CHAPTER

3
MANAGING THE EXTERNAL
ENVIRONMENT AND THE
ORGANIZATION’S CULTURE
 LEARNING OUTLINE
FOLLOW THIS LEARNING OUTLINE AS YOU READ AND STUDY THIS CHAPTER.

The Manager: Omnipotent or Symbolic

• Contrast the action of manager according to the omnipotent and
symbolic views.
• Explain the parameters of managerial discretion.
The Organization’s Culture
• Describe the seven dimensions of organizational culture.
• Explain the source of an organization’s culture and how that culture
continues.
• Describe how culture is transmitted to employees.

3–2
 LEARNING OUTLINE
FOLLOW THIS LEARNING OUTLINE AS YOU READ AND STUDY THIS CHAPTER.

Current Organizational Issues Facing Managers

• Describe the characteristics of an ethical culture, an innovative

culture, and a customer-responsive culture.

• Discuss why workplace spirituality seems to be an important concern.

• Describe the characteristics of a spiritual organization.

3–3
 L E A R N I N G O U T L I N E (CONT’D)
FOLLOW THIS LEARNING OUTLINE AS YOU READ AND STUDY THIS CHAPTER.

•The Environment (cont’d)

• Describe the components of the specific and general environments.

• Discuss the two dimensions of environmental uncertainty.

• Identify the most common organizational stakeholders.

• Explain the four steps in managing external stakeholder relationships.

3–4
 THE MANAGER: OMNIPOTENT OR SYMBOLIC?

• How much difference does a manager really make in how an

organization performs?

• People differ in answering this question and two views to the answer of
this question exist. These are known as Omnipotent view and Symbolic
view

3–5
 THE MANAGER: OMNIPOTENT OR SYMBOLIC?
• Omnipotent View of Management
• Managers are directly responsible for an organization’s
success or failure.
• The quality of the organization is determined by the quality
of its managers.
• Managers are held most accountable for an organization’s
performance yet it is difficult to attribute good or poor
performance directly to their influence
on the organization.

3–6
 THE MANAGER: OMNIPOTENT OR SYMBOLIC?

• Omnipotent View of Management

• This view is consistent with the stereotypical picture of the
take-charge business executive who overcomes any obstacle
in seeing that the organization achieves its goals.
• And this view isn’t limited to business organizations. It also
explains turnover among college and professional sports
coaches, who are considered the “managers” of their teams.
• Coaches who lose more games than they win are
usually fired and replaced by new coaches who are
expected to correct the poor performance.

3–7
 THE MANAGER: OMNIPOTENT OR SYMBOLIC?

• Symbolic View of Management

• Much of an organization’s success or failure is due to external
forces outside of managers’ control.
• The ability of managers to affect outcomes is influenced and
constrained by external factors.
• The economy, customers, governmental policies,
competitors, industry conditions, technology, and the actions
of previous managers.

3–8
 THE MANAGER: OMNIPOTENT OR SYMBOLIC?

• Symbolic View of Management

• Managers symbolize control and influence through their action.
How?
• Developing plans, making decisions, and engaging in other
managerial activities to make sense out of random, confusing,
and ambiguous situations.
• Role managers play in organizational success or failure is limited.

3–9
 PARAMETERS OF MANAGERIAL
DISCRETION
• In reality, managers are neither all-powerful nor helpless.
• Their decisions and actions are constrained.
• External constraints come from the organization’s environment and
internal constraints come from the organization’s culture.

3–10 Exhibit 3.1

 THE ORGANIZATION’S CULTURE
• W. L. Gore & Associates, a company known for its innovative and high-
quality fabrics used in outdoor wear and other products, understands the
importance of organizational culture.
• Since its founding in 1958, Gore has used employee teams in a flexible,
nonhierarchical organizational arrangement to develop its innovative
products.
• Associates (employees) at Gore are committed to four basic principles
articulated by company founder Bill Gore:
• fairness to one another and everyone you come in contact with;
• freedom to encourage, help, and allow other associates to grow in
knowledge, skill, and scope of responsibility;
• the ability to make your own commitments and keep them; and
• consulting other associates before taking actions that could affect
the company’s reputation. 3–11
 THE ORGANIZATION’S CULTURE
• After a visit to the company, one analyst reported that an associate
told him, “If you tell anybody what to do here, they’ll never work for
you again.”
• That’s the type of independent, people-oriented culture Bill Gore
wanted.
• And it works well for the company—it’s earned a position on
Fortune’s annual list of “100 Best Companies to Work For” every
year since the list began in 1998, one of only three companies to
achieve that distinction

