Introduction to

Management
Dr. Menatallah Darrag & Dr. Dalia Abdelwahab

Lecture
3
Chapter 3: Organizational Culture &
Environment
 Learning Objectives

 Contrast the actions of managers according to the omnipotent and symbolic views.

 Describe the constraints and challenges facing managers in today’s external environment.

 Discuss the characteristics and importance of organizational culture.

 Describe current issues in organizational culture.

 The Manager: Omnipotent or Symbolic?
How much difference does a manager make in how an organization
performs?
In the omnipotent view of management, a manager's role is to create meaning out of
randomness, confusion, and ambiguity False

 Omnipotent view: managers are directly responsible for an

organization’s success or failure. This is the dominant view
in management theory and society in general.

 Symbolic view: much of an organization’s success or

failure is due to external forces outside managers’
control. This is the counter opinion.
The symbolic view of management is based upon the belief that managers symbolize ________.
A) decisions of top management
C) control and influence Answer: C

According to the symbolic view, managers have a(n) ________ effect on substantive
organizational outcomes.
A) neutral B) limited C) unlimited D) controlling
Answer: B
 Managerial Constraints
 In reality, managers are neither all-powerful nor helpless. But their decisions
and actions are constrained.

o Internal constraints come from the organization’s culture.

o External constraints come from the organization’s environment.
 The External Environment

External Environment:
o Includes factors and forces outside the
organization that affect the organization’s
performance.
o It is composed of:
• Specific environment: external forces
that have a direct and immediate impact
on the organization.
• General environment: broad economic,
socio-cultural, political/legal, demographic,
technological, and global conditions that
may affect the organization.

Exhibit 3–9 The External Environment

 Specific Environment:
Customers
27) The part of the environment directly related to achievement of an organization's goals is the
specific environment. TRUE

- An organization exists to meet the

needs of customers who use its
output.
Customers unique and changes wz conditions
- Customers represent potential
uncertainty to an organization
because:
- their tastes can change
- or they can become dissatisfied
with the organization’s products
or services.
 Specific Environment:
Suppliers Suppliers
- Suppliers ensure a steady flow of
needed inputs (supplies).

- Aside of raw materials or

intermediary products, they also
can provide financial and labor
inputs.

- Any limitation or delay in delivery

can constrain managers’ decisions
and actions.
 Specific Environment:
Competitors

- All organizations ‒ profit and not-

for-profit ‒ have competitors.

- Managers cannot afford to ignore

Competitors the competition.

In addition to suppliers and customers, each of the following might also be considered Kateb
Co.
stakeholders except ________.
123) _____
A) competitors and media B) communities and unions
C) all of the above D) none of the above

D
 Specific Environment:
Public Pressure Groups

Public - Managers must recognize special-

Pressure interest groups that attempt to
Groups influence the actions of
organizations.
Exhibit 3-2 Components of External Environment (General Environment)

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
 The External Environment
A decrease in contributions from the public to charities such as the Red Crescent or Red Cross is
most likely the result of which of the following general environmental factors?
A) Economic B) Technological C) Social D) Political
Answer: A
 Those factors and forces outside the organization that affect its performance
 Economic (e.g. interest rates, inflation, changes in disposable income, stock market fluctuations,
and business cycle stages).
 Demographic (e.g. age, race, gender, education level, geographic location, and family
composition).
 Political/Legal (e.g. local laws as well as global laws and laws of other countries, & also includes
a country’s political conditions and stability).
 Sociocultural (e.g. as values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of
behavior).
 Technological (i.e. scientific or industrial innovations). NOT INCLUDES INDUSTRY

 Global (i.e. issues associated with globalization and a world economy).

Compared to the specific environment, which of the following is an accurate statement about the
general environment of an organization?
A) It is predominantly the concern of upper management.
B) It has about the same impact on an organization's operations.
C) It has less impact on the organization's operations.
D) It has more impact on the organization's operations.
Answer: C
Source: https://managementtheoriesnestle.wordpress.com/2014/09/04/external-environment/
Economic
General environment: Economic
Environment
Interest rates, inflation, changes in
disposable income, stock market
fluctuations, and the stage of the
general business cycle are some
economic factors that can affect
management practices in an
organization.
 Nestlé is facing increased commodity
costs. The maker of products from Crunch
chocolate bars to Nescafé coffee to Purina
pet food has seen the price of chocolate,
for instance, increase by nearly 30
percent in five years. Overall, Nestlé
spends more than $30 billion a year on raw
materials.

