All organizations differ from each other in various aspects. However, these aspects are important in all organizations’ performance. No organization can function in isolation, regardless of external cues. Therefore, the enterprise is an open system that can exist only with the active interaction with the external environment that is supported by the internal factors – strengths. External environment of an organization includes the conditions and factors that arise regardless of the organization’s activities and have a significant impact on it. In addition, they contribute to performance and effectiveness of its work. The main environmental factors that affect behavior of an organization can be divided into four major groups: political and legal, economic, social and cultural, and technological.
Technological innovations affect efficiency of production and selling process of the product, the rate of obsolescence of the product, collection, storage, and distribution of information. It determines what kind of new products and services consumers expect from the organization. It is both organizational and external environment factor of general influence. Technical and technological progress affects the activities of the organization increasing the production capacity of existing products and services, creating conditions for emergence of new ones, thus increasing efficiency of a business. However, technical and technological progress dramatically shortens the time of products on the market, placing increased influence on their originality and quality.
Economic situation in the country is an important factor for the organization. There exists the possibility of both negative and positive effects of economic factors on the activities of specific organizations. Economy of the country where company is operating is very important to ensure the stability of company’s performance. It determines inflation and deflation, employment rate, stability of currency, tax rate that primary shows the success and length of company’s existence. Managers of the organization should be able to predict how economic changes impact operations of the organization. Situation with global exchange rates also affects the cost of all inputs and the ability of consumers to buy certain goods and services. Socio-cultural factors determine tastes of customers, how frequently their habits change, attitudes, expectations of society towards entrepreneurship, the role of managers and minorities in society, changes in social attitudes of companies, and effort to protect the interests of consumers.
Political factors include regulatory documents, regulations of politicians relating to antitrust agreements, federal and municipal government’s credits for long-term investments, restrictions on recruitment, and agreements on tariffs and trade with other countries. These factors determine company’s international policy and its performance in the international arena. To succeed on the international market, the manager must take into account differences in culture, economics, law, and political environment. Some of the consequence of the impact of the environment include changing of the organizational structure, revision of strategy, and changing goals. The most important characteristic for the company in the general business environment is the degree of variability of the environment. It depends on the type of activity, the level of scientific and technical progress, and on the political system.
Modern scientists believe that processes in the organization are first determined by the environment, and then by the inside situation and company’s strengths. External environment sets rules of the game, while the internal environment determines the success or failure.
The main purpose of the company is to meet the needs and demands of consumers. If companies cannot satisfy the needs of customers in a competitive economy, it is doomed to disappear from the “map” of the business. In contrast, manufacturers, whose products meet or exceed customers’ expectations have the best opportunity for growth and prosperity.
Customer-driven organizations seek opportunities to achieve a high degree of customer satisfaction. The company’s philosophy should focus on ensuring a high level of customer satisfaction and acceptable level of stakeholders’ satisfaction with a help of available resources. This can be achieved through one of three main methods. First, the company has the ability to increase customer satisfaction by reducing the price of the product or by increasing the level of service. Otherwise, it will experience the fall in profit rates. Second, the company is able to increase profitability of other products, in addition it will cause the increase of customer satisfaction, for example, upgrading the manufacturing process or by increasing investment in research and development. Thirdly, the company has to deal with a number of stakeholder groups: employees, dealers, suppliers, and shareholders. Changing the direction of the flow of resources with a purpose to benefit consumers may cause dissatisfaction of key partners of the company. Therefore, the customer-driven company is the one that puts customer satisfaction on the first place and is ready to do everything in order to raise its rate. For these companies customers’ satisfaction is the purpose of their activities and is the aim of all marketing strategies.
Quality-driven organizations consider the problem of product improvement and customer service improvement as priority. Many Japanese companies owe their success to their top quality products. Most consumers do not want to settle for mediocre quality of the product. If the company is committed to continue to “run at a distance,” to maintain high level of profit, it must adopt a system of total quality management (TQM). TQM is a widely used method for continuous improvement of quality of all organizational processes, products, and services. Such companies argue that quality is the best guarantee of customer loyalty, source of competitive advantage in with foreign producers, and the only way to sustain growth and high income. Quality-driven organizations are focused on the continuous improvement of its performance by constant innovation process. They also perform assessment by the statistical rates and measures of low-quality and defective percentage in the production process or service delivery. Finally, they are seeking for the ways to improvement the current performance.
Multicultural organization is one of the most difficult forms of international business. This company uses international strategy to find foreign markets, while focusing on production and complex global business philosophy, which involves economic activity in the foreign country and the world as a whole. The basic principles of multicultural organizations that help to distinguish this form of organization from other forms include corporate integrity, based on the principle of equity participation, focus on achieving common strategic goals and address common strategic objectives, the presence of a single management structure and a central control as a holding company, bank, or group interaction, and, finally, indefinite duration of company’s performance.
