Chapter 3, R, Daft

Management, 14e
Chapter 3: The Environment and

Corporate Culture
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Learning Objectives
• By the end of this chapter you should be able 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.
Learning Objectives
• By the end of this chapter you should be able 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.
External Organizational Environment
• 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
3.1 The General, Task, and Internal Environments
The External Environment
• Organizational ecosystem: system formed by the interaction among a

community of organizations in the environment
• Internal environment: elements within the organization boundaries that affect
how well the organization adapts to the external environment
Task Environment
• 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/Supply chain: people and organizations that provide the raw
materials that the organization uses to produce its output
• Labor market: people in the environment who can be hired to work for the
organization
General Environment: International
• Managers must consider the international dimension

− Events and new opportunities originating in foreign countries
− New competitors, suppliers, and customers
− New technological, social, and economic trends
General Environment: Technological
• Technological dimension: scientific and technological advancements

in a specific industry as well as in society at large
• Industries that fail to adapt face decline
General Environment: Sociocultural
• 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
General Environment: Economic
• 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
General Environment: Legal–Political
• Legal–political dimension: government regulations at local, state, and federal

levels, as well as political activities
• Government laws and agency affecting business operations:
General Environment: Natural
• 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 shown 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
Environmental Uncertainty
• Uncertainty: managers do not have sufficient information about environmental

factors to understand and predict environmental needs and changes
• Environmental characteristics that influence uncertainty
− The number of factors that affect the organization
− Extent to which those factors change
Environmental Uncertainty
• High uncertainty
− Many external factors
− Eternal factors change rapidly
• Low uncertainty
− Few external factors
− External factors are stable
Adapting to the Environment
• Strategic issues: events or forces either inside or outside an organization that

are likely to alter its ability to achieve its objectives
• Boundary spanning: actions that link to and coordinate the organization with
key elements in the external environment
 Business intelligence
 Social media analytics and big data analytics
 Increasingly important because of a rapidly changing business
environment
The Internal Environment: Corporate Culture
• Corporate culture: set of key values, beliefs, understandings, and norms

shared by members of an organization
• Toxic culture: exists when persistent negative sentiments and infighting cause
stress, unhappiness, and lowered productivity among subgroups of employees
Levels of Corporate Culture
Interpreting/Shaping Culture
• 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
Four Types of Corporate Culture
Types of Culture
• 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
Shaping Corporate Culture for Innovative Response
• Corporate culture plays a key role in a climate that enables learning and
innovative responses to situations
− Threats from the external environment
− Challenging new opportunities
− Organizational crises
Managing the High-Performance Culture
• 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
Combining Culture and Performance
Cultural Leadership
• 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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Management, 14e

Chapter 3: The Environment and

• By the end of this chapter you should be able to:

1. Define an organizational ecosystem and show how the

• By the end of this chapter you should be able to:

4. Explain how symbols, stories, heroes, slogans, and

• All outside elements that could affect the organization

• Organizational ecosystem: system formed by the interaction among a

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

• Managers must consider the international dimension

• Technological dimension: scientific and technological advancements

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

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

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

• Environmental groups advocate action/policy

• Uncertainty: managers do not have sufficient information about environmental

• Strategic issues: events or forces either inside or outside an organization that

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

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

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

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

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