Prof: Abrar Ahmad Prepared by: Irum Naz

THE ENVIRONMENT AND CULTURE OF ORGANIZATION

The Environment and its Environment:

Organizations have both an external and an internal environment. The external

environment consists of two layers; the general environment and the task
environment.

POLITICAL INTERNATIONAL DIMENSIONS

Competitor Customers
s
TECHNOLOGICAL
S.P Owners DIMENSIONS
LEGAL Supp
Board of Directors
Employees liers
Physical Environment
Culture
Govern Pressure Groups
DIMENSION ment
SOCIO-CULTURAL ECONOMIC
DIMENSIONS DIMENSIONS

 THE EXTERNAL ENVIRONMENT:

 Everything outside an organization’s boundaries that might affect it.
 There are two layers of external environment.
i. General Environment.
ii. Task Environment.
A. General Environment:
 The set of board dimensions and forces in an organization surrounding that
create its overall context.
 The general environment of most organizations has economic, technical,
sociocultural, political legal environment and international dimensions.
a. Economic Dimensions:
 Being the biggest company in the soft drink industry, Coca-Cola enjoys the largest
market share.
 This company controls about 59% of the world market.

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COCA-COLA GENERAL ENVIRONMENT:

INTERNATIONAL ECONOMIC

DIMENSION DIMENSION

TECHNOLOGICAL

DIMENSION

POLITICAL

DIMENSION

SOCIO-CULTURAL DIMENSION

 POLITICAL LEGAL ENVIRONMENT:

 The Coca-Cola Company has completed the legal conditions of the
procedures from the government itself.
 Employees come from many different races and cultures. They employ
more than 47500 people from 76 nationalities.
 INTERNATIONAL DIMENSIONS:
 The extent to which an organization is involved in or affected by business
in other countries.
 Coca-Cola has own 04 Nos. of the world’s top 05 Non-Alcoholic sparkling
beverage brands.
 Associates; 92400 world vide.
 Operational Research; 200+ countries.
 TECHNICAL DIMENSIONS:
 Coca-Cola was being bottled and with the aid of transportation, networks
began to creep across the United States and to Foreign Countries.
 During World War-ll, Coca-Cola strengthened its image with the American
public and doubled its presence in International Market.
 The company continued to grow through the use of new media and
distribution technologies achieving the international status that it has
today.
 Originally, the Coca-Cola bottle had a uniform radius, like other common
beverages of the time. But upon studying how coke was sold to the average

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consumer, the company found that when consumers reach into the ice
chart, to pull out a beverage. They had no way of differentiating between a
coke and a competing soft drink.
 The company soon realized that if they altered the shape of their bottle to
the curved shape that skill remains today, the consumers would know
what they were grabbing as their hand was buried in ice.
 The new Coca-Cola bottle made it effectively easier to “Grab the Coke”.
B. Task Environment:
 The extent to which an organization is involved in or affected by business
is other countries.
 An organization’s task environment includes customer, supplier,
competitors, stake-holder, Government.

COCA-COLA TAS ENVIRONMENT

(GRAPH)

GOVERNMENT CUSTOMER

SUPPLIER
COCA-COLA
PRESSURE
GROUP

COMPETITORS

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 CUSTOMER:
 Coke’s commercials basically based on young generation.
 So the young generation is the target market of Coke, because they want
to represent Coke with the youth and energy but they also consider about
the old people they take then as a Co-Target.
 SUPPLIER:
 Calories Carbohydrates (Grams), Sodium (mg), Potassium (mg), Saccharin
(mg), Aspartame (mg), Acer fame, Potassium (mg), sucrose (mg). These
obtained from suppliers in the form of raw material for further processing.
 COMPETITORS:
 An organization that competes with other organizations.
 The main competitor OF Coca-Cola is Pepsi Cola.
 GOVERNMENT:
 Coca-Cola always follow the rules and regulations in Indonesia and other
countries as well.
 PRESSURE GROUP:
 Coca-Cola got an external pressure from its competitors, which is Pepsi
Cola and its show by the volume of sales.
 The fact is most of Indonesian people like Pepsi Cola, rather than Coca-
Cola, because Pepsi is sweeter than Coca-Cola.
 STRATEGIC PARTNER:
 An organization working together with one or more organizations in a Joint
welfare or other partnership.
(Coca-Cola with McDonald)

 THE INTERNAL ENVIRONMENT:

 The condition and forces within an organization.
 Internal environment consists of their owner, boards of directors.
Employees, physical work environment and cultures.

