Richard L. Daft - Management. 9th ed., 2010

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ContinuingCasept1

General Motors

Part One: Introduction to

Management

General Motors Celebrates 100 Years

of Change and Innovation

Of the many important dates in automotive history,

September 16, 2008, marks both the end of an era and

a bold new beginning. On that historic Tuesday, eager

crowds packed the Renaissance Center in Detroit,

Michigan, to celebrate a once-in-a-lifetime event: the

100-year anniversary of General Motors (GM).

Following months of centennial-themed pageantry

and parades, the American automaker’s towering

headquarters had taken on a museumlike aura. On the

ground  oor sat immaculate showroom classics from

the company’s fabled past: an orange 1963 Corvette

Sting Ray, a pistachio 1952 Saab, a shiny black 1955

Chevrolet Bel Air coupe, an apple-green 1973 Opel

GT. Auto enthusiasts, reporters, and GM employees

alike gazed nostalgically on the rows of vintage cars

as the clock turned back to a glorious, bygone era in

America’s history.

Despite the irresistible charm projected by these

solid-steel visitors from GM’s legendary past, it was

a concept vehicle from the company’s future that had

the crowd’s engines revving on the main  oor. For

years, management at GM had talked of introducing

alternative-energy models that excite consumers and

protect the environment. Now, at this momentous cel-

ebration, the talk was over, and GM pulled back the

curtain on what it says is the future of the auto indus-

try: the Chevy Volt.

With its aerodynamic design and 40 miles of

emissions-free driving on a single electric charge,

GM’s  rst-ever plug-in electric vehicle is a far cry

from the gas-guzzling trucks and SUVs that delivered

the company’s greatest  nancial successes in recent

decades. Indeed, the Volt represents a sea change

for the world’s largest auto manufacturer. Unlike

hybrids that use electric power to improve the mile-

age of their gasoline engines, the Volt uses a gasoline

generator to assist the range of its battery-powered

electric drive unit. According to GM, driving the Volt

will save owners $1,500 annually in energy costs.

It’s no wonder company of cials cite the concept as

proof of GM’s intention to lead the reinvention of the

automobile.

But the arrival of the Volt comes at a pivotal moment

in GM’s history. Ripple effects from an international

mortgage crisis in 2008 triggered the industry’s worst

sales slump since 9/11. Soaring energy prices in the

same period forced management to abandon Hummer

and other super-sized models that once represented

hope for a  nancial recovery. But the list goes on. GM

also faces slumping shares, stupefying quarterly losses,

ballooning debt, steep competition from Toyota, pre-

carious dealings with labor unions, and almost insur-

mountable fuel-ef ciency regulations from the federal

government.

If history is any indication, GM will tackle these

challenges head on, displaying the same innova-

tive spirit that gave the business its  rst 100 years of

manufacturing excellence. Since its founding in 1908,

the automaker has repeatedly demonstrated its strong

capacity for innovation and change. From speedom-

eters (1901 Oldsmobile) and electric headlights (1909

Cadillac) to automatic transmissions (1940 Oldsmo-

bile) and mass-produced V-8 engines (1914 Cadillac),

GM teams have given the world hundreds of innova-

tive  rsts.

Whether it’s big-idea concepts that reshape the

future or smaller innovations that improve existing

products, CEO Rick Wagoner and his management

teams are developing the strategies that will guide

the company successfully for the next 100 years. In

his speech introducing the Volt’s historic unveiling,

Wagoner underscored the remarkable times in which

we are living. “GM’s centennial comes at an incred-

ible time in our industry. The entire world is watching,

hoping for a breakthrough in personal transportation

that will address the very real energy and environmen-

tal challenges facing the globe.”

The stakes have never been higher. If GM is to

avoid becoming a museum of America’s great auto-

mobile manufacturing past, management must deliver

breakthrough ideas that once again stoke consum-

ers’ passions. With the Chevy Volt in production and

a large cache of renowned brands including Cadillac,

Chevrolet, Pontiac, and Saturn, there is every reason to

believe GM will succeed.

