Principles of Management (MNGT 3100) Exam 1 - Ewell-Chalmers

Chapter 3

environment

everything outside a organization's boundaries that might effect it

internal environment 1

the conditions, events and factors affecting an organization from within the organization

external environment

everything outside an organization's boundaries that might affect it

The external environment is made up of _________ and ____________.

general environment; task environment

general environment

the set of broad dimensions and forces in an organization's surrounding that create its overall context

What makes up the general environment?

1. technological dimension

2. sociocultural dimension

3. political-legal dimension

4. international dimension

5. economic dimension

technological dimension

the methods available for converting resources into products or services

(Example - computer assisted manufacturing)

sociocultural dimension

the customs, morals, values and demographic characteristics of the society in which the organization functions

economic dimension

the overall health and vitality of the economic system in which the organization operates

political-legal dimension

the government regulation of business and the relationship between business and government

international dimension

the extent to which an organization is involved in or is affected by business in other countries

task environment

specific organizations or groups that influence an organization.

(Examples: competitors, regulators, customers, supplies, and strategic partners)

competitors

an organization that competes with other organizations for resources

consumers (customers)

whoever pays money to acquire an organization's products or services

suppliers

an organization that provides resources for other organizations

strategic partners

organizations that work together with one or more other organizations in a joint venture or similar arrangement

(Example: Disney and DreamWorks film studio)

regulators

a unit that has the potential to control, legislate, or otherwise influence the organization's policies and practices

The two types of regulators are ______ and ______.

regulatory agencies; interest groups

regulatory agencies

an agency created by the government to regulate business activity.

Examples: Environmental Protection Agency (EPA), Securities and Exchange Commission, Food and Drug Administration (FDA) and the Equal Employment Opportunity Commission (EEOC)

interest groups

a group organized by its members to attempt to influence business

Examples: National Organization for Women, Mothers Against Drunk Driving, National Riffle Association, Consumer Union, etc.

internal environment

the conditions and forces within an organization

Internal environment includes:

1. owners

2. boards of directors

3. employees

4. physical work environment

Owners

whoever can claim property rights to an organization

Owners can be a single individual who establishes and runs a small business, parters who jointly own the business, individual investors who buy stock in a corporation, or other organizations

board of directors

A governing body that is elected by a corporation's stockholders who are in charge of overseeing the general management of the firm to ensure that it is being run in a way that best serves the stockholder's interests

employees

workers

physical work environment

the location of the business, the actual type of building the business is in, the area in which a person works, etc.

Who are elected by shareholders to represent their interests?

members of the board of directors

culture

the set of values, beliefs, behaviors, customs, and attitudes that helps the members of the organization understand what it stands for, how it does things, and what it considers important

What determines an organization's culture?

It usually starts out with the organization's founder and develops over a period of time.

Corporate success and shared experiences also shape culture.

True statements about culture -

- Cultural problems can arise when two companies with different cultures merge.

- A major way to shape culture is by bringing outsiders into important leadership positions.

- Culture can be maintained by rewarding and promoting people whose behaviors are desired.

How can managers deal this culture?

The manager must understand the current culture and then decide if it should be maintained or changed.

Culture can be maintained by rewarding and prompting people whose behaviors are consistent with the existing culture and by articulating the culture through slogans, ceremonies, etc.

One major way to shape culture is by bringing outsiders into important managerial positions.

multiculturalism

the broad issues associated with differences in values, beliefs, behaviors, customs, and attitudes held by people in different cultures

diversity

exists in a group or organization when its members differ from one another along one or more important dimensions, such as age, gender, or ethnicity.

Why are organizations becoming more diverse and multicultural?

1. Changing demographics in the labor force - more women and minorities have entered the work force for example.

2. People have become more aware that organizations can improve the overall quality of their workforce by hiring and promoting the most talented people available.

3. Legislation and judicial decisions have forced organization to hire more broadly. An organization can't discriminate.

4. More organizations have globalized meaning they have opened offices and related facilities in other countries and have had to deal with different customs, social norms, and more.

Dimensions of Diversity and Multiculturalism

Age - the average of the US workforce is gradually increasing and will continue.

Gender - Males use to dominate the workforce, but females now dominate in certain fields/types of work.

ethnicity - the ethnic composition of a group of organization. Organizations are hiring more diverse people. The workforce is not limited to white individuals.

