Management, 14e

Chapter 3: The Environment and

Corporate Culture

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 Icebreaker

• A slogan is a phrase or sentence that succinctly expresses a key

corporate value.

At the Mentimeter:
− List several slogans that you easily remember or find powerful.
− What is it about these particular slogans that makes them so
effective?

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 Learning Objectives (1 of 2)
• By the end of this chapter you should be able to:
1. Understand how the external organisational environment can
affect the organisation’s decisions.
2. Define corporate culture as part of the organization’s internal
environment.
3. Provide examples of the four types of corporate culture.
4. Explain the relationships among culture, corporate values, and
business performance, and describe the tools a cultural leader
can use to create a high-performance culture.

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 External Organizational Environment
(LO 1)

• All outside elements that could affect the organization

• Two levels
− Task environment
▪ factors that affect organizations directly
▪ the sectors that conduct day-today transactions with the organization
− General environment
▪ factors that affect organizations indirectly and equally
▪ events do not directly change day-to-day operations

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3.1 The General, Task, and Internal Environments
(LO 1)

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 Task Environment
(LO 1)

• Customers: people and organizations in the environment that acquire goods or

services from the organization
• Competitors: organizations in the same industry or type of business that
provide goods or services to the same set of customers
• Suppliers: people and organizations that provide the raw materials that the
organization uses to produce its output
− Supply chain: network of multiple businesses and individuals that are
connected through the flow of products or services
• Labor market: people in the environment who can be hired to work for the
organization
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 3.2 Sample External Environment
(LO 1)

Costco Wholesale Corporation

• Task Environment:
− Customers: 100 million members
− Competitors: Vigorous and widespread
− Suppliers: Brand-name vendors such as P&G and Kraft
− Labor market: 243,000 loyal, highly productive employees
• General Environment:
− Technological: Uses technology to manage store and corporate operations
− Natural: Greenhouse inventories to track emission trends
− Sociocultural: Focuses on bulk needs of families in suburban communities
− Economic: Negatively affected by economic slowdown
− Legal/Political: Managers pushing for increase in government-mandated minimum wage
− International: Strong growth expected in Asian markets

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 Knowledge Check 1

At your company, your main supplier notifies you of a change in specifications on

a part you use in manufacturing your product. This change comes from a shift in
industry standards. What would this change be categorized as?
a. a legal-political dimension of the general environment
b. a customer dimension of the task environment
c. a supplier dimension of the task environment
d. an economic dimension of the general environment

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 General Environment: International
(LO 1)

• Managers must consider the international dimension

− Events originating in foreign countries
− New opportunities for U.S. companies in other countries
− New competitors, suppliers, and customers
− New technological, social, and economic trends

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 General Environment: Technological
(LO 1)

• Technological dimension: scientific and technological advancements

in a specific industry as well as in society at large
• Advances drive competition and help innovative companies gain market
share
• Industries that fail to adapt face decline

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 General Environment: Sociocultural
(LO 1)

• Sociocultural dimension: demographic characteristics, norms, customs, and

values of a population
• Important sociocultural characteristics are geographical distribution, population
density, age, and education levels
• Current trends
▪ Technologically savvy customers
▪ Widespread social equality
▪ Growing diversity

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 General Environment: Economic
(LO 1)

• Economic dimension: economic health of the country/region in which the

organization operates
− Consumer purchasing power
− Unemployment rate
− Interest rates
• Organizations operate in a global environment face increasing complexity
and uncertainty

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 General Environment: Legal–Political
(LO 1)

• Legal–political dimension: government regulations at local, state, and federal

levels, as well as political activities
− U.S. political system encourages capitalism and avoids overregulation
• Government laws and agency affecting business operations:
− Occupational Safety and Health − Consumer protection and privacy
Administration (OSHA) legislation
− Environmental Protection Agency − Product safety requirements
(EPA) − Import and export limitations
− Fair trade practices − Information and labeling
− Libel statutes requirements
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 General Environment: Natural
(LO 1)

