Organizational Environment, Culture & Leadership in Global Business

Posted on Jan 6, 2026 in Business Administration and Management (BAM)

Organizational Environment

Internal Environment – Inside the Company

All internal elements are interconnected and influence how efficiently the company works. These are factors the company can directly control:

  • Mission: Defines the company’s purpose and direction.
  • Management and Culture: Leadership style, values, communication, and work atmosphere.
  • Structure: How the company is organized (departments, hierarchy, coordination).
  • Resources: Human, financial, physical, and informational resources.
  • Systems and Processes: Procedures and methods used to produce goods/services (quality, operations, workflow).

External Environment – Outside the Company

The external environment includes factors outside the company that it cannot control, but must monitor and adapt to.

Task Environment (direct impact on daily operations)

  • Customers: Business success depends on satisfying customer needs.
  • Suppliers: Provide the resources the company uses.
  • Competition: Firms must compete to attract customers.
  • Labor Force: Employees directly influence performance.
  • Shareholders: Owners can affect managerial decisions.

General Environment (broader long-term forces)

  • Technology: Changes how products are created and how fast business operates.
  • Economy: Economic conditions (inflation, interest rates, exchange rates) affect business results.
  • Government: Laws and regulations shape corporate behaviour.
  • Society / Social Trends: Society defines acceptable business practices.
  • Crisis / Unexpected Events: Sudden events that strongly impact the firm.

Global Environment

Includes international factors affecting the company (laws, cultures, markets, and economic conditions of different countries).

Types of Businesses

Globalization has changed how companies operate and compete worldwide.

  • Global mindset: Ability to understand and influence people and organisations across different countries and cultures.
  • Environmental scanning: Monitoring external factors (economic, social, political, technological) that may impact the firm.

Types of Businesses

  • Domestic Business: Operates only within one country. No international presence.
  • International Company: Based in one country but conducts business in others.
  • Multinational Corporation (MNC): Has ownership or operations in two or more countries.

Organizational Culture

Organizational culture is a shared set of beliefs and practices that define appropriate relationships and activities.

Artefacts of organizational culture

  • Heroes: People who have made outstanding contributions to their organisations.
  • Stories: Narratives that convey cultural knowledge, often about important people who made extraordinary efforts.
  • Slogans
  • Symbols
  • Rituals
  • Ceremonies

Levels:

  1. Behavior: Visible actions—what employees do and say.
  2. Values and Beliefs: What people believe they should do.
  3. Assumptions: Things that people think are true.

Culture and Social Groups

  • In-group: A group you feel you belong to and identify with.
  • Out-group: A group you do not feel connected to and do not see yourself as part of.
  • Stereotype: A simple and often incorrect idea that many people have about a type of person.
  • Ethnocentrism: The belief that your own culture is the most important and that other cultures should be judged based on your own.

Culture, Ethics and Social Responsibility

Ethics are standards of right and wrong that influence behaviour.

Views on Ethics:

  • Utilitarian view: Do what helps the most people.
  • Rights view: Respect everyone’s rights.
  • Justice view: Be fair to everyone.
  • Universalism: Follow the same moral rules everywhere.
  • Relativism: Follow the morals of the local culture.

Supply Chain Management

  • Global supply chains connect companies around the world to produce and deliver goods.
  • They allow firms to reduce costs by sourcing materials and labor from different countries.
  • Supply chains depend on transportation, technology, and coordination between many partners.
  • Risks include delays, natural disasters, political issues, and supplier failures.
  • Companies improve supply chain resilience through diversification, local sourcing, and better data systems.
  • Sustainability and ethical practices are becoming more important for global supply chains.

Leadership

Behavioral theories say leadership is learned through actions, not traits. There are two main behaviors: task-oriented (structure-initiating) and people-oriented (consideration). The Managerial Grid shows five leadership styles based on task vs. people focus: country-club, authority-obedience, impoverished, organization-person, and team-style.

Path-Goal Theory (PGT)

The leader’s job is to clear the path so followers reach goals. The leader adapts style to follower needs and the situation. Four leadership styles: Directive, Supportive, Participative, Achievement-Oriented.