Questions

1. Which management functions and skills enabled

GM’s leaders to cr

eate a bold vision for reinvent-

ing the automobile around green technology?

2. Identify social, political, and economic forces that

affect the auto industry and the practice of man-

agement at GM.

3. Which historical management perspective fueled

GM’s transformation into a manufacturing power-

house in the early twentieth century?

Introduction

SOURCES: Robert Snell, “GM Unveils Its Chevy Volt at Centennial

Celebration,” The Detroit News, September 16, 2008, http://www

.detnews.com (accessed October 8, 2008); Anita Lienert, “Aerodynamic

Chevrolet Volt Electriﬁ es GM’s 100th-Anniversary Celebration,” Inside

Line (September 16, 2008), http://www.edmunds.com/insideline (ac-

cessed October 10, 2008); David Phillips, “Innovations Propel Success,”

The Detroit News, September 16, 2008, http://www.detnews.com

(accessed October 7, 2008); “GM Starts Its Next 100 Years with New

Approach,” The Bay City Times, September 28, 2008, http://blog.mlive

.com/bcopinion/2008/09/gm_starts_its_next_100_years_w.html

(accessed October 11, 2008); David Kiley, “J.D. Power: Retail Sales To

Be 2 Million Lower in 2008,” BusinessWeek Online, October 8, 2008,

http://www.businessweek.com/autos/autobeat/archives/2008/10/

jd_power_retail.html (accessed October 11, 2008).

chapter3pt2

Learning Outcomes

Chapter Outline

After studying this chapter, you should be able to:

1. Describe the general and task environments and the dimensions of each.

2. Explain the strategies managers use to help organizations adapt to an

uncer

tain or turbulent environment.

3. Deﬁ

ne corporate culture and give organizational examples.

4. Explain organizational symbols, stories, heroes, slogans, and ceremonies

and their r

elationships to corporate culture.

5. Describe how corporate culture relates to the environment.

6. Deﬁ ne a cultural leader and explain the tools a cultural leader uses to

create a high-performance culture.

Are You Fit for Managerial Uncertainty?

The External Environment

General Environment

ask Environment

The Organization–Environment

Relationship

Environmental Uncertainty

Adapting to the Envir

onment

The Internal Environment: Corporate

Culture

Symbols

Stories

Her

oes

Slogans

Ceremonies

Environment and Culture

Adaptive Cultures

ypes of Cultures

New Manager Self-Test: Cultural Preference

Shaping Cor

porate Culture for Innovative

Response

Managing the High-Performance Culture

Cultur

al Leadership

The Environment and

Corporate Culture

Controlling

Planning

Environment

Organizing

Leading

Introduction

ARE YOU FIT FOR MANAGERIAL UNCERTAINTY?

Do you approach uncertainty with an open mind? Think

back to how you thought or behaved during a time

of uncertainty when you were in a formal or informal

leadership position. Please answer whether each of the

following items was Mostly True or Mostly False in that

circumstance.

Mostly

True

Mostly

False

1. Enjoyed hearing about new ideas

even when working toward a

deadline.

2. Welcomed unusual viewpoints of

others even if we were working

under pressure.

3. Made it a point to attend industry

trade shows and company events.

4. Speciﬁ cally encouraged others

to express opposing ideas and

arguments.

5. Asked “dumb” questions.

6. Always offered comments on the

meaning of data or issues.

7. Expressed a controversial opinion

to bosses and peers.

8. Suggested ways of improving my

and others’ ways of doing things.

SCORING AND INTERPRETATION: Give yourself one

point for each item you marked as Mostly True. If you

scored less than 5 you might want to start your career as

a manager in a stable rather than unstable environment.

A score of 5 or above suggests a higher level of mindful-

ness and a better ﬁ t for a new manager in an organization

with an uncertain environment.

In an organization in a highly uncertain environment

everything seems to be changing. In that case, an impor-

tant quality for a new manager is “mindfulness,” which

includes the qualities of being open-minded and an inde-

pendent thinker. In a stable environment, a manager with

a closed mind may perform okay because much work can

be done in the same old way. In an uncertain environ-

ment, even a new manager needs to facilitate new think-

ing, new ideas, and new ways of working. A high score on

the preceding items suggests higher mindfulness and a

better ﬁ t with an uncertain environment.

