PART II THE ENVIRONMENTAL

CONTEXT OF MANAGEMENT

1.
2.
3.
4.

The Environment of Organizations

The Ethical and Social Environment
The Global Environment
The Multicultural Environment
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1. THE ENVIRONMENT OF
ORGANIZATIONS
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THE ORGANIZATION AND ITS ENVIRONMENTS

External Environment
General environment: everything
outside an organizations
boundaries
economic, legal, political, sociocultural, international,
technical and natural forces.
Task environment: specific groups
and organizations that affect the firm.
customers, competitors,
suppliers, labour market

Internal Environment
Conditions and forces present at work
and within an organization
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MCDONALDS GENERAL ENVIRONMENT

MCDONALDS TASK ENVIRONMENT

HOW ENVIRONMENTS AFFECT ORGANIZATIONS

Change and Complexity
Environmental change occurs in two ways:
Degree to which change in environment is occurring
Degree of homogeneity or complexity of the environment
Uncertainty
A driving force that influences organizational decisions.

Competitive Forces

Porters Five Competitive Forces

Threat of new entrants into the market

Competitive rivalry among present competitors
Threat of substitute products
Power of buyers
Power of suppliers

Environmental Turbulence

Unexpected changes and upheavals in the environment of an organization.

WHY DO ORGANIZATIONS CARE SO MUCH

ABOUT FACTORS IN THE EXTERNAL
ENVIRONMENT?
Environment creates uncertainty for
managers, and they must respond by
designing the organization to adapt to the
environment

HOW ORGANIZATIONS ADAPT TO THEIR ENVIRONMENTS

2. THE ETHICAL AND SOCIAL

ENVIRONMENT
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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
Eye of the beholder or behavior that conforms to
generally accepted social norms.

Unethical Behavior???
Borrowing office supplies for personal use
Surfing the Net on company time
Filing falsified or inflated business expense reports

A GUIDE FOR
ETHICAL DECISION
MAKING
Ethical Norms Affecting Actions

Utility
Rights
Justice
Caring

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STEPS IN THE ETHICAL DECISION MAKING

PROCESS
1.

Stop and think

2.

Clarify what are short and long term goals

3.

Setup options while making decisions. Talk to someone about

the decision

4.

Consider the consequences

5.

Chose to make the decision. Talk to people whose judgment you

respect.

Do unto to others as you would have them do unto you.

SOCIAL RESPONSIBILITY AND ORGANIZATIONS

Organizational Stakeholders
People and organizations directly affected by the
behaviors of an organization and that have a stake in its
performance.

Social Responsibility
The set of obligations to behave responsibly.

Areas of Social Responsibility

Stakeholders
The natural environment
The general social welfare
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ORGANIZATIONAL STAKEHOLDERS

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ARGUMENTS FOR AND AGAINST SOCIAL

RESPONSIBILITY
Arguments for:
Public expectations
Long-run profits
Ethical obligation
Public image
Better environment
Discouragement of further
government regulation
Balance of responsibility and
power
Stockholder interests
Possession of resources
Superiority of prevention over
cures

Arguments against:
Purpose of the business to earn
profit
Costs
Business will get too much power
Lack of expertise to manage
Lack of accountability
Lack of broad public support

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APPROACHES TO SOCIAL RESPONSIBILITY

Obstructionist Stance
Do as little as possible

Defensive Stance
Do only what is legally required and nothing more.

Accommodative Stance
Meet legal and ethical obligations and go beyond that in selected
cases.

Proactive Stance
Organization views itself as a citizen and proactively seeks
opportunities to contribute to society.

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MANAGING SOCIAL RESPONSIBILITY:

FORMAL ORGANIZATIONAL DIMENSIONS
Legal Compliance
Extent to which the organization conforms to local, state,
govt., 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
Organization 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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3. THE GLOBAL ENVIRONMENT

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LEVELS OF INTERNATIONAL BUSINESS

ACTIVITY
Domestic Business
acquires all of its resources and sells all of its products or services
within a single country.
International Business
is primarily based in a single country yet acquires a meaningful
share of its resources and/or revenues from other countries.
Multinational Business
transcends national boundaries and buys raw materials, borrows
money, and manufactures and sells its products in a world-wide
marketplace.
Global Business
transcends national boundaries and is not committed to a single
home country.
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ADVANTAGES AND DISADVANTAGES OF DIFFERENT

APPROACHES TO INTERNATIONALIZATION

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ENVIRONMENTAL CHALLENGES OF
INTERNATIONAL MANAGEMENT

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MANAGEMENT CHALLENGES
IN A GLOBAL ECONOMY
Planning in a Global Economy
Understanding of both environmental issues and competitive issues.
Organizing in a Global Economy
Addressing issues of creating and managing operations on a
world-wide scale.

Leading in a Global Economy

Learning how to interact with and motivate persons of different
cultural, social, and economics backgrounds.
Controlling in a Global Economy
Integrating global operations that encompass time-zone
differences, cultural factors, and varying communication methods.
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MANAGING IN A GLOBAL ENVIRONMENT

Developing Cultural Intelligence
Cultural flexibility and ability to adapt
Cognitive, emotional and physical
Cultural sensitivity training
Cross-cultural task forces/teams

Managing Cross-Culturally
Expatriates can be successful by focusing on:
Human Resources, Leading, Decision Making, Motivating

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