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Management
R I C H A R D L . DA F T
Vanderbilt University
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1 2 3 4 5 6 7 14 13 12 11 10
PT2 Chapter3
Geanina Bechea, 2010/Used under license from Shutterstock.com
Are You Fit for Managerial Uncertainty? After studying this chapter, you should be able to:
Chapter Outline
Learning Outcomes
The External Environment 1. Describe the general and task environments and the dimensions of
General Environment each.
Task Environment 2. Explain the strategies managers use to help organizations adapt to
The Organization–Environment an uncertain or turbulent environment.
Relationship
3. Define corporate culture and give organizational examples.
Environmental Uncertainty
Adapting to the Environment 4. Explain organizational symbols, stories, heroes, slogans, and ceremo-
nies and their relationship to corporate culture.
The Internal Environment:
Corporate Culture 5. Describe four types of cultures and how corporate culture relates to
Symbols Slogans the environment.
Stories Ceremonies 6. Define a cultural leader and explain the tools a cultural leader uses
Heroes to create a high-performance culture.
Types of Cultures
Adaptability Culture Involvement Culture
Achievement Culture Consistency Culture
New Manager Self-Test:
Cultural Preference
Shaping Corporate Culture for
Innovative Response
Managing the High-Performance Culture
Cultural Leadership
Mana Photo, 2010/Used under license from Shutterstock.com

The Environment 1
and Corporate Culture
Introduction
Are You Fit for Managerial Uncertainty?1
Do you approach uncertainty with an open mind? Think leadership position. Please answer whether each of the
back to how you thought or behaved during a time following items was Mostly True or Mostly False in that
of uncer tainty when you were in a formal or informal circumstance.
2
Environment
Mostly Mostly
True False
1. Enjoyed hearing about new ideas even when working toward a deadline.
2. Welcomed unusual viewpoints of others even if we were working under pressure.
3. Made it a point to attend industry trade shows and company events.
4. Specifically encouraged others to express opposing ideas and arguments.
5. Asked “dumb” questions.
6. Always offered comments on the meaning of data or issues.
3
7. Expressed a controversial opinion to bosses and peers.
Planning
8. Suggested ways of improving my and others’ ways of doing things.
Scoring and Interpretation: Give yourself one point quality for a new manager is “mindfulness,” which includes the
for each item you marked as Mostly True. If you scored less qualities of being open-minded and an independent thinker. In
than 5, you might want to start your career as a manager in a stable environment, a manager with a closed mind may per-
a stable rather than unstable environment. A score of 5 or form okay because much work can be done in the same old
above suggests a higher level of mindfulness and a better way. In an uncertain environment, even a new manager needs
fit for a new manager in an organization with an uncertain to facilitate new thinking, new ideas, and new ways of working. 4
Organizing
environment. A high score on the preceding items suggests higher mindful-
In an organization in a highly uncertain environment ness and a better fit with an uncertain environment.
everything seems to be changing. In that case, an important
O
nce upon a time, not so very long ago, a trip to the video store was a part of
almost every young couple’s weekend plans and an event eagerly anticipated
by schoolchildren as the hours ticked by on a Friday afternoon. Blockbuster,
the king of video rental, had faux movie lights, popcorn and candy at the checkouts,
and film posters on the walls. Shelves full of VHS (and later DVD) boxes beckoned,
and it was a thrill to snap up the last copy of a hot new release. Now, the video store 5
is going the way of the milkman as mail-order and video-on-demand services change Leading
how people rent and view movies. Blockbuster has closed hundreds of stores and is
likely to file for bankruptcy. Meanwhile, Netflix, which offers movies by mail or via
online streaming, expanded its customer base to more than 13 million and saw its stock
price top $100 a share in early 2010. Blockbuster also offers mail order and streaming
services, but the company was slow to respond to changes in the industry and stuck too
long with its outdated business model of renting videos from large retail stores. Now,
the growing popularity of Redbox, which rents movies for $1 a night out of vending
machines conveniently located in supermarkets, could put the last nail in Blockbuster’s 6
coffin. CEO James Keyes conceded in March of 2010 that there was “substantial doubt
Controlling
about [Blockbuster’s] ability to continue as a going concern.”2

The environment in which companies operate is continually changing, sometimes
quite rapidly, as Blockbuster learned, and managers have to be on their toes. Netflix was
61
62 Part 2 The Environment of Management
founded in 1997, but Blockbuster managers failed to pay attention. Even though sales at
video stores began to decline, Blockbuster didn’t start offering new options for renting
movies until 2003. For organizations in all industries, environments are increasingly
dynamic, requiring managers to be prepared to respond quickly to even subtle envi-
ronmental shifts. This chapter explores in detail components of the external environ-
ment and how they affect the organization. The chapter also examines a major part of
the organization’s internal environment—corporate culture. Corporate culture is both
shaped by the external environment and shapes how managers respond to changes in
the external environment.
The External Environment

The tremendous and far-reaching changes occurring in today’s world can be under-
stood by defining and examining components of the external environment. The external
organizational environment includes all elements existing outside
the boundary of the organization that have the potential to affect
the organization.3 The environment includes competitors, resources,
“It is not the strongest of technology, and economic conditions that influence the organization.
It does not include those events so far removed from the organiza-
the species that survives, tion that their impact is not perceived.
nor the most intelligent The organization’s external environment can be further concep-
tualized as having two components: general and task environments,
that survives. It is the one as illustrated in Exhibit 3.1.4 The general environment affects or-
ganizations indirectly. It includes social, economic, legal/political,
that is the most adaptable international, natural, and technological factors that influence all or-
to change.” ganizations about equally. Changes in federal regulations or an eco-
nomic recession are part of the organization’s general environment.
— CHARLES DARWIN (1809–1882), NATURALIST
These events do not directly change day-to-day operations, but they
do affect all organizations eventually. The task environment is closer
to the organization and includes the sectors that conduct day-to-day transactions with the
organization and directly influence its basic operations and performance. It is generally
considered to include competitors, suppliers, customers, and the labor market.
The organization also has an internal environment, which includes the elements
within the organization’s boundaries. The internal environment is composed of current
employees, management, and especially corporate culture, which defines employee behav-
ior in the internal environment and how well the organization will adapt to the external
environment.
Exhibit 3.1 illustrates the relationship among the general, task, and internal environ-
ments. As an open system, the organization draws resources from the external environment
General Environment
EXHIBIT 3.1
Technological
Dimensions of the Task Environment
Organization’s General, Task,
Customers Natural
and Internal Environments
Competitors Internal Environment Sociocultural

Employees
Culture
Suppliers Economics
Management
Labor Market Legal/Political
International
Chapter 3 The Environment and Corporate Culture 63
and releases goods and services back to it. We will now discuss the two components of
the external environment in more detail. Then we will discuss corporate culture, the key
element in the internal environment. Other aspects of the internal environment, such as
structure and technology, will be covered in later chapters of this book.
General Environment
The dimensions of the general environment influence the organization over time but often
are not involved in day-to-day transactions with it. The dimensions of the general envi-
ronment include international, technological, sociocultural, economic, legal-political, and 2
natural.
Environment
International The international dimension of the external environment represents
events originating in foreign countries as well as opportunities for U.S. companies in other
countries. The international environment provides new competitors, customers, and sup-
pliers and shapes social, technological, and economic trends as well.
Today, every company has to compete on a global basis. The auto industry, for exam-
ple, has experienced profound shifts as China recently emerged as the world’s largest auto
market. In response, car makers are moving international headquarters into China and
designing features that appeal to the Chinese market, including bigger, limousine-like back
seats, advanced entertainment systems, and light-colored interiors. These trends, inspired
by the Chinese market, are reflected in models sold around the world.5 For many other
U.S. companies, such as Google, domestic markets have become saturated, and the only
potential for growth lies overseas. Google’s goal is to reach even the most far-flung corners
of the globe by providing search results in more than 35 languages and a translation feature
to users regardless of their native tongue.6
The global environment represents a complex, ever-changing, and uneven playing
field compared with the domestic environment. Managers who are used to thinking only
about the domestic environment must learn new rules to remain competitive. When
operating globally, managers have to consider legal, political, sociocultural, and economic
factors not only in their home countries but in other countries as well. Global manag-
ers working in China, for example, recognize
that their competitive success begins with
their ability to build personal relationships
and emotional bonds with their Chinese con-
tacts. The Manager’s Shoptalk offer tips for
creating successful business relationships in
China.
Technological The technological dimen-

sion of the general environment includes sci-
entific and technological advancements in a
specific industry as well as in society at large.
In recent years, this dimension created mas-
ROB KIM/Landov
sive changes for organizations in all industries.

Twenty years ago, many organizations didn’t
even use desktop computers. Today, computer
networks, Internet access, handheld devices, Changes in the technological dimension of the
videoconferencing capabilities, cell phones, environment have enabled H&R Block to expand its
and laptops are the minimum tools for doing services as well as its marketing practices. In 2008, the company launched an ambitious,
business. A new generation of handhelds often whimsical social media campaign that included a Second Life island where avatars
doled out tax advice. Because managers discovered customers were uncomfortable with
allows users to check their corporate e-mail, spelling out their tax problems on Facebook and Twitter, Block changed its approach. It
daily calendars, business contacts, and even now uses those sites to direct customers to a Q&A Web page, Get It Right, where over
customer orders from any location with a 1,000 specially trained employees field questions.
Creating Guanxi in China

With its low labor costs and huge potential mar- all-important work of forging an emotional
ket, China is luring thousands of U.S. companies bond. Be aware that the real purpose of your
in search of growth opportunities. Yet University initial meetings with potential business part-
of New Haven’s Usha C. V. Haley recently found ners is to begin building a relationship, so
that only one-third of multinationals doing busi- keep your patience if the deal you are plan-
ness in China have actually turned a profit. One ning to discuss never even comes up.
Manager’s Shoptalk
reason Western businesses fall short of expecta- ▪ Remember that relationships are not short-
tions, experts agree, is that they fail to grasp the term. The work of establishing and nurturing
centuries-old concept of guanxi that lies at the guanxi relationships in China is never done.
heart of Chinese culture. Western managers must put aside their usual
At its simplest level, guanxi is a supportive, focus on short-term results and recognize
mutually beneficial connection between two peo- that it takes a long time for foreigners to be
ple. Eventually, those personal relationships are accepted into a guanxi network. Often, for-
linked together into a network, and it is through eign companies must prove their trustworthi-
these networks that business gets done. Anyone ness and reliability over time. For example,
considering doing business in China should keep firms that weathered the political instability
in mind the following basic rules: that culminated in the 1989 student protests
▪ Business is always personal. It is impossible in Tiananmen Square found it much easier
to translate “don’t take it so personally—it’s to do business afterwards.
only business” into Chinese. Western man- ▪ Make contact frequently. Some experts
agers tend to believe that if they conclude a recommend hiring ethnic Chinese staff
successful transaction, a good business rela- members and then letting them do the heavy
tionship will follow. The development of a lifting of relationship building. Others em-
personal relationship is an added bonus, but phasize that Westerners themselves should
not really necessary when it comes to getting put plenty of time and energy into forging
things done. In the Chinese business world, links with Chinese contacts; those efforts will
however, a personal relationship must be in pay off because the contacts can smooth the
place before managers even consider enter- way by tapping into their own guanxi net-
ing a business transaction. Western manag- works. Whatever the strategy, contact should
ers doing business in China should cultivate be frequent and personal. In addition, be
personal relationships—both during and sure to keep careful track of the contacts you
outside of business hours. Accept any and make. In China, any and all relationships are
all social invitations—for drinks, a meal, or bound to be important at some point in time.
even a potentially embarrassing visit to a
karaoke bar. SOURCES: Michelle Dammon Loyalka, “Before You Set Up Shop
in China” part of the “Doing Business in China” special report,
▪ Don’t skip the small talk. Getting right down BusinessWeek Online, January 4, 2006, http://www.businessweek.com/
to business and bypassing the small talk smallbiz/content/jan2006/sb20060104_466114.htm (accessed
during a meeting might feel like an efficient January 6, 2006); Los Angeles Chinese Learning Center, “Chinese
Business Culture,” http://chinese-school.netfirms.com/guanxi.html;
use of time to an American manager. To the and Beijing British Embassy, “Golden Hints for Doing Business in
Chinese, however, this approach neglects the China,” http://chinese-school.netfirms.com/goldenhints.html.
wireless network. Cell phones can now switch seamlessly between cellular networks and
corporate WiFi connections. Some companies provide wireless key fobs with continually
updated security codes that enable employees to log onto their corporate networks and
securely view data or write e-mails from any device with a broadband connection.7
Advances in technology drive competition and help innovative companies gain mar-
ket share. They also have the potential to transform consumer expectations of an entire
industry. The amusement park industry, for example, has to continuously reinvest in spec-
tacular, technologically advanced attractions to draw in younger, digitally savvy visitors.
Disney invested $80 million in a makeover of its Adventure California theme park to
respond to growing expectations for more dazzling attractions. Toy Story Mania essen-
tially puts guests inside a video game and includes 56 giant screens programmed with
3-D animation from Pixar. Competitors, such as Universal Studios, are making similar
investments in attractions to appeal to consumer demands for
advanced technology.8
2
Environment
Sociocultural The sociocultural dimension of the general
environment represents the demographic characteristics as
well as the norms, customs, and values of the general popula-
tion. Important socio-cultural characteristics are geographical
distribution and population density, age, and education levels.
Today’s demographic profiles are the foundation of tomorrow’s
workforce and consumers. Forecasters see increased global-
ization of both consumer markets and the labor supply, with
increasing diversity both within organizations and consumer
markets.9 Consider the following key demographic trends in
the United States:
1. As the U.S. population continues to age, organizations
are rushing to create senior-friendly products and ser-
vices. Currently, the U.S. population includes 78 million
baby boomers, and roughly one-third will be 62 years old
or older by 2013.10 Organizations realize that it makes
good business sense to create products and services for
this aging population. One example is a Delta faucet that
turns on and off when a user taps it anywhere on the spout
or handle, making it convenient for customers who have a
Jay Clendenin/Aurora Photos

