Chapter 3
1. Environmental influences
a. Internal environment (or context): Consists of elements within the organization such as
its technology, structure or business processes.
b. Competitive environment (or context): Sometimes known as the micro-environment.
The industry-specific environment comprising the organization’s customers, suppliers
and competitors.
c. General environment (or context): Sometimes known as the macro-environment. It
includes political, economic, social technological, (natural) environmental and legal
factors that affect all organizations.
d. External environmental (or context): Consists of all elements, named above. It
combines the competitive and general environments.
i. The figure implies a constant interaction between an organization’s culture and
its external environment. Managers do not passively accept their businesses,
but try to shape it by actively persuading governments and other agencies to act
in their favor(Lobbying).
2. Cultures and their components
a. Culture: a pattern of shared basic assumptions that was learned by a group as it solved
its problems of external adaptation and internal integration, and that has worked well
enough to be considered valid and transmitted to new members
i. Managers believe culture influences behavior, and the claim that a strong and
distinct culture helps to integrate individuals into the team or organization
ii. Schein (2010): culture develops as people work together, and develop shared
beliefs about what works, which is transmitted to successive generations (Figure
3.2).
1. People share common values they use to;
2. Establish shared beliefs and;
3. Norms which guide the;
4. Individual and group behavior;
5. Positive outcomes reinforce their belief in the values underlying their
6. Behavior
, b. Components:
i. Artifacts: Represent the visible level – elements such as the language or
etiquette which someone coming into contact with a culture can observe:
1. Architecture
2. Technology and equipment
3. Style (clothing, manner of address)
4. Rituals and ceremonies
5. Courses
ii. Espoused beliefs and values: The accumulated beliefs that members hold about
their work. As a group develops, member refine their ideas about what works in
this business:
1. ‘Quality pays.’
2. ‘We should stick to our core business’
3. ‘Cultivate a sense of personal responsibility’
4. ‘We depend on close team work’
5. ‘Everyone is expected to challenge a proposal – whoever made it’
iii. Basic underlying assumptions: Deeply held ideas about the way people work
together, and the sources of their success:
1. ‘We need to satisfy customers to survive a business’
2. ‘Our business is to help people with X problem live better with X
problem’
3. ‘People can make mistakes, as long as they learn from them’
4. ‘We employ highly motivated and competent adults’
5. ‘Financial markets worry about the short term: we are here for the long
term’
3. Types of culture
a. Open systems: People recognize that the external environment has a big role in
managing, where there is a vital source of ideas, energy and ideas. It also sees the
environment as complex and turbulent, requiring entrepreneurial, visionary leadership
and flexible, responsive behavior.
i. Motivating factors: Growth, stimulation, creativity and variety.
1. Start-up firms and new business units (organic & flexible)
b. Rational goal: The organization as a rational, efficiency-seeking unit.
Production/economic goals is key for effectiveness. Managers create structures to deal
with the outside world. Leadership tends to be directive, goal-oriented and functional.
i. Motivating factors: competition, achievement of goals
1. Large, established businesses (mechanistic)
, c. Internal process: Members focus on internal matters (unit efficiency, stableness,
controlling). Tasks are repetitive and methods stress specialization, rules and
procedures. Leadership requires cautiousness, and spending time on technical issues.
i. Motivating factors: security, stability, order
1. Utilities, public authorities (suspicious of change)
d. Human relations: People underscore the value of informal interpersonal relations over
formal relations. Maintaining the organization and nurture its members and defining
effectiveness in terms of their well-being and commitment is the main purpose. Leaders
are participative, considerate and supportive.
i. Motivating factors: attachment, cohesiveness, membership
1. Voluntary groups, professional service firms, internal functions
4. Multiple cultures: organizations don’t gave one, but several cultures(Martin 2002):
a. Integration: A focus on identifying consistencies in the data, and using those common
pattern to explain events
b. Differentiation: A focus on conflict, identifying different and possibly conflicting views
of members towards events
c. Fragmentation: A focus on the fluid nature of organizations, and on the interplay and
change of views about events
i. Ogbonna & Harris (1988,2002): found out that a person’s position in the
hierarchy determined his or her perspective on the culture.
5. The competitive environment (Micro environment)
a. Managers are most directly affected by forces in their competitive environment.
i. Porter’s five forces analysis: A technique for identifying and listing those
aspects of the five forces most relevant to the profitability of an organization at
that time. The weaker the organizations, the more profitable they are.
Managers can use this analysis to shape strategy and maybe innovate in one of
these forces.
1. Treats of new entrants (Fewer new entrants = more profit)
a. Entry barriers include:
i. high costs of equipment and facilities;
ii. lack of distribution facilities;
iii. customers loyal to established brands;
iv. small companies lack economies of scale;
v. subsidies/regulations favor existing firms.
1. Example: patent protection for drugs,
presentation software (PowerPoint).