 Rising costs are also affecting the cost of

sushi. Higher global demand for fish and
the Japanese and U.S. currency exchange
rates are influencing prices.
 General environment:
Political/Legal Environment
Political/Legal
•Local laws, as well as global and other
country laws and regulations, influence
what organizations can and cannot do.

•They reduce managerial discretion by

limiting available choices. (Example:
legal implications of dismissing an
employee)

•Impact of stability on organizations.

Source: https://managementtheoriesnestle.wordpress.com/2014/09/04/external-environment/
https://www.nestle.com.my/aboutus/our-halal-commitment/nestle-malaysia-halal-policy
 General environment:
Sociocultural Environment
• Managers must adapt their
practices to the changing
expectations of the society in
which they operate.

• As these values, customs, and

Sociocultural tastes change, managers must also
change.

E.g.: As workers increasingly seek a

work–life balance, organizations offer
solutions.
Source: https://managementtheoriesnestle.wordpress.com/2014/09/04/external-environment/
https://www.nestle.com/aboutus/strategy
Demographics General environment:
Demographical Environment
• Demographic conditions
encompass trends in population
characteristics such as gender, age,
level of education, geographic
location, income, and family
composition.

• Changes in these characteristics

may constrain how managers plan,
organize, lead, and control.
According to Mintel (2011), ” The group that buys the most yoghurt is that
of women and households with children aged 1-9″. The current target
market of Nestlé is working mothers, aged between 35-44 years old
with older kids. However, an 11% increase in the number of children
aged 5-9 year olds is expected between 2012 and 2017. This gives
potential of growth and more affluent families being more likely to be
yoghurt consumers, and are likely to consume more of it (Mintel, 2011).

Source: https://www.ukessays.com/essays/marketing/the-macro-environmental-analysis-marketing-essay.php
 General environment:
Technological Environment
• The most rapid changes have
occurred in technology.
Technological
• Companies that capitalize on
technology, such as General Electric,
eBay, and Google, prosper.
Source: https://managementtheoriesnestle.wordpress.com/2014/09/04/external-environment/
https://www.nestle.com/aboutus/strategy
Global

General environment: Global

dimension
• Globalization is one of the major
factors affecting managers and
organizations.

• Managers are challenged by an

increasing number of global
competitors.
 How the External Environment Affects Managers?
1. Assessing Environmental Uncertainty

 Environmental uncertainty: the degree of change and complexity in an

organization’s environment. It has two dimensions:

Degree of Change Environmental

(Stable to dynamic) Complexity
(Simple to complex)

 If the components in an organization’s environment change  It looks at the number of components in an organization’s
frequently, it’s a dynamic environment. environment and the extent of the knowledge that the organization
 If change is minimal, it’s a stable one. has about those components.
 A stable environment might be one with no new  An organization with fewer competitors, customers, suppliers,
competitors, few technological breakthroughs by current government agencies, and so forth faces a less complex and
competitors, little activity by pressure groups to influence the uncertain environment.
organization, and so forth.  Complexity is also measured in terms of the knowledge an
organization needs about its environment.
 Examples explaining the Degree of Change
(Stable Vs. Dynamic)

Abu Dhabi Aviation is the largest Departmental stores make one around In the recorded music industry ,
commercial helicopter operator in the one third of their sales just before the digital formats and music download
ME., operating 59 helicopters and holiday seasons. The drop-off after the sites have turned the industry upside
employing over 748 personnel holiday season is significant down

Stable or Dynamic? Stable or Dynamic? Stable or Dynamic?