hard time gripping levers and knobs.11
2. The United States is experiencing the largest influx
of immigrants in more than a century. The Hispanic
population is expected to grow to 102.6 million, an in-
crease of 188 percent since 2000, and it will make up
about a quarter of the U.S. population by 2050. In this Shrewd home builders are responding
same time period, non-Hispanic whites will make up to shifts in the sociocultural dimen-
only about 50 percent of the population, down from sion. Aging baby boomers have been a mainstay of the housing market
74 percent in 1995 and 69 percent in 2004.12 during the economic downturn, and what they want are smaller houses
designed with features to help them stay in their own homes as long
3. Members of Generation Y are flooding the workplace. To as possible. Pictured here is a 2009 AARP Livable Communities Award
replace the 64 million skilled workers who will start retiring winner, the Green Lake Residence in Seattle, Washington, designed by
Emory Baldwin of ZAI, Inc. The efficient, adaptable plan includes no-step
by the end of this decade, companies will be poised to attract
entries and closets stacked on top of each other that can be converted
Gen Y workers if they offer competitive salaries, flat hierar- into an elevator shaft if necessary.
chies, support networks, work-life balance, challenging work,
and feedback on performance.13
Economic The economic dimension represents the general economic health of the
country or region in which the organization operates. Consumer purchasing power,
the unemployment rate, and interest rates are part of an organization’s economic envi-
ronment. Because organizations today are operating in a global environment, the eco-
nomic dimension has become exceedingly complex and creates enormous uncertainty
for managers. The global economic environment will be discussed in more detail in the
next chapter.
In the last few years, the weakened U.S. economy has had a devastating impact on
small business. In the first quarter of 2009, according to the Bureau of Labor Statistics,
more than 400,000 businesses with fewer than 100 employees ceased operations, eliminat-
ing one million jobs.14 When the construction industry collapsed, for instance, numerous
small businesses could no longer survive. Knight-Celotext, the world’s largest fiberboard
maker, was taking in $115 million in revenue in 2006. By late 2008, revenue fell to
$50 million and the company was sold in bankruptcy.15 However, there remains a tremen-
dous vitality in the small business sector of the economy. Small business and entrepreneurial
start-ups will be discussed in detail in Chapter 6.
Legal-Political The legal-political dimension includes government regulations at the

local, state, and federal levels, as well as political activities designed to influence company
behavior. The U.S. political system encourages capitalism, and the government tries not to
overregulate business. However, government laws do specify rules of the game. The fed-
eral government influences organizations through the Occupational Safety and Health Ad-
ministration (OSHA), Environmental Protection Agency (EPA), fair trade practices, libel
statutes allowing lawsuits against business, consumer protection legislation, product safety
requirements, import and export restrictions, and information and labeling requirements.
Many organizations also have to contend with government and legal issues in other coun-
tries. The European Union (EU) adopted environmental and consumer protection rules
that are costing American companies hundreds of millions of dollars a year. Companies
such as Hewlett-Packard, Ford Motor Company, and General Electric have to pick up the
bill for recycling the products they sell in the EU, for example.16
Managers must also recognize a variety of pressure groups that work within the legal-
political framework to influence companies to behave in socially responsible ways. Wake
Up Wal-Mart, a union-backed campaign group, drums up public awareness of Walmart’s
business practices to force the
retailer to improve workers’
wages and health care benefits.
High-school buddies Eric Ryan The group’s campaign direc-
(left) and Adam Lowry (right) tor hopes smaller companies
make environmentally friendly
products look good. Their com-
will then follow suit.17 Other
pany, Method, produces nontoxic activists have boldly petitioned
cleaning products with a concern Home Depot, which intro-
for the natural environment duced the Eco Options brand
and packages them in designer-
looking bottles. Lowry, a chemi-
for its environmentally friendly
cal engineer, and Ryan, with an products, to stop advertising
advertising background, founded on Fox News, whose hosts and
Method in 2000 and sales grew to commentators dismiss global
more than $100 million by 2009.
warming as ludicrous.18
Natural In response to pres-

sure from environmental ad-
vocates, organizations have
become increasingly sensitive to
the earth’s diminishing natural
resources and the environmen-
tal impact of their products
and business practices. As a
result, the natural dimension
of the external environment
Suzy Poling
is growing in importance. The

natural dimension includes all
elements that occur naturally on earth, including plants, animals, rocks, and natural re-
sources such as air, water, and climate. Protection of the natural environment is emerging
as a critical policy focus around the world. Governments are increasingly under pressure
to explain their performance on pollution control and natural resource management. Na-
tions with the best environmental performance, along with some comparison countries, are
listed in Exhibit 3.2. Note that the top performer is Iceland, which gets most of its power
from renewable sources—hydropower and geothermal energy.
The natural dimension is different from other sectors of the general environment because
it has no voice of its own. Influence on managers to meet needs in the natural environment
may come from other sectors, such as government regulation, consumer concerns, the media,
competitors’ actions, or even employees.19 For example, environmental groups advocate var- 2
Environment
ious action and policy goals that include reduction and clean up of man-made pollution,
development of renewable energy resources, reduction of greenhouse gases such as carbon
dioxide, and sustainable use of scarce resources such as water, land, and air. The oil spill in the
Gulf of Mexico in 2010 brought environmental issues to the forefront. Months after a BP-
Transocean rig at the Deepwater Horizon oil well exploded, hundreds of thousands of gal-
lons of oil were still flowing into open water each day, adding to the millions of gallons already
contaminating the water and beaches along the coast in Louisiana, Mississippi, Alabama,
and Florida, and threatening the region’s fish, birds, turtles, and vegetation. “One of the last
Rank Country Score EXHIBIT 3.2

1 Iceland 93.5 2010 Environmental
Performance Index
2 Switzerland 89.1
3 Costa Rica 86.4
4 Sweden 86.0
5 Norway 81.1
6 Mauritius 80.6
7 France 78.2
8 Austria 78.1
9 Cuba 78.1
10 Columbia 76.8
11 Malta 76.3
12 Finland 74.7
13 Slovakia 74.5
14 United Kingdom 74.2
15 New Zealand 73.4
43 Mexico 67.3
46 Canada 66.4
61 United States 63.5
99 Saudi Arabia 55.3
121 China 49.0
123 India 48.3
150 Iraq 41.0
SOURCE: 2010 Environmental Performance Index, Yale Center for Environmental Law and Policy, Yale University, http://epi.yale
.edu; and Center for International Earth Science Information Network, Columbia University.
Note: The scores for each country are based on 25 performance indicators covering both environmental public health and
ecosystem vitality, such as air pollution and greenhouse gas emissions.
pristine, most biologically diverse coastal habitats in the country is about to get wiped out,”
said Felicia Coleman, who directs the Florida State University Coastal and Marine Labora-
tory. “And there’s not much we can do about it.” The effects of the devastating spill are likely
to extend for dozens of years.20
Remember This
• The organizational environment, consisting of both • The sociocultural dimension includes demographic
general and task environments, includes all elements characteristics, norms, customs, and values of a popula-
existing outside the boundary of the organization that tion within which the organization operates.
have the potential to affect the organization. • The economic dimension represents the general
• The general environment indirectly influences all economic health of the country or region in which the
organizations within an industry and includes five organization operates.
dimensions. • The legal-political dimension includes government regu-
• The task environment includes the sectors that lations at the local, state, and federal levels, as well as po-
conduct day-to-day transactions with the organiza- litical activities designed to influence company behavior.
tion and directly influence its basic operations and • Pressure groups work within the legal-political frame-
performance. work to influence companies to behave in socially re-
• The international dimension of the external environ- sponsible ways.
ment represents events originating in foreign countries • The internal environment includes elements within the
as well as opportunities for U.S. companies in other organization’s boundaries such as employees, manage-
countries. ment, and corporate culture.
• The technological dimension of the general environ- • The natural dimension includes all elements that occur
ment includes scientific and technological advances in naturally on earth, including plants, animals, rocks, and
society. natural resources such as air, water, and climate.
Task Environment
As described earlier, the task environment includes those sectors that have a direct working
relationship with the organization, among them customers, competitors, suppliers, and the
labor market.
Customers Those people and organizations in the environment that acquire goods
or services from the organization are customers. As recipients of the organization’s out-
put, customers are important because they determine the organization’s success. Patients
are the customers of hospitals, students the customers of schools, and travelers the cus-
tomers of airlines. Many companies are searching for ways to reach the coveted teen and
youth market by tying marketing messages into online sites such as Twitter, MySpace, and
Facebook. With high school and college students representing a $375 billion consumer
spending market, it’s serious business for managers at companies such as Target, Apple,
Coca-Cola, and Disney.21
Customers today have greater power because of the Internet, which presents threats as
well as opportunities for managers. Consider how Hulu is cashing in on a new way to pro-
vide television shows to viewers. Hulu is the second most popular destination for Internet
video after YouTube in the United States and generated more than $100 million in adver-
tising revenue in 2009. A joint venture owned by NBC Universal (General Electric), Fox
Entertainment Group (News Corp.), and ABC, Inc. (Disney), Hulu offers free-to-watch
episodes of popular TV shows such as Glee, Lost, or Saturday Night Live.22 Cable industry
executives have taken notice of TV viewers’ shift to online viewing. Comcast, Time Warner
Cable, and other cable companies are going on the offensive and cannot afford to sit still.
“We don’t want to be alarmists,” says Time Warner Cable CEO Glenn Britt, “but we really
need to look at what consumers want.”23
Competitors Specific competitive issues characterize each industry. Other organiza-