The environments in which businesses operate are increasingly dynamic, requir-

ing managers to be ready to react and respond to even subtle environmental shifts.

Mattel was shaken when it learned that a Chinese subcontractor used lead paint

while manufacturing its toys. Because of the potential health hazard, Mattel recalled

nearly 850,000 of its most popular toys—months before its holiday selling season.

Not only did the recall frighten consumers, but it sparked a global debate about

the safety of Chinese-made products. Mattel managers moved swiftly to reassure

nervous parents of its high safety standards in its Chinese factories. In addition,

CEO Robert Eckert explained the recall to consumers on the company’s Web site

and announced steps Mattel was taking to prevent further recalls.

Mattel’s prompt response, teamed with its long-standing history of successful

manufacturing in China, led many independent analysts and watchdog groups to

say that it may be the best role model for how to operate prudently in China. “Mattel

realized very early that they were always going to be in the crosshairs of sensitivi-

ties about child labor and product safety, and they knew they had to play it straight.

Mattel was in China before China was cool, and they learned to do business there in

a good way,” says M. Eric Johnson, a Dartmouth management professor.

Environmental surprises, like the one Mattel faced in China, leave some managers

unable to adapt their companies to new competition, shifting consumer interests, or new

PART 2 THE ENVIRONMENT OF MANAGEMENT64

technologies. The study of management traditionally focused on factors within the

organization—a closed-systems view—such as leading, motivating, and controlling

employees. The classical, behavioral, and management science schools described in

Chapter 2 looked at internal aspects of organizations over which managers have

direct control. These views are accurate but incomplete. To be effective, managers

must monitor and respond to the environment—an open-systems view. The events

that have the greatest impact on an organization typically originate in the external

environment. In addition, globalization and worldwide societal turbulence affect

companies in new ways, making the international environment of growing concern

to managers everywhere.

This chapter explores in detail components of the external environment and how

they affect the organization. The chapter also examines a major part of the organiza-

tion’s internal environment—corporate culture. Corporate culture is shaped by the

external environment and is an important part of the context within which managers

do their jobs.

THE EXTERNAL ENVIRONMENT

The tremendous and far-reaching changes occurring in today’s world can be

understood by de ning and examinng components of the external environment.

The external organizational environment includes all elements existing outside

the boundary of the organization that have the potential to affect the organization.

The environment includes competitors, resources, technology, and economic condi-

tions that in uence the organization. It does not include those events so far removed

from the organization that their impact is not perceived.

The organization’s external environment can be further conceptualized as having

two layers: general and task environments, as illustrated in Exhibit 3.1.

The general

environment is the outer layer that is widely dispersed and affects organizations

Technological

Customers

Management

Suppliers

Competitors

Labor Market

CultureEmployees

International

Legal/Political

Economics

Sociocultural

Natural

General Envir onment

Task

Environment

Internal

Environment

EXHIBIT 3.1

Location of the Organiza-

tion’s General, Task, and

Internal Environments

org

anizationa

environme

All

ements existin

outsi

e organization’s

oun

aries

ave t

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to a

gan

iza

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fec

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gan

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tly

CHAPTER 3 THE ENVIRONMENT AND CORPORATE CULTURE 65

Environment

indirectly. It includes social, economic, legal/political, international, natural, and

technological factors that in uence all organizations about equally. Increases in

the in ation rate or the percentage of dual-career couples in the workforce are part

of the organization’s general environment. These events do not directly change

day-to-day operations, but they do affect all organizations eventually. The task

environment is closer to the organization and includes the sectors that conduct

day-to-day transactions with the organization and directly in uence its basic oper-

ations and performance. It is generally considered to include competitors, suppli-

ers, customers, and the labor market.

The organization also has an internal environment, which includes the ele-

ments within the organization’s boundaries. The internal environment is composed

of current employees, management, and especially corporate culture, which de nes

employee behavior in the internal environment and how well the organization will

adapt to the external environment.