 Examples Explaining the Degree of Change
(Stable Vs. Dynamic)

Abu Dhabi Aviation is the largest Departmental stores make one around In the recoded music industry ,
commercial helicopter operator in the one third of their sales just before the digital formats and music download
ME., operating 59 helicopters and holiday seasons. The drop-off after the sites have turned the industry upside
employing over 748 personnel holiday season is significant down

Stable Stable Dynamic

Example on How to Reduce the Complexity of the Environment
Hasbro Toy Company

 Hasbro toy company (one of the

largest toy manufacturer in the
world) simplified its environment
by acquiring many of its
competitors

 When an organization has fewer

competitors, customers, suppliers
and so forth, the less complex and
uncertain its environment is
 Exhibit 3-3 Environmental Uncertainty Matrix

Which cell is expected to show most and least Managerial influence?

Managers have the greatest influence on organizational outcomes in cell 1 and the least in cell 4. Because uncertainty poses a threat
to an organization’s effectiveness, managers try to minimize it.

Because certainty is a threat to an organization's effectiveness, managers try to minimize it. FALSE
Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
How the External Environment Affects Managers?
2. Managing Stakeholder Relationships
 Stakeholders: any constituencies in the organization’s environment that are affected by
an organization’s decisions and actions.
 These groups have a stake in or are significantly influenced by what the organization
does. In turn, these groups can influence the organization.
 The nature of stakeholder relationships is another way in which the environment
influences managers. The more obvious and secure these relationships are, the more
influence managers will have over organizational outcomes.
 Management researchers who have looked at this issue are finding that managers of
high-performing companies tend to consider the interests of all major
stakeholder groups as they make decisions.
 Managing Stakeholder Relationships

1. Identify the organization’s

external stakeholders.

2. Determine the particular

interests and concerns of the
external stakeholders.

3. Decide how critical each

external stakeholder is to the
organization.

4. Determine how to manage each

individual external stakeholder
relationship.

Exhibit 3–14 Organizational Stakeholders

Benefits of Good Stakeholder Relationships

It is the “right” thing to do. As an organization depends on these external groups as

sources of inputs (resources) and as outlets for outputs (goods and services), managers
need to consider their interests as they make decisions.

 Improved predictability of environmental changes

 Increased successful innovations

 Increased trust among stakeholders

 Greater organizational flexibility to reduce the impact of change

  Just as each individual has a unique personality traits and
characteristics influence the way we act and interact with others; an
organization, too, has a personality, which is referred to as
organizational culture

 Organizational culture is the shared values, principles, traditions,

What is and ways of doing things that influence the way organizational
Organizational members act and that distinguish the organization from other
organizations
Culture?  An organization’s culture can make employees feel included,
empowered, and supported or it can make them feel the opposite.

 Because culture can be a very powerful agent in organizations, it

is very important for managers to pay attention to it
 What is Organizational Culture?
 Thus, the definition of culture implies three things.
 First, culture is a perception. It’s not something that can be
physically touched or seen, but employees perceive it on the
basis of what they experience within the organization.

 Second, organizational culture is descriptive. It’s concerned

with how members perceive the culture and describe it, not
with whether they like it.

 Finally, even though individuals may have different

backgrounds or work at different organizational levels, they
tend to describe the organization’s culture in similar
terms. That’s the shared aspect of culture.

63) Which of the following is most likely to have a highly ethical organizational culture?
A) a highly aggressive, competitive business
B) a business with outgoing and friendly employees
C) a company with high risk tolerance
D) a business that focuses strictly on outcomes
Answer: C
 Exhibit 3-5 Dimensions of Organizational Culture

 Describing an organization
using these seven dimensions
gives a composite picture of
the organization’s culture.

 These dimensions range from

low to high, meaning it’s not
very typical of the culture (low)
or is very typical of the culture
(high).

 In many organizations, one

dimensions often is
emphasized than others and it
shapes the organization’s
personality and the way
organizational members work.
Sony Corporation's focus on product innovation is an example of which of the following
dimensions of organizational culture?
outcome orientation

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
 Exhibit 3-6 Contrasting Organizational Culture

 Risk-taking and change discouraged

 Creativity discouraged
 Close managerial supervision
 Work designed around individual employees

 Risk-taking and change rewarded

 Creativity and innovation rewarded
 Management trusts employees
 Work designed around teams
Can you list some of the multinational corporations with best
corporate cultures?
Top Global Corporate Cultures in 2019 According to Forbes Magazine