tions in the same industry or type of business that provide goods or services to the same
set of customers are referred to as competitors. The recording industry differs from the
steel industry and the pharmaceutical industry.
Competitive wars are being waged worldwide in all industries. UPS and FedEx are 2
Environment
stiff competitors in overnight shipping, logistics management, and supply chain manage-
ment. In a quest to claim e-commerce leadership for book sales, Walmart and Amazon
regularly square off in price wars by offering the hottest, bestselling new books for just
$10 each.24 Internet jeweler Blue Nile clashes with Tiffany’s, Zale’s, and Kay’s in a contest
for leadership in the diamond ring market. Using its low overhead and strong purchas-
ing power, Blue Nile sells diamond rings for 35 percent below most brick-and-mortar
stores.25
Suppliers Suppliers provide the raw materials the organization uses to produce its
output. A steel mill, for example, requires iron ore, machines, and financial resources. A
candy bar manufacturer may use suppliers from around the globe for ingredients such as
cocoa beans, sugar, and cream. Many multinational organizations rely on local suppliers for
manufacturing their products in emerging markets such as Thailand, Malaysia, and Korea,
but managers sometimes struggle to impose U.S. safety standards on foreign manufactur-
ing processes. Imagine the problem managers at candy-maker Cadbury faced when they
learned that a Beijing factory was using milk contaminated with minute traces of melamine
in the production of Cadbury chocolates. Managers recalled all of the candy made in that
plant and promptly investigated the source of the contamination—milk from a Chinese
supplier. After further testing, the Cadbury’s Beijing plant was found to be free of further
contaminants. Managers, however, developed a heightened awareness of the risk of using
local suppliers and boosted the number of tests for dangerous microbes and contaminants
in the Beijing plant.26
The trend today is for companies to use fewer suppliers and try to build good rela-
tionships with them so that they will receive high-quality supplies, parts, and materials at
lower prices. The relationship between manufacturers and suppliers has traditionally been
an adversarial one, but managers are finding that cooperation is the key to saving money,
maintaining quality, and speeding products to market.
Labor Market The labor market represents people in the environment who can be
hired to work for the organization. Every organization needs a supply of trained, quali-
fied personnel. Unions, employee associations, and the availability of certain classes of
employees can influence the organization’s labor market. Labor market forces affecting
organizations right now include: (1) the growing need for computer-literate knowledge
workers; (2) the necessity for continuous investment in human resources through recruit-
ment, education, and training to meet the competitive demands of the borderless world;
and (3) the effects of international trading blocs, automation, outsourcing, and shifting
facility locations on labor dislocations, creating unused labor pools in some areas and
labor shortages in others.
Changes in these various sectors of the general and task environments can create tremen-
dous challenges, especially for organizations operating in complex, rapidly changing industries.
Nortel Networks, a Canadian company that also has offices in the U.S., China, and the United
Kingdom, is an example of an organization operating in a highly complex environment.
Nortel Networks Nortel Networks is a global company that connects people to the information they need
Innovative Way
through advanced communication technologies. With customers in more than 150 countries,
Nortel designs and installs new networks and upgrades, supports, and manages existing
systems. Nortel’s complex external environment, illustrated in Exhibit 3.3, directly influences
its operations and performance. The Canadian-based company began in 1895 as a manu-
facturer of telephones and has reinvented itself many times to keep up with changes in the
environment.
Today, Nortel’s purpose is clear—to create a high-performance twenty-first century
communications company leveraging innovative technology that simplifies the compli-
cated, hyperconnected world. To achieve this goal, Nortel adapts and responds to the
uncertainty of the external environment. One response to the competitive environ-
ment was to spend billions to acquire data and voice networking companies, including
Bay Networks (which makes Internet and data equipment), Cambrian Systems (a hot
maker of optical technology), Periphonics (maker of voice-response systems), and Clarify
(customer relationship management software). These companies brought Nor tel top-
notch technology, helping the company snatch customers away from rivals Cisco and
Lucent Technologies. In addition, even during tough economic times, Nortel kept spend-
ing nearly 20 percent of its revenues on research and development to keep pace with
changing technology. 27
Remember This
• Customers are part of the task environment and include • AT&T and Verizon are competitors in the telecommu-
people and organizations that acquire goods or services nications industry.
from the organization. • Suppliers provide the raw materials the organization
• Competitors are organizations within the same indus- uses to produce its output.
try or type of business that compete for the same set of • The labor market represents the people available for
customers. hire by the organization.
The Organization–Environment
Relationship
Why do organizations care so much about factors in the external environment? The rea-
son is that the environment creates uncertainty for organization managers, and they must
respond by designing the organization to adapt to the environment.
Environmental Uncertainty
Uncertainty means that managers do not have sufficient information about environmen-
tal factors to understand and predict environmental needs and changes.28 As indicated in
Exhibit 3.4, environmental characteristics that influence uncertainty are the number of
factors that affect the organization and the extent to which those factors change. A large
multinational like Nortel Networks has thousands of factors in the external environment
creating uncertainty for managers. When external factors change rapidly, the organiza-
tion experiences high uncertainty; examples are telecommunications and aerospace firms,
computer and electronics companies, and e-commerce organizations that sell products and
services over the Internet. Companies have to make an effort to adapt to the rapid changes
EXHIBIT 3.3 The External Environment of Nortel
General Environment
Technological
• 3,750 issued U.S. patents
• Optical fiber networks
Task Environment • Wireless technologies (4G)
• Carrier ethernet
• Secure networking
• 450
Customers
Fortune 500 companies
2
Environment
• Governments
organizations
and not-for-profit
• Cable and wireless operators

Natural
• Organizations demanding new
optical and wireless equipment • Recycling initiatives in Brazil
• Reuse center in U.S. offices
• Teleworking for employees
• GreenCommute – “Best
Workplace for Commuters”
Competitors
• Lucent, Cisco, 3Com
• Siemens, Germany
• Alcatel, France
• Ericsson, Sweden Sociocultural
• Web surfers
• Opening new global markets
• Wireless lifestyles
Nortel Networks
Suppliers
• Components from subcontractors
• Banks, bondholders provide
capital
• High-quality parts from worldwide
suppliers Economic
• Shifting
Worldwide economic slowdown
• interest rates
access to credit and volatile
Labor Market
• Operates facilities in 34 states
• Hires experienced professionals and
computer-literate college graduates Legal/Political
• R&D
Employs 33,000, including 10,000
professionals • Canadian ownership
• Committed to diversity • Accounting

troubles
and regulatory
• Risk of terrorism
• Tough EU regulations
• NAFTA
International
• 40% of business outside U.S.
• Headquarters
Canada
in Brampton, Ontario,
• Joint
Competes in over 150 countries
• and Israel
ventures in Spain, Poland,
SOURCES: “Chinese Ministry of Railways Chooses Nortel Mobile Network,” M2Presswire (January 29, 2008); Nortel Web site, http:www.nortel.com (accessed May
12, 2010); J. Weber with A. Reinhardt and P. Burrows, “Racing Ahead at Nortel,” BusinessWeek (November 8, 1999): 93–99; “Nortel’s Waffling Continues: First Job
Cuts, Then Product Lines, and Now the CEO,” Telephony (May 21, 2001): 12; and M. Heinzl, “Nortel’s Profits of $499 Million Exceeds Forecast,” The Wall Street Journal,
January 30, 2004.
EXHIBIT 3.4 High
The External Environment

High Adapt to
and Uncertainty
Uncertainty Environment
Rate of
Change in
Factors in
Environment
Low
Uncertainty
Low
Low High
Number of Factors in
Organization Environment
in the environment. When an organization deals with only a few external factors
Refer to your score on the and these factors are relatively stable, such as those affecting soft-drink bottlers or
opening questionnaire to see food processors, managers experience low uncertainty and can devote less atten-
how well you might adapt as a
tion to external issues.
new manager in an uncertain
environment. Adapting to the Environment
If an organization faces increased uncertainty with respect to competition, cus-
tomers, suppliers, or government regulations, managers can use several strategies to adapt
to these changes, including boundary-spanning roles, interorganizational partnerships,
and mergers or joint ventures.
Boundary-Spanning Roles Boundary-spanning roles link and coordinate the or-

ganization with key elements in the external environment. Boundary spanners serve two
purposes for the organization: They detect and process information about changes in the
environment, and they represent the organization’s interests to the environment.29 Brian
Moynihan, CEO of Bank of America Corporation, spent most of his early days on the
job as a boundary spanner between his bank in Charlotte, North Carolina, and federal
regulators and elected officials in Washington, D.C. The bank wanted to be known as
“a force for positive change in key issues affecting the U.S. economy and consumers.”
To achieve that vision, Moynihan met with key political officials to revamp the com-
pany’s tarnished reputation, create opportunities to influence new legislation, and nur-
ture healthy relationships with federal banking industry officials. “Brian wants Bank of
America to be part of the solution to the economic challenges facing the country,” said
a bank spokesman. “We have a lot of resources and expertise that he wants to bring to
bear in tandem with policy makers in Washington. If the economy grows, we grow. It’s
pretty straightforward.”30
Another recent approach to boundary spanning is the use of business intelligence,
which results from using sophisticated software to search through large amounts of inter-
nal and external data to spot patterns, trends, and relationships that might be significant.
For example, Verizon uses business intelligence software to actively monitor customer
interactions and fix problems almost immediately.31 Business intelligence is related to the
growing area of boundary spanning known as competitive intelligence (CI), which refers
to activities to get as much information as possible about one’s rivals. Competi-

tive intelligence specialists use Web sites, commercial databases, financial re-
ports, market activity, news clippings, trade publications, personal contacts, and Read the Ethical Dilemma on
numerous other sources to scan an organization’s environment and spot poten- page 86 that pertains to com-
tial threats or opportunities.32 Visa has an employee who searches the Web for petitive intelligence. Do you
two hours each day for insights on MasterCard and other competitors. Harley- have the courage to risk your
Davidson hires an outside research firm to search through massive amounts of job by challenging the boss’s
data and reveal patterns that help decipher and predict competitors’ actions.33 inappropriate use of confiden-
Boundary spanning is an increasingly important task in organizations because tial information?
environmental shifts can happen quickly in today’s world. Managers need good
information about their competitors, customers, and other elements of the envi- 2
Environment
ronment to make good decisions. Thus, the most successful companies involve everyone in
boundary-spanning activities.
Interorganizational Partnerships An increasingly popular strategy for adapting

to the environment is to reduce boundaries and increase collaboration with other orga-
nizations. North American companies have typically worked alone, competing with one
another, but an uncertain and interconnected global environment changed that tendency.
Companies are joining together to become more effective and to share scarce resources.
Disney agreed to sell Rayovac brand batteries at all its theme and water parks in packag-
ing that features popular Disney characters such as Mickey Mouse. This move will boost
Rayovac battery sales as well as increase consumer exposure to the Disney brand.34 Sony,
Toshiba, and IBM collaborated on a new, tiny computer chip. Supermarket chains Kroger,
Albertsons, and Safeway banded together to negotiate with labor unions. Head-to-head
competition among independent firms is giving way to networks of alliances that compete
for business on a global basis. For example, the aerospace industry is controlled by two
networks—those of Boeing and Airbus, each of which is made up of more than 100 part-
ner organizations.35
Managers in partnering organizations are shifting from an adversarial orientation to a
partnership orientation. The new paradigm, shown in Exhibit 3.5, is based on trust and
the ability of partners to work out equitable solutions to conflicts so that everyone profits
from the relationship. Managers work to reduce costs and add value to both sides, rather
than trying to get all the benefits for their own company. The new model is also character-
ized by a high level of information sharing, including e-business links for automatic order-
ing, payments, and other transactions. In addition, person-to-person interaction provides
corrective feedback and solves problems. People from other companies may be onsite or
participate in virtual teams to enable close coordination. Partners are frequently involved
in one another’s product design and production, and they are committed for the long term.
From Adversarial Orientation To Partnership Orientation EXHIBIT 3.5

The Shift to a Partnership
• Suspicion, competition, arm’s length • Trust, value added to both sides Paradigm
• Price, efficiency, own profits • Equity, fair dealing, everyone profits
• Information and feedback limited • E-business links to share information and
conduct digital transactions
• Lawsuits to resolve conflict • Close coordination; virtual teams and
people onsite
• Minimal involvement and up-front • Involvement in partner’s product design
investment and production
• Short-term contracts • Long-term contracts
• Contracts limit the relationship • Business assistance goes beyond the contract
It is not unusual for business partners to help

one another, even outside of what is specified
in the contract.36
Mergers and Joint Ventures A step

beyond strategic partnerships is for compa-
nies to become involved in mergers or joint
ventures to reduce environmental uncer-
tainty. A frenzy of merger and acquisition
activity both in the United States and in-
AP Photo/Paul Beaty
ternationally in recent years is an attempt

by organizations to cope with the tremen-
dous volatility of the environment.37 A
merger occurs when two or more organiza-
tions combine to become one. For example,
In May 2010, United Airlines Chairman, President, and
CEO Glenn Tilton (left) and Continental Airlines Chair-
Wells Fargo merged with Norwest Corpo-
man, President, and CEO Jeff Smisek (right) announced the proposed $3 billion merger of ration and Wachovia Corporation to form
their companies, resulting in the world’s biggest airline. Two years earlier, Delta and North- the nation’s fourth largest financial services
west merged, and Southwest and AirTran merged in September of 2010. Mergers are one corporation.
strategy the industry is using to adapt to a highly uncertain environment full of un-
controllable external factors, such as 9/11, the credit crisis and recession, volatile fuel prices,
A joint venture involves a strategic alli-
the H1N1 flu scare, and a volcanic eruption in Iceland. ance or program by two or more organiza-
tions. A joint venture typically occurs when
a project is too complex, expensive, or uncertain for one firm to handle alone. Oprah
Winfrey’s Harpo Inc. formed a joint venture with Hearst Magazines to launch O, The
Oprah Magazine.38 Despite her popularity and success with her television show, Winfrey
recognized the complexity and uncertainty involved in starting a new magazine. The
combined resources and management talents of the partners contributed to the most
successful start-up ever in the magazine publishing industry.
Joint ventures are on the rise as companies strive to keep pace with rapid technologi-
cal change and compete in the global economy. Chrysler and Nissan created a joint ven-
ture that involves Nissan supplying Chrysler with a much-needed fuel-efficient car based
on the Nissan Versa to be sold in South America. The Nissan–Chrysler arrangement
could grow to include Chrysler providing pickup trucks to Nissan for sale in the United
States. Interorganizational partnerships like this one occur frequently in the automobile
industry.39
Many small businesses are also turning to joint ventures with large firms or with inter-
national partners. A larger partner can provide sales staff, distribution channels, financial
resources, or a research staff. Small businesses seldom have the expertise to deal interna-
tionally, so a company such as Nypro, Inc., a plastic injection-molding manufacturer in
Clinton, Massachusetts, joins with overseas experts who are familiar with the local rules.
Nypro now does business in four countries.40
Remember This
• When external factors change rapidly, the organization • A merger occurs when two or more organizations com-
experiences high uncertainty. bine to become one.
• Boundary-spanning roles link and coordinate the orga- • A joint venture is a strategic alliance or program by two
nization with key elements in the external environment. or more organizations.
• Interorganizational partnerships reduce boundaries and
increase collaboration with other organizations.
The Internal Environment:

Corporate Culture
The internal environment within which managers work includes corporate culture, produc-
tion technology, organization structure, and physical facilities. Of these, corporate culture
surfaces as extremely important to competitive advantage. The internal culture must fit the
needs of the external environment and company strategy. When this fit occurs, highly com-
mitted employees create a high-performance organization that is tough to beat.41
Most people don’t think about culture; it’s just “how we do things around here” or
“the way things are here.” However, managers have to think about culture, because it typ-
2
Environment
ically plays a significant role in organizational success. The concept of culture has been of
growing concern to managers since the 1980s as turbulence in the external environment
has grown, often requiring new values and attitudes. Organizational culture has been
defined and studied in many and varied ways. For the purposes of this chapter, we define
culture as the set of key values, beliefs, understandings, and norms shared by members
of an organization.42 The concept of culture helps managers understand the hid-
den, complex aspects of organizational life. Culture is a pattern of shared values
and assumptions about how things are done within the organization. This pat-
tern is learned by members as they cope with external and internal problems Complete the Small Group
and taught to new members as the correct way to perceive, think, and feel. Breakout on page 86 that
Culture can be analyzed at two levels, as illustrated in Exhibit 3.6. At 43 concerns identifying cultural
the surface level are visible artifacts, which include things such as manner of norms.
dress, patterns of behavior, physical symbols, organizational ceremonies, and
office layout. Visible artifacts are all the things one can see, hear, and observe by
watching members of the organization. At a deeper, less obvious level are values and be-
liefs, which are not observable but can be discerned from how people explain and justify
what they do. Members of the organization hold some values at a conscious level. Th ese
values can be interpreted from the stories, language, and symbols organization members
use to represent them.
Some values become so deeply embedded in a culture that members are no longer
consciously aware of them. These basic, underlying assumptions and beliefs are the
essence of culture and subconsciously guide behavior and decisions. In some organiza-
tions, a basic assumption might be that people are essentially lazy and will shirk their
duties whenever possible; thus, employees are closely supervised and given little free-
dom, and colleagues are frequently suspicious of one another. More enlightened orga-
nizations operate on the basic assumption that people want to do a good job; in these
EXHIBIT 3.6
Culture that can Visible Levels of Corporate Culture
be seen at the 1. Artifacts, such as dress,
surface level office layout, symbols,
slogans, ceremonies
Invisible
2. Expressed values, such as “The Deeper values
Penney Idea,” “The HP Way” and shared
3. Underlying assumptions and understandings
deep beliefs, such as “people held by
here care about one another organization
like a family” members
organizations, employees are given more freedom and responsibility, and colleagues
trust one another and work cooperatively. At the Zappos Family of companies, a cul-
ture of well-being and happiness has been instrumental in the growth of this successful
online retailer.
Zappos Family
Innovative Way
Zappos.com, an online retail site best known for its wide selection of shoes and its free
shipping, boldly proclaims its unique culture in an offbeat set of ten core values, including
“Create fun and a little weirdness.” CEO Tony Hsieh believes these core values illustrate
the company’s innovative culture and demonstrate its ultimate business goal—cultivating
happiness. Hsieh’s management theory goes like this: If you create a work culture that
fosters well-being, good practices and (eventually) good profits will naturally flow out of
the operation. So far, his theory is producing outstanding business results. Zappos.com, Inc.
is raking in $1 billion worth of annual gross sales, and employees widely report that their
work is exciting and challenging. “We really buy into the idea that the better we treat each
other, the better we’ll all be able to treat our customers,” says Rebecca Ratner, director of
human resources.
One way the Zappos Family of companies perpetuates its unique culture is by hiring em-
ployees who will fit into the slightly wacky, drama-club atmosphere. After resumes have been
reviewed in the standard way, potential employees go through a “culture interview” where
they are asked unusual questions such as “How lucky are you in life?” Department managers
know that people who consider themselves lucky are open-minded—one of the company’s
core values. The following table demonstrates other unique features of the Zappos’ Family
culture.44
Standard Interview Question
Zappos Family: How weird are you?
Typical Company: What are your strengths and weaknesses?
Hiring Bonus:
Zappos Family: New hires are offered $2,000 to refuse the job and go away. Those who stay
(about 96 percent) are more committed and engaged thereafter.
Typical Company: Actual hiring bonus, which makes it hard to say “no” to a place where one
may not fit in.
Atmosphere:
Zappos Family: Themed conference rooms including “Zen,” “beach,” and “superheroes.”
Typical Company: Fluorescent lights, white walls.
Customer Service:
Zappos Family: Phone reps are trusted to connect with customers however they see fit.
Typical Company: Phone reps follow scripts, fill out call logs, and adhere to time limits.
Copyright © 2010 Zappos.com, Inc. or its affiliates. Used by permission.
The Zappos Family of companies has created a unique culture that is reflected in its
core values. Fundamental values are demonstrated in organizations through symbols, sto-
ries, heroes, slogans, and ceremonies.
Symbols
A symbol is an object, act, or event that conveys meaning to others. Symbols can be con-
sidered a rich, nonverbal language that vibrantly conveys the organization’s important
values concerning how people relate to one another and interact with the environment.45
For example, managers at a New York-based start-up that provides Internet solutions to
local television broadcasters wanted a way to symbolize the company’s unofficial mantra
of “drilling down to solve problems.” They bought a dented old drill for $2 and dubbed it
The Team Drill. Each month, the drill is presented to a different employee in recognition
of exceptional work, and the employee

personalizes the drill in some way before
passing it on to the next winner.46
Stories
A story is a narrative based on true events
and is repeated frequently and shared
among organizational employees. Sto-
ries paint pictures that help symbolize
the firm’s vision and values and help em- 2
Environment
ployees personalize and absorb them.47
A frequently told story at UPS concerns
an employee who, without authorization,
REUTERS/JP Moczulski
ordered an extra Boeing 737 to ensure
timely delivery of a load of Christmas
packages that had been left behind in the
holiday rush. As the story goes, rather
than punishing the worker, UPS re-
warded his initiative. By telling this story, Toyota’s handling of its 2010 recall crisis illustrates a para-
UPS workers communicate that the com- dox: A company can be a successful multinational but still
pany stands behind its commitment to not have a global corporate culture. Some observers characterize Toyota’s corporate
culture as parochial. They support this claim, in part, by pointing to the fact that President
worker autonomy and customer service.48 and CEO Akio Toyoda (pictured here painting an eye on a traditional Japanese doll) speaks
only limited English, despite having earned his MBA in the United States. Critics attribute the
company’s reticence to go public once it realized there were quality problems to its deep
Heroes roots in Japanese culture, which believes that airing dirty linen in public is impolite.
A hero is a figure who exemplifies the

deeds, character, and attributes of a
strong culture. Heroes are role models for employees to follow. Sometimes heroes are
real, such as the security supervisor who once challenged IBM’s chairman when she no-
ticed he wasn’t carrying the appropriate clearance identification to enter a security area.49
Heroes show how to do the right thing in the organization. Companies with strong cul-
tures take advantage of achievements to define heroes who uphold key values.
At 3M Corporation, top managers keep alive the image of heroes who developed proj-
ects that were killed by top management. One hero was a vice president who was fired ear-
lier in his career for persisting with a new product even after his boss had told him, “That’s
a stupid idea. Stop!” After the worker was fired, he would not leave. He stayed in an unused
office, working without a salary on the new product idea. Eventually he was rehired, the
idea succeeded, and he was promoted to vice president. The lesson of this hero as a major
element in 3M’s culture is to persist at what you believe in.50
Slogans
A slogan is a phrase or sentence that succinctly expresses a key corporate value. Many compa-
nies use a slogan or saying to convey special meaning to employees. The Ritz-Carlton adopted
the slogan, “Ladies and gentlemen taking care of ladies and gentlemen” to demonstrate its cul-
tural commitment to take care of both employees and customers. “We’re in the service busi-
ness, and service comes only from people. Our promise is to take care of them, and provide
a happy place for them to work,” said General Manager Mark DeCocinis, who manages the
Portman Hotel in Shanghai, recipient of the “Best Employer in Asia” award for three con-
secutive years.51 Cultural values can also be discerned in written public statements, such as
corporate mission statements or other formal statements that express the core values of the
organization. The mission statement for Hallmark Cards, for example, emphasizes values of
excellence, ethical and moral conduct in all relationships, business innovation, and corporate
social responsibility.52
Ceremonies
A ceremony is a planned activity at a special event that is conducted for the benefit of
an audience. Managers hold ceremonies to provide dramatic examples of company values.
Ceremonies are special occasions that reinforce valued accomplishments, create a bond
among people by allowing them to share an important event, and anoint and celebrate
heroes.53 In a ceremony to mark its 20th anniversary, Southwest Airlines rolled out a spe-
cialty plane it created called the “Lone Star One” that was designed like the Texas state flag
to signify the company’s start in Texas. Later, when the NBA chose Southwest Airlines as
the league’s official airline, Southwest launched another specialty plane, the “Slam Dunk
One,” designed in blue and orange with a large basketball painted toward the front of the
plane. Today, ten specialty planes celebrate significant milestones in Southwest’s history
and demonstrate key cultural values.54
Remember This
• Organizational culture is the set of key values, beliefs, • A hero is a figure who exemplifies the deeds, character,
understandings, and norms shared by members of an and attributes of a strong culture.
organization. • A slogan, such as Disney’s “The happiest place on
• A symbol is an object, act, or event that conveys mean- earth,” succinctly expresses a key corporate value.
ing to others. • Managers hold ceremonies, planned activities at special
• A story is a narrative based on true events and is events, to reinforce company values.
repeated frequently and shared among organizational
employees.
Types of Culture
A big influence on internal corporate culture is the external environment. Cultures can
vary widely across organizations; however, organizations within the same industry often
reveal similar cultural characteristics because they are operating in similar environments.55
The internal culture should embody what it takes to succeed in the environment. If the
external environment requires extraordinary customer service, the culture should encour-
age good service; if it calls for careful technical decision making, cultural values should
reinforce managerial decision making.
In considering what cultural values are important for the organization, managers con-
sider the external environment as well as the company’s strategy and goals. Studies suggest
that the right fit between culture, strategy, and the environment is associated with four cat-
egories or types of culture, as illustrated in Exhibit 3.7. These categories are based on two
dimensions: (1) the extent to which the external environment requires flexibility or stabil-
ity and (2) the extent to which a company’s strategic focus is internal or external. The four
categories associated with these differences are adaptability, achievement, involvement, and
consistency.56
Adaptability Culture
The adaptability culture emerges in an environment that requires fast response and
high-risk decision making. Managers encourage values that support the company’s ability
to rapidly detect, interpret, and translate signals from the environment into new behavior
Needs of the Environment

