CHAPTER 3

ORGANIZATION CULTURE AND ENVIRONMENT: THE

CONSTRAINTS
 INTRODUCTION
The elements of an organization's culture are as
complicated as the various parts of a person's
personality. Managers today must understand how
a company's internal and external dynamics
influence, and sometimes constrain, its output.
Managers must recognize that organizational
culture and environmental factors have significant
consequences for how a company is managed.
 THE USEFULNESS OF MANAGEMENT

 Omnipotent view of management

- The view that managers are directly responsible for an
organization's success or failure.

 Symbolic view of management

- The view that external forces beyond managers' control account
for a large portion of an organization's success or failure.

 Reality suggests a synthesis

- Managers are neither helpless nor powerful. Instead, the more
rational approach is to regard the manager as working within the
restrictions imposed by the organization's culture and environment.
 WHAT IS THE ORGANIZATIONAL CULTURE?

It is a set of shared beliefs, ideas, traditions, and

methods of doing things that impact how members of
an organization operate.
 SEVEN DIMENSIONS OF AN ORGANIZATION’S
CULTURE HAVE BEEN PROPOSED

a. Innovation and risk taking - the degree to which employees are encouraged to be
innovative and take risks.
b. Attention to detail - the degree to which employees are expected to exhibit
precision, analysis, and attention to detail.
c. Outcome orientation - the degree to which managers focus on results or
outcomes rather than on the techniques and processes used to achieve those
Outcomes.
d. People orientation - the degree to which management decisions take into
consideration the effect on people within the organization)
e. Team orientation - the degree to which work activities are organized around
teams rather than individuals.
f. Aggressiveness - the degree to which people are aggressive and competitive
rather than easygoing and cooperative.
g. Stability - the degree to which organizational activities emphasize maintaining
the status quo in contrast to growth.
 THE CULTURE OF AN ORGANIZATION
 Strong Versus Weak Cultures
- In strong cultures, the key values are deeply held
and widely shared
- Strong cultures have greater influence on employees than
do weak cultures
- Employees more committed to organizations with strong
cultures
- Strong cultures are associated with high organizational
performance
- Most organizations have moderate to strong cultures
 THE CULTURE OF AN ORGANIZATION
( CONTINUED )

 The Source of Culture

- Usually reflects the vision or mission of the founder
founders project image of what the organization should be
 How Employees Learn Culture
- Stories - a narrative of significant events or people
- Rituals - repetitive sequences of activities
- Material symbols – essential in creating an
organization’s personality.
- Language - identifies members of a culture
organizations develop unique terminology or jargon.
 THE CULTURE OF AN ORGANIZATION
( CONTINUED )

 How Culture Affects Managers

- Establishes appropriate managerial behavior.

- Constrains decision making in all management functions.

 Planning - degree of risk that plans should contain

how much environmental scanning is necessary.
 Organizing - degree of autonomy given to employees
degree of interdepartmental interaction.
 Leading - degree of concern for job satisfaction
what leadership styles are appropriate.
 Controlling - reliance on external or internal controls
what performance criteria to use.
 ORGANIZATION CULTURE ISSUES

 Creating an Ethical Culture  Creating an Innovative

Culture
High in risk tolerance Challenge and
Low to moderate involvement
aggressiveness Freedom
Focus on means as Trust and openness
well as outcomes Idea time
Playfulness/humor
Conflict resolution
Debates
Risk-taking
 DEFINING THE EXTERNAL ENVIRONMENT

 External Environment
 Those factors and forces outside the organization that affect the organization’s
performance.
 Components of the External Environment
Specific environment: external forces that have a
direct and immediate impact on the organization.
-customers
-suppliers
-competitors
-pressure groups
General environment: includes the broad conditions that may affect the
organizations.
- Economic conditions
- Political/legal conditions
- Socio-cultural conditions
- Demographic conditions
- Technological conditions
- Global conditions
 HOW THE ENVIRONMENT AFFECTS
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.
 STAKEHOLDER RELATIONSHIPS

 Stakeholders
 Any constituencies in the organization’s environment
that are affected by the organization’s decisions and actions.

 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.
 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.