CH 3- ORGANIZATIONAL ENVIRONMENTS AND CULTURE

DYNAMIC ENVIRONMENT

rate of environmental change is fast

STABLE ENVIRONMENT

rate of environmental change is slow

PUBLIC COMMUNICATIONS APPROACH

relies on voluntary participation by the news media and the advertising industry to send out an advocacy group's message

ORGANIZATIONAL STORIES

-make sense of organizational events -emphasize culturally consistent assumptions, decisions, and actions

OPPORTUNISTIC BEHAVIOR

-a high degree of buyer or seller dependence can lead to this behavior -one party benefits at the expense of the other -might make you profits for a week or so but that's it

ACTING ON THREATS AND OPPORTUNITIES

-after scanning for information on environmental events and issues and interpreting them as threats or opportunities, managers have to decide how to respond to these environmental factors -deciding what to do under conditions of uncertainty is always difficult -because it is impossible to comprehend all the factors and changes, managers often rely on simplified models of external environments called cognitive maps- -summarize the perceived relationships between environmental factors and possible organizational actions

INTERPRETING ENVIRONMENTAL FACTORS

-after scanning, managers determine what environmental events and issues mean to the organization -typically, managers view environmental events and issues as either threats or opportunities -when managers interpret environmental events as threats, they take steps to protect the company from further harm

MAKING SENSE OF CHANGING ENVIRONMENTS

-because external environments can be dynamic, confusing, and complex, managers use a three-step process to make sense of the change in their external environments- -environmental scanning -interpreting environmental factors -acting on threats and opportunities

COMPETITOR COMPONENT

-companies in the same industry that sell similar products or services -often the difference between business success and failure comes down to whether your company is doing a better job of satisfying customer wants and needs than the competition -consequently, companies need to keep close track of what their competitors are doing -to do this, managers perform competitive analysis- -a process of monitoring the competition that involves identifying competition, anticipating their moves, and determining their strengths and weaknesses

SUPPLIER COMPONENT

-companies that provide material, human, financial, and informational resources to other companies -a key factor influencing the impact and quality of the relationship between companies and their suppliers is how dependent they are on each other -supplier dependence -buyer dependence -a high degree of buyer or seller dependence can lead to opportunistic behavior -opportunistic behavior -relationship behavior

ADVOCACY GROUPS

-concerned citizens who band together to try to influence the business practices of specific industries, businesses, and professions -the members of a group generally share the same point of view on a particular issue -public communications approach -media advocacy approach -product boycott

GENERAL ENVIRONMENT

-consists of the economy and the technological, sociocultural, and political/legal trends that indirectly affect all organizations -changes in any sector of the (blank) environment eventually affect most organizations

SUCCESSFUL ORGANIZATIONAL CULTURES

-cultures based on- -adaptability -involvement -a clear mission -consistency help companies achieve- -higher sales growth -return on assets -profits -quality -employee satisfaction

SELECTION

-cultures can also be changed by hiring and selecting people with values and beliefs consistent with the company's desired culture -the process of gathering information about job applicants to decide who should be offered a job -most instruments measure whether job applicants have the knowledge, skills, and abilities needed to succeed in their jobs -but companies are increasingly testing job applicants to determine how they fit with the company's desired culture by using selection tests, instruments, and exercises to measure these values and beliefs in job applications

COMPONENTS OF THE GENERAL ENVIRONMENT

-economy -technology -sociocultural -political/legal

CHARACTERISTICS OF EXTERNAL ENVIRONMENTS

-environmental change -environmental complexity -resource scarcity -uncertainty

UNCERTAINTY

-extent to which managers can predict which external changes and trends will affect their business -how well managers can understand or predict the external changes and trends affecting their business

RELATIONSHIP BEHAVIOR

-focuses on establishing a mutually beneficial, long-term relationship between buyers and sellers -the kind of behavior you want because the other doesn't last long

BEHAVIORAL SUBSTITUTION

-having managers and employees perform a new behavior in place of another behavior -key in both instances is to choose behaviors that are central to and symbolic of the old culture you're changing and the new culture that you want to create

PROACTIVE CUSTOMER MONITORING

-identifying and addressing customer needs, trends, and issues before they occur -becoming more popular because of technology

REACTIVE CUSTOMER MONITORING

-identifying and addressing customer trends and problems after they occur -one strategy is to listen closely to customer complaints and respond to customer concerns

TECHNOLOGICAL COMPONENT

-knowledge, tools, and techniques used to transform inputs (raw materials, information, and so on) into outputs (products and services) -changes in technology can help companies provide better products or produce their products more efficiently -although technological changes can benefit a business, they can also threaten it -companies must embrace new technology and find effective ways to use it to improve their products and services or decrease costs -if they don't, they will lose out to companies that do

MEDIA ADVOCACY APPROACH

-much more aggressive than the public communications approach -typically involves framing the group's concerns as public issues affecting everyone; exposing questionable, exploitative, or unethical practices; and creating controversy that is likely to receive extensive news coverage

ORGANIZATIONAL CULTURES EXIST ON THREE LEVELS...

-on the first, or surface, level are the reflections of an organization's culture that can be seen and observed, such as symbolic artifacts (for example, dress codes and office layouts) and workers' and managers' behaviors -next, just below the surface, are the values and beliefs expressed by people in the company -you can't see these values and beliefs, but they become clear if you carefully listen to what people say and observe how decisions are made or explained -finally, unconsciously held assumptions and beliefs about the company are buried deep below the surface -these are the unwritten views and rules that are so strongly held and so widely shared that they are rarely discussed or even thought about unless someone attempts to change them or unknowingly violates them -changing such assumptions and beliefs can be very difficult -instead, managers should focus on the parts of the organizational culture they can control -these include observable surface-level items, such as workers' behaviors, symbolic artifacts, and expressed values and beliefs, which can be influenced through employee selection -behavioral addition -behavioral substitution -visible artifacts -selection

HOW ARE VALUES, ATTITUDES, AND BELIEFS SUSTAINED IN ORGANIZATIONAL CULTURES?