EXHIBIT 3.7
Flexibility Stability
Four Types of Corporate
Culture
External
Adaptability Achievement
Strategic Focus Culture Culture
Involvement Consistency
2
Environment
Culture Culture
Internal
SOURCES: Based on D. R. Denison and A. K. Mishra, “Toward a Theory of Organizational Culture and Effectiveness,”
Organization Science 6, no. 2 (March–April 1995): 204–223; R. Hooijberg and F. Petrock, “On Cultural Change: Using the
Competing Values Framework to Help Leaders Execute a Transformational Strategy,” Human Resource Management 32,
no.1 (1993): 29–50; and R. E. Quinn, Beyond Rational Management: Mastering the Paradoxes and Competing Demands of
High Performance (San Francisco: Jossey-Bass, 1988).
responses. Employees have autonomy to make decisions and act freely to meet new needs,
and responsiveness to customers is highly valued. Managers also actively create change by
encouraging and rewarding creativity, experimentation, and risk-taking. Lush Cosmetics,
a fast-growing maker of shampoos, lotions, and bath products made from fresh ingredi-
ents such as mangoes and avocados, provides a good example of an adaptability culture.
A guiding motto at the company is “We reserve the right to make mistakes.” Founder and
CEO Mark Constantine is passionately devoted to change and encourages employees to
break boundaries, experiment, and take risks. The company kills off one-third of its prod-
uct line every year to offer new and offbeat products.57 Other companies in the cosmetics
industry, as well as those involved in electronics, e-commerce, and fashion, often use an
adaptability culture because they must move quickly to respond to rapid changes in the
environment.
Achievement Culture
The achievement culture is suited to organizations concerned with serving specific
customers in the external environment but without the intense need for flexibility and
rapid change. This results-oriented culture values competitiveness, aggressiveness, per-
sonal initiative, and willingness to work long and hard to achieve results. An emphasis
on winning and achieving specific ambitious goals is the glue that holds the organiza-
tion together.58 Siebel Systems, now part of Oracle, thrived on an achievement culture.
Professionalism and aggressiveness were core values at Siebel. Employees were forbid-
den to eat at their desks or to decorate with more than one or two personal photo-
graphs. People who succeeded at Siebel were those who were focused, competitive, and
driven to win. Those who met stringent goals were richly rewarded; those who didn’t
were fired.59
Involvement Culture
The involvement culture emphasizes an internal focus on the involvement and par-
ticipation of employees to adapt rapidly to changing needs from the environment. This
culture places high value on meeting the needs of employees, and the organization may be
characterized by a caring, family-like atmosphere. Managers emphasize values such as co-
operation, consideration of both employees and customers, and avoiding status differences.
Consider the involvement culture at Valero, which is partly responsible for helping the
company become the top oil refinery in the United States.
Valero
Innovative Way
When Hurricane Katrina hit New Orleans in late August 2005, companies throughout the
region set their disaster plans into action. But few matched the heroic efforts put forth by
employees at Valero’s St. Charles oil refinery. Just eight days after the storm, the St. Charles
facility was up and running, while a competitor’s plant across the road was weeks away from
getting back online. During the same time period, St. Charles’s disaster crew managed to
locate every one of the plant’s 570 employees.
Part of the credit goes to Valero’s family-like, let’s-get-it-done-together culture, which has
given Valero a distinctive edge during an era of cutthroat global competition in the oil industry.
As former CEO Bill Greehey transformed Valero, once primarily a natural-gas-pipeline com-
pany, into the nation’s largest oil refinery business, he also instilled a culture where people
care about one another and the company. Many of the refineries Valero bought were old and
run-down. After buying a refinery, Greehey’s first steps would be to assure people their jobs
were secure, bring in new safety equipment, and promise employees that if they worked hard
he would put them first, before shareholders and customers. Employees held up their end of
the bargain, and so did Greehey.
Putting employees first has engendered amazing loyalty and dedication. When Greehey
visited the St. Charles facility after Katrina, he was surprised to be greeted at a giant tent
with a standing ovation. Even in the aftermath of a hurricane, employees had held to their
tradition of throwing a plantwide barbecue lunch whenever top managers visit a plant. “Right
now morale is so high in this refinery you can’t get at it with a space shuttle,” an electrical
superintendent at St. Charles said. “Valero has been giving away gas, chain saws, putting up
trailers for the employees.They’ve kept every employee paid. Other refineries shut down and
stopped paying. What else can you ask?”60
Some managers might think putting employees ahead of customers and share-
holders is nice, but not very good for business. But at Valero, a strong involvement
Would you rather work in an culture based on putting employees first has paid off in terms of high employee
organization with an adapt- performance and rising market share, profits, and shareholder value.
ability, achievement, involve-
ment, or consistency culture? Consistency Culture
Complete the New Manager
Self-Test to get an idea of The final category of culture, the consistency culture, uses an internal focus and
what type of culture you a consistency orientation for a stable environment. Following the rules and being
would be most comfortable thrifty are valued, and the culture supports and rewards a methodical, rational, or-
working in. derly way of doing things. In today’s fast-changing world, few companies operate in
a stable environment, and most managers are shifting toward cultures that are more
flexible and in tune with changes in the environment. However, one thriving com-
pany, Pacific Edge Software, successfully implemented elements of a consistency cul-
ture, ensuring that all its projects are on time and on budget. The husband-and-wife team of
Lisa Hjorten and Scott Fuller implanted a culture of order, discipline, and control from the
moment they founded the company. The emphasis on order and focus means employees can
generally go home by 6:00 p.m. rather than working all night to finish an important project.
Hjorten insists that the company’s culture isn’t rigid or uptight, just careful. Although some-
times being careful means being slow, so far Pacific Edge has managed to keep pace with the
demands of the external environment.61
Each of these four categories of culture can be successful. In addition, organizations
usually have values that fall into more than one category. The relative emphasis on vari-
ous cultural values depends on the needs of the environment and the organization’s focus.
Managers are responsible for instilling the cultural values the organization needs to be
successful in its environment.
Culture Preference
New Manager Self-Test

The fit between a new manager and organizational culture can determine success and satisfaction. To under-
stand your culture preference, rank the items below from 1 to 8 based on the strength of your preference
(1 = strongest preference).
1. The organization is very personal, much like an 5. Management style is characterized by team-
extended family. work and participation. 2
Environment
2. The organization is dynamic and changing, 6. Management style is characterized by innova-
where people take risks. tion and risk-taking.
3. The organization is achievement oriented, with 7. Management style is characterized by high per-
the focus on competition and getting jobs done. formance demands and achievement.
4. The organization is stable and structured, with 8. Management style is characterized by security
clarity and established procedures. and predictability.
Scoring and Interpretation: Each question A lower score means a stronger culture preference.
pertains to one of the four types of culture in You will likely be more comfortable and more effec-
Exhibit 3.7. To compute your preference for each tive as a new manager in a corporate culture that is
type of culture, add together the scores for each compatible with your personal preferences. A higher
set of two questions as follows: score means the culture would not fit your expec-
tations, and you would have to change your style
Involvement culture—total for questions 1, 5: _____ and preference to be comfortable. Review the text
discussion of the four culture types. Do your cultural
Adaptability culture—total for questions 2, 6: _____ preference scores seem correct to you? Can you
think of companies that fit your culture preference?
Achievement culture—total for questions 3, 7: _____
SOURCE: Adapted from Kim S. Cameron and Robert D. Quinn,
Diagnosing and Changing Organizational Culture (Reading, MA:
Consistency culture—total for questions 4, 8: _____
Addison-Wesley, 1999).
Remember This
• For the organization to be effective, corporate culture • An achievement culture is a results-oriented culture
should be aligned with organizational strategy and the that values competitiveness, personal initiative, and
needs of the external environment. achievement.
• Organizations within the same industry often reveal • A culture that places high value on meeting the needs
similar cultural characteristics because they are operat- of employees and values cooperation and equality is an
ing in similar environments. involvement culture.
• The adaptability culture is characterized by values that • A consistency culture values and rewards a methodical,
support the company’s ability to interpret and translate rational, orderly way of doing things.
signals from the environment into new behavior responses.
Shaping Corporate Culture for

Innovative Response
Research conducted by a Stanford University professor indicates that the one factor that
increases a company’s value the most is people and how they are treated.62 In addition, sur-
veys show that CEOs often cite organizational culture as their most important mechanism
for attracting, motivating, and retaining talented employees, a capability considered the
single best predictor of overall organizational excellence.63 In a survey of Canadian senior
executives, fully 82 percent believe a direct correlation exists between culture and financial
performance.64
Corporate culture plays a key role in creating an organizational climate that enables
learning and innovative responses to threats from the external environment, challenging
new opportunities, or organizational crises. However, managers realize they can’t focus all
their effort on values; they also need a commitment to solid business performance.
Managing the High-Performance

“If you see your job not as chief Culture
Companies that succeed in a turbulent world are those that
strategy officer and the guy who pay careful attention to both cultural values and business
has all the ideas, but rather as performance. Cultural values can energize and motivate em-
ployees by appealing to higher ideals and unifying people
the guy who is obsessed with around shared goals. In addition, values boost performance
enabling employees to create by shaping and guiding employee behavior, so that everyone’s
actions are aligned with strategic priorities.65 Exhibit 3.8 il-
value, I think you will succeed.” lustrates four organizational outcomes based on the relative
attention managers pay to cultural values and business per-
— VINEET NAYAR, CHIEF EXECUTIVE OF HCL TECHNOLOGIES
formance.66 A company in Quadrant A pays little attention to
either values or business results and is unlikely to survive for
long. Managers in Quadrant B organizations are highly focused on creating a strong cohesive
culture, but they don’t tie organizational values directly to goals and desired business results.
When cultural values aren’t connected to business performance, they aren’t likely to benefit
the organization during hard times. The corporate culture at The LEGO Group headquarters
in Billund, Denmark, nearly doomed the toymaker in the 1990s when sales plummeted as
children turned away from traditional toys to video games. Imagination and creativity, not busi-
ness performance, were what guided Lego. The attitude among employees was, “We’re doing
great stuff for kids—don’t bother us with financial goals.” New CEO Jørgen Vig Knudstorp
upended the corporate culture with a new employee motto: “I am here to make money for the
company.” The shift to bottom-line results had a profound impact, and Lego has become one of
the most successful companies in the toy industry.67
Quadrant C represents organizations that are focused primarily on bottom-line results
The idea for this vertical fashion and pay little attention to organizational values. This approach may be profitable in the
show at Rockefeller Center, where short run, but the success
an acrobatic rappelling troupe
walked down the side of a building, is difficult to sustain over
was born in Target’s high per- the long term because the
formance culture.Target has “glue” that holds the orga-
quarterly Big Idea internal contests nization together—that is,
in which departments compete
for additional budget allocations shared cultural values—is
Paul Hawthorne/Getty Images
awarded for innovative ideas.The missing. Think about the

fun, creative competition encour- numerous get-rich-quick
ages a sense of employee owner- goals of dot-com entrepre-
ship and reinforces shared values.
Tapping into employee talent helps neurs. Thousands of com-
Target meet its mission of providing panies that sprang up in
customers with more for less. the late 1990s were aimed
High
Good for short-term Both bottom-line results EXHIBIT 3.8
bottom line, but is it and inspiration. Combining Culture and
sustainable? Sustainable success via Performance
a high-performance
culture.
Attention to C D
Business
May be going out of Strong culture is good 2
Environment
Performance
business. for morale, but can
Little emphasis on managers afford to keep
results or values. it up without business
results?
A B
Low
Low High
Attention to Values
SOURCE: Adapted from Jeff Rosenthal and Mary Ann Masarech, “High-Performance Cultures: How Values Can Drive Business
Results,” Journal of Organizational Excellence (Spring 2003): 3–18.
primarily at fast growth and quick profits, with little effort to build a solid organization based
on long-term mission and values. When the crash came, these companies failed. Those that
survived were typically companies with strong cultural values that helped them weather the
storm. For example, Amazon.com managers paid careful attention to organizational culture,
as did smaller e-commerce companies like Canada’s Mediagrif Interactive Technologies, an
online B2B brokerage that allows businesses to meet online and trade their goods.68
Finally, companies in Quadrant D put high emphasis on both culture and solid busi-
ness performance as drivers of organizational success. Managers in these organizations
align values with the company’s day-to-day operations—hiring practices, performance
management, budgeting, criteria for promotions and rewards, and so forth. A study of
corporate values by Booz Allen Hamilton and the Aspen Institute found that manag-
ers in companies that report superior financial results typically put a high emphasis on
values and link them directly to the way they run the organization.69 A good example is
the fast-growing Umpqua Bank, which expanded from 11 branches and $140 million in
assets to 92 branches and $5 billion in assets over a period of nine years. At Umpqua,
every element of the culture focuses on serving customers, and every aspect of opera-
tions reflects the cultural values. Consider training programs. To avoid the “it’s not my
job” attitude that infects many banks, managers devised the “universal associate” pro-
gram, which trains every bank staffer in every task, so that a teller can take a mortgage
application and a loan officer can process your checking account deposit. Employees are
empowered to make their own decisions about how to satisfy customers, and branches
have free reign to devise unique ways to coddle the clientele in their particular location.
Umpqua also carefully measures and rewards the cultural values it wants to maintain.
The bank’s executive vice president of cultural enhancement devised a software program
that measures how cultural values are connected to performance, which the bank calls
“return on quality” (ROQ). The ROQ scores for each branch and department are posted
every month, and they serve as the basis for determining incentives and rewards.70
Quadrant D organizations represent the high-performance culture, a culture that
(1) is based on a solid organizational mission or purpose, (2) embodies shared adaptive
values that guide decisions and business practices, and (3) encourages individual em-
ployee ownership of both bottom-line results and the organization’s cultural backbone.71
One of the most important things managers do is create and influence organizational
culture to meet strategic goals because culture has a significant impact on performance. In
Corporate Culture and Performance, Kotter and Heskett provided evidence that companies
that intentionally managed cultural values outperformed similar companies that did not.
Recent research validated that some elements of corporate culture are positively corre-
lated with higher financial performance.72 A good example is Caterpillar Inc. Caterpillar
developed a Cultural Assessment Process (CAP) to measure and manage how effectively
the culture contributes to organizational effectiveness. The assessment gave top execu-
tives hard data documenting millions of dollars in savings attributed directly to cultural
factors.73
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 to ensure that employees
understand the new culture values, and they signal these values in actions as well as words.
A cultural leader defines and uses signals and symbols to influence corporate culture.
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. Values are tied to a clear and compelling mission, or core purpose.
2. The cultural leader heeds the day-to-day activities that reinforce the cultural vision. The
leader makes sure that work procedures and reward systems match and reinforce the
values. Actions speak louder than words, so cultural leaders “walk their talk.”74
Managers widely communicate the cultural values through words and actions. Values
statements that aren’t reinforced by management behavior are meaningless or even harmful
for employees and the organization. Whole Foods founder and CEO John Mackey wants
his managers to place more value on creating “a better person, company, and world” than
on pursuing personal financial gain. To demonstrate his personal commitment to this belief,
he asked the board of directors to donate all his future stock options to the company’s two
foundations, the Animal Compassion Foundation and the Whole Planet Foundation.75
Cultural leaders also uphold their commitment to values during difficult times or crises,
as illustrated by the example of Bill Greehey at Valero earlier in this chapter. On Fortune
magazine’s list of 100 Best Companies to Work For, Valero zoomed from Number 23 to
Number 3 based on its treatment of employees following the devastating 2005 hurricanes.
Despite the costs, Valero kept people on the payroll throughout the crisis, set up special
booths to feed volunteers, and donated $1 million to the American Red Cross for hurricane
relief efforts.76 Upholding the cultural values helps organizations weather a crisis and come
out stronger on the other side. Creating and maintaining a high-performance culture is not
easy in today’s turbulent environment and changing workplace, but through their words—
and particularly their actions—cultural leaders let everyone in the organization know what
really counts.
Remember This
• Managers emphasize both values and business results to • Managers create and sustain adaptive high-performance
create a high-performance culture. cultures through cultural leadership.
• Culture enables solid business performance through the • Cultural leaders define and articulate important values
alignment of motivated employees with the mission and that are tied to a clear and compelling mission, which they
goals of the company. communicate widely and uphold through their actions.
ch3 Discussion Questions
1. How can you prepare yourself to become an effective manager 7. Many companies are “going green” or adopting environ-
in an increasingly uncertain global business environment? mentally friendly business strategies. Clorox, for example,
2. Would the task environment for a cellular phone company now offers an eco-friendly household cleaner called Green
contain the same elements as that for a government welfare Works. How do companies benefit from going green?
agency? Discuss. 8. Cultural symbols are usually noticed through sight, sound,
touch, and smell. For example, Abercrombie retail stores
3. What do you think are the most important forces in
the external environment creating uncertainty for organi- use music, attractive models, and fragrance to communicate 2
Environment
zations today? Do the forces you identified typically arise elements of its retail store culture. Why are symbols impor-
in the task environment or the general environment? tant to a corporate culture?
4. Contemporary best-selling management books often argue 9. Both China and India are rising economic powers. How
that customers are the most important element in the might your approach to doing business with Communist
external environment. Do you agree? In what company China be different from your approach to doing business
situations might this statement be untrue? with India, the world’s most populous democracy? In
which country would you expect to encounter the most
5. Why do you think many managers are surprised by rules? The most bureaucracy?
environmental changes and hence are less able to help their
10. General Electric is famous for firing the lowest-
organizations adapt?
performing 10 percent of managers each year. With its
6. Why are interorganizational partnerships so important for strict no-layoff policy, Valero Energy believes people need
today’s companies? What elements in the current environ- to feel secure in their jobs to perform their best. Yet both
ment might contribute to either an increase or a decrease in are high-performing companies. How do you account for
interorganizational collaboration? Discuss. the success of such opposite philosophies?
ch3 Apply Your Skills: Experiential Exercise
Working in an Adaptability Culture77 6. Management above me took action on recommendations