• Natural dimension: all elements that occur naturally on earth, including plants,
animals, rocks, and natural resources such as air, water, and climate
• Organizations must be show sensitivity concerning their environmental impact
• Environmental protection is a critical policy focus worldwide
− Natural dimension does not have own voice

• Environmental groups advocate action/policy

− Reduction and cleanup of pollution − Reduction of greenhouse gases
− Development of renewable energy − Ethical treatment of animals
resources − Sustainable use of scarce resources

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 Polling Activity 1

Which of the following companies has been most affected by the general
environment’s various dimensions (technological, natural, sociocultural,
economic, legal/political, and international) brought about by the COVID-19
pandemic?
a. Air Asia
b. Victoria Station
c. TGV
d. Disneyland

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 The Internal Environment: Corporate Culture
(LO 3)

• Corporate culture: set of key values, beliefs, understandings, and norms

shared by members of an organization
− Symbols
− Stories
− Heroes
− Slogans
− Ceremonies
• Toxic culture: exists when persistent negative sentiments and infighting cause
stress, unhappiness, and lowered productivity among subgroups of employees

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3.5 Levels of Corporate Culture
(LO 3)

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 Interpreting/Shaping Culture
(LO 4)

• Symbol: object, act, or event that conveys meaning to others

• Story: narrative based on true events that is repeated and shared among
organizational employees
• Hero: figure who exemplifies the deeds, character, and attributes of a strong
corporate culture
• Slogan: phrase or sentence that succinctly expresses a key corporate value
• Ceremony: planned activity at a special event that is conducted for the benefit
of an audience

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3.6 Four Types of Corporate Culture
(LO 5)

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 Types of Culture
(LO 5)

• Adaptability culture: highly responsive; values the ability to rapidly detect,

interpret, and translate signals from the environment into new behaviors
• Achievement culture: results-oriented; values competitiveness,
aggressiveness, personal initiative, cost cutting, and willingness to work long
and hard to achieve results
• Involvement culture: internally focused; values meeting the needs of
employees as well as cooperation and equality
• Consistency culture: stable; values following the rules and thriftiness and
rewards a methodical, rational, orderly way of doing things

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 Knowledge Check 2

Tiana works in a high-tech company that helps clients’ accounting departments

streamline and improve workflows through cloud-based software. At her company,
managers have open and intentional conversations that focus on employees’
input about external and internal factors that affect the company. Tiana’s company
is considered which of the following types of corporate culture?
a. adaptability
b. involvement
c. achievement
d. consistency

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 Managing the High-Performance Culture
(LO 6)

• High-performance culture focuses on both cultural values and business

performance
− Based on a solid organizational mission or purpose
− Embodies shared adaptive values that guide decisions and business
practices
− Encourages individual employee ownership of both bottom-line results and
the organization’s cultural backbone

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3.7 Combining Culture and Performance
(LO 6)

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 Cultural Leadership
(LO 6)

• Cultural leader: one who defines and uses signals and symbols to influence
corporate culture
• Influences culture in two key areas
− Articulates a vision for the organizational culture that employees can
believe in
− Heeds the day-to-day activities that reinforce the cultural vision

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 Summary (1 of 2)

• Now that the lesson has ended, you should have learned how to:
1. Define an organizational ecosystem and show how the general and
task environments affect an organization’s ability to thrive.
2. Explain the strategies managers can use to help organizations adapt
to an uncertain or turbulent environment.
3. Define corporate culture as part of the organization’s internal
environment, and identify when a culture becomes toxic for some or
all employees.

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 Summary (2 of 2)

• Now that the lesson has ended, you should have learned how to:
4. Explain how symbols, stories, heroes, slogans, and ceremonies can
be used to interpret and shape corporate culture.
5. Provide examples of the four types of corporate culture.
6. Explain the relationships among culture, corporate values, and
business performance, and describe the tools a cultural leader can
use to create a high-performance culture.

©2022 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 26