The document discusses the organizational environment, including both external and internal factors. The external environment contains general factors like the political/legal, economic, sociocultural, and technological landscape. It also contains specific factors like customers, competitors, suppliers, industry regulations, and advocacy groups. The internal environment includes organizational culture, which is influenced by the founder and maintained through symbols and behaviors. Environmental scanning involves searching for external factors that could impact the organization. Managers interpret these factors as potential threats or opportunities.
Customers purchase products and services. Companies cannot exist without customer support. Monitoring customers’ changing wants and needs is therefore critical to business success. There are two basic strategies for monitoring customers: reactive and proactive.
Surprisingly, managers often do a poor job of identifying potential competitors because they tend to focus on only two or three well-known competitors with similar goals and resources. Another mistake managers may make when analyzing the competition is to underestimate potential competitors’ capabilities. When this happens, managers don’t take the steps they should to continue to improve their products or services.
How important is relationship behavior? Researchers examined the relationships between auto suppliers and eight major automakers in Japan, Korea, and the United States and found that, in cases where a lack of trust existed between suppliers and buyers, procurement costs could be as much as five times higher than when parties trusted one another. Furthermore, the least-trusted companies were often the least profitable.
The public communications approach relies on voluntary participation by the news media and the advertising industry to send out an advocacy group’s message.
Media advocacy is much more aggressive than the public communications approach. A media advocacy approach typically involves framing the group’s concerns as public issues (affecting everyone); exposing questionable, exploitative, or unethical practices; and forcing media coverage by buying media time or creating controversy that is likely to receive extensive news coverage.
A product boycott is a tactic in which an advocacy group actively tries to persuade consumers not to purchase a company’s product or service.
Internal environments consist of the trends and events within an organization that affect the management, employees, and organizational culture. Internal environments are important because they affect what people think, feel, and do at work.
The key component in internal environments is organizational culture, or the set of key values, beliefs, and attitudes shared by members of the organization.
Adaptability is the ability to notice and respond to changes in the organization’s environment.
Company mission is the business’s purpose or reason for existing. In an organizational culture that includes a clear company mission, the organization’s strategic purpose and direction are apparent to everyone in the company.
Finally, in a consistent organizational culture, the company actively defines and teaches organizational values, beliefs, and attitudes. Consistent organizational cultures are also called strong cultures because the core beliefs are widely shared and strongly held.
As shown in Exhibit 3.6, organizational cultures exist on three levels. On the first, or surface, level are the elements of an organization’s culture that can be seen and observed, such as symbolic artifacts (e.g., dress codes and office layouts) and workers’ and managers’ behaviors. Next, just below the surface, are the values and beliefs expressed by people in the company. You can’t see these values and beliefs, but they become clear if you carefully listen to what people say and observe how decisions are made or explained. Finally, unconsciously held assumptions and beliefs about the company are buried deep below the surface. These are the unwritten views and rules that are so strongly held and so widely shared that they are rarely discussed or even thought about unless someone attempts to change them or unknowingly violates them. Changing such assumptions and beliefs can be very difficult. Instead, managers should focus on the parts of the organizational culture they can control. These include observable surface-level items, such as workers’ behaviors and symbolic artifacts, and expressed values and beliefs, which can be influenced through employee selection.