Exhibit 3.1 illustrates the relationship among the general, task, and internal envi-

ronments. As an open system, the organization draws resources from the external

environment and releases goods and services back to it. We will now discuss the two

layers of the external environment in more detail. Then we will discuss corporate

culture, the key element in the internal environment. Other aspects of the internal

environment, such as structure and technology, will be covered in later chapters of

this book.

General Environment

The general environment represents the outer layer of the

environment. These dimensions in uence the organiza-

tion over time but often are not involved in day-to-day

transactions with it. The dimensions of the general envi-

ronment include international, technological, sociocul-

tural, economic, legal-political, and natural.

International The international dimension of the

external environment represents events originating in

foreign countries as well as opportunities for U.S. com-

panies in other countries. Note in Exhibit 3.1 that the

international dimension represents a context that in u-

ences all other aspects of the external environment. The

international environment provides new competitors,

customers, and suppliers and shapes social, technologi-

cal, and economic trends as well.

Today, every company has to compete on a global

basis. High-quality, low-priced automobiles from Japan

and Korea have permanently changed the American auto-

mobile industry. In cell phones and handhelds, U.S.-based

companies face stiff competition from Korea’s Samsung,

Finland’s Nokia, and Taiwan’s High Tech Computer Cor-

poration (HTC). For many U.S. companies, such as Google,

domestic markets have become saturated, and the only

potential for growth lies overseas. Google’s mission is to

reach even the most far- ung corners of the globe by pro-

viding search results in more than 35 languages and a trans-

lation feature to users regardless of their native tongue.

The most dramatic change in the international envi-

ronment in recent years is the shift of economic power

to China and India. Together, these countries have the

population, brainpower, and dynamism to transform the

“The big idea behind fair trade is that

you can actually make globalization work for the poor,” says Paul

Rice, founder and CEO of TransFair USA. TransFair is the only U.S.

organization authorized to grant the Fair Trade logo to products

made from a growing list of crops, such as coffee, cocoa, and sugar,

for which farmers in developing countries have been paid a fair

price. The Oakland, California-based nonproﬁ t is inﬂ uencing the

international dimension of today’s business environment by helping

increase the sales of fair trade products around the world. Rice says

adhering to TransFair standards is just good business as the global

environment grows increasingly important.

tas

environment T

yer

e externa

environment

irect

ﬂ

uences t

ani

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ion

’

ope

rat

ion

erformance.

nterna

environmen

vironment t

at inc

e e

ements wit

in t

rganization’s

oun

aries.

nternationa

imension

ortion o

e externa

environ

ent t

at re

resents events

riginating in

oreign countrie

well as o

ortunities for U.

ies in other countries

PART 2 THE ENVIRONMENT OF MANAGEMENT66

global economy of the twenty- rst century. If things continue on the current track,

some analysts predict that India will overtake Germany as the world’s third-largest

economy within three decades, and China will overtake the United States as number

one by midcentury. In China, per capita income has tripled in a generation, and lead-

ers are building the infrastructure for decades of expansion, as re ected in the coun-

try’s hunger for raw materials. In 2005, China represented roughly 47 percent of the

global cement consumption, 30 percent of coal, and 26 percent of crude steel. No one

can predict the future, but it is clear that however things in India and China shake out,

U.S. and other western  rms have no choice but to pay attention.

The global environment represents a complex, ever-changing, and uneven playing

 eld compared with the domestic environment. Managers who are used to thinking

only about the domestic environment must learn new rules to remain competitive.

When operating globally, managers have to consider legal, political, sociocultural,

and economic factors not only in their home countries but in other countries as well.

Global managers working in China, for example, recognize that their competitive suc-

cess begins with their ability to build personal relationships and emotional bonds with

their Chinese contacts. The Manager’s Shoptalk offer tips for creating successful busi-

ness relationships in China.

