This is a 5-6 pages eassy about management called Interview Experience and Synthesis Paper.

Organizational Environments and Cultures

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LEARNING OUTCOMES

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1 Discuss how changing environments affect organizations

2 Describe the four components of the general environment

3 Explain the five components of the specific environment

4 Describe the process that companies use to make sense of their changing environments

5 Explain how organizational cultures are created and how they can help companies be successful

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Changing Environments

• Environmental change: Rate at which a company’s general and specific environments change • Stable environment: Rate of change is slow • Dynamic environment: Rate of change is fast

• Punctuated equilibrium theory • Companies go through long periods of stability,

followed by short periods of dynamic, fundamental change, and then a new equilibrium

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Changing Environments

• Environmental complexity: Number and intensity of external factors in the environment that affect organizations • Simple environment: Includes few factors • Complex environment: Includes many factors

• Resource scarcity: Abundance or shortage of critical organizational resources in an external environment

• Uncertainty: Extent to which managers can predict which external changes and trends will affect their businesses

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Exhibit 3.1 Environmental Change, Environmental Complexity, and Resource Scarcity

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Exhibit 3.2 General and Specific Environments

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Components of the General Environment

• Economy • Consumers in:

• Growing economy have more money to spend • Shrinking economy have less money to spend

• Business confidence indices: Show managers’ level of confidence about future business growth

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Components of the General Environment

• Technology: Knowledge, tools, and techniques used to transform inputs into outputs • Changes in technology help companies provide

better products • Companies should use new technology

effectively to improve their products and services

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Components of the General Environment

• Sociocultural • Includes demographic characteristics, general

behavior, attitudes, and beliefs of people in a particular society

• Changes in demographic characteristics affect how companies staff their businesses

• Changes in behavior, attitudes, and beliefs affect the demand for a business’s products and services

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Components of the General Environment

• Political/legal • Legislation, regulations, and court decisions that

govern and regulate business behavior • Managers must be aware of the laws,

regulations, and potential lawsuits that could affect their business

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Components of the Specific Environment

• Purchase products and services

Customers

• Companies in the same industry that sell similar products or services to customers

Competitors

• Companies that provide material, human, financial, and informational resources to other companies

Suppliers

• Regulations and rules that govern the business practices and procedures

Industry regulation

• Concerned citizens that band together to try to influence business practices

Advocacy group

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Making Sense of Changing Environments

• Three-step process employed by managers • Environmental scanning: Searching the

environment for important events or issues that might affect an organization

• Interpreting environmental factors • Acting on threats and opportunities

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Creation and Maintenance of Organizational Cultures

• Company founders create organizations in their images • Imprint companies with their beliefs, attitudes,

and values • Organizational stories

• Make sense of organizational events • Emphasize culturally consistent assumptions,

decisions, and actions

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Creation and Maintenance of Organizational Cultures

• Organizational culture is sustained by recognizing and celebrating heroes • Organizational heroes: People admired for their

qualities and achievements within an organization

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Successful Organizational Cultures

• Factors that influence successful cultures • Adaptability, involvement • Clear mission, and consistency

• Cultures based on the above factors help companies achieve: • Higher sales growth • Return on assets • Profits • Quality • Employee satisfaction

SUMMARY

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• Changing environments affect environmental uncertainty

• General environment consists of the economy, technological, sociocultural, and political/legal trends that indirectly affect all organizations

• Components of specific environment are customer, competitor, supplier, industry regulation, and advocacy groups

SUMMARY

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• Steps to understand changes in their external environments • Environmental scanning, interpreting

environmental factors, and acting on threats and opportunities

• Factors that influence successful cultures • Adaptability involvement, clear mission, and

consistency

KEY TERMS

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• External environments • Environmental change • Stable environment • Dynamic environment • Punctuated

equilibrium theory • Environmental

complexity • Simple environment • Complex environment • Resource scarcity

• Uncertainty • General environment • Specific environment • Business confidence

indices • Technology • Competitors • Competitive analysis • Suppliers • Supplier dependence • Buyer dependence

KEY TERMS

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• Opportunistic behavior • Relationship behavior • Industry regulation • Advocacy groups • Public communications • Media advocacy • Product boycott • Environmental

scanning • Cognitive maps • Internal environment • Organizational culture

• Organizational stories • Organizational heroes • Company mission • Consistent

organizational culture • Behavioral addition • Behavioral substitution • Visible artifacts

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