Think of a specific full-time job you have held. Please answer made from people at my level.
the following questions according to your perception of the 1 2 3 4 5
managers above you in that job. Circle a number on the 1–5 7. Management rewarded me for correcting problems.
scale based on the extent to which you agree with each state- 1 2 3 4 5
ment about the managers above you: 5 Strongly agree; 4 Agree;
3 Neither agree nor disagree; 2 Disagree; 1 Strongly disagree. 8. Management clearly expected me to improve work unit
procedures and practices.
1 2 3 4 5
1. Good ideas got serious consideration from management
above me. 9. I felt free to make recommendations to management above
1 2 3 4 5 me to change existing practices.
1 2 3 4 5
2. Management above me was interested in ideas and
suggestions from people at my level in the organization. 10. Good ideas did not get communicated upward because
1 2 3 4 5 management above me was not very approachable.
1 2 3 4 5
3. When suggestions were made to management above me,
they received fair evaluation.
Scoring and Interpretation
1 2 3 4 5
To compute your score: Subtract each of your scores for ques-
4. Management did not expect me to challenge or change the tions 4 and 10 from 6. Using your adjusted scores, add the
status quo.
numbers for all 10 questions to give you the total score. Divide
1 2 3 4 5 that number by 10 to get your average score: ______.
5. Management specifically encouraged me to bring about im- An adaptability culture is shaped by the values and actions
provements in my workplace. of top and middle managers. When managers actively encourage
1 2 3 4 5 and welcome change initiatives from below, the organization will
be infused with values for change. These ten questions measure Thinking about this job, is the level of management openness
your management’s openness to change. A typical average score to change correct for the organization? Why? Compare your scores
for management openness to change is about 3. If your aver- to those of another student, and take turns describing what it was
age score was 4 or higher, you worked in an organization that like working for the managers above your jobs. Do you sense a re-
expressed strong cultural values of adaptation. If your average lationship between job satisfaction and your management’s open-
score was 2 or below, the culture was probably not an adaptabil- ness to change? What specific management characteristics and
ity culture. corporate values explain the openness scores in the two jobs?
ch3 Apply Your Skills: Small Group Breakout
Organizational Culture in the Step 3. Try to group the norms by common themes, and give
Classroom and Beyond each group of norms a title. Decide as a group which norms are
Step 1. Write down the norms that you believe to be most important for regulating student behavior in each location.
operating in the following places: (1) in most of your courses, Step 4. As a group, analyze the source or origin of each
(2) in formal social groups such as fraternities and sororities, of the more important norms. Does the norm originate in
and (3) in student clubs or school-sponsored organizations. the environment, from a leader, or elsewhere? Can you find
Use your personal experience in each place and consider the any examples of norms that are expressed but not followed,
norms. Some norms are implicit, so you may have to think which means that people do not “walk the talk” of the norms?
carefully to identify them. Other norms may be explicit. Step 5. What did you learn about cultural norms that
Step 2. After you have developed your lists, divide into groups exist in organizations and social groups? How is it helpful
of four to six students to discuss norms. Each student should to make explicit those aspects of organization culture that
share with the group the norms identified for each of the assigned are typically implicit? Who should be responsible for set-
places. Make a list of norms for each place and brainstorm any ad- ting norms in your courses or in student social groups and
ditional norms that you and fellow group members can think of. organizations?
ch3 Apply Your Skills: Ethical Dilemma
Competitive Intelligence Predicament78 clear company policies or regulations that offered any guidance.
Miquel Vasquez was proud of his job as a new product manager His sense of fair play told him that to use the information was
for a biotechnology start-up, and he loved the high stakes and unethical, if not downright illegal. What bothered him even more
tough decisions that went along with the job. But as he sat in his was the knowledge that this kind of thing might happen again.
den after a long day, he was troubled, struggling over what had Using this confidential information would certainly give him and
happened earlier that day and the information he now possessed. his company a competitive advantage, but Miquel wasn’t sure he
Just before lunch, Miquel’s boss had handed him a stack of wanted to work for a firm that would stoop to such tactics.
private strategic documents from their closest competitor. It was a
competitive intelligence gold mine—product plans, pricing strate-
gies, partnership agreements, and other documents, most clearly What Would You Do?
marked “proprietary and confidential.” When Miquel asked where 1. Go ahead and use the documents to the company’s ben-
the documents came from, his boss told him with a touch of pride efit, but make clear to your boss that you don’t want him
that he had taken them right off the competing firm’s server. “I got passing confidential information to you in the future. If he
into a private section of their intranet and downloaded everything threatens to fire you, threaten to leak the news to the press.
that looked interesting,” he said. Later, realizing Miquel was suspi- 2. Confront your boss privately and let him know you’re
cious, the boss would say only that he had obtained “electronic ac- uncomfortable with how the documents were obtained and
cess” via a colleague and had not personally broken any passwords. what possession of them says about the company’s culture.
Maybe not, Miquel thought to himself, but this situation wouldn’t In addition to the question of the legality of using the in-
pass the 60 Minutes test. If word of this acquisition of a competi- formation, point out that it is a public relations nightmare
tor’s confidential data ever got out to the press, the company’s waiting to happen.
reputation would be ruined. 3. Talk to the company’s legal counsel and contact the Society
Miquel didn’t feel good about using these materials. He spent of Competitive Intelligence Professionals for guidance. Then,
the afternoon searching for answers to his dilemma, but found no with their opinions and facts to back you up, go to your boss.
ch3 Apply Your Skills: Case for Critical Analysis
Rio Grande Supply Company79 spending hours at work visiting pornographic sites, the more
Jasper Hennings, president of Rio Grande Supply Company, explicit the better. Jasper was stunned. After a few speechless
knew full well that a company’s top executives were largely minutes, he told Henry to take the rest of the day off, go home,
responsible for determining a firm’s corporate culture. That’s and think things over.
why he took such personal pride in the culture of his Texas- The president himself needed the afternoon to gather his
based wholesale plumbing supply company. It didn’t just pay wits. How should he handle this turn of events? On the one
lip service to the values it espoused: integrity, honesty, and a hand, Henry’s immediate dismissal of the woman who’d tapped 2
Environment
respect for each individual employee. His management team set into another employee’s e-mail when the operations chief was
a good example by living those principles. At least that’s what violating the Internet policy himself was hypocritical, to say the
he’d believed until the other day. least. The person charged with enforcing that policy needed to
The importance Jasper attached to respecting each indi- be held to the highest standards. On the other hand, Jasper knew
vidual was apparent in the company’s Internet use policy. It was that Rio Grande employees routinely used computers at their
abundantly clear that employees weren’t to use Rio Grande’s desks to check personal e-mail, do banking transactions, check
computers for anything but business-related activities. How- the weather, or make vacation arrangements. The company had
ever, Jasper himself had vetoed the inclusion of what was turned a blind eye because it didn’t seem worth the effort of
becoming a standard provision in such policies that manage- enforcing the hard-and-fast policy for such minor infractions. Be-
ment had the right to access and review anything employees sides, Henry was a valued, if clearly troubled, employee. Replacing
created, stored, sent, or received on company equipment. He him would be costly and difficult. If Jasper decided to keep him
cut short any talk of installing software filters that would on, the president clearly had no choice but to cross the line and get
prevent abuse of the corporate computer system. Still, the involved in Henry’s private life, and he would be treating Darger
company reserved the right to take disciplinary action, includ- differently from the treatment the female employee received.
ing possible termination, and to press criminal charges if an When he met with Henry again first thing in the morning,
employee was found to have violated the policy. he needed to have a plan of action.
So how was he to square his cherished assumptions about
his management team with what he’d just discovered? Henry Questions
Darger, his hard-working chief of operations and a member of 1. What environmental factors have helped to create the situ-
his church, had summarily fired a female employee for having ac- ation Jasper Hennings faces? What factors does Jasper need
cessed another worker’s e-mail surreptitiously. She hadn’t taken to consider when deciding on his course of action?
her dismissal well. “Just ask Darger what he’s up to when he shuts 2. Analyze Rio Grande’s culture. In addition to the expressed
his office door,” she snarled as she stormed out of Jasper’s office. cultural values and beliefs, what other subconscious values
She made what Jasper hoped was an idle threat to hire a lawyer. and beliefs do you detect? Are conflicting values present?
When Jasper asked Henry what the fired employee could When values are in conflict, how would you decide which
possibly have meant, tears began to roll down the operations ones take precedence?
chief ’s face. He admitted that ever since a young nephew had 3. Assume you are Jasper. What are the first two action steps
committed suicide the year before and a business he’d helped you would take to handle the Henry Darger situation?
his wife start had failed, he’d increasingly been seeking escape How would your role as a cultural leader influence your
from his troubles by logging onto adult pornography sites. decision? What message will your solution send to the
At first, he’d indulged at home, but of late he’d found himself other managers and rank-and-file employees?
ch3 On the Job and BizFlix Video Cases
Students, to access the On the Job and BizFlix video cases for At the CengageBrain.com home page, search for the ISBN of
this and all chapters, visit the CourseMate web site or, if you do your title (from the back cover of your book) using the search
not have access to CourseMate, ask your instructor for a copy box at the top of the page. This will take you to the product
of the cases. page where free companion resources can be found. Please feel
Instructors, to access the On the Job and BizFlix video free to share the cases with your students for use in classroom
cases for this and all chapters, visit www.cengagebrain.com. discussion.
Endnotes
Chapter 1 28, 2009; Robin Sidel and Kate “Causes and Consequences of Mana-
Kelly, “Bear Stearns a Year Later: gerial Failure in Rapidly Changing
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research findings reported in Linda A. Name, and Culture, Fade Away 50 (2007): 145–155.
Hill, Becoming a Manager: How New After J.P. Morgan’s Fire-Sale Deal,” 20. Paul Sonne, “The Gulf Oil Spill:
Managers Master the Challenges of The Wall Street Journal, March 14, Hayward Fell Short of Modern
Leadership, 2nd ed. (Boston, MA: 2009; Joyce Routson, “Risk Taking Is CEO Demands,” The Wall Street
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2003); and John J. Gabarro, The Chase,” Stanford GSB News, January 21. Longenecker et al., “Causes and
Dynamics of Taking Charge (Boston, 2009, http://www.gsb.stanford Consequences of Managerial Failure
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7. Richard Siklos, “Bob Iger Rocks ers: The Bosses That Drove Me Value of Middle Management,”
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Kotter, “What Effective General Leadership, 2nd ed. (Boston, MA: Glasgow Airport Boss with Heading
Managers Really Do,” Harvard Harvard Business School Press, the City’s Chamber of Commerce,”
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Morrison, and Robert L. Hannan, in White, “Learning to Be the Boss”; of the CEO: Understanding the
“Studies of Managerial Work: and Belker and Topchik, The First- Executive Experience,” Academy of
Results and Methods,” Technical Time Manager. Management Executive 4 (August
Report No. 9, Center for Creative 37. Jeanne Whalen, “Chance Turns a 1990): 36–48.
Leadership, Greensboro, NC, 1978. Teacher into a CEO; Religion Lec- 49. Dan Fitzpatrick and Damian Paletta,
32. Alison M. Konrad, Roger Kashlak, turer Leaves Academic Path and “Mr. Moynihan Gives Bank of
Izumi Yoshioka, Robert Waryszak, Learns to Run a Biotech Start-Up” America a Washington
and Nina Toren, “What Do Man- (Theory & Practice column), The Presence,” The Wall Street Journal
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by first-time managers, see Linda A. 40. Based on Damien Cave, “A Tall 50. Guy Chazan and Monica Langley,
Hill, “Becoming the Boss,” Harvard Order for a Marine: Feeding the “Dudley Faces Daunting To-Do
Business Review ( January 2007): Hand That Bit You,” The New York List,” The Wall Street Journal Europe,
49–56; Loren B. Belker and Gary S. Times, December 30, 2007. July 27, 2010.
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A Practical Guide to the Management 42. Carol Hymowitz, “Packed Calendars Drucker, Managing the Non-
of People, 5th ed. (New York: Rule,” The Asian Wall Street Journal, Profit Organization: Principles and
AMACOM, 2005); J. W. Lorsch June 16, 2009; and “The 18-Hour Practices (New York: HarperBusi-
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sionals Have to Manage,” Harvard (March–April 2008): 20. Managing a Nonprofit Organization
Business Review ( July–August 1987): 43. Adam Shell, “CEO Profile: Casting (New York: Fireside/Simon &
78–83; R. A. Webber, Becoming a a Giant (New Jersey) Net,” USA Schuster, 1990).
586 Endnotes
52. Christine W. Letts, William P. Ryan, 61. Based on Doug Wallace, “A Talent Industry,” Industrial Management
and Allen Grossman, High Per- for Mismanagement: What Would (March–April 2009): 20–24.
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(New York: Wiley & Sons, 1999), ber–December 1992): 3–4. tory: Issues and Ideas for Teaching
pp. 30–35. 62. Based on Lawrence R. Rothstein, and Research,” Journal of Management
53. Carol Hymowitz, “In Sarbanes- “The Empowerment Effort That 13 (1987): 339–350.
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54. Eilene Zimmerman, “Your True 1. This questionnaire is from William Century.”
Calling Could Suit a Nonprofit,” Pfeiffer and John E. Jones, eds., 12. The following is based on Wren,
(interview, Career Couch column) “Supervisory Attitudes: The X–Y Evolution of Management Thought,
The New York Times, April 6, 2008. Scale,” The 1972 Annual Handbook chapters 4, 5; and Claude S. George,
55. This section is based on “The New for Group Facilitators (New York: John Jr., The History of Management
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pany,” The Economist (January 21, 2006); This material is used by permission Prentice-Hall, 1968), chapter 4.
Harry G. Barkema, Joel A. C. Baum, of John Wiley & Sons, Inc. The X–Y 13. Cynthia Crossen, “Early Industry
and Elizabeth A. Mannix, “Manage- scale was adapted from an instru- Expert Soon Realized a Staff Has Its
ment Challenges in a New Time,” ment developed by Robert N. Ford of Own Efficiency,” The Wall Street Jour-
Academy of Management Journal AT&T for in-house manager training. nal, November 6, 2006.
45, no. 5 (2002): 916–930; Michael 2. Eric Abrahamson, “Management 14. Alan Farnham, “The Man Who
Harvey and M. Ronald Buckley, “As- Fashion,” Academy of Management Changed Work Forever,” Fortune
sessing the ‘Conventional Wisdoms’ Review 21, no. 1 ( January 1996): ( July 21, 1997): 114; Charles D.
of Management for the 21st Century 254–285. Also see “75 Years of Wrege and Ann Marie Stoka,
Organization,” Organizational Dy- Management Ideas and Practice,” a “Cooke Creates a Classic: The Story
namics 30, no. 4 (2002): 368–378; supplement to the Harvard Business Behind F. W. Taylor’s Principles of
and Toby J. Tetenbaum, “Shifting Review (September–October 1997), Scientific Management,” Academy
Paradigms: From Newton to Chaos,” for a broad overview of historical of Management Review (October
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56. Caroline Ellis, “The Flattening Management Thought, 4th ed. (New Taylor and the Enigma of Efficiency
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ment Review (Summer 2003): 5. 4. Based on Stephanie Armour, “The X and Y Factors: What Goes
57. Andrea Coombes, “Seeking Loyal, “Generation Y: They’ve Arrived at Around Comes Around,” special sec-
Devoted Workers? Let Them Stay Work with a New Attitude,” USA tion in “The New Organisation:
Home,” The Wall Street Journal, Today, November 6, 2005, www A Survey of the Company,” The
September 11, 2007; Christopher .usatoday.com/money/workplace/ Economist ( January 21–27, 2006):
Rhoads and Sara Silver, “Working 2005-11-06-gen-y_x.htm (accessed 17–18.
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Street Journal, December 29, 2005; Green, “Beware and Prepare: The Thought, 171; and George, History of
and Kelley Holland, “When Work Government Workforce of the Management Thought, 103–104.
Time Isn’t Face Time,” The New York Future,” Public Personnel Manage- 16. Vanessa O’Connell, “Stores Count
Times, December 3, 2006. ment (Winter 2000): 435ff. Seconds to Trim Labor Costs,” The
58. Kerr Inkson, Angela Heising, and 5. Jena McGregor, “‘There Is No More Wall Street Journal, November 17,
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ing Industry Analysts, in “How to Dominates World Bank Meet,” India 20 & 27, 2007): 58–60.
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Spirit of Capitalism, trans. Talcott 1940); Arnold, Business-Week, Mile- 35. Douglas McGregor, The Human Side
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UPS Doesn’t Just Deliver,” USA and Theories of Authority,” Cecil H. Bell Jr., and Robert A.
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78–83; Scott Kirsner, “Venture Vé- Mystery: The First Complete History (Boston: Houghton Mifflin,
rité: United Parcel Service,” Wired Account of the Origin of the 1986), chapters 10, 11; and Alex
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The Atlanta Journal and Constitution, Contributions of Charles E. Snow Heritage and BusinessWeek, The
April 26, 1992; Kathy Goode, Betty and Homer Hibarger,” paper pre- American Heritage History of Ameri-
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UPS,” UPS corporate Web site, Bolton, and Regina A. Greenwood, Sloan, Michael Porter, and Peter
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Management Institute, 1930); Henri the Worker (Cambridge, MA: Har- 41. Dan Heath and Chip Heath, “In De-
Fayol, General and Industrial Man- vard University Press, 1939). fense of Feelings: Why Your Gut Is
agement, trans. Constance Storrs 30. H. M. Parson, “What Happened at More Ethical Than Your Brain,” Fast
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Week, Milestones in Management thorne Effect: A Reconsideration of a New Breed of Math Whizzes
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Dobbins, and Oscar S. Fowler, Man- Diaper, “The Hawthorne Effect: A Practice, Stock Formulas Weren’t Per-
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Group Organization: The Solution Half Century Later,” 219–221. Jonas, “General Systems Theory: A
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Longmans, Green, 1918); and Mary Management and the Worker. Human Biology 23 (December 1951):
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(London: Longmans, Green, 1924). Stearns, Management, 2nd ed. “General Systems Theory—The
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The Collected Papers of Mary Parker 34. Tausky, Work Organizations: Major 44. This section is based on Peter M.
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588 Endnotes
and Practice of the Learning Orga- 52. Darrell Rigby, “Management Tools of Complexity (San Francisco: Jossey-
nization (New York: Doubleday, Survey 2003: Usage Up as Com- Bass, 2001).
1990); John D. Sterman, “Systems panies Strive to Make Headway in 2. Josh Kosman, “Call It Block-
Dynamics Modeling: Tools for Tough Times,” Strategy & Leadership Busted—Troubled Video Rental
Learning in a Complex World,” Cali- 31, no, 5 (2003): 4–11. Chain Talks about Bankruptcy,” New
fornia Management Review 43, no. 53. Study reported in Phred Dvorak, York Post, March 18, 2010; “Video
4 (Summer 2001): 8–25; and Ron “Why Management Trends Quickly Store Going the Way of the
Zemke, “Systems Thinking,” Training Fade Away (Theory and Practice col- Milkman,” Herald, March 7, 2010;
(February 2001): 40–46. umn), The Wall Street Journal, June Anthony Clark and Andrea
45. This example is cited in Sterman, 26, 2006. Rumbaugh, “Did Netflix Kill the
“Systems Dynamics Modeling.” 54. Andy Reinhardt, “From Gearhead to Video Store?” Gainesville Sun, June
46. Fred Luthans, “The Contingency Grand High Pooh-Bah,” BusinessWeek 3, 2010; and Darrell Smith, “Video
Theory of Management: A Path Out (August 28, 2000): 129–130. Stores Fall Prey to the Web; More
of the Jungle,” Business Horizons 16 55. Definition based on Steven A. Outlets Are Closing Their Doors,”
( June 1973): 62–72; and Fremont E. Melnyk and David R. Denzler, Oper- The Sacramento Bee, April 23, 2010.
Kast and James E. Rosenzweig, ations Management: A Value Driven 3. This section is based on Richard L.
Contingency Views of Organization Approach (Burr Ridge, IL: Richard Daft, Organization Theory and
and Management (Chicago: Science D. Irwin, 1996): 613. Design, 10th ed. (Cincinnati, OH:
Research Associates, 1973). 56. Global Supply Chain Games project, South-Western, 2010), pp. 140–143.
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Eclecticism: Current Organizational Jackson, and John W. Slocum Jr., 6. Google Web site, http://www.google
Trends and the Evolution of Mana- Managing: A Competency-Based .com (accessed February 7, 2008).
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49. Jeremy Main, “How to Steal the Best 59. Based on Betty Harrigan, “Career ( June 20, 2005): 87–90.
Ideas Around,” Fortune (October 19, Advice,” Working Woman ( July 8. Brook Barnes, “Will Disney Keep
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“Management Tools and Trends CNA Insurance Created a KM 9. William B. Johnston, “Global Work
2009,” Bain & Company Inc., Culture,” CIO Magazine, September Force 2000: The New World Labor
2009, http://www.bain.com 1, 2002, http://www.cio.com Market,” Harvard Business Review
/management_tools/home.asp /archive/090102/underwriting (March–April 1991): 115–127.
(accessed March 10, 2010). .html (accessed July 9, 2010); and 10. Sara Lin, “Designing for the Senior
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Prusak, with Jim Wilson, What’s the “Preserving Knowledge in an April 25, 2008.
Big Idea? Creating and Capitalizing Uncertain World,” MIT Sloan 11. Ibid.
on the Best Management Thinking Management Review (Fall 2001): 12. U.S. Census Bureau, “The Face of
(Boston, MA: Harvard Business 101–102. Our Population,” U.S. Census
School Press, 2003); Theodore Bureau, 2008, http://factfinder.census
Kinni, “Have We Run out of Big .gov/jsp/saff/SAFFInfo.jsp?_pageId
Ideas?” Across the Board (March–
Chapter 3
5tp9_race_ethnicity (accessed
April 2003): 16–21, Hamel, “The 1. These questions are based on ideas January 28, 2008).
Why, What, and How of Manage- from R. L. Daft and R. M. Lengel, 13. “You Raised Them, Now Manage
ment Innovation”; and Joyce Fusion Leadership (San Francisco: Them,” Fortune (May 28, 2007): 38–46.
Thompson Heames and Michael Berrett Koehler, 2000): chapter 4; B. 14. Ian Mount, “And Seven Businesses
Harvey, “The Evolution of the Con- Bass and B. Avolio, Multifactor Leader- That Did Not Survive,” The New
cept of the Executive from the 20th ship Questionnaire, 2nd ed. (Menlo York Times, December 31, 2009.
Century Manager to the 21st Cen- Park, CA: Mind Garden, Inc., 2004); 15. Ibid.
tury Global Leader,” Journal of Lead- and Karl E. Weick and Kathleen M. 16. Samuel Loewenberg, “Europe Gets
ership and Organizational Studies 13, Sutcliffe, Managing the Unexpected: Tougher on U.S. Companies,” The
no. 2 (2006): 29–41. Assuring High Performance in an Age New York Times, April 20, 2003.
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Just IBM’s First Name,” Business- thropology: An Applied Perspective, Corruption,” The Washington Post,
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Work Is Going Abroad,” The New nal, May 11, 2010; and G. Bowley dimensions, see “Retrospective:
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ligence is based on P. Christopher 10: Where Do We Go From Here?” December 10, 2003.
Earley and Elaine Mosakowski, The Nation (February 2, 2004): 11; 79. Alison Stein Wellner, “Turning the
“Cultural Intelligence,” Harvard Busi- Geri Smith and Cristina Lindblad, Tables,” Inc. (May 2006): 55–59.
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594 Endnotes
“Global Business: Emerging Lessons,” Life Unravel,” The Wall Street 9. Dan Tracy, “Blood-Bank Chief ’s
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Cheap Luxury,” The Wall Street Jour- Efrati, “Law School Rankings Re- Journal, June 27, 2008.
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Sees the World As Its Client,” The Street Journal, August 26, 2008. Fidler, “School for Scandal,” The Wall
New York Times, December 12, 2009. 3. Nicholas Casey, “Corporate News: Street Journal, May 16–17, 2009.
84. Based in part on “How Well Do You Ex-American Apparel Accountant 13. CBS News reports, as discussed
Exhibit Good Inter-cultural Manage- Sues; Plaintiff Claims He Was Fired in Deborah L. Rhode and Amada
ment Skills?” in John W. Newstrom after Refusing to Inflate Balance- K. Packet, “Ethics and Nonprofits,”
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602 Endnotes
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604 Endnotes
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and Company Performance: An Managing with Style: A Guide to Rigs,” The Wall Street Journal, May
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13–28; and P. C. Nutt, “Surprising ness School Press, 1999); Max H. Quality of the Best Idea” by Karen
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gies: Ursula Burns,” Fortune (May preserve the organization’s anonymity. Bureaucratic Accountability and
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Chapter 10 Dive, “When Is an Organization
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Speed.” ership Attitudes and Beliefs Scale: An 11. Carrie R. Leana, “Predictors and
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Blue Took Canadian to Oscars,” Large School Districts,” Organiza- Right Organization Design?” Organi-
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616 Endnotes
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Endnotes 627
Chapter 16 (September 2002): 58; and Curt A. Locke and Gary P. Latham,
Coffman and Gabriel Gonzalez- “Building a Practically Useful Theory
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Lucy Gilson, “Team Effectiveness Academy of Management Executive nication Clear and Consistent with
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Advancements and a Glimpse into the 24. Mathew Schwartz, “From Short tries Isn’t Easy, Says Author Maya
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634 Endnotes
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58. Shaw, Group Dynamics. and Determinants of Intragroup Journal of Leadership Studies 3, no. 2
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Research, 1954). formance, Academy of Management ment Without Giving In (New York:
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of Industrial and Organizational Psy- Functional and Dysfunctional Conflict in many publications, including “The
chology, ed. M. Dunnette (Chicago: on Strategic Decision Making.” Six Best Questions to Ask Your Cus-
Rand McNally, 1976). 74. Dean Tjosvold, Chun Hui, Daniel tomers,” Marketing and Distribution
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Daniel C. Feldman, “The Develop- Values and Team Relationships: .madisco.bz/articles/The%20Six%20
ment and Enforcement of Group Conflict’s Contribution to Team Best%20Questions%20to%20
Norms,” Academy of Management Effectiveness and Citizenship in Ask%20Your%20Customers.pdf
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636 Endnotes
85. Based in part on Hill, “A Note for Chapter 19 12. Based on Kaplan and Norton, “The
Analyzing Work Groups.” Balanced Scorecard”; Chow, Haddad,
86. “Big and No Longer Blue,” The Econ- 1. Adapted from J. J. Ray, “Do Au- and Williamson, “Applying the Bal-
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Science 149 (1965): 269–274; and (1976): 307–325. 1998): 28–36.
Miriam Erez and Anit Somech, “Is 2. “Playoff Gameday,” NBA Web site, 13. Arik Hesseldahl, “Facebook: Popu-
Group Productivity Loss the Rule http://www.nba.com/lakers larity Unpopular,” BusinessWeek On-
or the Exception? Effects of Culture /news/100617_gameday_celtics. line, August 12, 2010, http://
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The Group’s Shared Attitude to /NA_WSJ_PUB:SB10001424052 Using the Balanced Scorecard: A
Its Task and Work Environment,” 74870486930457510972372 Note on the Dutch Experience,”
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& Practice: Teamwork Raises Ev- 5. Douglas S. Sherwin, “The Meaning Plan,” Journal of Business Strategy
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Bond Benefits Companies More ( January, 1956). 15. Nils-Göran Olve, Carl-Johan Petri, Jan
Than Promoting ‘Stars,’” The Wall 6 Gordon Fairclough, “In China, a Roy, and Sofie Roy,“Twelve Years Later:
Street Journal, November 7, 2005. Contrast in Drug Supply,” The Wall Understanding and Realizing the Value
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Ithacan Online, April 12, 2001, www Not Management Control: The True Balanced Scorecard,” CIO (May 15,
.ithaca.edu/ithacan/articles/0104/12 Role of Performance Measurement,” 2002): 93–100.
/news/0college_to_e.htm (accessed California Management Review 48, 16 Ibid.; and Brigitte W. Schay, Mary
April 12, 2001). no. 3 (Spring 2006): 105 ff. Ellen Beach, Jacqueline A. Caldwell,
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Strategy That Wouldn’t Travel,” of the balanced scorecard in Richard Standardized Outcome Measures
Harvard Business Review (November– L. Daft, Organization Theory and in the Federal Government,” Human
December 1996): 18–31; Cathy Design, 7th ed. (Cincinnati, OH: Resource Management 41, no. 3 (Fall
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Performance Measurement,” Indus- October 4, 2010). and Philip C. Thompson, Quality
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Measurement,” Harvard Business 68–75; and Randy Myers, “Cash Training and Development
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Measurement.” 59–69. to IT: Targeting Perfection,” CIO
22. Frank Eltman, “Tracking Systems 33. David Kiley, “Ford’s Savior?” (December 1, 2003): 62–70; Hal
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638 Endnotes
9000 Myth and Reality: A Reason- 59. Damian Paletta and David Enrich, .com, http://www.businessdictionary
able Approach to ISO 9000,” SAM “Banks Get New Restraints,” The .com/definition/supply-chain-
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45–51. 61. Based on Michael Barbaro, “Some _Management_Definition_and
52. David Amari, Don James, and Leeway for the Small Shoplifter,” _Solutions (accessed August 27,
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Growth,” Business 2.0 (December (Second Quarter 2005): 76–87; World, After All,” The New York Times
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20. Maryanne Murray Buechner, Company (February 2002): 40, 42; 43. Based on Andrew Mayo, “Memory
“Cracking the Code,” FSB: Fortune Norihiko Shirouzu, “Gadget Inspec- Bankers,” People Management
Small Business (March 2004): 72–73. tor: Why Toyota Wins Such High ( January 22, 1998): 34–38;
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22. “ZDNet Definition for: RFID.” Jones, The Machine That Changed the Todd Datz, “How to Speak Geek,”
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the Japanese,” BusinessWeek ( July 10, Butler, “Introducing JIT Manu- Gets Smart,” CIO (September 15,
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640 Endnotes
46. Dorit Nevo, Izak Benbasat, and Yair 52. Andreas M. Kaplan and Michael Horizons (November–
Wand, “Knowledge Management; Haenlein, “Users of the World, December 2003): 17–26; and Detmar
Who Knows What?” The Wall Street Unite! The Challenges and Straub and Richard Klein, “E-Com-
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Survey Results,” McKinsey Green, “The Water Cooler Is Now on Push Sales through Social Media,”
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_from_Web_20_McKinsey Sweeney and Simon Jacobson, “ERP Its Stores to Get an Edge Online,”
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Birds Twitter Most Effectively,” source Planning: Common Myths Journal, January 15, 2010.
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.com/managing/content/oct2009 56. Derek Slater, “What Is ERP?” CIO Tweets,” The Wall Street Journal,
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ers of the World—Collaborate,” FSB: Social Networking Skills,” Will E-Commerce Have on the U.S.
Fortune Small Business (April 2005): The New York Times, June 7, 2010. Economy?” Economic Review— Federal
57–58. 59. Emily Steel, “Nestlé Takes a Beating Reserve Bank of Kansas City 89, no. 2
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Teamwork,” FSB: Fortune Small Coordinates Protests Over Food J. Mullaney with Heather Green,
Business (February 2008): 51–54; Giant’s Palm-Oil Purchases from Michael Arndt, Robert D. Hof, and
and Russ Juskalian, “Wikinom- Firm Alleged to Have Cut Down Linda Himelstein,“The E-Biz Surprise,”
ics Could Change Everything As Rain Forest,” The Wall Street Journal, BusinessWeek (May 12, 2003): 60–68.
Concept of Sharing Spreads,” USA March 29, 2010. 68. Straub and Klein, “E-Competitive
Today, January 2, 2007, http://www. 60. This discussion is based on Long Transformations.”
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/reviews/2007-01-02-wikinomics “Toward an Objective-Based Typol-
_x.htm (accessed January 2, 2007). ogy of E-Business Models,” Business

