MANAGING THE

ENVIRONMENT
AND THE
ORGANIZATION’S
CULTURE

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 LEARNING OBJECTIVES
1. Contrast the actions of managers according to the omnipotent
and symbolic views.
2. Describe the constraints and challenges facing managers in
today’s external environment.
▪ Develop your skill at scanning the environment so you can
anticipate and interpret changes taking place.
3. Discuss the characteristics and importance of organizational
culture.
▪ Know how to read and assess an organization’s culture.
4. Describe current issues in organizational culture.

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 READING AN ORGANIZATION’S
CULTURE: FIND ONE WHERE YOU'LL BE
HAPPY
“A key to success in
management and in your
career is knowing how to
“read” an organization’s
culture so you can find one
in which you’ll be happy.”

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 SCANNING THE ENVIRONMENT
▶ Do background work. Check out the company’s Web site.
▶ What impression do you get from it? Are corporate values listed?
Mission Statement?
▶ Observe the physical surroundings and corporate symbols.
▶ Notice visible symbols of organizational culture, such as, logos, signs,
posters, pictures, photos, style of dress, etc.
▶ How would you characterize the people who work there ? Are they
formal? Casual? Serious? Jovial? Open?

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 THE MANAGER:
OMNIPOTENT OR SYMBOLIC?
▶ Omnipotent view of management: The view
that managers are directly responsible for an
organization’s success or failure.

▶ Symbolic view of management: The view that

much of an organization’s success or failure is due
to external forces outside managers’ control.

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 MANAGERIAL CONSTRAINTS

▶ In reality, managers are neither all-powerful nor

helpless. But their decisions and actions are
constrained.

▶ As you can see in Exhibit 3-1, external

constraints come from the organization’s
environment and internal constraints come from
the organization’s culture.

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 EXHIBIT 3-1
CONSTRAINTS ON MANAGERIAL
DISCRETION

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 THE EXTERNAL ENVIRONMENT:
CONSTRAINTS AND CHALLENGES

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 THE EXTERNAL ENVIRONMENT
▶ The External Environment: Those factors and forces outside the
organization that affect it’s performance. The external environment
includes several different components.
▶ Economic – Encompasses factors such as interest rates, inflation,
changes in disposable income, stock market fluctuations, and
business cycle stages.
▶ Demographic – Concerned with trends in population characteristics
such as age, race, gender, education level, geographic location,
income and family composition.
▶ Political/Legal – Concerned with federal, state and local laws, and
global laws.

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 THE EXTERNAL ENVIRONMENT (CONT.)

▶ Technological – Concerned with scientific or

industrial innovations.
▶ The Sociocultural – Concerned with societal and
cultural factors such as values, attitudes, trends,
traditions and lifestyles, beliefs, tastes, and patterns
of behavior.
▶ Global – Encompasses issues associated with
globalization and a world economy.

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 THE EXTERNAL ENVIRONMENT (CONT.)

The demographic component is concerned with

trends in population characteristics such as age,
race, gender, education level, geographic location,
income, and family composition.

The political/legal component looks at federal,

state, and local laws, as well as global laws and
laws of other countries. It also includes a country’s
political conditions and stability.

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 EXHIBIT 3-2
COMPONENTS OF THE EXTERNAL
ENVIRONMENT

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 FACTORS IMPACTING GLOBAL
BUSINESSES
▶ Like many global businesses, Nestlé is facing increased
commodity (raw materials) costs.
▶ Nestlé, the maker of products from Crunch chocolate
bars to Nescafé coffee to Purina pet foods, spends
more than $30 billion a year on raw materials.
▶ Commodity costs are just one of the many volatile
economic factors facing organizations. Managers need
to be aware of the economic context so they can make
the best decisions for their organizations.

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 THE GLOBAL ECONOMY AND THE
ECONOMIC CONTEXT
▶ The lingering global economic challenges – once
described as the “Great Recession” by some analysts –
began with the turmoil in the United States housing
market.
▶ As credit markets collapsed, businesses were impacted.
▶ Credit was no longer readily available to fund
businesses.
▶ Economic difficulties spread across the globe.
▶ The fragile economic recovery continues to be a
business constraint.

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 ECONOMIC INEQUALITY AND THE
ECONOMIC CONTEXT
▶ As economic growth has languished and sputtered,
and as people’s belief that anyone could prosper
declined, social discontent over growing income
gaps has increased.
▶ Business leaders must realize that societal attitudes
in the economic context have the potential to
create constraints.

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 The Demographic
Environment

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 THE DEMOGRAPHIC ENVIRONMENT (CONT.)