“There is a consistent effort to be transparent and have a "Intangibles are great. People are cool; opportunities are
diverse work culture. People are encouraged to speak up and around, quality of life, in general, is high." – Google
solve problems.” – Microsoft

https://www.forbes.com/sites/rachelmontanez/2019/12/10/the-best-companies-for-corporate-culture-in-2019/#5b4abec96dc3
 https://www.careeraddict.com/best-company-culture

Other Top Global Corporate Cultures in 2019

 Netflix’s culture is described by freedom and  Airbnb’s motto ‘Belong anywhere’ isn’t limited
The coffee giant is strongly committed to to its customer base.
responsibility. inclusion, diversity and equity.
It expects its staff to strive for excellence and work  Indeed, the online lodging marketplace
 Indeed, regardless of their role, all Starbucks strives to create an environment where all its
as a team to achieve the best results they can. employees are referred to as partners in order to employees can find their place.
Employees love the sense of trust and flexibility form a sense of unity.
that they have, as the company encourages its staff  Its staff get the complete Airbnb experience
 Beyond in-store discounts and free coffee and too, as the company offers travel coupons that
to take the initiative and create their own work tea, Starbucks partners have their pick on stock
schedules. allow its employees to come in direct contact
options, tuition support, health insurance and with their work.
even a crisis fund
41
https://www.greatplacetowork.com/worlds-best-workplaces
In your opinion, which companies are known for good corporate
culture in Egypt?
Example of Multinationals Identified as
Best Employers in Egypt for the year 2023

https://www.linkedin.com/pulse/top-companies-2023-15-best-workplaces-grow-your-2f/
 Best Places to Work is an international certification program, considered as the
‘Platinum Standard’ in identifying and recognizing top workplaces around the world,
providing employers the opportunity to learn more about the engagement and the
satisfaction of their employees and honour those who deliver an outstanding work
experience with the highest standards in regards to working conditions.

(1) BSH Egypt, an affiliate of the world's leading home appliance company, was
awarded the top position
(2) Schneider Electric, an affiliate of the French multinational company providing
energy and automation digital solutions.
(3) Parkville, a leading pharmaceutical came in the third position followed by
(4) Zoetis Egypt, an affiliate of the world’s largest global animal health company.
(5) El Ezaby pharmacy, the leading provider of health and personal care products
came in the fifth position followed by
(6) Magrabi and (7) Jamjoom pharma.

44
https://www.linkedin.com/company/thebestplacestoworkinegypt/?originalSubdomain=eg; https://www.egypt-business.com/web/details/2250-the-top-7-best-places-to-work-in-egypt-for-2022-
revealed/424918#:~:text=BSH%20Egypt%20was%20awarded%20the%20top%20position%20followed%20by%20Schneider%20Electric.&text=BSH%2C%20Schneider%20Electric%2C%20Parkville%2C,
Places%20to%20Work%E2%80%9D%20certification%20program.
Organizational Culture
Strong Organizational Cultures
 Organizational cultures can be either Strong or Weak ones.
 Most organizations have moderate to strong cultures; that is, there is relatively high
agreement on what’s important, what defines “good” employee behavior, what it
takes to get ahead, and so forth.

 The stronger a culture becomes, the more it affects the way managers plan,
organize, lead, and control.

 Strong cultures are ones in which the key values are intensely held and widely
shared
 Strong cultures have a greater influence on employees than weaker cultures.

 The more employees accept the organization’s key values and the greater their
commitment to those values, the stronger the culture is.
Organizational Culture
Strong Organizational Cultures

Some factors Influencing

the Strength of Culture Benefits of a Strong Culture
• Size of the organization are:
• Age of the organization
• Creating a stronger employee
• Rate of employee turnover commitment to the organization.
• Clarity of cultural values and • Aiding in the recruitment and
beliefs socialization of new employees.
• Fostering higher organizational
performance by instilling and
promoting employee initiative.
 Exhibit 3-7 Strong Versus Weak Cultures

