Chapter 3 Organizational Environments and Culture

Economy (general environment)

A growing economy provides a favorable environment for business growth. Business confidence indices are a part of this section

Environmental Change, Environmental Complexity, and Resource Scarcity.... what amount do you want of these?

A low amount

Malice in Dallas

Boxing ring instead of lawsuit over SW airlines slogan.

Believed

Buried deep below surface Rarely discussed or thought about

Specific Environment

Customers Competitors Suppliers Industry regulations Advocacy groups

Sociocultural Component (general environment)

Demographic characteristics, general behavior, attitudes, and beliefs of people in a particular society.

Behaviors

Opportunistic behavior Relationship behavior

Punctuated Equilibrium Theory

Stability, moments of equilibrium. Then dynamic change, revolutionary period (punctuated portion). Punctuated by event or change in external & internal "revolutionary period" Companies often experience both stable and dynamic environments

SWAT analysis

Strengths Weaknesses Opportunities Threats

Political/Legal Component (general environment)

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.

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

Consistent organizational cultures

a company culture in which the company actively defines and teaches organizational values, beliefs, and attitudes

Company mission

a company's purpose or reason for existing

Competitive analysis

a process of monitoring the competition that involves identifying competition, anticipating their moves, and determining their strengths and weaknesses

External Environments

all events outside a company that have the potential to influence or affect it

Complex environments

an environment with many environmental factors Complex like computer

Technological Component/ Technology (general environment)

an umbrella term for the knowledge, tools, and techniques used to transform inputs into outputs Change in technology can help companies provide better products or produce their products more efficiently. Not phone/comp technology. Ex: Uber new technology, new way to do taxi service

Strategy has to be

close to your culture

Competitors

companies in the same industry that sell similar products or services

Suppliers

companies that provide material, human, financial, and informational resources to other companies

Dynamic environment

environment in which the rate of change is fast

Stable environment

environment in which the rate of change is slow

Organizational strategies affect

environmental scanning

Dynamic

fast rate of change Usually during this time companies lose money

Simple environments

few environmental factors that affect organizations Simple like milk

Relationship behavior

focuses on establishing a mutually beneficial, long-term relationship between buyers and sellers

Two types of external environments that influence organizations

general environment and specific environment

Cognitive Maps

graphic depictions of how managers believe environmental factors relate to possible organizational actions.

Proactive customer monitoring

identifying and addressing customer needs, trends, and issues before they occur

Reactive Customer monitoring

identifying and addressing customer trends and problems after they occur

The organization is

internal environment, everything else is external

Changing visible artifacts

like getting rid of the dress code, or changing the office design and layout around.

Specific Environment usually affects

only people in that industry: jet fuel etc.

Environmental scanning contributes to

organizational performance

Product boycott

people boycott a product altogether, trying to persuade consumers not to purchase a company's product or service

Organizational heroes

people celebrated for their qualities and achievements within an organization

Managers scan the environment to

reduce uncertainty

Organizational stories

stories told by organizational members to make sense of organizational events and changes and to emphasize culturally consistent assumptions, decisions, and actions

Resource Scarcity

the abundance or shortage of critical resources in an organization's external environment.

Specific environment

the customers, competitors, suppliers, industry regulations, and advocacy groups that are unique to an industry and directly affect how a company does business.

Supplier dependence

the degree to which a company relies on a supplier because of the importance of the supplier's product to the company and the difficulty of finding other sources of that product.

Buyer dependence

the degree to which a supplier relies on a buyer because of the importance of that buyer to the supplier and the difficulty of finding other buyers for its products.

Uncertainty

the extent to which managers can understand or predict the external changes and trends affecting their business.

Environmental complexitiy

the number and the intensity of external factors in the environment that affect organizations.

Behavioral substitution

the process of having managers and employees perform new behaviors central to the new organizational culture in place of behaviors that were central to the old organizational culture.

Behavioral addition

the process of having managers and employees perform new behaviors that are central to and symbolic of the new organizational culture that a company wants to create (ex: giving bonuses).

Changing organizational cultures

Behavioral addition Behavioral substitution Change visible artifacts Hiring people with values and beliefs consistent with desired culture

Competitor Component (specific environment)

Competitors Competitive analysis

Advocacy Groups

Concerned citizens who band together to try to influence the business practices of specific industries, businesses, and professions Such as: WWF -Public communication (least aggressive) -Media advocacy -Product boycott (most aggressive)

Companies that are generally successful have

Consistency Clear mission Employee involvement Adaptability

4 Characteristics of External Environments

Environmental change Environmental complexity Resource scarcity Uncertainty

Making sense of changing environments

Environmental scanning Interpreting environmental factors Acting on threats and opportunities

Both general and specific environments are ____.

External

Heard

How decisions are made and explained Widely shared assumptions and beliefs

Organization is the only ____ environment. Everything else is ____.

Internal, external

Creation and maintenance of organizational cultures

Primary source of organizational culture is the company founder Organizational culture is sustained by organizational stories and heroes. Ex: Southwest airlines laid back approach, Delta corporate strict.

Customer Component (specific environment)

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 Proactive better than reactive, and takes a lot of money and creativity.

Industry Regulation Component (specific environment)

Regulations and rules that govern the practices and procedures of specific industries businesses, and professions

Environmental scanning

Searching the environment for important events or issues that might affect an organization

Three levels of Organizational Culture

Seen - Surface level Heard - Expressed value and beliefs Believed - Unconscious assumptions & beliefs

Internal Environments ask the question: What are you ____, what type of ____ do you need to succeed?

Selling, culture

Environmental Complexity

Simple Complex

Supplier Component (specific environment)

Suppliers - companies that provide material, human, financial, and informational resources to other companies Supplier dependence v. Buyer dependence Walmart and Rubber Maid example

Seen

Symbolic artifacts such as dress codes Workers' and managers' behaviors What people say

Environmental Change

The rate at which a company's general and specific environments change. The idea that the environment changes -Stable -Dynamic

Public communication

relies on voluntary participation by the news media and advertising industry to send out the advocacy group's message. (Hopes media will show up)

Business confidence indices

show how confident managers are about future business growth.

Stable

slow rate of change

General environment

the economic, technological, sociocultural, and political/legal trends that indirectly affect all organizations. Changes in any sector of the general environment eventually affect most organizations.

Internal environment

the events and trends inside an organization that affect management, employees, and organizational culture.

Organizational Culture

the values, beliefs, and attitudes shared by organizational members

Media advocacy

typically framing the group's concerns as public issues (affecting everyone); exposing questionable, exploitative, or unethical practices; and forcing media coverage by buying media time or creating controversy that is like to receive extensive news coverage

Visible artifacts

visible signs of an organization's culture, such as the office design and layout, company dress code, and company benefits and perks, like tock options, personal parking spaces, or the private company dining room

Opportunistic behavior

when one party benefits at the expense of another