▶ The size and characteristics of a country’s population can have a

significant effect on what it’s able to achieve in politics, economics, and
culture.
▶ Baby Boomers – Born between 1946 and 1964, one of the largest and
most influential demographic groups in history.
▶ Gen Y or (Millennials) – Children of Baby Boomers, born between 1978
and 1994, making an impact on technology and the workplace.
▶ Post-Millennials – The youngest group identified age group—basically
teens and middle-schoolers. They have also been called the
iGeneration because advances in technology have customized
everything to the individual.

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 ASSESSING ENVIRONMENTAL
UNCERTAINTY
▶ Environmental uncertainty refers to the degree of
change and complexity in an organization’s
environment.
▶ The first dimension of uncertainty is change.
1. Organizations are stable, minimal change
2. Organizations are dynamic, frequent change
▶ Organizational Complexity refers to the number of
components in an organization’s environment and the
extent of the organization’s knowledge about those
components.

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 EXHIBIT 3-3
ENVIRONMENTAL UNCERTAINTY MATRIX

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COPYRIGHT © 2016 PEARSON EDUCATION, INC.
 MANAGING STAKEHOLDER
RELATIONSHIPS
▶ The nature of stakeholder relationships is another way in
which the environment influences managers. The more
obvious and secure these relationships, the more influence
managers will have over organizational outcomes.
▶ Stakeholders – Any constituencies in an organization’s
decisions and actions.
▶ Exhibit 3 - 4 identifies some of the organization’s most
common stakeholders which includes both internal and
external constituent groups.

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 EXHIBIT 3-4
ORGANIZATIONAL STAKEHOLDERS

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 THE BENEFITS OF GOOD STAKEHOLDER
RELATIONSHIPS
▶ Improved predictability of environmental
changes
▶ Increased successful innovations
▶ Increased trust among stakeholders
▶ Greater organizational flexibility to reduce
the impact of change

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 ORGANIZATIONAL CULTURE:
CONSTRAINTS AND CHALLENGES
▶ Just as each individual has a unique personality —
traits and characteristics influence the way we act
and interact with others. An organization, too, has
a personality, which is referred to as organizational
culture.
▶ An organization’s culture can make employees feel
included, empowered, and supported or it can
make them feel the opposite.

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 ORGANIZATIONAL CULTURE
▶ Organizational Culture —The shared values, principles,
traditions, and ways of doing things that influence the way
organizational members act and that distinguish the organization
from other organizations.
▶ Cultural Values and practices evolve over time.
▶ Organizational Culture is:
▶ Perception — based on employee experience within the
organization.
▶ Descriptive — how members describe it.
▶ Shared — employees share perception and experiences.
▶ Research suggests seven dimensions of culture that seem to
capture the essence of an organization’s culture. These
dimensions are shown in Exhibit 3-5 and range from low to high.

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 EXHIBIT 3–5
DIMENSIONS OF ORGANIZATIONAL CULTURE

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 CONTRASTING ORGANIZATIONAL CULTURE

▶ In many organizations, one cultural dimension is often

emphasized more than others and essentially shapes the
organization’s personality and the way the organization
works.
▶ For example, Sony Corporation focuses on product
innovation and risk-taking. The company “lives and
breaths” innovations, and employees’ behaviors support
that goal. (Product Orientation).
▶ Conversely, Southwest Airlines focuses on it’s employees
and has made them a central focus of it’s culture. (People
Orientation).

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 EXHIBIT 3-6
CONTRASTING ORGANIZATIONAL CULTURE

▶ Risk-taking and change ▶ Risk-taking and change

discouraged rewarded
▶ Creativity discouraged ▶ Creativity and innovation
▶ Close managerial supervision rewarded
▶ Work activities designed ▶ Management trusts employees
around the individual employee ▶ Work designed around teams

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 CONTRASTING CULTURAL VALUES (CONT.)

▶ Exhibit 3-6 illustrates how the dimensions of

culture can create significantly different
cultures.
▶ Both Organization A and Organization B are
manufacturing firms, but each company
emphasizes a different dimension that have
shaped organizational culture.

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 EXHIBIT 3-7
STRONG VERSUS WEAK CULTURES

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 STRONG CULTURES
▶ All organizations have cultures, but not all cultures equally
influence employees’ behaviors and actions.
▶ Strong Cultures—Organizational cultures in which the key
values are intensely held and widely shared.
▶ The more employees accept the organization's key values
and greater their commitment to those values, the stronger
the culture. .

▶ The stronger the culture becomes, the more it affects the

way managers plan, organize, lead, and control.
▶ Strong Cultures are associated with high organizational
performance.

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3 - 30
 Strong Cultures
Apple’s strong culture of
product innovation and
customer-service reflects the
core values of it’s visionary
cofounder, Steve Jobs. Jobs
instilled these core values in
all employees, from top
executives to sales
associates, such as the
Genius Bar employee shown
here training a customer at
the Apple Store in
Manhattan.

