1.

Summarize how managers respond to changes in the external environment:

Managers can respond to environmental uncertainty in three different ways. First, they can adapt to
it. The approach they take depends on whether the uncertainty arises from complexity, dynamism,
or both. Managers adjust their organizations to become more (or less) decentralized and more (or
less) bureaucratic to deal with environmental uncertainty. Also, managers have the option of
adapting their organization at its boundaries (e.g., employing temporary workers) or at its core (e.g.,
use flexible processes). The second way to decrease uncertainty occurs when managers proactively
attempt to influence their environment through independent action that includes competitive
aggression and pacification, public relations, and voluntary, legal, and political action. Also, two or
more organizations working together to manage uncertainty use contracts, cooptation, and
coalitions. The third approach that managers use is to change the boundaries of the environment.
This can be done through domain selection, diversification, mergers and acquisitions, and divestiture.

2. Discuss how organization cultures can be leveraged to overcome challenges in the external
environment:

The internal environment, or organization culture, consists of three levels, including visible artifacts,
values, and unconscious assumptions. Visible artifacts can be anything you can see or hear, including
office layout, organization charts, dress code, and so on. Values are less apparent and consist of the
underlying qualities and desirable behaviors that the organization rewards. You can infer what the
organization’s values are by observing managerial and employee behavior. Unconscious assumptions
are deeply held beliefs that govern the behavior within the organization. Organization cultures can
be strong or weak. Companies provide many clues about their cultures, including corporate mission
statements; business practices; symbols, rites, and ceremonies; and stories about organizational
heroes. There are four major types of organization cultures: group, hierarchical, rational, and
adhocracy. Effective managers can leverage the strengths of their organization cultures to address
uncertainty in the external environment by crafting an inspirational vision of “what can be” as a way
to align the internal and external environments; “walking the talk” by showing employees that the
manager is committed to long-term culture change; and celebrating and rewarding members who
exemplify the desired behaviors of the culture.