Technological The technological dimension includes scienti c and technological

advancements in a speci c industry as well as in society at large. In recent years,

this dimension created massive changes for organizations in all industries. Twenty

years ago, many organizations didn’t even use desktop computers. Today, computer

networks, Internet access, handheld devices, videoconferencing capabilities, cell

phones, and laptops are the minimum tools for doing business. A new generation

of handhelds allows users to check their corporate e-mail, daily calendars, business

contacts, and even customer orders from any location with a wireless network. Cell

phones can now switch seamlessly between cellular networks and corporate WiFi

connections. Some companies hand out wireless key fobs with continually updated

security codes that enable employees to log onto their corporate networks and

securely view data or write e-mails from any PC with a broadband connection.

Other technological advances will affect organizations and managers. The decod-

ing of the human genome could lead to revolutionary medical advances. Cloning

technology and stem cell research are raising both

scienti c and ethical concerns. Because of microchip

innovations, Motorola can now make the MotoFone F3

affordable to the world’s poor, opening up vast eco-

nomic opportunities for entrepreneurs in developing

countries.

Nanotechnology, which refers to manipu-

lating matter at its tiniest scale, is moving from the

research lab to the marketplace. Some 1,200 nanotech-

nology start-ups have emerged around the world, and

smart managers at established organizations such as

3M, Dow Chemical, Samsung, NASA, Intel, Johnson &

Johnson, and IBM are investing research dollars in this

technological breakthrough.

Sociocultural The sociocultural dimension of the

general environment represents the demographic

characteristics as well as the norms, customs, and

values of the general population. Important socio-

cultural characteristics are geographical distribution

and population density, age, and education levels.

Today’s demographic pro les are the foundation of

tomorrow’s workforce and consumers. Forecasters

see increased globalization of both consumer markets

Want to get the best out of Generation Y

employees? Why not let your current Gen Y workers show you how?

That’s what Monarch Mountain, a ski and snowboard area near Salida,

Colorado, does. As millions of Gen Y employees ﬂ ood the job market,

companies are ﬁ nding ways to adapt to this shift in the sociocultural

dimension of the environment. At Monarch, young employees, not

managers, talk with prospective hires to answer questions and address

their concerns from the perspective of the job seeker. Through the “First

Responder” program, the employee provides a realistic picture of what it’s

like to work at Monarch and often becomes a mentor if the candidate is hired.

tec

ica

imension

imension o

enera

vironment t

at inc

ienti

ﬁ

c an

tec

ogica

vancements in t

e in

ustr

society at large.

ociocu

tura

imension

men

sio

gen

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ironment re

resentin

emograp

ic c

aracteristics,

orms, customs, and values of

ulation within which

ization o

ates.

CHAPTER 3 THE ENVIRONMENT AND CORPORATE CULTURE 67

Environment

With its low labor costs and huge potential mar-

ket, China is luring thousands of U.S. companies

in search of growth opportunities. Yet University

of New Haven’s Usha C. V. Haley recently found

that only one-third of multinationals doing busi-

ness in China have actually turned a pro t. One

reason Western businesses fall short of expectations,

experts agree, is that they fail to grasp the centuries-

old concept of guanxi that lies at the heart of Chinese

culture.

At its simplest level, guanxi is a supportive,

mutually bene cial connection between two people.

Eventually, those personal relationships are linked

together into a network, and it is through these net-

works that business gets done. Anyone considering

doing business in China should keep in mind the fol-

lowing basic rules:

▪ Business is always personal. It is impossible to

translate “don’t take it so personally—it’s only

business” into Chinese. Western managers tend

to believe that if they conclude a successful

transaction, a good business relationship will

follow. The development of a personal relation-

ship is an added bonus, but not really necessary

when it comes to getting things done. In the

Chinese business world, however, a personal

relationship must be in place before managers

even consider entering a business transaction.

Western managers doing business in China

should cultivate personal relationships—both

during and outside of business hours. Accept

any and all social invitations—for drinks, a

meal, or even a potentially embarrassing visit

to a karaoke bar.

▪ Don’t skip the small talk. Getting right down

to business and bypassing the small talk during

a meeting might feel like an ef cient use of time

to an American manager. To the Chinese, how-

ever, this approach neglects the all-important

work of forging an emotional bond. Be aware

that the real purpose of your initial meetings

with potential business partners is to begin

building a relationship, so keep your patience if

the deal you are planning to discuss never even

comes up.