Strong Cultures Weak Cultures

Values widely shared Values limited to a few people – usually
top management
Culture conveys consistent messages Culture sends contradictory messages
about what’s important about what’s important
Most employees can tell stories about Employees have little knowledge of
company history or heroes company history or heroes
Employees strongly identify with culture Employees have little identification with
culture
Strong connection between shared Little connection between shared values
values and behaviors and behaviors

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
48
https://images.forbes.com/forbesinsights/StudyPDFs/ASQ_CultureofQuality_REPORT.pdf
What is the possible impact of toxic corporate cultures on workers
and on the company itself?
Toxic Workplace Cultures Hurt Workers and Company Profits

https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/toxic-workplace-culture-repo
Toxic Workplace Cultures Hurt Workers and Company Profits

https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/toxic-workplace-culture-report.aspx
Where do Organizational Cultures Come From ?
and How do they Continue?
Organizational Culture
Where Culture Comes From? and How it Continues?

 The original source of the culture usually reflects the vision of the founders.

 Company founders are not constrained by previous customs or approaches and can
establish the early culture by articulating a vision of what they want the organization to
be.

 Also, the small size of most new organizations makes it easier to instill that vision with
all organizational members.

 Once the culture is in place, certain organizational practices help maintain it.

 For instance, during the employee selection process, managers typically judge job
candidates not only on the job requirements, but also on how well they might fit into
the organization. At the same time, job candidates find out information about the
organization and determine whether they are comfortable with what they see.
Mariam was surprised to find that most organizational cultures are ________.
A) weak
C) weak to moderate
B) moderate to strong
Answer: B
 Organizational Culture
Where Culture Comes From? and How it Continues?

 The actions of top managers also have a major impact on the organization’s culture.

 Through what they say and how they behave, top managers establish norms that
filter down through the organization and can have a positive effect on employees’
behaviors.

 For instance, Gravity CEO, Dan Price, raised the minimum wage at his firm to $70,000
annually and has cut his million dollar salary to fund those pay increases. Since making
this decision, Gravity’s financial performance increased.

 However, as we’ve seen in numerous corporate ethics scandals, the actions of top
managers also can lead to undesirable outcomes.
A real estate certification program would be considered as
The company plans to introduce the new product into a particular segment of its market. This which of the following for your
segment represents which of the following to the organization as a whole? organization?
119) _____ 122) _____
A) sociocultural condition B) general environment A) demographic group B) pressure group
C) political/legal condition D) specific environment C) supplier D) customer
Answer: D Answer: C
Organizational Culture
Sources of Organizational Culture
• The organization’s founder
• Vision and mission
• Past practices of the organization
• The way things have been done
• The behavior of top management

Continuation of the Organizational Culture is tied to the:

• Recruitment of like-minded employees who “fit”
• Socialization of new employees to help them adapt to the culture

Exhibit 3–5 Establishing and Maintaining Culture

How do employees learn about an organizational culture?
Organizational Culture
How do Employees Learn about an Org. Culture?

 Stories:
• They typically contain a narrative of significant events or people, including such
things as the organization’s founders, rule breaking, reactions to past mistakes, and
so forth.
• To help employees learn the culture, organizational stories anchor the present in the
past, provide explanations and legitimacy for current practices, exemplify what is
important to the organization, and provide compelling pictures of an organization’s
goals

 Rituals:
• They are repetitive sequences of activities that express and reinforce the important
values and goals of the organization.
• E.g. annual awards ceremony for sales representatives.
 Low risk tolerance generally leads to high ethical standards within an organization. False

Organizational Culture
How do Employees Learn about an Org. Culture?
• Language:
• Many organizations and units within organizations use language as a way to identify and
unite members of a culture.
• Over time, organizations often develop unique terms to describe equipment, key
personnel, suppliers, customers, processes, or products related to its business. New
employees are frequently overwhelmed with acronyms and jargon that, after a short period
of time, become a natural part of their language. Once learned, this language acts as a
common denominator that bonds members.

• Material Artifacts and Symbols:

• The layout of an organization’s facilities, how employees dress, the types of automobiles
provided to top executives, and the availability of corporate aircraft are examples of
material symbols.
• Others include the size of offices, the elegance of furnishings, executive “perks” (extra
benefits provided to managers such as health club memberships, use of company-owned
facilities, and so forth), employee fitness centers or on-site dining facilities, and reserved
parking spaces for certain employees.
 Organizational Culture
How Cultures Affect Managers?
Exhibit 3-9 Types of Managerial Decisions Affected by Culture

 Because an organization’s culture

constrains what they can and cannot
do and how they manage, it’s
particularly relevant to managers.

