CHAPTER 3: THE ENVIRONMENT AND

CORPORATE CULTURE

*1) What is the external environment?

- The external organizational environment includes all outside elements
that have the potential to affect the organization.
- There are two components of the external environment:
+ Task environment (includes competitors, suppliers, customers, and
the labor market): affects organizations directly.
+ General environment (includes 6 dimensions: social, economic,
legal-political, international, natural, and technological dimension):
affects organizations indirectly.
*2) Why does the task environment affect directly and the general
environment affect indirectly on the organization?
Because the task environment is closer to the organization and includes
the sectors that conduct day-to-day transactions with the organization,
on the other hand, events caused by the general environment do not
directly change day-to-day operations, but they do affect all
organizations eventually
*3) What are the factors of the task environment?
- Customers: are those people and organizations that acquire goods or
services from the organization. They are important because they
determine the organization’s success.
- Competitors: Organizations in the same industry or type of business
that provide goods or services to the same set of customers are referred
to as competitors.
- Suppliers: provide the raw materials that the organization uses to
produce its output.

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- Labor market: represents people in the environment who can be hired
to work for the organization.
*4) What are the dimensions of the general environment?
- There are 6 dimensions of the general environment:
* International: includes:
+ Events originating in foreign countries
+ New opportunities for Vietnam companies in other countries
And provides:
+ New competitors, suppliers, customers
+ New technological, social, and economic trends
* Technological:
+ Includes scientific and technological advancements in a specific
industry and society
+ Advances in technology drive competition and help innovative
companies gain market share
* Sociocultural: represents the demographic characteristics (age,
gender, population density,…), norms, customs, and values of the
general population. Smart managers may want to consider how the
following sociocultural trends are changing the consumer and business
landscape:
+ Connected Generation or Generation Z has woven technology into
every aspect of life
+ Widespread social equality
+ Growing diversity has huge implications for business
- Cultural factor includes visible factors (clothes, languages, religion,
customs,…) and invisible factors (norms, values, assumptions, beliefs,
…)
* Economic: represents the general economic health of the country or
region

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 + Because organizations today are operating in a global
environment, the economic dimension has become exceedingly complex
and creates enormous uncertainty for managers.
+ Consumer purchasing power, the unemployment rate, and interest
rates are part of an organization’s economic environment
+ When talking about the economic factor, we talk about GDP,
inflation rate and unemployment rate
+ When comparing an economic subject, we compare it in the course
of 3-5 years
* Legal-Political:
+ Includes government regulations at the local, state, and federal
levels, as well as political activities designed to influence company
behavior.
+ When talking about the political factor, we talk about: political
stability, regime and the relationship between government and
organization. When talking about legal factor, we talk about: regulation,
policy and resolution.
* Natural: includes all elements that occur naturally on Earth,
including plants, animals, rocks, and resources such as air, water and
climate. Environmental groups advocate actions and policies:
+ Reduce pollution
+ Develop renewable energy
+ Reduce greenhouse gases such as carbon dioxide
+ Sustainable use of scarce resources
*5) What strategies do managers use to help organizations adapt to
an uncertain or turbulent environment?
There are four strategies:
- Boundary-spanning roles: link and coordinate the organization with
external environment, seek:

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 + Business intelligence: using sophisticated software to search
through internal and external data to spot patterns, trends, and
relationships that might be signifcant
+ Big Data analytics: searching and examining massive, complex data
to uncover hidden patterns and correlations and make better decisions
+ Competitive intelligence: getting information about one’s rivals
- Interorginizational partnerships:
+ Reduce boundaries and begin collaborating with other organizations
+ Managers in partnering organizations shift from an adversarial
orientation to a long-term partnership orientation. Managers work to
reduce costs and add value to both sides, rather than trying to get all the
benefits for their own company.
- Mergers: occurs when two or more organizations combine to become
one
- Joint Ventures: involves a strategic alliance or program by
two or more organizations. Occurs when a project is too complex,
expensive, or uncertain for one firm to handle alone. (short-term
partnership)
*6) What is the definition of internal environment?
Internal environment includes the elements within the organization’s
boundaries. The internal environment is composed of current employees,
management, and especially corporate culture, which defines employee
behavior in the internal environment and how well the organization will
adapt to the external environment.
*7) What is the definition of corporate culture?
Corporate culture is the set of key values, beliefs, understandings, and
norms that members of an organization share.
*8) How many levels of corporate culture?
Culture can be analyzed at two levels:

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 - At the surface level are visible artifacts, which include things such as
manner of dress, patterns of behavior, physical symbols, organizational
ceremonies, and office layout. Visible artifacts are all the things one can
see, hear, and observe by watching members of the organization.
- At a deeper, less obvious level are values and beliefs, which are not
observable but can be discerned from how people explain and justify
what they do. Members of the organization hold some values at a
conscious level. These values can be interpreted from the stories,
language, and symbols that organization members use to represent them.
*9) What are the fundamental values of an orginization?
- Symbols: A symbol is an object, act, or event that conveys meaning
to others. Symbols can be considered a rich, non-verbal language that
vibrantly conveys the organization’s important values concerning how
people relate to one another and interact with the environment.
- Stories: A story is a narrative based on true events that is repeated
frequently and shared among organizational employees. Stories paint
pictures that help symbolize the firm’s vision and values and help
employees personalize and absorb them.
- Heroes: A hero is a figure who exemplifies the deeds, character,
and attributes of a strong culture. Heroes are role models for employees
to follow. Heroes with strong legacies may continue to influence a
culture even after they are gone.
- Slogans: A slogan is a phrase or sentence that succinctly expresses
a key corporate value.
- Ceremonies: A ceremony is a planned activity at a special event
that is conducted for the benefit of an audience. Managers hold
ceremonies to provide dramatic examples of company values.
Ceremonies are special occasions that reinforce valued
accomplishments, create a bond among people by allowing them to
share an important event, and anoint and celebrate heroes.

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10) How many types of culture?
There are 4 types of culture:
- Adaptability culture:
+ Organizations are oriented by customers
+ The adaptability culture emerges in an environment that requires
fast response and high risk decision making.
+ Employees have the autonomy to make decisions and act freely to
meet new needs, and responsiveness to customers is highly valued
+ Managers also actively create change by encouraging and rewarding
creativity, experimentation, and risk taking
+ Managers encourage values that support the company’s ability to
rapidly detect, interpret, and translate signals from the environment into
new behaviors
+ Organizations are dynamic and innovative, accept the risks and
learn from previous mistake
+ Specific leadership style: innovation and risk taking
- Achievement culture:
+ Organizations have a clear awareness about goals; and ways to
determine the target strategy and to show a future vision for
organizations
+ The achievement culture is suited to organizations concerned with
serving specific customers in the external environment, but without the
intense need for fexibility and rapid change.
+ This results-oriented culture values competitiveness,
aggressiveness, personal initiative, cost cutting, and willingness to work
long and hard to achieve results.
+An emphasis on winning and achieving specific ambitious goals is
the glue that holds the organization together.
+ Specific leadership style: Produtivity and high achievement
- Involvement culture:

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 + Organizations empower employees, develop everyone’s ability at
all levels
+ The involvement culture emphasizes an internal focus on the
participation of employees to adapt rapidly to changing needs from the
environment.
+This culture places a high value on meeting the needs of
employees, and the organization may be characterized by a caring,
familylike atmosphere.
+ Managers emphasize values such as cooperation, consideration of
both employees and customers, and avoiding status differences.
+ Everyone feels that they have an influence on or have the right to
decide, their work is directly connected to organization’s goals
+ Specific leadership style: teamwork and participation
encouragement
- Consistency culture:
+ The consistency culture, uses an internal focus and a consistency
orientation for a stable environment.
+ Following the rules and being thrifty are valued, and the culture
supports and rewards a methodical, rational, and orderly way of doing
things.
+ Specific leadership style: Security and predictablity
11) What are the 4 types of culture based on?
They are based on 2 dimensions:
- The extent to which the external environment requires flexibility or
stability
- The extent to which a company’s strategic focus is internal or external