1. Environmental influences
a. Internal environment (or context): Consists of elements within the organization such as
its technology, structure or business processes.
b. Competitive environment (or context): Sometimes known as the micro-environment.
The industry-specific environment comprising the organization’s customers, suppliers
and competitors.
c. General environment (or context): Sometimes known as the macro-environment. It
includes political, economic, social technological, (natural) environmental and legal
factors that affect all organizations.
d. External environmental (or context): Consists of all elements, named above. It
combines the competitive and general environments.
i. The figure implies a constant interaction between an organization’s culture and
its external environment. Managers do not passively accept their businesses,
but try to shape it by actively persuading governments and other agencies to act
in their favor(Lobbying).
2. Cultures and their components
a. Culture: a pattern of shared basic assumptions that was learned by a group as it solved
its problems of external adaptation and internal integration, and that has worked well
enough to be considered valid and transmitted to new members
i. Managers believe culture influences behavior, and the claim that a strong and
distinct culture helps to integrate individuals into the team or organization
ii. Schein (2010): culture develops as people work together, and develop shared
beliefs about what works, which is transmitted to successive generations (Figure
3.2).
1. People share common values they use to;
2. Establish shared beliefs and;
3. Norms which guide the;
4. Individual and group behavior;
5. Positive outcomes reinforce their belief in the values underlying their
6. Behavior
, b. Components:
i. Artifacts: Represent the visible level – elements such as the language or
etiquette which someone coming into contact with a culture can observe:
1. Architecture
2. Technology and equipment
3. Style (clothing, manner of address)
4. Rituals and ceremonies
5. Courses
ii. Espoused beliefs and values: The accumulated beliefs that members hold about
their work. As a group develops, member refine their ideas about what works in
this business:
1. ‘Quality pays.’
2. ‘We should stick to our core business’
3. ‘Cultivate a sense of personal responsibility’
4. ‘We depend on close team work’
5. ‘Everyone is expected to challenge a proposal – whoever made it’
iii. Basic underlying assumptions: Deeply held ideas about the way people work
together, and the sources of their success:
1. ‘We need to satisfy customers to survive a business’
2. ‘Our business is to help people with X problem live better with X
problem’
3. ‘People can make mistakes, as long as they learn from them’
4. ‘We employ highly motivated and competent adults’
5. ‘Financial markets worry about the short term: we are here for the long
term’
3. Types of culture
a. Open systems: People recognize that the external environment has a big role in
managing, where there is a vital source of ideas, energy and ideas. It also sees the
environment as complex and turbulent, requiring entrepreneurial, visionary leadership
and flexible, responsive behavior.
i. Motivating factors: Growth, stimulation, creativity and variety.
1. Start-up firms and new business units (organic & flexible)
b. Rational goal: The organization as a rational, efficiency-seeking unit.
Production/economic goals is key for effectiveness. Managers create structures to deal
with the outside world. Leadership tends to be directive, goal-oriented and functional.
i. Motivating factors: competition, achievement of goals
1. Large, established businesses (mechanistic)
, c. Internal process: Members focus on internal matters (unit efficiency, stableness,
controlling). Tasks are repetitive and methods stress specialization, rules and
procedures. Leadership requires cautiousness, and spending time on technical issues.
i. Motivating factors: security, stability, order
1. Utilities, public authorities (suspicious of change)
d. Human relations: People underscore the value of informal interpersonal relations over
formal relations. Maintaining the organization and nurture its members and defining
effectiveness in terms of their well-being and commitment is the main purpose. Leaders
are participative, considerate and supportive.
i. Motivating factors: attachment, cohesiveness, membership
1. Voluntary groups, professional service firms, internal functions
4. Multiple cultures: organizations don’t gave one, but several cultures(Martin 2002):
a. Integration: A focus on identifying consistencies in the data, and using those common
pattern to explain events
b. Differentiation: A focus on conflict, identifying different and possibly conflicting views
of members towards events
c. Fragmentation: A focus on the fluid nature of organizations, and on the interplay and
change of views about events
i. Ogbonna & Harris (1988,2002): found out that a person’s position in the
hierarchy determined his or her perspective on the culture.
5. The competitive environment (Micro environment)
a. Managers are most directly affected by forces in their competitive environment.
i. Porter’s five forces analysis: A technique for identifying and listing those
aspects of the five forces most relevant to the profitability of an organization at
that time. The weaker the organizations, the more profitable they are.
Managers can use this analysis to shape strategy and maybe innovate in one of
these forces.
1. Treats of new entrants (Fewer new entrants = more profit)
a. Entry barriers include:
i. high costs of equipment and facilities;
ii. lack of distribution facilities;
iii. customers loyal to established brands;
iv. small companies lack economies of scale;
v. subsidies/regulations favor existing firms.
1. Example: patent protection for drugs,
presentation software (PowerPoint).