Relational Theories (LMX)

Leadership is the quality of the relationship between a leader and each follower. Leaders form different-quality exchanges (not all followers are treated the same). Trust is the willingness to be vulnerable, built on:

  • Ability: Leader is competent.
  • Benevolence: Leader cares.
  • Integrity: Leader acts ethically.

Transformational and Contemporary Leadership

Transformational Leadership (Full-Range Model): Two types:

  1. Transactional: Basic exchanges (rewards and correction).
  2. Transformational: Inspires people to exceed expectations. Four I’s: Idealized Influence; Inspirational Motivation; Intellectual Stimulation; Individualized Consideration.

Contemporary / Values-Based Approaches:

  • Ethical Leadership: Doing the right thing consistently.
  • Servant Leadership: Leader serves followers first.
  • Authentic Leadership: Leader acts according to real values and self-awareness.

Emotional Intelligence

Emotional intelligence means understanding and managing your own emotions and the emotions of others. It is an important skill in modern management, especially in marketing. EI helps managers make better and more empathetic decisions. It allows teams to communicate better and avoid unnecessary conflicts. Managers with high EI can motivate their team and create a positive work environment. EI helps companies build stronger relationships with customers and other stakeholders. Overall, emotional intelligence is essential for success in today’s fast-changing business world.

Business Analysis (example)

Porter’s 5 forces

  1. Threat of new entrants: Medium – It’s easy to create music apps, but hard to compete with Spotify’s brand and partnerships.
  2. Threat of substitutes: High – People can use YouTube, Apple Music, or free radio instead.
  3. Bargaining Power of Suppliers: Medium – Artists and record labels have power because Spotify needs their music.
  4. Bargaining Power of Buyers: High – Customers can switch to another platform anytime.
  5. Industry Rivalry: Very High – Competition with Apple Music, Amazon Music, and YouTube Music is strong.

SWOT Analysis

  • Strengths: Global brand, user-friendly app, strong music recommendation system.
  • Weaknesses: High royalty costs, low profit margins.
  • Opportunities: Growth in podcasts, new markets, AI-driven recommendations.
  • Threats: Competition from other streaming services, copyright issues, changing music industry trends.

Vision and Mission (example)

Patagonia — Mission: “We’re in business to save our home planet.” Vision: To use business to protect nature and inspire others to do the same.

Spotify — Mission: To unlock the potential of human creativity. Vision: To be the world’s number one audio platform.

Ethical Challenges and Social Responsibility Issues

Describe an ethical challenge or social responsibility issue you’ve seen in a business recently (example):

  • Amazon: Criticized for poor working conditions in warehouses and excessive pressure on workers. It stood out because it shows how fast growth can harm employees’ well-being.
  • Nestlé: Accused of using too much water in areas with water shortages. It raises issues of fairness and sustainability.

Connect to the topic: We agreed that ethics and social responsibility are essential in global business. Companies affect people all around the world, not just their customers. It is not enough that the company is very successful if it has serious ethical issues. Global businesses must balance profits with respect for people and the planet.

Example

CRISIS: At Anthony’s Pizza, we had a fire in the oven and had to close for two weeks to replace the oven and clean up the mess.

Crisis and Stakeholder Notes

  1. Shareholders: “The owners of the company will get to vote on its being acquired or staying independent.”
  2. Customers: “Are you going to close that sale to Costco?”
  3. Labour Force: “If we don’t get a 4% raise, the Teamsters union will go on strike at our company.”
  4. Society: “Animal activist groups pressured the Ringling Brothers circus to the point that it stopped having elephant acts in 2018.”
  5. Suppliers: “KFC bought some bad chicken in China, and sales declined.”
  6. Governments: “Our company was going to be sold to Sprint, but the government said that would be in violation of antitrust laws.”
  7. Technology: “Tesla is working on software for its cars to be self-driven.”
  8. Competition: “LinkedIn and other social media websites took some of the traffic away from Facebook.”
  9. Crisis / Economy: “Since the recession ended, we have had an increase in sales, but revenues are still not above pre-recession levels.”

Question: How will the move to electric vehicles affect Jiffy Lube oil change services?