Chapter III Organizational Culture and Environment

A. Organizational culture
I. What is organizational culture? 1. Definition 2. Culture Assessment II. The source of culture III. Influence on management practice

B. Environment
I. What is environment? 1. General environment 2. Specific environment 3.Internal environment II. Influence on management practice


Organizational Culture and Environment

What is an Organizational Culture ? Definitions of Culture
The way things are done around here (M.Bower,1966). The dominant values espoused by an organization" (T.Deal & A. Kennedy, 1982).


The philosophy that guides an organization's policy toward employees and customers (R.Pascal & A.Athos, 1981). The basic assumptions and beliefs that are shared by members of an organization" (E.Schein, 1985) . A system of shared meaning within an organization that determines, in large degree how employees act (Stephen P.Robbins, 1994).


A Closer Look At What An Organizational Culture Means Physical Aspects Values and Beliefs Patterns of Behavior Attitudes and Behaviors

Culture Purposes

How to Assess an Org. Culture?
III Member identity Group emphasis Unit integration Control People focus Risk tolerance Reward Criteria Conflict tolerance Means-ends orientation Open system focus
High Low

The Sources of Culture

Values and Beliefs
Patterns of Behaviors
Basic Assumptions

The Sources of Culture
 The founders biases and assumptions.  What first employees learn subsequently

from their own experience.  Internalize value and belief  At this point others are brought into organization, and a common history begins to be built.

Influence on Management Practice?


Look busy, even if you are not. Before you make a decision , run it by your boss so that he or she is never surprised . We make our product only as good as the competition forces us to.


What is Environment ?

Outside institutions or forces that potentially affect an organization's performance.

What is Specific Environment ?
The part of the environment that is directly relevant to the achievement of an organization's goals.

What is General Environment ?
Everything outside the organization.

External Stakeholders

General environment
- International - Social culture
- Economy

Internal Stakeholders

Specific environment
Internal environment -Employees
-Owners -Board of directors -Structure

-suppliers -Customers - Competitors


-Technology -Creditors
-Demographic -Government

- pressure group

- Resource


The General Environment
The General Environment or macro
environment includes six forces: International Social culture Economic Political-legal Technological Demographic

The General Environment
International Forces
Political-legal Forces changes in the economic, political, legal, and technological global system that may affect an organization Economic Forces consist of general economic conditions and trends—unemployment, inflation, interest rates, economic growth—that may affect an organization’s balance

changes in the way politics shape laws and shape the opportunities for and threats to an organization Technological Forces new developments for transforming resources into goods or services
Demographic Forces

Social culture Forces

influences and trends originating in a country, society, or culture’s human relationships and values that may affect and organization

influences on an organization arising from changes in characteristics of a population—age, gender or ethnic origin

The Specific Environment
The Specific Environment consists of 11 groups that present you with daily tasks to handle:
Suppliers Customers Competitors Creditors Government regulators Distributors Pressure Group Mass media Strategic allies Local communities Financial institutions Special-interest groups

The Specific Environment
Customers those who pay Strategic Allies describe
to use an organization’s goods or services the relationship of two organizations who join forces to achieve advantages neither can perform as well alone

Competitors people or
organizations that compete for customers or resources

Pressure Group
unions and associations—as a rule of thumb unions represent hourly workers, associations tend to represent salaried workers

Distributor is a person or
an organization that helps another organization sell its goods and services to customers

The Specific Environment
Local Communities
schools and municipal governments rely on the organization for their tax base—families and merchants depend on the organization for its payroll for their livelihood entrepreneurs may rely on credit cards, established companies need loans and rely on lenders such as commercial banks, investment banks, and insurance companies

Government Regulators

regulatory agencies that establish ground rules under which organizations can operate

Special Interest Groups

Financial Institutions

groups whose members try to influence specific issues Mass Media no manager can afford to ignore the power of the mass media— most organizations have a public-relations person or department to communicate effectively with the press

Internal Environment (Stakeholders)
Employees Owners Board of Directors
In many of today’s forward looking organizations, employees are considered the “talent”—the most important resource Owners of an organization consist of all those who can claim it as their legal property Its members are elected by stockholders to see that the company is being run according to their best interests—in nonprofit organizations, called board of trustees, or board of regents A formal system of task and reporting relationships that coordinates and motivates organizational members so that they work together to achieve organizational goals. Asset such as people, machinery, raw materials,


Influence on Management Practice?

SWOT Analysis (Michael Porter)
Internal Environment analysis Strength Weakness External Environmental analysis Threats Opportunity

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