FOM

1

Environment & Corporate Culture

1. External Environment• General• Technological• Sociocultural• Economic• Legal -Political

2. Task Environment• Customers• Competitors• Suppliers• Labor Market

3. Internal Environment• Production Technology• Organization Structure• Physical Facilities

4. Environmental Uncertainty• Adapt• Influence

5. Corporate Culture• Communication• Success

FOM

2

External Environment

Def: All elements existing outside the boundary of the organization that have the potential to affect the organization

General Environment: Influences the organization but not on a day-to-day basis.

International • Potential impact on new & existing markets• Future competition (Indonesia aircraft repair)• Country relations (Tariffs, Nationalism, Gov’t stability)

Technology (Fads vs Innovations)• E-commerce (Buying & Selling)• PCs & Cell phones• Fuels

SocioCultural: Represents demographic characteristics as well as norms, customs & values of the general population

• Shift in average age of workforce• Makeup of U.S. population• Demographics of customer

FOM

3

External Environment (con’t)

Economic General economic health of region and country the organization does business.

• Trend from rural to urban• Urban to suburban• Concentration of wealth

Legal – Political• Government regulations• Workers Safety (OSHA)• Labeling• Export & Import restrictions• Product safety• NAFTA

FOM

4

Task Environment

Def: Includes sectors that have a direct working relationship with the organization . ( More current issues)

Customers (What currently is their needs)• Pricing• Packaging• Availability• Customer Service expected (return policy)

Competitors • What are the current direct competition

• What is the market share?• How do they differ in product & distribution?• Perceived value?

• Are there any substitutes?• Price differential?

FOM

5

Task Environment (con’t)

Suppliers• Are they reliable?• What is the current relationship?

• Based on price• Strategic Partnerships

Labor Market• Level of training?• How mobile?• What skills are required and available?

FOM

6

Internal Environment

Def: Structure and attitudes in place at organization to address the impact of the External & task environmental factors.

Corporate Culture• Flexible• Entrepreneurial• Does management “Walk the Talk”?

Production Technology• Age of equipment• Flexibility of processes

Organizational Structure• Centralized vs Decentralized• Vertical or Learning

Physical Facilities• Age of plant• Capacity

FOM

7

Environmental Uncertainty

There are many factors that are outside the direct control of an organization with the potential to change in a way that can be to the advantage or disadvantage of the organization. How does the organization minimize the negative impact while taking full advantage of the opportunities?

Adapt to the change• Boundary spanning roles• Increased planning• Forecasting• Flexible structure• Merger or joint venture

Influence the level and timing of the change• Advertising• Political activity• Trade association

FOM

8

Corporate Culture

Represented by a set of key values, beliefs, understanding and norms shared by members of an organization.

• Typically generated from Top Management • Successful if communicated by a strong focused leader.

Means of Communication• Symbols• Stories• Heroes• Slogans• Ceremonies

Harvard Study: A strong corporate culture alone did not ensure success unless the culture encouraged healthy adaptation to the external environment.

• Focus on customers and internal people and processes that bring about useful change towards attainment of organizational goals.