Management, 13e

Richard L. Daft

Chapter 3
The Environment and
Corporate Culture

© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Business Environment

2016 or posted to a publicly accessible website, in whole or in part.

© 2018 Cengage. May not be scanned, copied or duplicated,
General environment
Technology – scientific and technological advancements in a specific
industry as well as in society at large

Natural – plants, animals, rocks, and natural resources such as air, water,
and climate

Sociocultural - distribution, population density, age, and education

Economic - Consumer purchasing power, Unemployment rate, Interest

rates

Political - government regulations at local, state, and federal levels, as well

as political activities

International – uncertainty environment

© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 General Environment:
Legal–Political (slide 1 of 2)
 Legal–political dimension: government regulations
as well as political activities
 OSHA
 Environmental Quality Regulations
 Consumer protection and privacy legislation
 Information and labeling requirements
 Product safety requirement (e.g: SIRIM)
 MCO,CMO,RMCO

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 General Environment: Economic
 Economic dimension: economic health of the
country/region in which the organization operates
 Includes
 Consumer purchasing power
 Unemployment rate
 Interest rates
 Organizations operate in a global environment that is
complex today

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© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 General Environment:
Sociocultural
 Sociocultural dimension: demographic
characteristics, norms, customs, and values
 Important sociocultural characteristics are
geographical distribution, population density, age,
and education levels
 Current trends
 Technologically savvy customers
 Widespread social equality
 Growing diversity

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© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 General Environment:
Technological
 Technological dimension: scientific and
technological advancements in a specific industry as
well as in society at large
 Advances drive competition and help innovative
companies gain market share
 Industries that fail to adapt face decline

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© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 General Environment: Natural (slide 1
of 2)

 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 sensitive to the environment
 Growing importance and pressure
 Natural dimension does not have own voice

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 General Environment: Natural (slide 2
of 2)

 Environmental groups advocate action/policy

 Reduction and cleanup of pollution
 Development of renewable energy resources
 Reduction of greenhouse gases
 Ethical treatment of animals
 Sustainable use of scarce resources

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© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 General Environment:
International
 Managers must consider the international
dimension
 Events originating in foreign countries
 New opportunities for companies in other countries
 New competitors, suppliers, and customers
 New technological, social, and economic trends

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© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 The Internal Environment:
Corporate Culture (slide 1 of 3)
 Corporate culture: set of key values, beliefs,
understandings, and norms shared by members of an
organization
 Symbols
 Stories
 Heroes
 Slogans
 Ceremonies

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3.5 Levels of Corporate Culture

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© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Internal Environment: Corporate
Culture (slide 2 of 3)

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
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© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Internal Environment: Corporate
Culture (slide 3 of 3)

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

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© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3.6 Four Types of Corporate Culture

Competitive/

Cooperative/ Bureaucratic/

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© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Types of Culture (slide 1 of 2)
 (i) Adaptability culture: characterized by values that
support the company’s ability to rapidly detect,
interpret, and translate signals from the environment
into new behavior responses
 TubeMogul – take risks, be creative and learning from
mistakes

 (ii) Achievement culture/Competitive: results-oriented

culture that values competitiveness, aggressiveness,
personal initiative, cost cutting, and willingness to work
long and hard to achieve results
 Oracle – aggressive, result-oriented and uncompromising
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© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Types of Culture (slide 2 of 2)
 (iii) Involvement/cooperative culture: places high
value on meeting the needs of employees and values
cooperation and equality
 Southwest Airlines – employee involvement,
appreciation and support

 (iv) Consistency/ Bureaucratic culture: values

following the rules and thriftiness and rewards a
methodical, rational, orderly way of doing things
 Amazon – cost-cutting, modest compensation for
employees.
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© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Cultural Leadership
 A primary way in which managers shape cultural norms and values to
build a high performance culture is through cultural leadership.
 Managers must overcommunicate - signal these values in actions as well
as words to ensure that employees understand
 A cultural leader defines and uses signals and symbols to influence
corporate culture.
 The leader clarifies what the new culture should be and crafts a story that
inspires people to change.
 Act as “chief marketing officer” for the desired cultural values.

© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Cultural Leadership

Cultural leaders influence culture in two key

areas:
1. The cultural leader articulates a vision for the organizational
culture that employees can believe in.
 The leader defines and communicates central values that
employees believe in and will rally around.
2. The cultural leader heeds the day-to-day activities that
reinforce the cultural vision.
 develop work procedures and reward systems match and
reinforce the values.
walk their talk
© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Management, 13e
Richard L. Daft

Chapter 3 (Part 2)
Managing in a
Global Environment

© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
 Globalization
 Globalization: the extent to which trade and
investments, information, social and cultural ideas,
and political cooperation flow between countries
Result is that countries, businesses, and people
become increasingly interdependent
Fewer large international corporations located in the
U.S.
‘Everyone is connected, everywhere and all the time,
in a vast web of interactive data’

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 Developing a Global
Mind-Set
 Global mind-set: ability of managers to
appreciate and influence individuals, groups,
organizations, and systems that represent different
social, cultural, political, institutional, intellectual,
and psychological characteristics
 Expand a global mind-set
 Thinking: curiosity -ability to open your mind and
appreciate different viewpoints
 Doing: cultivating relationships with people across
cultural and national boundaries
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 Characteristics of Multinational
Corporations
(slide 1 of 2)

 Multinational corporation: receives more than 25% of its

total sales revenues from operations outside parent’s home
country
 Characteristics
 Managed as integrated worldwide business systems – acquire
materials and manufacture parts wherever in the world it is
most advantageous to do so.
 Controlled by a single management authority that make key
strategic decision.
 Regard the entire world as one market for strategic decisions,
resource acquisition, and location of production, advertising, and
marketing efficiency
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 Getting Started Internationally (slide 1 of 2)

 Exporting: strategy in which the corporation

maintains its production facilities within the home
nation and transfers its products for sale in foreign
countries
 Global outsourcing: engaging in the international
division of labor so that work activities can be done
in countries with the cheapest sources of labor and
supplies
 Also called offshoring

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 Getting Started Internationally (slide 2 of 2)

 Partnerships
 Represent a higher level of involvement in
international trade
 Joint venture: a company shares costs and risks
with another firm, typically in the host country, to
develop new products, build a manufacturing facility,
or set up a sales and distribution network
 E.g: Renault-Nissan Alliance’s joint-partnership for
eGT New Energy Automotive Co. (electric car in
China)
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4.3 Strategies for Entering the International Arena

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 Legal–Political Challenges
 Political risk: the risk of loss of assets, earning
power, or managerial control due to political events
or actions by host governments
 Includes government takeovers of property and acts
of violence directed against a firm’s properties or
employees
 Political instability: events such as riots,
revolutions, civil disorders, and frequent changes in
government

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 Sociocultural Challenges
 A nation’s culture includes the shared knowledge, beliefs, and
values, as well as the common modes of behavior and ways of
thinking among members of a society.
 Many managers fail to realize that the values and behaviors
that typically govern how business is done in their own country
don’t always translate to the rest of the world.
 Ethnocentrism: natural tendency of people to regard
their own culture as superior and to downgrade or
dismiss other cultural values

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 Social Values
 One way that managers can fight their own
ethnocentric tendencies is to understand and
appreciate differences in social values.
 Hofstede’s value dimensions
 Four dimensions of national value systems that
influence organizational and employee working
relationships

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 Hofstede’s Value Dimensions
(slide 1 of 3)

(i) Power distance: acceptance of inequality in power among

institutions, organizations, and people (High PD – subordinate follow order)
(ii) Uncertainty avoidance: comfort level with uncertainty and
ambiguity (high UA–low risk taker)
(iii) Individualism vs collectivism
 Individualism: value for a loosely knit social framework
in which individuals are expected to take care of
themselves
 Collectivism: preference for a tightly knit social
framework in which individuals look after one another and
organizations protect their members’ interests
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 Hofstede’s Value Dimensions
(slide 2 of 3)

(iv) Masculinity vs femininity

 Masculinity: preference for achievement, heroism,
assertiveness, work centrality (with resultant high
stress), and material success
 Femininity: values relationships, cooperation, group
decision making, and quality of life

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 Hofstede’s Value Dimensions
(slide 3 of 3)

(v) 5. Long-term vs short-term orientation

 Long-term orientation: greater concern for the future and
highly values thrift and perseverance and sustainability
 Willing to delay short-term material or social success or
even short-term emotional gratification in order to prepare
for the future.

 Short-term orientation: more concerned with the past

and the present and places a high value on tradition and
meeting social obligations
 value the current social hierarchy and care more about
immediate gratification than long-term fulfillment.

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4.4 Rank Orderings of Ten Countries Along Four
Dimensions of National Value Systems

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THE END

© 2018 Cengage. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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