(GRAPH) INTERNAL ENVIRONMENT

1. Owners.
2. Board of Directors.
3. Employees.
4. Physical Work.
5. Environment.

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 OWNERS:
 Whoever can claim property rights to an organization.
 Owners can be a single individual who establishes and runs a small
business, partners who jointly own the business. Individual investors who
buy stock in a corporation or other organizations.
 Ar. John S. Pemberton is the founder of Coca-Cola. Ar. John. S. Pemberton
started the Coca-Cola company in 1886.
 Atlanta Pharmacist who created a flavoured syrup that resulted in an
excellent soda when combined with carbonated water.
 Frank M. Robinson, Dr. Pemberton’s book keeper and partner, came up
with the idea of naming the drink Coca-Cola.
 Dr. Pemberton and Robinson did not remain sole owners for long. By the
time Dr. Pemberton died in 1888. He had sold fractions of his business of
different parties.
 The majority share-holders at the time was Asa Griggs Candler, an Atlanta
Businessman.
 BOARD OF DIRECTORS:
 Governing body elected by a corporation’s Stack-Holders and charged with
over-seeing. The general management of the firm to ensure that it is being
run in a way that best serves the Stock-Holder’s interest.
 Muhtar Kent is the Board of Directors of the Coca-Cola company.
 From 2009-2018, he serves as the company’s chairman and Chief
Executive Officer and earlier president and Chief Operating Officer.
 EMPLOYEES:
 An organization’s employees are also major element of its internal
environment.
 More than 700000 associates create the Coca-Cola system.
 Each associates brings his or her unique talents and ideas to work every
day to help the Coca-Cola system achieve the goals.
 PHYSICAL WORK ENVIRONMENT:
 A final part of internal environment is the actual physical environment of
organization and the work that people do.
 The physical environment includes land, air, water plants, buildings and
other infrastructure and all of the natural resources that provide our basic
needs and opportunities for social and economic developments.
 Coca-Cola aim to help its staff by making well-being part of the company’s
everyday experience.
 Coke took an introspective look at its health and well-being offerings,
which span the physical, emotional, social and financial.

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ORGANIZATION CULTURE

 The set of values, beliefs, behaviours, customs and attitudes that helps the
members of the organization understand what it stands for, how it does thing
and what it considers important.
 Culture provides a sense of identity.
 Culture helps to create a commitment to the vision and the mission of the
organization
 It also promotes healthy relationships at workplace among the employees.

MANAGING ORGANIZATION CULTURE

 The managers must understand the culture and then decide whether it should
be maintained or changed.
 By understanding the organization’s current culture managers can take
appropriate actions.
 Manager must walk a fine line between maintaining a culture that still works
effectively and changing a culture that has become dysfunctional.
 Culture problems sometimes arise from mergers or the growth of rival factions
within an organization. For example; continental and united recently merged
to form one of the world’s largest airline. Delta recently merged with Northwest
Airlines.
 Adopting an innovative focus and creating specialized courses for employees,
the new culture speed down from senior executive to restaurant employees
across the world.
ORGANIZATION ENVIROMENT RELATIONSHIP

In organization environment relationship first we discuss how environment

affect organization and then we note a number of ways in which organization adapt
to their environment.

HOW ENVIRONMENT AFFECT ORGANIZATION

Three basic perspective can be used to describe how environments affect

organization; environmental change and complexity, competitive forces and
environmental turbulence.

ENVIRONMENTAL CHANGE AND COMPLEXITY

 James A. Thompson was one of the first people to recognize the importance of
the organization’s environment.
 Thompson suggested that the environment can be described along two
dimensions; its degree of change and its degree of homogeneity.
 The degree of change is the extent to which the environment is relatively stable
or relatively dynamic.
 The degree of homogeneity is the extent to which the environment is relatively
simple or relatively complex.
 The degree of homogeneity and the degree of change combine to create
uncertainty for organizations, for example; a simple and stable environment

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creates the least uncertainty and a complex and dynamic environment creates
the most uncertainty.

SIMPLE

Degree of Homogenous
Least Moderate
Uncertainty Uncertainty

Moderate Most
Uncertainty Uncertainty

COMPLEX

STABLE Degree of Change DYNAMIC

COMPETITIVE FORCES
 The manager views the environment of their organization in term of fine
competitive forces; the threat of new entrants, competitive rivalry, the threat
of substitute products, the power of buyers and the power of suppliers.
 The threat of new entrants is the extent to which new competitors can easily
enter a market or market segment.
 Competitive rivalry is the nature of the competitive relationship between
dominant firms in the industry. Like Coke and Pepsi, Samsung and Nokia.
 The threat of substitute product is the extent to which alternation products
or services may supplant or diminish the need for existing products or
services.
 The power of buyers is the extent to which buyers of the product or services
in an industry the suppliers.
 The consumers pressure can exert on businesses to get them to provide higher
quality products, better costumer services and lower prices.
 The power of suppliers is the extent to which suppliers have the ability to
influence potential buyers.
 The power of suppliers refers to the pressure suppliers can exert on
businesses by raising prices, lowering quality or reading availability of their
products.
ENVIRONMENTAL TURBULENCE
Although always subject to unexpected changes and upheavals, the fine
competitive forces can never the less be studied and assessed systematically,
and plans can be developed for dealing with them.
 At the same time, through organizations face the possibility of the
environmental change no warning at all.
 The most common form of organizational turbulence is a crisis of same sort.
 Environmental turbulence refers to the amount of change and complexity.
 Like terrorist attacks, work place violence.

