3 Organizational Culture and

Environment

1
ORGANIZATIONAL
ENVIRONMENT
 Organizational Environment
Sociocultural Technological Internal
conditions conditions
Competitors Customers
External:

Employees
•Specific
•General
ORGANIZATION (PEST –
PESTEL
Shareholders analysis)
Management

Public pressure
Media
groups
Economic Political/legal
conditions conditions

Internal Stakeholders

External Stakeholders

General Environment

3
 Organizational Stakeholders

Source: Robbins, S.P., Coulter, M. (2009) Management 10th ed., Pearson Education, Inc., Upper Saddle River, New Jersey
 Defining the External Environment
External Environment: factors and forces outside the
organization that affect the organization’s
performance.
Components of the External Environment:
• Specific environment: external forces that have a direct
and immediate impact on the organization. Affects the industry.
• General environment: broad economic, socio-cultural,
political/legal, demographic, technological, and global
conditions that may affect the organization. Affects all organizations

Source: Robbins, S.P., Coulter, M. (2009) Management 10th ed., Pearson Education, Inc., Upper Saddle River, New Jersey
 General environmental factors
PEST
analysis

Economic Technological
trends trends

Political/ legal Sociocultural

trends trends
ORGANIZATION

Ecology
 Specific environment

Customers

Public
pressure Competitors
groups
Organization

Industry
Suppliers
regulation

7
 How the Environment Affects Managers
• Environmental Uncertainty: the degree of
change and complexity in the environment
• The extent to which managers are able to predict
change in their organization’s external
environment is affected by:
• Degree of environmental change: how dynamic or stable
the external environment is.
Dynamic or stable. video games & food
• Degree of environmental complexity: the number of
components in an organization’s external environment and
the knowledge that the organisation has about them.
Complex or simple. IT & milk

• Scarcity of resources

Source: Robbins, S.P., Coulter, M. (2009) Management 10th ed., Pearson Education, Inc., Upper Saddle River, New Jersey
 Understanding the environment
Internal

• Environmental scanning
• Understanding external
Strenghts Weaknesses
factors
• Reacting to threats and
opportunities

Opportunities Threats

External
9
ORGANIZATIONAL CULTURE
 Internal Environment
• Internal environment - the events and trends inside an
organization that affect management, employees, and
organizational culture
• The key component in internal environment –
organizational culture
 Organizational Culture
• A system of shared values, traditions, principles,
meanings and ways of doing things that influence the
way organizational members act.
• “The way we do things around here.”
• Values, symbols, rituals, myths, and practices

Source: Robbins, S.P., Coulter, M. (2009) Management 10th ed., Pearson Education, Inc., Upper Saddle River, New Jersey
 Organizational Culture
• Visible indicators

• Things you hear (what people

say, how decisions are made)

• Things you believe in (beliefs,

values, often subconscious,
rarely talked about)
13
 How an Organization’s Culture Is Established and Maintained

Vision and values Recruitment of

like-minded
employees who to help them
“fit” adapt to the
culture

Source: Robbins, S.P., Coulter, M. (2009) Management 10th ed., Pearson Education, Inc., Upper Saddle River, New Jersey
 Changing culture
• To establish new patterns of behaviour:
– Behavioural addition
– Behavioural substitution
• Changing visible artifacts
• Selection of applicants
 Sources:
1. Robbins, S.P., Coulter, M. (2009) Management
10th ed., Pearson Education, Inc., Upper
Saddle River, New Jersey
2. Williams, C. (2012) MGMT 4, Management,
South-Western, Cengage Learning