Different religious beliefs, single parents, dual-career couples, sexual orientations, people with special dietary preferences (like vegetarians) and people with different political ideologies and viewpoints also represent major dimensions in diversity in today's organizations.

ethnicity

the ethnic composition of a group of organization.

glass ceiling

A perceivable barrier in some organizations that keep women from advancing to top management positions.

How do environments affect organizations?

1. Environmental Change and Complexity -

The rate of change is the extent to which the environment is relatively stable.

The degree of homogeneity is the extent to which the environment is relatively simple.

2. Competitive forces -

3. Environmental Turbulence - unexpected environmental changes or turbulence (example COVID, 911 attack, etc)

uncertainty

unpredictability created by environmental changes and complexity

five competitive forces

1. Treat of new entrants

2. competitive rivalry

3. Threat of substitute products

4. Power of buyers

5. Power of suppliers

threat of new entrants

the extent to which new competitors can easily enter a market or market segment

competitive rivalry

the nature of the competitive relationship between dominant firms in the industry

threat of substitute products

the extent to which alternative products or services may supplement or diminish the need for existing products or services

power of buyers

the extent to which buyers of the products or services in an industry can influence the suppliers

Example: Airbus has only a few potential buyers. Only companies like Delta and a few others can buy them. These buys have influence over the price they are willing to pay.

power of suppliers

the extent to which suppliers can influence potential buyers

Example: There may be only one local electric company providing electricity in your community. Subject to state and local regulations, the company can charge what it wants for its product.

How do organizations adapt to their environments?

1. information management

2. strategic response

3. mergers, acquisitions, and alliances

4. organization design and flexibility

5. direct influence

6. Social responsibility

information management

boundary spanner - an employee who spends much of their time in contact with others outside the organization

environmental scanning - the process of actively monitoring the environments through activities such as observation and reading

information systems - within an organization there are computer based technology that gathers and organizes relevant information for managers

strategic response

adopting new strategies, altering a strategy, maintaining the same strategy

Mergers, Acquisitions, and Alliances

mergers - occurs when 2 or more firms combine to form a new firm

acquisition - occur when one firm buys another, sometimes against its will

alliance (partnership) - when a firm undertakes a new venture with another firm.

Chapter 4

ethics

one's personal beliefs about whether a behavior, action, or decision is right or wrong

What saying could be applied to the understanding of ethics?

Beauty is in the eye of the beholder.

ethical behavior

behavior that conforms to generally accepted social norms

unethical behavior

behavior that does not conform to generally accepted social norms

Why is reaching a consensus/agreement on what is or isn't ethical behavior sometimes a challenge?

Because ethical beliefs are determined at the individual level.

Given that laws tend to reflect societal norms about ethics, but that ethics is based on personal beliefs, what it true?

some people may believe that some behaviors may be legal but unethical

managerial ethics

standards of behavior that guide individual managers in their work

Three areas of concern for managers:

1. Organization's treatment of its employees

(Examples: wages, hiring/firing, working conditions, privacy/respect)

2. Employee's treatment of the organization

(Examples: honesty, conflict of interest, secrecy/confidentiality

3. Employee's or the organization's treatment of other economic agents (Examples: customers, competitors, stockholders, suppliers, dealers, unions, government, etc.)

codes of ethics

a formal, written statement of the values and ethical standards that guide a firm's actions

organizational justice

the perception of people in an organization regarding fairness

Four ethical norms

1. Justice

2. Utility

3. Rights

4. Caring

The ethical norm, Justice, answers the question:

Is it consistent with what is fair?

The ethical norm, Utility, answers the question:

Does is optimize the best for all?

The ethical norm, Rights, answers the question:

Does is respect the rights of those involved?

The ethical norm, Caring, answers the question:

Is it consistent with my responsibility to care?

Sarbanes-Oxley Act

a law passed in 2002 that requires CEO's and CFO's to personally vouch for the truthfulness and fairness of their firm's financial disclosures.