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 WHERE CULTURE COMES FROM AND
HOW IT CONTINUES
▶ Exhibit 3-8 illustrates how an organization’s culture is
established and maintained.
▶ Organizational Culture usually reflects the vision of the
founder. FredEx. is virtually indistinguishable from its
founder, Fred Smith, who has been boss since 1971. The
75-year-old, who came up with his idea for air freighting
packages at Yale University, is the stuff of folklore. In
January 2019 the board in effect gave Mr Smith tenure forlif
e, by waiving the firm’s retirement age of 75 for executives.
▶ The small size of most new organizations makes it easier to
establish organizational culture.
▶ Once culture is established, organizational practices help to
maintain it.
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 EXHIBIT 3-8
ESTABLISHING AND MAINTAINING
CULTURE

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 when you are looking at the issues of culture, basically we need to
address, how do we create and maintain organizational culture.
creating a culture is could happen because of many reasons but
typically we can think of one by the founder or the top level
manager.
example, when Toyota was founded by the founder Toyota, one of
the early days , Somebody stole all his designs, so on that day
Toyota was thinking, so if I create things in the paper somebody can
take it away but if I create all the things in the minds of the people
then nobody can take away those things and that is how the Toyota
started creating an organization where all the values, all the ideas
are within the people and that is how the Toyota manufacturing
philosophy got created which others cannot duplicate it, others
cannot create it because it is impossible to create such human
beings in a short period of time.
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 ▶ So strong person can sow the seeds of strong culture, we
have seen many organizations.
▶ the leadership of the organization builds that vision, what is
acceptable and what is not acceptable.
▶ Gerstener of IBM, who was convinced that all cost cutting
will fail to save the IBM unless it changes the way it does
the business. So he changed the IBM from top to bottom
everybody has to have that kind of a beliefs and values.

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 this is the first step of socialization. Without
socialization, you cannot integrate the individual to the
organization and integrating the individual to the
organization means integrating to the organizational
culture.
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 the initial step is important but after that when set of people
come together then you need to do systematic integration of
all the people and also the new persons. Another way of
socializing is placement on the job, So you give an acting
assignment making people to go and work for some time and
then accept and respond.
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 you give systematic, extensive and carefully reinforced field
experiences. So that they understand the organizational
culture through this kind of systematic exposure. So there is
no shock, when individual comes to the organization
particularly, when they are in educational field, we are talking
about the practical’s or making people to go and work in an
organization before they really start their careers that is only to
help them to be a part of the work culture.

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 This socialization process is accomplished through
conveying what is acceptable behavior and what is
not so acceptable behaviors and also through
adherence to important values of firms.

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 they are valued for what is desirable, so different organization
articulates that you need to stay long or you need to sacrifice
and the stories around that. stories which validate the
organization's culture and the way of doing things, it is
highlighted in terms of various experiences of the senior
people certainly, the recognition and promotion.

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 this is the final step. So you project such people who have
contributed their best and also how they have done. So
once you create that kind of a visibility and then, reward
and recognize such people others also learn from those
experiences.

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 ▶ So when you do systematically build organizational
culture, you socialize new employees and integrate
these new employees as early as possible through
different methods. none of these methods are
extraordinary but all of them are important.
▶ The Japan’s culture developed late in Asian terms
and was much influenced by China and later the
West. it was a closed society for several 100 years
and the early in Japan's history society was
controlled by a ruling elite of powerful clans
▶ Japanese organizations are well known for its
performance particularly, with respect to quality
and efficiency.
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 ▶ Japan is known for the way they rebuilt it based on
new and earnest desires for peaceful development
becoming an economic superpower in the second half
of the 20th century.
▶ The culture of Japanese management is very famous in
the West. When we talk about Japanese management
we are talking about very successful organizations,
corporations in Japan like Toyota, Hitachi, Toshiba,
Sony, Yokogawa and many of these companies who
are so successful and they have emerged as global
leaders.

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 ▶ flagships of the Japanese economy provide their
workers with excellent salaries and working
conditions and very secured employment. So the
employment security and excellent reward systems
with a great concern for their employees have all
combined and have contributed to the success of
the Japanese organizations.
▶ The key features of the Japanese management is
the permanent employment, called shushin koyo. it
is regarded as the life term or lifelong employment.
▶ Permanent employment covers the minority of the
work force that work for the major companies.
several other countries do practice this.
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 ▶ Recruitment
▶ On the job culture
▶ Workers union culture
▶ Reward and pay
▶ Japanese tend to see the manager as more of a
coordinator than as a leader or decision maker.
▶ the Japanese do not associate the specific tasks
being done by the manager with that persons title
or salary because the concept is that master.

