CHAPTER TWO

O R G A N I Z AT I O N A L
ENVIRONMENTS
A N D C U LT U R E S
The Changing Environment
of Organizations

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 WHAT WOULD YOU DO?

You are the CEO of McDonald’s…

Sales are declining,

stores are closing
Competitors are stronger
Food quality is dropping,
food preferences have
changed
Service is rude and inaccurate

How can you deal with these

external and internal problems
and turn them into opportunities?
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 ENVIRONMENTAL CHANGE

Environmental Change is the rate at which a

company’s environments change
 stable environments
 dynamic environments

The changing environment of business presents both

opportunities and challenges for managers today.

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ENVIRONMENTAL FORCES
 I. GLOBALIZATION

-is the internationalization of business activities and the shift

toward an integrated global economy

In 2012, the volume of international trade in current dollars was

about 50 times greater than the amount in 1960.

Indeed, while international trade actually declined by 11 percent

in 2009 due to the global recession, it increased by that same
amount in 2010 as the economy began a slow rebound.
 FOUR MAJOR FACTORS ACCOUNT FOR MUCH
OF THE GROWTH IN INTERNATIONAL TRADE

1. Communication and transportation have improved

-it is simply easier to conduct international business today than was
the case just a few years ago

2. Expand internationally to increase markets

-Now most midsize and even many small firms routinely buy and/or
sell products and services in other countries.

3. To control cost
 In searching for lower labor costs, some companies have
discovered well-trained workers and built more efficient plants that
are closer to international markets.

4. In response to competition
 CROSS-CULTURAL DIFFERENCES AND
SIMILARITIES
Culture
-is the set of shared values, often taken for granted, that help
people in a group, organization, or society understand which
actions are considered acceptable and which are deemed
unacceptable

Geert Hofstede
 a Dutch researcher
 studied workers and managers in 60 countries and found that
specific attitudes and behaviors differed significantly because
of the values and beliefs that characterized those countries
 Come up with the DIMENSIONS OF CULTURE
 DIMENSIONS OF CULTURE

1. Individualism
-extent that people in a culture define themselves primarily as
individuals rather than as part of one or more groups or
organizations
2. Collectivism
 characterized by tight social frameworks in which people tend
to base their identities on the group or organization to which
they belong
3. Power distance
 or orientation to authority
 the extent to which people accept as normal an unequal
distribution of power
 DIMENSIONS OF CULTURE

4. Uncertainty avoidance
-also called preference for stability
-the extent to which people feel threatened by unknown
situations and prefer to be in clear and unambiguous situations
5. Masculinity
 or assertiveness or materialism
 the extent to which the dominant values in a society
emphasize aggressiveness and the acquisition of money and
other possessions as opposed to concern for people,
relationships among people, and overall quality of life
 DIMENSIONS OF CULTURE

6. Long-term orientation
- include focusing on the future, working on projects that have a
distant payoff, persistence, and thrift

7. Short-term orientation
-more oriented toward the past and the present and include
respect for traditions and social obligations
 II. DIVERSITY

Workforce diversity
-refers to the important similarities and differences among the
employees of organizations

Unfortunately, many people tend to stereotype others in

organizations.

A stereotype is a generalization about a person or a group of

persons based on certain characteristics or traits.

Prejudices are judgments about others that reinforce beliefs

about superiority and inferiority.
 DIMENSIONS OF DIVERSITY

1. Primary dimensions of diversity

-are those factors that are either inborn or exert extraordinary
influence on early socialization.
-make up the essence of who we are as human beings
-include age, race and ethnicity, gender, physical and mental
abilities, and sexual orientation

2. Secondary dimensions of diversity

-include factors that matter to us as individuals and that to
some extent define us to others
-less permanent than primary dimensions and can be adapted or
changed
-include educational background, geographical location, income,
marital status, military experience, parental status, religious
beliefs, and work experience
Assimilation
-is the process through which members of a minority group are
socialized into learning the ways of the majority group

HOW TO OVERCOME THESE PROBLEMS?

Value DIVERSITY
 III. TECHNOLOGY

-refers to the methods used to create products, including both

physical goods and intangible services
-is the basis of competition for some firms, especially those
whose goals include being the technology leaders in their
industries
 Categorize into two
1. Manufacturing is a form of business that combines and
transforms resources into tangible outcomes that are then
sold to others
2. Service organization is one that transforms resources into
an intangible output and creates time or place utility for its
customers
 IV.ETHICS AND CORPORATE
GOVERNANCE
Ethics are a person’s beliefs regarding what is right or wrong in
a given situation.

Corporate governance refers to the oversight of a public

corporation by its board of directors.
 ETHICAL ISSUES IN INFORMATION
TECHNOLOGY
1. individual rights to privacy and
2. the potential abuse of information technology by companies

HOW TO ADDRESS THIS?

One way management can address these concerns is by posting

a privacy policy on its website. The policy should explain exactly
what data the company collects and who gets to see the data.
 V. NEW EMPLOYMENT RELATIONSHIPS

 involve the management of knowledge workers and the

outsourcing of jobs to other businesses, especially when
those businesses are in other countries

Traditionally, employees added value to organizations because

of what they did or because of their experience.

However, during today’s “information age,” many employees

add value simply because of what they know
THE MANAGEMENT
OF KNOWLEDGE OUTSOURCING
WORKERS

-are those employees

-is the practice of
who add value in an
hiring other firms to
organization simply
do work previously
because of what they
performed by the
know
organization itself;
when this work is
moved overseas
-often called offshoring
-helps firms focus on
their core activities
 TEMP AND TIERED
CONTINGENCY WORKFORCE
WORKERS

-a person who works for

an organization on -exists when one group
something other than a of an organization’s
permanent or full-time workforce has a
basis. contractual
-categories arrangement with the
• independent organization
contractors objectively different
• on-call workers from another group
• temporary employees performing the same
(usually hired through jobs
outside agencies)
• contract and leased
employees
• part-time workers