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