Chapter 3 - Organizational Environment and Cultures
Cognitive map
A graphic depiction of how managers believe environmental factors relate to possible organizational actions
What are the keys to a successful organizational culture?
1. Adaptability 2. Employee involvement (in decision making) 3. Vision 4. Strong culture
What are the five components of the specific environment?
1. Customer 2. Competitor 3. Supplier 4. Industry regulation 5. Advocacy groups
What are the three basic characteristics of changing external environments?
1. Degree of change in environmental components (how dynamic or stable the environment is) 2. Environmental complexity 3. Resource scarcity
What is the three-step process managers use to make sense of changes in the external environment?
1. Environmental scanning 2. Interpreting environmental factors (as threats or opportunites) 3. Acting on threats and opportunities
What are the two types of external environments that influence organizations?
1. General environment 2. Specific environment
What are the three levels of organizational culture?
1. Seen (surface level) - symbolic artifacts such as dress codes, workers' and managers behaviours 2. Heard ( expressed values & beliefs) - what people say, how decisions are made and explained 3. Believed ( unconscious assumptions & beliefs) - widely shared assumptions and beliefs, buried deep below surface, rarely discussed or though about
Why do managers scan the environment?
1. To stay up to date on important factors in their industry 2. To reduce uncertainty 3. To be aware of trends and events that are directly related to their company's ability to compete in the marketplace 4. To detect environmental changes and problems before they can become a crisis
What are the four components of the general environment?
1. economy 2. technological 3. sociocultural 4. political and legal trends
Company vision
a business's purpose or reason for existing
What causes opportunistic behaviour?
a high degree of buyer or seller dependence
Competitive analysis
a process for monitoring the competition that involves identifying competition, anticipating their moves, and determining their strengths and weaknesses
Punctuated equilibrium theory
a theory according to which companies go through long, simple periods of stability (equilibrium), followed by short periods of dynamic, fundamental change (revolution), and ending with a return to stability (equilibrium)
Opportunistic behaviour
a transaction in which one party in the relationship benefits at the expense of another
External Environements
all events outside a company that have the potential to influence or affect it
Media advocacy
an advocacy group tactic that involves framing issues as public issues; exposing questionable, exploitive, or unethical practices; and forcing media coverage by buying media time or creating controversy that is likely to receive extensive news coverage
Product boycott
an advocacy group tactic that involves protesting a company's actions by convincing consumers not to purchase its product or service
Public communications
an advocacy group tactic that relies on voluntary participation by the news media and the advertising industry to get the group's message out
Dynamic environment
an environment which the rate of change is fast
Stable environment
an environment which the rate of growth is slow
Simple environment
an environment with few environmental factors
Complex environment
an environment with many environmental factors
Competitors
companies in the same industry that sell similar products or services to customers
Suppliers
companies that provide material, human, financial, and informational resources to other comapanies
Uncertainty
extent to which managers can understand or predict which environmental changes and trends will affect their business
Employee involvement (in decision making)
gives employees a greater sense of ownership and responsibility
Advocacy groups
groups of concerned citizens who band together to try and influence the business practices of specific industries, businesses and professions
What is the key factor influencing the impact and quality of the relationship between companies and their suppliers?
how independent they are
Proactive 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
Business confidence indices
indices that show managers' level of confidence about future business growth
Relationship behaviour
mutually beneficial, long-term exchanges between buyers and suppliers
Political/legal component
part of the general environment that includes laws, regulations, and court decisions that govern and regulate business behavior
Sociocultural component
part of the general environment that refers to demographic characteristics, general behaviour, and beliefs of people in a particular society
Organizational heros
people celebrated for their qualities and achievements within an organization
What are the two basic strategies for monitoring customers?
reactive and proactive
Industry regulation
regulations and rules that govern the business practices and procedures of specific industries, businesses and professions
Environmental scanning
searching the environment for important events or issues that might affect an organization
Organizational stories
stories told by members to make sense of events and changes in an organization and to emphasize culturally consistent assumptions, decisions, and actions
Adaptability
the ability to notice and respond to changes in the organization's environment
Resource scarcity
the abundance or shortage of critical organizational 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 for 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
General environment
the economic, technological, sociocultural, and political trends that indirectly affect all organizations
Technology
the knowledge, tools, and techniques used to transform inputs into outputs
Environmental complexity
the number of factors it the external environment that affect organizations
Environmental change
the rate at which a company's general and specific environments change
Internal environment
the trends and event within an organization that affect management, employees, and organizational culture
Organizational culutre
the values, beliefs, and attitudes shared by members of the organization
Consistent organizational culture (strong cultures)
when a company actively defines and teaches organizational values, beliefs, and attitutes