UNIT 4: Organizational culture

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Management
Fifteenth Edition, Global Edition

Chapter 3
Influence of the External
Environment and the
Organization’s Culture

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Learning Objectives
3.1 Contrast the actions of managers according to the
omnipotent and symbolic views.
3.2 Describe the constraints and challenges facing
managers in today’s external environment.
3.3 Discuss the characteristics and importance of
organizational culture.

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The Manager: Omnipotent or Symbolic?
• Omnipotent view: managers are directly responsible for
an organization’s success or failure
• Symbolic view: much of an organization’s success or
failure is due to external forces outside managers’ control

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Managerial Constraints
• In reality, managers are neither all-powerful nor helpless.
But their decisions and actions are constrained.
• External constraints come from the organization’s
environment and internal constraints come from the
organization’s culture

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Exhibit 3.1 Constraints on Managerial Discretion

Exhibit 3.1 shows that external constraints come from the organization’s environment and
internal constraints come from the organization’s culture.

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The Environment and Environmental Uncertainty
• Environment: institutions or forces outside of the
organization that could potentially affect performance.
– Environments differ on degree of environmental
uncertainty
– Environmental uncertainty has two dimensions
 Degree of change
 Degree of complexity

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Exhibit 3.2 Environmental Uncertainty Matrix

Exhibit 3.2 shows the two dimensions of environmental uncertainty.

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Degree of Change
• Environments can be either dynamic or stable
– In a dynamic environment the components in an
organization’s environment change frequently
– In a stable environment the components in an
organization’s environment change very little

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Degree of Environmental Complexity
• Environmental complexity looks at the number of
components in an organization’s environment and the
extent of the knowledge the organization has about those
components.
• Depending on the organizational environment, managers
may need to know a lot about the components, or very
little.

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The External Environment
• Those factors and forces outside the organization that
affect its performance
– Economic
– Demographic
– Political/Legal
– Sociocultural
– Technological
– Global

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Exhibit 3.3 Components of External Environment

Exhibit 3.3 shows the different components that make up the external environment.

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The Specific Environment (1 of 2)
• Specific Environment: the part of the environment
directly relevant to the achievement of organizational goals
• Most of management’s attention typically focuses on the
specific environment

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The Specific Environment (2 of 2)
• The specific environment includes one or more of the
following:
– Suppliers
– Customers
– Competitors
– Government agencies
– Special interest groups

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Specific Environment Components (1 of 2)
• Suppliers: Managers need to ensure a steady flow of
inputs
• Customers: Organizations exist to meet customer needs
• Competitors: All organizations have competitors that they
need to monitor

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Specific Environment Components (2 of 2)
• Government: Federal, state, and local governments
influence what the organization can and cannot do.
• Pressure Groups: Special interest groups can have a
significant impact on the organization. Lobbyists,
protestors, various action groups all effect change.

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Exhibit 3.6 Strong vs. Weak Cultures

Exhibit 3.4 shows the different components that make up the specific environment.
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Organizational Culture
• Just as each individual has a unique personality, an
organization, too, has a personality.

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What is Organizational Culture?
• Organizational culture: the shared values, principles,
traditions, and ways of doing things that influence the way
organizational members act and that distinguish the
organization from other organizations

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What is Organizational Culture?
Culture implies three things.
1), culture is a perception. It’s not something that can be
physically touched or seen, but employees perceive it on the
basis of what they experience within the organization.
2) culture is descriptive. It’s concerned with how members
perceive the culture and describe it, not with whether they
like it.
3) even though individuals may have different backgrounds
or work at different organizational levels, they tend to
describe the organization’s culture in similar terms. That’s
the shared aspect of culture.

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Six Dimensions of Organizational Culture
• Research shows there are six dimensions that appear to
capture an organization’s culture:
1. Adaptability
2. Attention to detail
3. Outcome orientation
4. People orientation
5. Team orientation
6. Integrity

Each of these dimensions ranges from high to low with

high meaning it is typical of the organization’s culture.

