The Organisation’s Environment &

Corporate Culture
 Session Outline

Assess the different aspects of an organization’s

environment that impact upon the need for
organizational change:

• The External Environment

• The Internal Environment
- Organizational Culture

• The Organization - Environment Relationship

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The General, Task, and Internal
Environments

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The External Environment

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 External (Macro) Environment
The external organizational environment includes all
outside elements that effect the organization.
1. The general environment is the wide-ranging
economic, technological, socio- cultural,
demographic, political and legal, and global forces
that affect the organization and its task
environment.
2. The task environment is the set of forces that
affect an organization’s ability to obtain inputs and
dispose of its outputs.

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 (A) General Environment:
(1)International Dimension
Globalization influences all other aspects of
the external environment
New competitors, customers, suppliers
Changes in social, technological, and economic trends

All organizations must compete and think

globally
The global environment is complex and ever-
changing

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 (A) General Environment:
(2) Technological Dimension

✓ Massive changes for organizations

✓ The tool for doing business
✓ Working with and through Technology
✓ Advances are impacting organizations and
managers

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 (A) General Environment:
(3) Socio-cultural Dimension
Demographic characteristics, norms, customs, and
values
✓ Population is aging
✓ Large influx of foreign labour
✓ Generation Y/Millenials &
Generation Z are entering the
workplace
✓ Changing values and needs
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 (A) General Environment:
(4) Economic Dimension
• Economic health of the country/region
• Consumer purchasing power
• Unemployment rate, interest rates,
inflation rates

The Global Economy

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 (A) General Environment:
(5) Legal-Political Dimension
• Government regulation & political
activities

• Managers must recognize the power of

pressure groups and unions

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 (A) General Environment:
(6) Natural Dimension
Organizations must be sensitive to the
environment
Natural dimension does not have own voice
Environmental groups advocate action/policy
Reduce pollution
Develop renewable energy
Climate change/global warming
Oil Spills

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 (B) Task Environment

Forces in the task environment result from the actions of

suppliers, distributors, customers, and competitors, and
have a significant impact on short-term decision-making.

✓ Customers
✓ Competitors
✓ Suppliers
✓ Labor Market

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 (B) Task Environment:
(1) Customers
Customers are individuals and groups that buy goods and
services that an organization produces.

- Changes in the number and types of customers or changes in

customers’ tastes and needs also result in opportunities and
threats.
- An organization’s success depends on its response to
customers.

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 (B) Task Environment:
(2) Competitors
Competitors: other organizations that
produce similar goods.
• Rivalry between competitors is usually the most serious force
facing managers.
• High levels of rivalry often means lower prices.
• Profits become hard to find.
• Barriers to entry keep new competitors out and result from:
• Economies of scale: cost advantages due to large scale
production.
• Brand loyalty: customers prefer a given product.

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 (B) Task Environment
(3) Suppliers
Suppliers: individuals and organizations that provide the input
resources that an organization needs to produce goods and
services.
• In return, the supplier receives compensation for those goods
and services.
• An important part of a manager’s job is to ensure a reliable
supply of input resources.
- Changes in the nature or types of any supplier result in forces that
produce opportunities and threats to which managers must respond.
- Another supplier-related threat arises when suppliers’ bargaining
position is so strong that they can raise the prices of inputs they supply.
- Suppliers can make operations difficult by restricting access to
important inputs.
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 (B) Task Environment
(4) Labour Market
Labour markets: People available for hire

• Every organization needs well-trained and

qualified workers.
• Research shows the workers with high level of
competencies, knowledge, and training increases
the overall performance of the organization.

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 Organization-Environment
Relationship
1. The environment creates
uncertainty for managers

2. Managers must respond and

design adaptive organizations

3. Organic vs Mechanistic
Organizations
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 Mechanistic Structure

Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved. 18

 Organic Structure

Copyright ©2012 by South-Western, a division of Cengage Learning. All rights reserved. 19

External Environment
and Uncertainty

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 Adapting to the Environment
✓ Changing Management Philosophy: Proactive,
Collaboration, Open to Change
✓ Boundary-spanning roles – link and coordinate the
organization with external environment
✓ Inter-organizational partnerships – reduce
boundaries and begin collaborating with other
organizations
✓ Mergers/joint ventures – legal combination of
operations; legal collaboration for specific project
✓ Change Interventions- Systematic approaches
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 The Shift to a
Partnership/Collaboration Paradigm

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The Internal Environment

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 The Internal Environment:
Corporate Culture
Corporate culture is the set of key values, beliefs, understandings, and norms that
members of an organization share

✓Symbols
✓Stories
✓Heroes
✓Slogans
✓Ceremonies
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Levels of Corporate Culture

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Types of Corporate Cultures

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 Shaping Corporate Culture for
Innovative Response
• Corporate culture plays a key role in learning and
innovative responses

• Successful companies balance culture and

performance

• Culture is the “glue” that holds the organization

together

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 Cultural Leadership

Articulate a vision for the organizational culture that

employees can believe in

Heeds the day-to-day activities that reinforce the cultural

vision

Leaders communicate through words and actions

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Corporate Culture at Apple

https://www.youtube.com/watch?v=EcHpgsTg458

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Test your knowledge!
1. Organizations must manage environmental
uncertainty to be effective.
True or False?

2. Cultural values in organizations are rarely

observed but are rather deeply embedded to
the extent that members are not consciously
aware of them.
True or False?

3. In determining what cultural values are

important for the organization, managers
should consider the
external environment as well as the company’s
strategy and goals.
True or False?
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Test your knowledge!
1. Organizations must manage environmental
uncertainty to be effective.
True

2. Cultural values in organizations are rarely

observed but are rather deeply embedded to
the extent that members are not consciously
aware of them.
False

3. In determining what cultural values are

important for the organization, managers
should consider the
external environment as well as the company’s
strategy and goals.
True
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 Thinking Session
How has the organizational
environment changed over time?
How do managers respond to an
constantly changing
environment?

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 Team Placement Form

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