3–12
 THE ORGANIZATION’S CULTURE
• Organizational Culture
“A system of shared meanings and common beliefs held by
organizational members that determines, in a large degree, how
they act towards each other.”
• How is this system developed?
• In most organizations, these shared values and practices
have evolved over time and determine the following:
• “The way we do things around here.”
• Values, symbols, rituals, myths, and practices
• Implications:
• Culture is a perception.
• Culture is shared.
• Culture is descriptive.
3–13
DIMENSIONS OF ORGANIZATIONAL
CULTURE

3–14
Exhibit 3.2
 DIMENSIONS OF ORGANIZATIONAL
CULTURE
• An organization using these seven dimensions gives a composite
picture of the organization’s culture.
• In many organizations, one cultural dimension often is emphasized
more than the others and essentially shapes the organization’s
personality and the way organizational members work.
• Example: at Sony Corporation, the focus is product innovation
(innovation and risk taking). The company “lives and breathes”
new product development and employees’ work behaviors support
that goal.
• In contrast, Southwest Airlines has made its employees a central
part of its culture (people orientation).

3–15
DIMENSIONS OF ORGANIZATIONAL
CULTURE

3–16
Exhibit 3.3
DIMENSIONS OF ORGANIZATIONAL
CULTURE

3–17
Exhibit 3.4
 CONTRASTING ORGANIZATIONAL
CULTURES
Dimension Organization A Organization B
Attention to Detail High Low
Outcome Orientation Low High
People Orientation Low High
Team Orientation Low High
Aggressiveness Low High
Stability High Low
Innovation and Risk Taking Low High

3–18
STRONG VERSUS WEAK CULTURES

3–19
Exhibit 3.5
 STRONG VERSUS WEAK CULTURES

• Factors Influencing the Strength of Culture

• Size of the organization
• Age of the organization
• Rate of employee turnover
• Strength of the original culture
• Clarity of cultural values and beliefs

3–20
 BENEFITS OF A STRONG CULTURE

• Creates a stronger employee commitment to the organization.

• Aids in the recruitment and socialization of new employees.

• Fosters higher organizational performance by instilling and

promoting employee initiative.

3–21
 ORGANIZATIONAL CULTURE

• Sources of Organizational Culture

• The organization’s founder: Vision and mission
• Past practices of the organization: The way things have been done
• The behavior of top management
• Continuation of the Organizational Culture
• Recruitment of like-minded employees who “fit”
• Socialization of new employees to help them adapt to the culture

3–22
HOW AN ORGANIZATION’S CULTURE IS
ESTABLISHED AND MAINTAINED

Exhibit 3.6
3–23
 HOW EMPLOYEES LEARN CULTURE

• Stories
• Narratives of significant events or actions of people that convey
the spirit of the organization
• Rituals
• Repetitive sequences of activities that express and reinforce the
values of the organization
• Material Symbols
• Physical assets distinguishing the organization
• Language
• Acronyms and jargon of terms, phrases, and word meanings
specific to an organization

3–24
 HOW CULTURE AFFECTS MANAGERS

• Cultural Constraints on Managers

• Whatever managerial actions the organization recognizes as proper or

improper on its behalf

• Constraints are rarely explicit (written down).

• Managers quickly learn what to do and not do in their organization.

Simple rule for getting ahead in an organization:

Find out what the organization rewards and do those things.

3–25
MANAGERIAL DECISIONS AFFECTED BY
CULTURE

3–26
Exhibit 3.7
 SUGGESTIONS FOR MANAGERS:
CREATING A MORE ETHICAL CULTURE
• Be a visible role model.
• Communicate ethical expectations.
• Provide ethics training.
• Visibly reward ethical acts and punish unethical ones.
• Provide protective mechanisms so employees can discuss
ethical dilemmas and report unethical behavior without fear.