▪ Remember that relationships are not short-

term. The work of establishing and nurturing

guanxi relationships in China is never done.

Western managers must put aside their usual

focus on short-term results and recognize that it

takes a long time for foreigners to be accepted

into a guanxi network. Often, foreign com-

panies must prove their trustworthiness and

reliability over time. For example,  rms that

weathered the political instability that culmi-

nated in the 1989 student protests in Tiananmen

Square found it much easier to do business

afterwards.

▪ Make contact frequently. Some experts recom-

mend hiring ethnic Chinese staff members

and then letting them do the heavy lifting of

relationship building. Others emphasize that

Westerners themselves should put plenty of

time and energy into forging links with Chinese

contacts; those efforts will pay off because the

contacts can smooth the way by tapping into

their own guanxi networks. Whatever the strat-

egy, contact should be frequent and personal.

In addition, be sure to keep careful track of the

contacts you make. In China, any and all rela-

tionships are bound to be important at some

point in time.

SOURCES: Michelle Dammon Loyalka, “Doing Business

in China,” BusinessWeek Online (January 6, 2006), www

.businessweek.com/smallbiz/; Los Angeles Chinese Learning

Center, “Chinese Business Culture,” http://chinese-school

.netﬁ rms.com/guanxi.html; and Beijing British Embassy,

“Golden Hints for Doing Business in China,” http://chinese-

school.netﬁ rms.com/goldenhints.html.

Creating

Guanxi

in China

Manager’sShoptalk

and the labor supply, with increasing diversity both within organizations and consumer

markets.

Consider the following key demographic trends in the United States:

1. The United States is experiencing the largest in ux of immigrants in more than a

century. The Hispanic population is expected to grow to 102.6 million, an increase

of 188 percent since 2000, and it will make up about a quarter of the U.S. popula-

tion by 2050. In this same time period, non-Hispanic whites will make up only

about 50 percent of the population, down from 74 percent in 1995 and 69 percent

in 2004.

PART 2 THE ENVIRONMENT OF MANAGEMENT68

2. Members of Generation Y are  ooding the workplace. To replace the 64 million

skilled workers who will start retiring by the end of this decade, companies will

be poised to attract Gen Y workers if they offer competitive salaries,  at hierar-

chies, support networks, work-life balance, challenging work, and feedback on

performance.

3. The fastest-growing type of living arrangement is single-father households, which

rose 62 percent in 10 years, even though two-parent and single-mother house-

holds are still much more numerous.

Demographic trends affect organizations in other countries just as powerfully.

Japan, Italy, and Germany are all faced with an aging workforce and customer base

due to years of declining birth rates. In both Italy and Japan, the proportion of people

over the age of 65 reached 20 percent in 2006.

Economic The economic dimension represents the general economic health of the

country or region in which the organization operates. Consumer purchasing power,

the unemployment rate, and interest rates are part of an organization’s economic

environment. Because organizations today are operating in a global environment, the

economic dimension has become exceedingly complex and creates enormous uncer-

tainty for managers. The economies of countries are more closely tied together now.

For example, the economic recession and the decline of consumer con dence in the

United States in the early 2000s affected economies and organizations around the

world. Similarly, economic problems in Asia and Europe had a tremendous impact

on companies and the stock market in the United States.

One signi cant recent trend in the economic environment is the frequency of

mergers and acquisitions. Citibank and Travelers merged to form Citigroup, IBM

purchased Pricewaterhouse Coopers Consulting, and Cingular acquired AT&T

Wireless. In the toy industry, the three largest toy makers—Hasbro, Mattel, and

Tyco—gobbled up at least a dozen smaller competitors within a few years. At the

same time, however, a tremendous vitality is evident in the small business sector

of the economy. Entrepreneurial start-ups are a signi cant aspect of today’s U.S.

economy and will be discussed in Appendix A.