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Management

Director, Content and Media Production: Barbara

Cengage Learning products are represented in Canada by Nelson Education, Ltd.

For your course and learning solutions, visit www.cengage.com

Printed in the United States of America

Mana Photo, 2010/Used under license from Shutterstock.com

about [Blockbuster’s] ability to continue as a going concern.”2

The External Environment

Competitors Internal Environment Sociocultural

Labor Market Legal/Political

Technological The technological dimen-

sive changes for organizations in all industries.

Creating Guanxi in China

Jay Clendenin/Aurora Photos

Legal-Political The legal-political dimension includes government regulations at the

Natural In response to pres-

is growing in importance. The

Rank Country Score EXHIBIT 3.2

Competitors Speciﬁc competitive issues characterize each industry. Other organiza-

EXHIBIT 3.3 The External Environment of Nortel

• Cable and wireless operators

• Committed to diversity • Accounting

EXHIBIT 3.4 High

The External Environment

Boundary-Spanning Roles Boundary-spanning roles link and coordinate the or-

to activities to get as much information as possible about one’s rivals. Competi-

Interorganizational Partnerships An increasingly popular strategy for adapting

From Adversarial Orientation To Partnership Orientation EXHIBIT 3.5

It is not unusual for business partners to help

Mergers and Joint Ventures A step

ternationally in recent years is an attempt

The Internal Environment:

Copyright © 2010 Zappos.com, Inc. or its affiliates. Used by permission.

of exceptional work, and the employee

A hero is a ﬁgure who exempliﬁes the

Needs of the Environment

New Manager Self-Test

Shaping Corporate Culture for

Managing the High-Performance

awarded for innovative ideas.The missing. Think about the

ch3 Discussion Questions

ch3 Apply Your Skills: Experiential Exercise

Working in an Adaptability Culture77 6. Management above me took action on recommendations

ch3 Apply Your Skills: Small Group Breakout

ch3 Apply Your Skills: Ethical Dilemma

ch3 Apply Your Skills: Case for Critical Analysis

ch3 On the Job and BizFlix Video Cases

Law Leaves Industry in Limbo,” Long 20businesses%20that%20did%20 /newsroom/releases/archives

“Teaching Downsizing Survivors 3. Quoted in Susan Caminiti, “The /management/2009-12-29-female-

56. Jennifer N. Demirdjian, “Mentors / education/09college.html 26, 2010, http://www.forbes.com

2. “Eﬀective Communication Strategy Electronic Communication,” http:// Employees,” Organizational Dynamics

/writing_for_employ.html (accessed 2008, http://www.inquisitr Chapter 18

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