MANAGEMENT

The Environment of Organizations and Managers

The Changing Economy

Agriculture
Until the late nineteenth century, all economies were agrarian.

Industrialization
From the late 1800s until the 1960s, most developed countries moved from agrarian societies to industrial societies.

Information
Information technology is transforming society from its manufacturing focus to one of service. Knowledge workers

EXHIBIT 21 Old Economy

National borders limit competition Technology reinforces rigid hierarchies and limits access to information Job opportunities are for bluecollar industrial workers Population is relatively homogeneous Business is estranged from its environment Economy is driven by large corporations Customers get what business chooses to give them

The Changing Economy New Economy

National borders are nearly meaningless in defining an organizations operating boundaries Technology changes in the way information is created, stored, used, and shared have made it more accessible Job opportunities are for knowledge workers Population is characterized by cultural diversity Business accepts its social responsibilities Economy is driven by small entrepreneurial firms Customer needs drive business

A Global Marketplace
Global Village
The concept of a boundaryless world; the production and marketing of goods and services worldwide.

Borderless Organization
A management structure in which internal arrangements that impose artificial geographic barriers are broken down

EXHIBIT 22

EXHIBIT 23

Stages of Going Global

Globalizations Effect On Managers

Parochialism
A narrow focus in which one sees things solely through ones own view and from ones own perspective

Hofstedes Framework for Assessing Cultures:

Power distance Individualism versus collectivism Quantity of life versus quality of life Uncertainty avoidance Long-term versus short-term orientation

Global Leadership and Organizational Behavior Effectiveness (GLOBE)

A Cross-cultural Cultural Dimensions Investigation of Leadership Assertiveness and National Culture Future orientation
Confirms and extends Hofstedes work on national cultural dimensions and leadership. Found that the strength of cultural dimensions appear to be changing. Gender differentiation Uncertainty avoidance Power distance Individualism/collectivism In-group collectivism Performance orientation Humane orientation

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GLOBE Highlights

Source: M. Javidan and R. J. House, Cultural Acumen for the Global Manager: Lessons from Project GLOBE, Organizational Dynamics (Spring 2001), pp. 289305.

EXHIBIT 24

GLOBE Highlights (contd)

Source: M. Javidan and R. J. House, Cultural Acumen for the Global Manager: Lessons from Project GLOBE, Organizational Dynamics (Spring 2001), pp. 289305.

The Organizations Environment

External Environment
General environment - economic, legal, political, socio-cultural, international, and technical forces. Task environment is composed of specific groups and organizations that effect the firm.

Internal Environment
Conditions and forces within an organization.

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The Organization and Its Environments

International dimension Competitors

Technological dimension

Regulators

Owners Customers Employees Physical environment Board of directors Culture Economic dimension

Politicallegal dimension

Strategic partners

Suppliers

Internal environment Task environment General environment External environment

Sociocultural dimension

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The External Environment

The General Environment
The set of broad dimensions and forces in an organizations surroundings that create its overall context. Economic dimension is the overall health and vitality of the economic system in which the organization operates. Technological dimension refers to the methods available for converting resources into products or services.

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The External Environment (contd)

The General Environment (contd)
Sociocultural dimension includes the customs, morals, values, and demographic characteristics of the society in which the organization functions. Political-legal dimension is the extent of government regulation of business and the general relationship between business and government. International dimension is the extent to which the organization is affected by business in other countries.

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The External Environment (contd)

The Task Environment
Specific groups affecting the organization Competitors seeking the same resources as the organization. Customers who acquire an organizations products or resources. Suppliers that provide resources for the organization. Regulators (agencies and interest groups) that control, legislate, or influence the organizations policies and practices. Strategic partners (allies) who are in a joint venture or partnership with the organization.
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The Internal Environment

Owner: someone who has legal property rights to a business. Board of directors: governing body elected by a corporations stockholders and charged with overseeing the general management of the firm. Employees: those employed by the organization. Physical work environment: the firms facilities. Culture

Mc Donalds General Environment

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McDonalds Task Environment

Competitors KFC Pizza Hut Nirulas Subway Customers Individual consumers Institutional customers

Regulators Food Adulteration

Environmental Agency

McDonalds

Strategic Partners Disney Foreign partners

Suppliers Cola Wholesale food processors Packaging manufacturers

Internal environment Task environment Figure 2.1

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How Organizations and Environments Interact

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How Business and Government Influence Each Other

The government influences business through direct and indirect regulation:

The Government

Environmental protection legislation Consumer protection legislation Employee protection legislation The tax codes

Business influences the government through: Personal contacts and networks Lobbying Political action committees (PACs) Favors and other influence tactics

Business

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FiveFive-Forces Analysis (Porter)

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Individual Ethics In Organizations

Ethics
An individuals personal beliefs regarding what is right and wrong or good and bad.

Ethical Behavior
This behavior is in the eye of the beholder. However, it also refers to behavior that conforms to generally accepted social norms.

Examples of Unethical Behavior

Borrowing office supplies for personal use. Surfing the Net on company time.

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Determinants of Individual Ethics

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Managerial Ethics
Employees

Conflicts of interest Secrecy and confidentiality Honesty

Organization
Hiring and firing Wages and working conditions Privacy and respect

Three areas of concern for managerial ethics The relationships of the firm to the employee. The employee to the firm. The firm to other economic agents.