Corporate leaders may face a variety of ethical dilemmas. What ethical concern is addressed by the Sarbanes-Oxley Act?

the accuracy of corporate financial disclosures

Ethical Issues in Organizations include:

1. Ethical leadership

2. Ethical issues in corporate governance

3. Ethical issues in information technology

social responsibility

the set of obligations an organization has to protect and enhance the societal context in which it functions

organizational stakeholders

person or organization who is directly affected by the practices of an organization and has a stake in its performance

Four approaches to social responsibility (LOWEST to HIGHEST levels):

KNOW IN ORDER

1. obstructionist (lowest)

2. defensive

3. accommodative

4. proactive (highest)

obstructionist

do as little as possible to solve social or environmental problems

defensive

do only what is legally required

accommodative

meet legal and ethical obligations and do more on a case by case basis

proactive

seek opportunities to contribute to society

Areas of social responsibility:

1. Environment

2. Social Welfare

Environmental social responsibility

deals with preserving the environment

Examples: reducing pollution, emissions in manufacturing, recycling, replenishing natural resources like trees, creating products that are consistent with Corporate Social Responsibility (CSR), renewable resources, etc.

Social welfare

promotes the general welfare of society; supports the society;

Examples: Contributing financially to charities, non profit organizations, museums, public radio, tv, etc. Giving loans to small business, hiring women in corporate offices, etc. Support society with healthcare, nutrition, housing, and financial assistance

Arguments for Social Responsibility:

1. Businesses create problems and should help solve them.

2. Corporations are citizens in our society

3. Businesses have the resources to solve problems

4. Business is a partner in society

Arguments Against Social Responsibility:

1. Business lacks expertise in social programs

2. Involvement gives businesses more power

3. There may by conflicts of interest

4. Business exists to generate profit for the owners

How does the Government influence organizations/businesses?

through direct regulations and indirect regulations

direct regulations

Government's attempts to influence business by establishing laws, rules, and regulations that dictate what businesses can and cannot do.

Examples:

Environmental Protection Agency handles environmental issues. The Federal Trade Commission and the Food and Drug Administration focus on consumer-related concerns, etc.

indirect regulations

include things like the Government's tax codes, the Government providing greater or lesser tax incentives, etc.

How do businesses influence the government?

Businesses rely on:

1. lobbying

2. political action committees

3. personal contacts

How do Governments influence businesses?

Governments rely on:

laws or legislation

lobbying

the use of persons or groups to formally represent an organization or group of organizations before political bodies to influence the government.

Lobbyists are paid by organizations to influence government regulators to make decisions that benefit the organization. They seek to influence laws that benefit corporations and are sometimes viewed in a negative light in the media.

How do organizations manage social responsibility?

1. Formal organizational actions

- legal compliance

- ethical compliance

- philanthropic giving

2. Informal organizational actions

- organizational leadership and culture

- whistle-blowing

legal compliance

the extent to which an organization follows local, state, federal, and international laws

ethical compliance

the extent to which an organization and its members follow basic ethical standards of behavior

philanthropic compliance

awarding funds or gifts to charities or other worthy causes

How can companies show social responsibility?

By being legally and ethically compliant

By supporting charities

(Examples: Donating money to charity, making ethical decisions, educating the public about social issues).

whistle-blowing

the disclosure/uncovering by an employee of illegal or unethical conduct on the part of others within the organization

corporate social audit

a formal and thorough analysis of the effectiveness of a firm's social performance

Corporate Social Responsibility Report

its the publication in which companies summarize their responsibility efforts and their achievements

Chapter 5

domestic business

a business that acquires all of its resources and sells all of its products or services within a single country.

Examples usually include small business like hair salons, retail stores, restaurants, dry cleaners, etc.

international business

a business that is based primarily in a single country but acquires some meaningful share of its resources or revenues (or both) from other countries.

Example: Lowes because it has 1,700 stores in the US and 279 I Canada. It plans not to expand outside of North American; however, many of its products its sells, like tools, are made abroad.

multinational business

a business that has a worldwide marketplace from which it buys raw materials, borrows money, where it manufactures its products, and to which it subsequently sells its products.

Example: Coca-Cola

global business

a business that transcends national boundaries and is not committed to a single home country.

importing

bringing a good, service, or capital into the home country from abroad

exporting

making a product in the firm's domestic marketplace and selling it in another country

licensing

an arrangement whereby one company allows another country to use its brand name, trademark, technology, patent, copyright, or other assets in exchange for a royalty (money) based on sales