3–27
 ORGANIZATION CULTURE ISSUES
• Creating an Innovative Culture
• Challenge and involvement—Are employees involved in,
motivated by, and committed to the long-term goals and
success of the organization?
• Freedom—Can employees independently define their work,
exercise discretion, and take initiative in their day-to-day
activities?
• Trust and openness—Are employees supportive and respectful
of each other?
• Idea time—Do individuals have time to elaborate on new ideas
before taking action?
3–28
 ORGANIZATION CULTURE ISSUES (COND)
• Creating an Innovative Culture (Contd)
• Playfulness/humor—Is the workplace spontaneous and fun?
• Conflict resolution—Do individuals make decisions and
resolve issues based on the good of the organization versus
personal interest?
• Debates—Are employees allowed to express opinions and put
forth ideas for consideration and review?
• Risk taking—Do managers tolerate uncertainty and ambiguity,
and are employees rewarded for taking risks?

3–29
 ORGANIZATION CULTURE ISSUES (COND)
• Creating a Customer-Responsive Culture
• Hiring the right type of employees (ones with a strong interest
in serving customers)
• Having few rigid rules, procedures, and regulations
• Using widespread empowerment of employees
• Having good listening skills in relating to customers’ messages
• Providing role clarity to employees to reduce ambiguity and
conflict and increase job satisfaction
• Having careful, caring employees willing to take initiative

3–30
ORGANIZATION CULTURE ISSUES (COND)

3–31
Exhibit 3.8
 SPIRITUALITY AND ORGANIZATIONAL CULTURE
• Workplace Spirituality
 A spiritual culture that recognizes that employees have
both a mind and a spirit seek to find meaning and purposes
in their work, and desire to connect with other employees
and be part of a community.
 Spiritual organizations are concerned with helping
employees develop and reach their potentials. They are
also concerned with addressing problems created by work
life conflicts.
•

3–32
 SPIRITUALITY AND ORGANIZATIONAL CULTURE

 Characteristics of a Spiritual Organization

 Strong sense of purpose
 Focus on individual development
 Trust and openness
 Employee empowerment
 Toleration of employees’ expression (expression of feelings)

3–33
 BENEFITS OF SPIRITUALITY

• Improved employee productivity

• Reduction of employee turnover
• Stronger organizational performance
• Increased creativity
• Increased employee satisfaction
• Increased team performance
• Increased organizational performance

3–34
 DEFINING THE EXTERNAL ENVIRONMENT
• External Environment

• External environment includes the forces and institutions outside

the organization that potentially can affect the organization’s
performance.

• Components of the External Environment

• Specific environment: external forces that have a direct and

immediate impact on the organization.

• General environment: broad economic, socio-cultural,

political/legal, demographic, technological, and global conditions
that may affect an organization.

3–35
 THE EXTERNAL
ENVIRONMENT

3–36 Exhibit 3.9

 HOW THE ENVIRONMENT AFFECTS
MANAGERS
There may three ways environmental factors may pose constraints
and challenges for managers:
 Jobs and Employments:
Availability of Jobs: Managers may have to go through
cutting down jobs and increasing jobs to match with
economic upturn and downturns.
Way Jobs are Created: Depending on the type of workforce
availability and task requirements, managers may have to
choose between regular and flexible working hours, mutual
and authoritative models, etc.

3–37
 HOW THE ENVIRONMENT AFFECTS
MANAGERS
There may three ways environmental factors may pose constraints
and challenges for managers:
 Environmental Uncertainty: The extent to which managers have
knowledge of and are able to predict change their organization’s
external environment is affected by:
Complexity of the environment: the number of components
in an organization’s external environment.
Degree of change in environmental components: how
dynamic or stable the external environment is.

3–38
ENVIRONMENTAL UNCERTAINTY
MATRIX

3–39
Exhibit 3.10
 HOW THE ENVIRONMENT AFFECTS
MANAGERS
There may three ways environmental factors may pose constraints
and challenges for managers:
 Stakeholder Relationships
Stakeholders
 Any communities in the organization’s external environment
that are affected by the organization’s decisions and actions
 For example, stakeholders of MTV include viewers, music
celebrities, advertisers, affiliate TV stations, public
service groups, and others.
Why Manage Stakeholder Relationships?
 It can lead to improved organizational performance.
 It’s the “right” thing to do given the interdependence of the
organization and its external stakeholders.
3–40
 MANAGING STAKEHOLDER RELATIONSHIPS

1. Identify the organization’s external stakeholders.

2. Determine the particular interests and concerns of the external
stakeholders.
3. Decide how critical each external stakeholder is to the
organization.
4. Determine how to manage each individual external stakeholder
relationship.

3–41
ORGANIZATIONAL STAKEHOLDERS

3–42
Exhibit 3.11
43
Thank YOU!