-organizational stories -organizational heroes -organizational ceremonies

CUSTOMER COMPONENT

-purchase products and services -companies cannot exist without customer support -monitoring customers' changing wants and needs is critical to business success -there are two basic strategies for monitoring customers- -reactive customer monitoring -proactive customer monitoring

ENVIRONMENTAL CHANGE

-rate at which a company's general and specific environments change -stable environment -dynamic environment -punctuated equilibrium theory

ENVIRONMENTAL COMPLEXITY

-refers to the number and intensity of external factors in the environment that affect organizations -simple environment -complex environment

INDUSTRY REGULATION COMPONENT

-regulations and rules that govern the practices and procedures of specific industries, businesses, and professions -airbnb example

ENVIRONMENTAL SCANNING

-searching the environment for important events or issues that might affect an organization -managers scan the environment to stay up to date on important factors in their industry and to reduce uncertainty -they want to know if demand will increase, prices for key components will rise, and whether competitors' sales are rising or falling -organizational strategies also affect environmental scanning- -managers pay close attention to trends and events that are directly related to their company's ability to compete in the marketplace -contributes to organizational performance

ADAPTABILITY

-the ability to notice and respond to changes in the organization's environment -cultures need to reinforce important values and behaviors, but a culture becomes dysfunctional if it prevents change

COMPANY MISSION

-the business's purpose or reason for existing -in organizational cultures with a clear (blank), the organization's strategic purpose and direction are apparent to everyone in the company -when managers are uncertain about their business environments, the mission helps guide the discussion, decisions, and behavior of the people in the company

CONSISTENT ORGANIZATIONAL CULTURES

-the company actively defines and teaches organizational values, beliefs, and attitudes -when core beliefs are widely shared and strongly held, it is very difficult to bring about needed change -consequently, companies with strong cultures tend to perform poorly when they need to adapt to dramatic changes in their external environments -their consistency sometimes prevents them from adapting to those changes

ECONOMY

-the current state of a country's economy affects virtually every organization doing business there -in general, in a growing economy, more people are working, and wages are growing, and therefore consumers have relatively more money to spend -in contrast, in a shrinking economy, consumers have less money to spend, and relatively fewer products are bought and sold

SOCIOCULTURAL COMPONENT

-the demographic characteristics, general behavior, attitudes, and beliefs of people in a particular society influence organizations in two important ways- -first, changes in demographic characteristics, such as the number of people with particular skills or the growth of or decline in the number of people with particular population characteristics (marital status, age, gender, ethnicity), affect how managers staff their businesses -second, sociocultural changes in behavior, attitudes, and beliefs also affect the demand for a business's products and services ("hipsters")

POLITICAL/LEGAL COMPONENT

-the legislation, regulations, and court decisions that govern and regulate business behavior -new laws and regulations continue to impose additional responsibilities on companies -increasingly, businesses and managers are being sued for negligent hiring and supervision, defamation, invasion of privacy, emotional distress, fraud, and misrepresentation during employee recruitment -as a manager, it is your responsibility to educate yourself about the laws, regulations, and potential lawsuits that could affect your business -failure to do so may put you and your company at risk of sizable penalties, fines, or legal charges

ORGANIZATIONAL CULTURE

-the set of key values, beliefs, and attitudes shared by members of the organization -the key component in internal environments -creating, maintaining, and changing organizational culture matters because research shows that positive, consistent cultures improves company performance

PUNCTUATED EQUILIBRIUM THEORY

-the theory that companies go through long periods of stability (equilibrium) during which incremental changes occur; followed by short, complex periods of dynamic, fundamental change (revolutionary periods); and finishing with a return to stability (new equilibrium) -although you might think that a company's external environment would be either stable or dynamic, research suggests that companies often experience both

PRODUCT BOYCOTT

a tactic in which an advocacy group actively tries to persuade consumers not to purchase a company's product or service

RESOURCE SCARCITY

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

VISIBLE ARTIFACTS

another way in which managers can begin to change corporate culture is to change the (blanks) of their old culture, such as the office design and layout, company dress code, and recipients (or non-recipients) of company benefits and perks such as stock options, personal parking spaces, or the private company dining room

INTERNAL ENVIRONMENT

consists of the trends and events within an organization that affect the management, employees, and organizational culture -important because they affect what people think, feel, and do at work

CHANGING ENVIRONMENTS

external environments are the forces and events outside a company that have the potential to influence or affect it

ORGANIZATIONAL CEREMONIES

gatherings in which symbolic acts commemorate or celebrate notable achievements or changes

SIMPLE ENVIRONMENT

have few environmental factors

COMPLEX ENVIRONMENT

have many environmental factors

ORGANIZATIONAL HEROES

organizational people admired for their qualities and achievements within an organization

SUPPLIER DEPENDENCE

the degree to which a company relies on that 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's sales and the difficulty of finding other buyers of its products

BEHAVIORAL ADDITION

the process of having managers and employees perform a new behavior -the key in both instances is to choose behaviors that are central to and symbolic of the old culture you're changing and the new culture that you want to create

SPECIFIC ENVIRONMENT

unique to that firm's industry and directly affects the way it conducts day-to-day business COMPONENTS- -customers -competitors -suppliers -industry regulation -advocacy group