In present conditions there are many corporations in different countries and they have to deal with different national cultures. There are two theories that differentiate the methods of the workforce performance in the organization. Convergence theory shows that corporations with multicultural organization, regardless of the country, use the same techniques and methods of company’s activity and their culture become unique for every employee. On the other hand, divergence theory argues that national culture penetrates deep into the consciousness. No technique can change it, so national peculiarities should be taken into account. Multicultural organizations are based not only on cultural diversity, but also use opportunities and abilities of other nationalities. This allows companies to reduce the costs associated with staff turnover and attract new people, acquire qualified national staff, concentrate on the advantages of the national markets, promote creativity, solve problems in the determined country, and promote organizational flexibility.
In general, in today’s world, if multinational corporations want to operate effectively, they must have the following features:
- Ability to operate effectively in countries with different cultures by being flexible and considerate of other values and ideas;
- Intercultural communication;
- Cultural sensitivity, that is, the desire to understand another culture;
- Cultural adaptation – the ability to take up the specific cultural contexts.
The main purpose of multicultural organization is to develop such a workforce that would have different national or cultural peculiarities that can give company the ability to manage people, who have different values and thoughts about how business should be performed. In order to reach high level of creativity and perform effective brainstorming sessions, company gather people who are seeing, making, thinking, and doing in the different ways. This model is most frequently applied in the organizations, whose performance is connected with innovations.
As a result, different cultures have an impact on the method of control. However, management practices that are effective in one country are not always effective in the other. They also impact labor productivity: accounting culture can properly assign responsibilities, motivate, and so on. Finally, they influence the nature of international business: the world subject to general information technology, quality, etc. As a result, a company performs more effectively and efficiently in the market.
Many companies abroad understand the benefits of diversified organizational cultures and develop specific culture within the organization that encourages people to differ from each other.
“Glass ceiling” – a term of American management, introduced in the early 1980s to describe invisible and not formally designated barriers limiting women’s advancement through the career ladder for reasons unrelated to their professional skills. Subsequently, the term has been extended to other social groups and minorities (ethnic minorities, sexual minorities, etc.).
Women today face the problem of this invisible barrier. Thus, about 84% of top managers of 500 leading companies in the US are men, while women make up a significant part of all employees at the lowest levels in the companies. This barrier was created by deep-rooted stereotypes (e.g. gender stereotypes) for oppressed social groups and with the manifestation of the so-called fear of success of the last.
Today “glass ceiling” in women’s careers manifests itself in both their career positions and in the level of wages. Although now its nature had changed, but it still exists. Most of the women of our time, if not eliminated from decision-making positions as it was a few decades ago, often get positions in companies that have a semblance of power and prestige.
Glass ceiling phenomenon is manifested in different ways. Even if a woman is unable to advance to the leadership of the company, men are looking at her as an “upstart” and perceive her as a challenge to the emergence of “male ego.” Women find it difficult, if not impossible, to become part of “the company of old friends,” most of whom are men. Men feel easier with other men, and, therefore, perceive women membership in top management as undesirable. Women are at a disadvantage and it is usually hard to find a female executive since all senior positions are held by men. Majority of male leaders consider it to be risky to help women and teach move up the career ladder because it can undermine their own professional reputation and slow down career growth.
The “glass ceiling” factor is highly relevant for the members of minority groups. For example, because of numerous stereotypes concerning the nationality, people from Asia earn more and receive higher positions than an average person of the same region, however, native Americans receive less money and occupy worse position.
Workplace diversity is characterized by differences of experiences and perspectives of managed people in the organization. These differences are based on the discrepancy of the race, religion, culture, gender, sexual orientation, age, heritage, mental, and physical abilities. The diversified workplace strongly impacts organizational culture. Appropriate, effective, and efficient management of such personnel can give company a lot of benefits such as quick adoptability and flexibility, highly united workforce that has high level of tolerance. Such workplaces are differed by high level of creativity that provides numerous benefits for the company’s performance.
Diversified workplace also impacts organizational culture of the company. Such employees prefer to work in the informal organizational culture that encourages diversity. The best organizational structures that effectively satisfy the needs of the employees are matrix, circle and, project ones. Such organizational management empowers employees, motivates them, and, as a result, makes them involved into the process of continuous organizational improvement and customer orientation policy that allows employees’ full participation in the organization’s performance.
Cultural experience and differences in perceptions contribute to the development of different points of views and allow for broader problem discussion that has positive impact on the organizational performance as it leads to mutual problem understanding and solving. This in turn broadens one’s outlook, increases the level of tolerance, and develops emotional intelligence of employees. Thus, emotional intelligence increases the mobility and communication techniques of personnel and encourages leadership development and socialization. These promote staff cohesion, which gives competitive advantage in the organizational problem solving and decreases the level of labor turnover and absenteeism. These factors build company’s unique knowledge base and can be seen as the unique value advantage. High level of staff cohesion builds employees commitment to the success of organization and encourages them to make moral and discretionary effort. Therefore, the diversified workplace positively contributes to organizational culture and supports its development.