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