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 ▶ So the role is much more important than the
designation. The ability to do all the things is much
more important than mere designated or the
designation-based kind of a behavior.
▶ So the organization becomes very flexible, they can
deploy the human resource depending upon the
pressures of the business

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 HOW EMPLOYEES LEARN CULTURE
▶ Employees “learn” an organization’s culture in a
number of ways. The most common are stories,
rituals, material symbols, and language.
▶ Stories — organizational stories abut significant
events in the life of the company help keep culture
alive.
▶ Rituals — repetitive sequences of activities that
express and reinforce important organizational
values and goals.

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 HOW EMPLOYEES LEARN CULTURE
(CONT.)
▶ Material Artifacts and Symbols — convey to
employees what is important and the kinds of
expected behaviors, ex. Risk-taking, etc.
▶ Language — many organizations or units of an
organization use language to identify and unite
members of a culture. New employees are
frequently overwhelmed with acronyms and jargon
that quickly becomes a part of their language.

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 EXHIBIT 3-9
TYPES OF MANAGERIAL DECISIONS AFFECTED
BY CULTURE

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 Creating an
Innovative Culture

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 EXHIBIT 3-10
CREATING A CUSTOMER-RESPONSIVE CULTURE

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 CREATING A CUSTOMER-RESPONSIVE
CULTURE (CONT.)
▶ Research shows that customer satisfaction is
directly related to customer spending and
consumption.
▶ Satisfied customers will be repeat customers for
businesses.
▶ higher customer satisfaction leads to higher
market value.
▶ But how can a business keep clients satisfied? The
answer, according to a recent study, is to treat
employees well.

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COPYRIGHT © 2016 PEARSON EDUCATION, INC.
 ▶ The link was strongest in industries where
workers have the most direct contact with
customers, such as retail, restaurants and
tourism.
▶ Companies with high scores for both
employee and customer satisfaction include
Southwest Airlines, Trader Joe’s, a grocer,
and Hilton Hotels. The link is less strong
among manufacturing and energy firms.
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 SPIRITUALLY AND ORGANIZATIONAL CULTURE

▶ Workplace Spiritually — A culture where organizational

values promote a sense of purpose through meaningful
work that takes place in the context of community.
▶ Organizations with a spiritual culture recognize that people:
▶ Have a mind and spirit.
▶ Seek to find meaning and purpose in their work.
▶ Desire to connect with others and be a part of a
community.

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 FIVE CULTURAL CHARACTERISTICS OF
SPIRITUAL ORGANIZATIONS
▶ Research indicates that Spiritual Organizations have five
characteristics:
1. Strong sense of purpose, culture built around meaningful
purpose.
2. Focus on individual development, recognize worth and
value of individuals.
3. Trust and openness, characterized by mutual trust, honesty,
and openness.
4. Employee empowerment, managers trust employees to
make good decisions.
5. Tolerance of employee expression, employees free to
express emotions.

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 REVIEW OF LEARNING OBJECTIVE 3.1

▶ Contrast the actions of managers according to

the omnipotent and symbolic views.
1. Omnipotent View — Managers are directly responsible for
the organization’s success or failure.
2. Symbolic View — Much of the organization’s success or
failure is due to external forces outside of the manager’s
control.
3. The two constraints on managers' discretion are
organizational culture (internal) and the environment
(external).

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 REVIEW OF LEARNING OBJECTIVE 3.2
▶ Describe the constraints and challenges facing
managers in today’s external environment.
1. The external environment includes those factors and
forces outside the organization that affect its
performance.
2. The main components of the external environment are,
economic, demographic, political/legal, Sociocultural,
technological, and global.
3. Managers face constraints and challenges from these
components because they have an impact on jobs,
environmental uncertainty, and stakeholder relationships.

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 REVIEW OF LEARNING OBJECTIVE 3.3
▶ Discuss the characteristics and importance of
organizational culture.
1. The seven dimensions of culture are: attention to detail,
outcome orientation, people orientation, team orientation,
aggressiveness, stability, innovation and risk taking.
2. The stronger the culture, the greater the impact on the
way managers plan, organize, lead, and control.
3. The original source of the organizational culture reflects
the founder’s vision.
4. Culture is transmitted through stories, rituals, material
symbols, and language.

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 REVIEW OF LEARNING OBJECTIVE 3.4
▶ Describe current issues in organizational culture.
1. The characteristics of an innovative culture are challenge and
involvement, freedom, trust and openness, idea time,
playfulness/humor, conflict resolution, debates, and risk taking.
2. A customer responsive culture has five characteristics: outgoing
and friendly employees; jobs with few rigid rules, procedures,
and regulations; empowerment; clear roles and expectations;
and employees who are conscientious in their desire to please
the customer.
3. Spiritual organizations have five characteristics: strong sense of
purpose, focus on individual development, trust and openness,
employment, and toleration of employee expression.

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 3 - 46
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