Managing the External Environment and Organizational Culture – Notes

🔹 Managerial Views of Responsibility

• Omnipotent View: The view that managers are directly responsible for an organization’s success or failure.

• Symbolic View: The view that the success/failure is mainly due to external forces outside managers’ control.

• Reality: Managers are neither all-powerful nor powerless; they are constrained by:

  • External environment (outside forces).

  • Internal environment (organizational culture).

🔹 The External Environment

Definition: Factors and forces outside the organization that affect its performance.

Key Components:

1. Economic – inflation, interest rates, economic inequality.

   • Polls show that the gap between the rich and the poor is problematic.

2. Demographic – workforce composition by age, gender, etc.

   • Baby Boomers, Gen Y (Millennials), Post-Millennials.

3. Political/Legal – regulations, government policies.

4. Sociocultural – values, lifestyles, cultural shifts.

5. Technological – innovation, automation, digital tools.

6. Global – globalization, international trade, global crises.

Effects on Managers:

• Impact on jobs and employment (hiring, layoffs, restructuring).

• Creates constraints and opportunities in decision-making.

🔹 Environmental Uncertainty

• Definition: The degree of change and complexity in an organization’s environment.

• Change Dimension:

  • Stable → little change.

  • Dynamic → frequent, unpredictable change.

• Complexity Dimension:

  • Simple → few external factors.

  • Complex → many external factors.

📌 Managers must scan environments to anticipate and adapt to uncertainty.

(read environment uncertainty matrix on pg 18)

🔹 Stakeholder Relationships

• Stakeholders: Groups within the organization’s environment that are affected by the organization’s decisions.

• TYPES:

  • Primary – directly essential (customers, employees, suppliers, shareholders).

  • Secondary – influence reputation or indirectly affected (media, activist groups).

Benefits of strong stakeholder relationships:

• Better ability to predict changes.

• Greater success of innovations

• Increased trust and cooperation.

• Flexibility to handle change effectively.

🔹 Organizational Culture

Definition: Shared values, principles, traditions, and ways of doing things that influences the way in which the members of an organization act.

Key Aspects:

1. Culture is a perception – seen through interactions.

2. Culture is descriptive – it defines “how things are done here.”

3. Culture is shared – passed across members.

Dimensions of Culture (Exhibit 3-5):

• Attention to detail.

• Innovation and risk-taking.

• Outcome orientation.

• People orientation.

• Team orientation.

• Aggressiveness.

• Stability.

• (look at pg 27)

🔹 Strong vs Weak Cultures

• Strong Culture: Organizational cultures where there are:

  • key values that are intensely held and widely spread.

  • Clear, consistent messages.

  • Strong identification and connection between values & behaviors.

• Weak Culture:

  • Values held only by top management.

  • Contradictory messages.

  • Employees have little knowledge of company’s history. Employees show little connection to organizational identity.

📌 Strong cultures = higher commitment & performance.

🔹 Origins and Maintenance of Culture

• initial source of culture usually reflects the Founders’ vision

• Maintained through:

  • Hiring practices (criteria to be selected)

  • Top management behavior.

  • Socialization processes (training, mentoring).

How employees learn culture:

• Stories

• Rituals

• Material symbols

• Language

🔹 Culture’s Impact on Managers

• Culture constrains what managers can/cannot do.

• Influences decisions about:

  • Risk-taking, planning, organizing, leading, controlling performance evaluation, teamwork, innovation.

🔹 Creating a Customer-Responsive Culture

• Hire employees with customer-service values (friendly, patient, good listeners).

• Minimize rigid rules and procedures.

• Empower employees to make decisions that will better satisfy the customers.

• Have good listening skills towards customers

• Provide role clarity and continuous training

• Reinforce organization-wide commitment to customer satisfaction.

🔹 Workplace Spirituality

Definition: Culture that promotes purpose through meaningful work within a community.

Characteristics of Spiritual Organizations:

1. Strong sense of purpose.

2. Focus on individual development.

3. Trust and openness.

4. Employee empowerment.

5. Toleration of employee expression.

Examples: Xerox, Southwest Airlines, Ford, Timberland, Build-a-Bear Workshop, Life is Good.

📌 Case: Southwest Airlines – Emphasizes humor, teamwork, empowerment, employee ownership → high satisfaction + consistent profitability.

🔹 Key Takeaways

• Managers face internal and external constraints.

• External environment includes economic, demographic, political/legal, sociocultural, technological, and global forces.

• Uncertainty and stakeholders shape managerial decisions.

• Organizational culture defines how work gets done and impacts all managerial actions.

• Strong cultures, customer responsiveness, and workplace spirituality create higher performance and employee commitment.