 Such constraints are rarely explicit.

They’re not written down. It’s unlikely
they’ll even be spoken of. But they’re
there, and all managers quickly learn
what to do and not do in their
organization.
 Current Organizational Culture Issues

 Creating an ethical/ sustainability culture

 Creating an innovative culture

 Creating a customer-responsive culture

 Creating a culture that supports diversity

 Spirituality and Organizational culture

 Creating a Sustainability Culture

 For many companies, sustainability is developed into the organization’s overall

culture.
 Companies can create rituals to create and maintain sustainability cultures.
 Some practices could be:
 Having a “Social Responsibility Day.”
 Recycling integration within the value-chain.
 Alternatively, managers may use rewards.
 Management begins each corporate meeting with the topic of sustainability.
 Employees’ bonuses are tied to meeting sustainability goals.
 Creating an Innovative Culture

An innovative culture is characterized by:

 Challenge and involvement (Are employee involved in,

motivated by and committed to the long-term goals)?
In a survey of senior executives, over half said that the  Freedom (Can employees independently define their work
most important driver of innovation for companies was and take initiative in their day-to-day activities?)
a supportive corporate culture.
 Trust and openness (Are employees supportive and
But not every company has established an adequate respective to each other?)
culture to foster innovation.  Idea time (Do employees have time to elaborate on new
idea before taking actions?)
In a survey of employees, about half expressed that a
culture of management support is very important to the  Playfulness/humor (is the workplace spontaneous and
generation of innovative ideas, but only 20 percent fun?)
believe that management actually provides such
 Conflict resolution (Do individuals make decisions based
support. on the good of the organization vs. personal interest?)

 Debates (Are employees allowed to express opinions?)

 Risk taking (Do managers tolerate uncertainty and

ambiguity and are employees rewarded for taking risks?)
Exhibit 3-10 Creating a Customer Responsive Culture

Characteristics of Suggestions for Managers

Customer Responsive
Culture
Type of employee Hire people with personalities and attitudes consistent with
customer service: friendly, attentive, enthusiastic, patient,
good listening skills
Type of job environment Design jobs so employees have as much control as possible
to satisfy customers, without rigid rules and procedures

Empowerment Give service-contact employees the discretion to make day-

to-day decisions on job-related activities

Role clarity Reduce uncertainty about what service-contact employees

can and cannot do by continual training on product
knowledge, listening, and other behavioral skills
Consistent desire to satisfy Clarify organization’s commitment to do whatever it takes,
and delight customers even if it’s outside an employee’s normal job requirements

Copyright © 2018, 2016, 2014 Pearson Education, Inc. All Rights Reserved
Creating a Culture Supporting Diversity

The main concept is to encourage inclusion of diverse

workforce regardless of race, age, sex, color, religion,
marital status, mental or physical disability or any other
factor.

1. Managers should value diversity through their

decision making and actions (e.g. in hiring, value
competencies only).

2. Reinforce employee behaviors that champion

inclusiveness (e.g. celebrate those who fend for
diversity).
 Spirituality and Organizational Culture
Which of the following accurately reflects four values of the Saudi conglomerate, Savola?
Answe A) Honesty, Conscientiousness, caring justice, and personal control

Workplace Spirituality is the Characteristics of a Spiritual

recognition that people have an inner life Organization
that nourishes and is nourished by • Strong sense of purpose
meaningful work that takes place in the • Focus on individual development
context of community.
• Trust and openness
• Employee empowerment
Benefits of Spirituality: • Toleration of employees’ expression
• Improved employee productivity
• Reduction of employee turnover
• Stronger organizational performance
• Increased creativity
• Increased employee satisfaction
Workplace spirituality has become important in the contemporary workplace because it
• Increased team performance helps to
A) bring religion into business B) restore a sense of community
D) boost company profits C) reduce unemployment rates
Answer: b
Thank you