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Six Dimensions of Organizational Culture
• Adaptability: the degree to which employees are encouraged to be
innovative and take risks
• Attention to detail: the degree to which employees are expected to
exhibit precision, analysis, and attention to detail.
• Outcome orientation: the degree to which managers focus on results
or outcomes rather than on the techniques and processes used to
achieve those outcomes.
• People orientation: the degree to which management decisions take
into consideration the effect on people within the organization.
• Team orientation: the degree to which work activities are organized
around teams rather than individuals.
• Integrity: the degree to which people exhibit honesty and high ethical
principles in their work.

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Exhibit 3.5 Contrasting Organizational Culture
• Risk taking and change
discouraged
• Creativity discouraged
• Close managerial supervision
• Work designed around individual
employees
• Risk taking and change
rewarded
• Creativity and innovation
rewarded
• Management trusts employees
• Work designed around teams

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Strong Cultures
• Strong cultures: organizational cultures in which the key
values are intensely held and widely shared
• The more employees accept the organization’s key values
and the greater their commitment to those values, the
stronger the culture.
• Most organizations have moderate to strong cultures; that
is, there is relatively high agreement on what’s important,
what defines “good” employee behavior, what it takes to
get ahead, and so forth.
• The stronger a culture becomes, the more it affects the
way managers plan, organize, lead, and control.

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Strong Cultures

Why is having a strong culture important?

in organizations with strong cultures, employees are more

loyal than employees in organizations with weak cultures.

Research also suggests that strong cultures are associated

with high organizational performance.

However, the drawback is that a strong culture also might

prevent employees from trying new approaches,
especially when conditions change rapidly.

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Exhibit 3.6 Strong Versus Weak Cultures
Strong Cultures Weak Cultures
Values widely shared Values limited to a few people –
usually top management
Culture conveys consistent messages Culture sends contradictory
about what’s important messages about what’s important
Most employees can tell stories about Employees have little knowledge of
company history or heroes company history or heroes
Employees strongly identify with Employees have little identification
culture with culture
Strong connection between shared Little connection between shared
values and behaviors values and behaviors

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Where Culture Comes From and How it Continues

• The original source of an organization’s culture is usually a

reflection of the vision or mission of the organization’s
founders

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Exhibit 3.7 Establishing and Maintaining Culture

***The original source of the culture usually reflects the vision of the founders
***Once the culture is in place certain organizational practices help maintain it
such as the selection process (the explicit goal of the selection process is to
identify and hire individuals with the knowledge, skills and abilities to perform
successfully). The final decision however includes a judgment call how well the
individual fit into the organization?

*** The action of top managers also have a major impact on the organization’s
culture. Through words and actions seniors executive establish norms that filter
through the organization about for example whether risk taking is desirable.
*** Organization helps employees to adapt to the culture through socialization. A
process that help new employees learn the organization’s way of doing things
(e.g.. Internships, formal orientation programs, training programs etc.)
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How Employees Learn Culture

• Stories are one way that employees learn the culture.

These stories typically involve a narrative of significant
events or people.

• Rituals are repetitive sequences of activities that express

and reinforce the key values of the organization, which
goals are most important, and which people are important
or expendable.

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How Employees Learn Culture
• The use of material artifacts and symbols is another way
in which employees learn the culture, learn the degree of
equality desired by top management, discover which
employees are most important, and learn the kinds of
behavior that are expected and appropriate.
• Language is often used to identify members of a culture.
Learning this language indicates members’ willingness to
accept and preserve the culture. This special lingo acts as
a common denominator to unite members of a particular
culture.
Ohana is a Hawaiian term that means an
extended "family". And that is what
Salesforce Ohana is all about, a support
system that is like a family.

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How Culture Affects Managers
• Because an organization’s culture constrains what they
can and cannot do and how they manage, it’s particularly
relevant to managers.
– The link between corporate values and managerial
behavior is fairly straightforward.
– The culture conveys to managers what is appropriate
behavior.
– An organization’s culture, particularly a strong one,
constrains a manager’s decision-making options in all
managerial functions

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Exhibit 3.8 Types of Managerial Decisions
Affected by Culture

As shown in Exhibit 3.8, a manager’s decisions are influenced by the culture in which he or
she operates.
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