Subject to ethical ambiguities Advertising and promotions Ordering and purchasing Bargaining and negotiation Financial disclosure Other business relationships

Economic Agents Customers Competitors Stockholders Suppliers Dealers Unions

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Ethics in Organizations
Managing Ethical Behavior
Begins with top management which establishes the organizations culture and defines what will and will not be acceptable behavior. Includes training on how to handle different ethical dilemmas. Developing a code of ethics. Written statement of the values and ethical standards that guide the firms actions.

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Social Responsibility and Organizations

Social Responsibility
The set of obligations (to behave responsibly) that an organization has to protect and enhance the social context in which it functions.

Areas of Social Responsibility

Stakeholders: customers, employees, and investors. The natural environment: environmentally sensitive products, recycling, and public safety. The general social welfare: charitable contributions, and support for social issues such as child labor and human rights.

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Approaches to Social Responsibility

Obstructionist Stance A company does as little as possible and may attempt to deny or cover up violations Defensive Stance A company does everything required of it legally but no more Accommodative Stance A company meets its legal and ethical requirements and also goes further in certain cases Proactive Stance A company actively seeks to contribute to the wellbeing of groups and individuals in its social environment
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EXHIBIT 26

Arguments For and Against Social Responsibility Arguments against the social responsibility of business are: 1. 2. 3. 4. 5. 6. 7. Violation of profit maximization Dilution of purpose. Costs Too much power Lack of skills Lack of accountability. Lack of broad public support

Arguments for the social responsibility of business are: 1. 2. 3. 4. 5. 6. Public expectations Long-run profits Ethical obligation Public image

Better environment Discouragement of further government regulation 7. Balance of responsibility and power 8. Stockholder interests 9. Possession of resources 10. Superiority of prevention over cures

Source: Adapted from R. J. Monsen Jr., The Social Attitudes of Management, in J. M. McGuire, ed. Contemporary Management: Issues and Views (Upper Saddle River, NJ: Prentice Hall, 1974), p. 616: and K. Davis and W. Frederick, Business and Society: Management, Public Policy, Ethics, 5th ed. (New York: McGraw-Hill, 1984), pp. 2841.

Managing Social Responsibility: Formal Organizational Dimensions

Legal Compliance
Extent to which the organization conforms to local, state, national, and international laws.

Ethical Compliance
Extent to which members of the organization follow basic ethical/legal standards of behavior.

Philanthropic Giving
Awarding of funds or gifts to charities and other social programs.

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Managing Social Responsibility: Informal Organizational Dimensions

Organizational Leadership and Culture
Leadership practices and the culture of the organization can help define the social responsibility stance an organization and its members will adopt.

Whistle Blowing
The organizational response to the disclosure by an employee of illegal or unethical conduct on the part of others within the organization is indicative of the organizations stance on social responsibility.

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The Cultural Environment

Language
In Japanese the word hai can mean either yes or I understand. General Motors brand name Nova pronounced as no va in Spanish means doesnt go.

The Meaning of Colors

Green is popular in Muslim countries, yet it signifies death in other countries. Pink is associated with feminine characteristics in the U.S.; yellow is the most feminine color in other countries.
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The Organization and Culture

Organization Culture
The collection of values, beliefs, behaviors, customs, and attitudes that characterize a community of people.

The Importance of Organization Culture

Culture determines the overall feel of the organization, although it may vary across different segments of the organization. Culture is a powerful force that can shape the firms overall effectiveness and long-term success.

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The Organizations Culture

Determinants of Organization Culture
Organizations founder (personal values and beliefs). Symbols, stories, heroes, slogans, and ceremonies that embody and personify the spirit of the organization. Corporate success that strengthens the culture. Shared experiences that bond organizational members together.

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Organization Culture (contd)

Managing Organization Culture
Understand the current culture to understand whether to maintain or change it. Articulate the culture through slogans, ceremonies, and shared experiences. Reward and promote people whose behaviors are consistent with desired cultural values.

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Organization Culture
Changing Organization Culture
Develop a clear idea of what kind of culture you want to create. Bring in outsiders to important managerial positions. Adopt new slogans, stories, ceremonies, and purposely break with tradition.

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Examples of Cultural Mishaps

Nike: June, 1997 "flaming air" logo for Nike Air sneakers looked too similar to the Arabic form of God's name, "Allah".

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Contd..
Nike: Has a television commercial for hiking shoes that was shot in Kenya using Samburu tribesmen. The camera closes in on the one tribesman who speaks, in native Maa. As he speaks, the Nike slogan "Just do it" appears on the screen. The Kenyan is really saying, "I don't want these. Give me big shoes."

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Contd..
Nissan Moco: Distributors in Santiago, Chile asked that the vehicle be renamed since Moco is the Spanish word for mucous. Pepsi: In Taiwan, the translation of the Pepsi slogan "Come alive with the Pepsi Generation" came out as Pepsi will bring your ancestors back from the death.

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 Kentucky Fried Chicken slogan finger-lickin good in Chinese came out as eat your fingers off.

An American T-shirt maker in Miami printed shirts for the Spanish market which promoted the Pope's visit Instead of "I Saw the Pope" (el Papa), the shirts read "I Saw the Potato" (la papa)

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 Chinese translation for Second time - After Coke, which took two researching 40,000 tries to get it right. First Chinese characters, Ke-kou-ke-la. Coke came up with "ko-kou-ko-le The phrase means "bite the wax tadpole" or "happiness in the "female horse stuffed mouth". with wax", depending on the dialect.

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 Pepsi is being sued in a Hyderabad, India city court in a public interest litigation for glorifying child labor in a television ad. In the ad, the Indian cricket team is in a celebratory huddle when a young boy serves them Pepsi.
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