
• Heroes know how to do the right thing in the Org
• VP fired earlier in his career for persisting with a
new product ……….
• Lee proved the courage to work for $1 a year
when first came to Chrysler
SLOGANS
• Phrase or sentence that in brief expresses a
key corporate value
• Pepsi- describe the value of turning a bright
young people into strong managers is “ We
take eagles and teach them to fly in
formation”
• “ You do not have to please the boss; you
have to please the customer” embroidered in
Spanish on the pockets of workers jackets:
Sequins Intel where 80 % of the employees
are Hispanics
Ceremonies
• A planned activity that makes up a special event
and is conducted for the benefit of an audience
• Ceremonies are special occasions that reinforce
valued accomplishments, create a bond among
people by allowing them to share an important
event & celebrate heroes
• They setting is typically an auditorium, infront of
a large, cheering audience, and everyone
dresses in glamorous evening clothes
• The most successful consultants are introduced
by film clips.
Summary
• Many managers help define
important symbols, stories,
and heroes to shape the
culture
Environment & Culture
• A big influence on internal corporate culture is the
external environment.
• Strong corporate culture alone can not ensure
business success unless the culture encouraged
healthy adaptation to the external environment
• If the external environment requires extraordinary
customer service, the culture should encourage
good service; if it calls for careful technical
decision making, cultural values should reinforce
managerial decision making
Adaptive Cultures
Baseball team Culture
Club Culture
Academy Culture
Fortress Culture
Baseball team culture
• Emerges in an environmental situation with highrisk decision making & fast feedback from the
environment
• Talent, innovation & performance are valued and
rewarded
• Toper performers see themselves as “free agents
• Performers with “low batting averages” are
quickly dropped from line up
• BTC are found in fast-paced, high risk companies
involved in areas such as movie production,
advertising, and software development where
futures are bet on new product or project
Club Culture
• Characterized by loyalty, commitment and fitting
into the group
• This stable, secure environment values age &
experience and rewards seniority
• Individuals start young & stay( military)
• promote from within & members are expected to
progress slowly, proving competence at each
level
• Individuals tend to be generalists & may have
vast experience in a number of Org Functions
• Reluctant to change
Academy culture
• Hires young recruits interested in long-term
association & slow steady climb up the Org
• Unlike club culture, employees rarely cross one
division to another
• Person enters a specific “track” and gains a high
level of expertise in that area
• Technical mastery are the bases for reward and
advancement ( coca-cola, Ford, GM)
• Limit interdepartmental collaboration but works
very well in stable environment
Fortress Culture
• May emerge in an environmental survival
situation
• Textile firms & savings & loan Org are examples
of former dominant industries that are now
retrenching for survival
• This culture offers little job security or
opportunity for professional growth while
companies restructure & downsize to fit the new
environment
• Also offers tremendous turn around
opportunities for managers with confidence and
love of challenge
Shaping Corporate Culture For The
Twenty-First Century
• Changing And Merging Corporate Cultures
• Symbolic Leadership
Changing And Merging Corporate
Cultures
• A corporation’s culture may not always be
alignment with its needs & environment
• The difference between desired culture
norms and values and actual norms &
values is called the Culture Gap
• Culture gaps can be immense, especially
in mergers & acquisitions
HOW?
• 90% mergers never live up to expectations
• One reason is that managers are able to
integrate the acquired firm’s financial systems
& production technologies, they typically
unable to integrate the unwritten norms and
values that have an ever greater impact on a
Co. success
(global companies & cross-cultural mergers & acquisitions)
Pre-Press Graphics/ Harty Press
• Trying to put two cultures together can be a killer
• At harty workers wear smudged aprons, have ink
under their fingernails and carry union cardsloose & flexible style
• At Pre-Press people in running shoes & jeans sit
before computer screens- everything precisely
measured, employees forbidden to make person
phone calls, 30 minutes lunch break
• Two cultures clashed from the beginning, but the
most damaging tensions were related to
employee anxiety and fear of losing their jobs
• Pre-Press employees were reluctant to share
knowledge for fear that once Harty employees
learned new skills, they might no longer be
needed
• Harty employees with conventional printing skills
saw a digital future and worried that they were
about to become obsolete
“Managers often forget that human
systems of a company are what make
or break any change initiative”
Symbolic Leadership
• They way managers change norms and values
toward what is adaptive to the external
environment is through symbolic leadership
• Managers use Symbols, stories, slogans and
ceremonies to change the corporate culture
• Mangers should over communicate to ensure
that employees understand the new culture
values, and they must signal these values in
actions as well as words………………
Symbolic leader
continues
• Symbolic leader influence culture in the following
manner and to adapt it external environment:
• Use of artifacts such as public statements,
ceremonies, stories, heroes, symbols and
slogans
• Changing culture is not easy, but through their
words-and particularly their actions symbolic
leaders let employees know what really counts
in the company
• Read Examples of symbolic leaders