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CHAPTER 2 THE ENVIRONMENT AND CORPORATE CULTURE True/False Questions 1. The general environment and the task environment are the two layers of an organization's external environment. 2. The outer layer of the external environment is the task environment. 3. Customers and competitors are two important sectors of the economic dimension of a firm's general environment. 4. Current employees, management, and especially corporate culture are part of an organization's internal environment. *5. In response to decreasing supplies of oil, the automobile industry is preparing for the day when all cars will run on hydrogen. This is an example of how the political- legal dimension of the general environment influences an industry. *6. Wine merchants have seen extraordinary growth in the sale of red wine and an associated decline in other types of alcoholic beverages because a large percentage of the Chinese market has adopted red wine consumption as the fad of the moment. This is an example of how the sociocultural dimension can influence an industry. *7. One significant trend in the economic environment is entrepreneurial start-ups that are taking advantage of new competitive rules. *8. The legislatures in many undeveloped nations are reducing perceived operational risks for foreign investors who are looking for new manufacturing locations. This would be part of the legal-political dimension of the general environment. 9. The task environment includes sectors that have a direct working relationship with the organization, such as customers, suppliers, and the labor market. 10. Suppliers are the people in the environment who acquire goods and services from the organization. 11. In Islamic communities, Mecca-Cola and Qibla-Cola are competitors with Coca- Cola and Pepsi-Cola for the soft drink market. 12. If British Petroleum (BP) provides jet fuel for American Airlines (AA), then BP is considered a supplier for AA. 13. Cooperation with suppliers is becoming an exception rather than the rule.
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Chapter 2 – The Environment and Corporate Culture 14. People in the environment who can be hired to work for an organization make up the labor market. *15. The reason that organizations care so much about the external environment is that this environment creates uncertainty for organization managers. 16. The set of key values, beliefs, and norms that are shared by members of an organization are combined to create the symbols of an organization. 17. A symbol is a figure who exemplifies the deeds, character, and attributes of a corporate culture. 18. Corporate culture includes stories that keep an organization's values alive. *19. A slogan is a phrase or sentence that succinctly expresses a key corporate value. 20. An achievement culture is found in an environment that is dynamic and requires high-risk decision-making. 21. The involvement culture is suited to organizations that are concerned with serving specific customers in the external environment but without the intense need for flexibility and rapid change. 22. The consistency culture has an external focus and a consistency orientation for a dynamic environment. 23. When culture change is needed to adapt to the external environment, managers must become cultural leaders and learn how to use speech, symbols, and stories to influence underlying cultural assumptions. Multiple Choice Questions *1. The ____ includes all elements existing outside the boundary of the organization that have the potential to affect the organization. a. organizational environment b. internal environment c. task environment d. general environment e. technological environment
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