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 Such crises affect organizations in different ways and same organization have
developed crises plans and terms.
HOW ORGANIZATION ADAPT TO THEIR ENVIRONMENT
 Organizations attempt to adopt to their environment.
 The most common methods are information management; strategic response;
merger, acquisitions and alliances; organization design flexibility direct
influence and social responsibility.

GENERAL ENVIRONMENT

TASK ENVIRONMENT

INFORMATION MANAGEMENT

SOCIAL STRATEGIC
RESPONSIBILITY RESPONSIBILITY

THE
ORGANIZATION

MANAGERS
DIRECT
ACQUISIONS &
INFLUENCE
ALLIANCES

ORGANIZATION DESIGN AND

FLEXIBILITY

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INFORMATION MANAGEMENT
 One way organizations adapt to their environments is through information
management.
 Information management is especially important when forming an initial
understanding of the environments and when monitoring the environment for
signs of change.
 One technique for managing information is relying on boundary spanners.
 Enterprise resource planning techniques are also useful methods for
improving information management.
STRATEGIC RESPONSE
Another way that an organization adopts to its environment is through a
strategic response.
 If the market that a company currently serves is growing rapidly, the firm
might decide to invest even more heavily in product and services for that
market.
 Likewise, if a market is shrinking or does not provide reasonable possibilities
for growth, the company may decide to jeh back.
MERGERS, ACQUISITIONS AND ALLIANCES
A related strategic approach that some organizations use to their
environments involves mergers, acquisition and alliances.
 A merger occurs when two or more firms combine to form a new firm.
 For example; as noted earlier delta merged with Northwest Airlines.
 An acquisition occurs when one firm buys another, sometimes against its with
(usually called a “nestle take ones”). The firm taken ones may cease to exist
and becomes part of the other company.
 For example; as part of its international expansion starbucles bought a British
coffee company.
 An alliance, the firm undertakes a new venture with another firm. A company
engages in these kinds of strategies for a variety of reasons, such as easing
entry into new markets or expansating its presence in a current market.
ORGANIZATION DESIGN AND FLEXIBILITY
An organization may also adapt to environmental conditions by incorporating
flexibility in its structural design.
 For example, a firm that operates in an environment with relatively low levels
of uncertainty might choose to use a design with many basic rules, regulation
and standard operating procedures.
 Alternatively, a firm that faces a great deal of uncertainty might choose a
design with relatively few standard operating procedures, instead allowing
managers considerable discretion and flexibility with decisions.
 The farmed type, sometimes called a “mechanistic organization design” is
characterized by formal and rigid rules and relationship.
 The latter, sometimes called an “organic design” is considerably more flexible
and permits the organization to respond quickly to environment change.

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DIRECT INFLUENCE
Organization are not necessarily helpless in the face of their environment.
Indeed, many organizations are able to directly influence their environments
in many different ways.
 For example, firm can influence their suppliers by signing long-term contract
with fixed prices as a hedge against inflation.
 Organizations also influence their customers by creating new uses for a
product, finding entirely new customers, taking customers away from
competitors and convincing customers that they need something new.
 Organizations influence their regulators through robbing and bargaining.
THE ENVIRONMENT AND ORGANIZATIONAL EFFECTIVENESS
Effectiveness refers to the degree of congruence b/w organizational goals and
observed outcome.
MODELS OF ORGANZATIONAL EFFECTIVENESS
There are many different models of organizational effectiveness of
organizational effectiveness.
 The system resource approach to organizational effectiveness focuses on the
extent to which the organization can acquire the resources it needs.
 The internal processes approach deals with the internal mechanisms of the
organization and focuses on minimizing strain, integrating individuals and the
organization efficient operations.
 The goals approach focuses on the degree to which an organization reaches
its goals. When a firm establishes by 10 percent and then achieves that
increase the goal approach maintains that the organization is effective.
 Finally, the strategic constituencies approach focuses on the groups that have
a stake in the organization.
 In this view, effectiveness is the extent to which the organization satisfies the
demands and expectations of all these groups.
 Although there four basic models of effectiveness are not necessarily
contradictory, they do focus on different things.
 The system resources approach focuses on inputs, the internal processes
approach focuses on transformation processes, the goal approach focuses on
outputs and the strategic constituencies approach focuses on feedback.

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System Resource Internal Process Goal Approach

Approach Approach
1 2 3
Acquiring the And combining them Facilitates the
resources needed from in an efficient and attainments of
the Environment Productive Manner Organizational goals.

TRANSFORMATION

inputs Outputs

FEEDBACK

Combined Strategic
Approach Approach
4 5
Acquiring the Facilitates the
resources needed from attainments of
the Environment Organizational goals.

(FINISHED)

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