Legal-Political The legal-political dimension includes government regula-

tions at the local, state, and federal levels, as well as political activities designed

to in uence company behavior. The U.S. political system encourages capitalism,

and the government tries not to overregulate business. However, government

laws do specify rules of the game. The federal government in uences organi-

zations through the Occupational Safety and Health Administration (OSHA),

Environmental Protection Agency (EPA), fair trade practices, libel statutes allow-

ing lawsuits against business, consumer protection legislation, product safety

requirements, import and export restrictions, and information and labeling

requirements. Many organizations also have to contend with government and

legal issues in other countries. The European Union (EU) adopted environmen-

tal and consumer protection rules that are costing American companies hundreds

of millions of dollars a year. Companies such as Hewlett-Packard, Ford Motor

Company, and General Electric have to pick up the bill for recycling the products

they sell in the EU, for example.

Managers must also recognize a variety of pressure groups that work within the

legal-political framework to in uence companies to behave in socially responsible

ways. Wake Up Wal-Mart, a union-backed campaign group, drums up public awareness

of Wal-Mart’s business practices to force the retailer to improve worker’s wages and

health care bene ts. The group’s campaign director hopes smaller companies will then

follow suit.

Other activists have boldly petitioned Home Depot, which introduced the

Eco Option brand for its environmentally friendly products, to stop advertising on Fox

News, whose hosts and commentators dismiss global warming as ludicrous.

eco

ension of the

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anization operates.

egal-political dimension

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udes

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e ways.

CHAPTER 3 THE ENVIRONMENT AND CORPORATE CULTURE 69

Environment

Natural In response to pressure from environmental

advocates, organizations have become increasingly sen-

sitive to the earth’s diminishing natural resources and the

environmental impact of their products. As a result, the

natural dimension of the external environment is grow-

ing in importance. The natural dimension includes all

elements that occur naturally on earth, including plants,

animals, rocks, and natural resources such as air, water,

and climate.

The natural dimension is different from other sectors

of the general environment because it has no voice of its

own. In uence on managers to meet needs in the natu-

ral environment may come from other sectors, such as

government regulation, consumer concerns, bad press in

the media, competitors’ actions, or even employees.

For

example, environmental groups advocate various action

and policy goals that include reduction and clean up of

man-made pollution, development of renewable energy

resources, and sustainable use of scarce resources such

as water, land, and air. More recently, there has been a

strong concern about climate change such as global

warming caused by greenhouse gases, most notably car-

bon dioxide.

Concern about the environment has prompted com-

panies to take these actions:

▪ Eliminating nonbiodegradable plastic bags from the

environment. Whole Foods will stop offering dispos-

able, plastic grocery bags in all 270 stores, replac-

ing them with recyclable bags. This change means

roughly 100 million plastic bags will be kept out of

the environment in the  rst eight months of the new

program.

▪ Improving ef ciency of plants and factories. Nissan’s

Sunderland (UK) factory will use eight wind turbines

to generate 6 percent of the plant’s energy require-

ment, cutting carbon dioxide emissions by 4,000 tons

per year. Toyota recycles 100,000 tons of wastewater a year in its reverse osmosis

facility in its Burnaston (UK) plant.

▪ Investing in cleaner technologies. GE, which once polluted the Hudson River

with polychlorinated biphenyls (PCBs) as it manufactured transformers, now

promises that it will invest $1.5 billion annually in researching cleaner forms of

technology by 2010, up from $700 million in 2004.

Task Environment

As described earlier, the task environment includes those sectors that have a direct

working relationship with the organization, among them customers, competitors,

suppliers, and the labor market.

Customers Those people and organizations in the environment that acquire goods

or services from the organization are customers. As recipients of the organization’s

output, customers are important because they determine the organization’s suc-

cess. Patients are the customers of hospitals, students the customers of schools, and

travelers the customers of airlines. Many companies are searching for ways to reach

the coveted teen and youth market by tying marketing messages into online social

High-school buddies Eric Ryan (left)

and Adam Lowry (right) make environmentally friendly products

look good. Their company, Method, produces nontoxic cleaning

products with a concern for the natural environment and packages

them in designer-looking bottles. Lowry, a chemical engineer, and

Ryan, with an advertising background, founded Method in 2000

and sales grew to nearly $100 million in 2007.

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