Fundamentals of Management 7e - Mississippi State University

Fundamentals of Management 7e - Mississippi State University

Chapter Learning Objectives After studying this chapter you should be able to: 1. Discuss the nature of an organizations environments and identify the components of its general, task, and internal environments. 2. Describe the ethical and social environment of management, including individual ethics, the concept of social responsibility, and how organizations can manage social responsibility. 3. Discuss the international environment of management, including trends in international business, levels of international business activities, and the context of international business. 4. Describe the importance and determinants of an organizations culture, as well as how organization culture can be managed. 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 22 FIGURE 1.4

The Systems Perspective of Organizations Remember Systems Theory? Based on interaction with the external ENVIRONMENT of the system 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 13 Systems Theory and Actual Management The study of management has sometimes focused on factors within the organization a closed system view. However, to be effective, managers must monitor and respond to the environment an open systems view.

Explain from a systems theory perspective. The Organizations Environments External Environment General environment is a set of broad dimensions and forces in an organizations surroundings that determine its overall context Task environment is composed of specific groups and organizations that affect the firm. Internal Environment Conditions and forces within an organization. 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 25 The Organization and Its Environments Technological

dimension Competitors Owners Employees Regulators Customers Physical environment Board of directors Politicallegal dimension Culture Strategic partners

Suppliers Economic dimension Internal environment Task environment General environment External environment 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 26 The External Environment The General Environment Economic dimension

Technological dimension Political-legal dimension 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 27 The Economic Dimension The overall health of the economic system where the organization operates Common economic indicators? General economic growth, inflation, interest rates, unemployment Find information on at least one economic indicator in the WSJ today. 1. ____________________ 2. ____________________ 3. ____________________

The Technological Dimension Technology methods to convert inputs into outputs. Examples of technology Is a shovel technology? Pencil? Technological trends we need to stay updated on. Accentures 7 Tech Trends for Business InformationWeek http:// www.informationweek.com/global-cio/trends/accenture-seven-key-tech-tre nds-for-busi/240148805 1. 2. 3. 4.

5. 6. 7. Relationships. Moving beyond transactions and into digital relationships requires a change in how companies approach customer engagement and a unified approach across IT and business. Analytics. Enterprises need a strategy that sees data more as a supply chain than a warehouse. Data. As companies see increasing competitive advantage from "time to insight," data and analytical skills become more critical to converting insights to action before opportunities are lost. Collaboration. Enterprises have an opportunity in understanding the growing expectation that every app will be social and developing tools that change business processes. Software-defined networking. SDN represents the "last mile" of virtualization. It enables IT to unleash the full power of virtualization and makes it easier to move to the cloud. Security. The security emphasis is shifting from monitoring to understanding and acting. This has led to the development of new data platforms and systems that shift the security emphasis accordingly. Cloud. Cloud is enterprise-ready. Conversations should now turn to how cloud services can

differentiate a company's business, help get products and services to market faster, operate the business more efficiently and respond more flexibly to new opportunities and challenges. 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 210 Political-Legal Dimension Regulation of business. Who regulates? Why? How will it impact the way you do business and manage? http://smallbusiness.chron.com/five-areas-government-regulation-business-701.html Advertising? Employment and labor? Environmental? Privacy?

Safety? The External Environment (contd) Dimensions of the Task Environment Why do companies often focus more on their Task Environment than their General Environment? Specific groups affecting the organization Competitors Customers Suppliers Regulators (agencies and interest groups) Strategic partners (allies) 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 212 FIGURE 2.1

McDonalds Task Environment What about interest groups? What interest groups could influence McDonalds? 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Not just demographics, but social trends as well. What social trends impact McDonalds? 213 Environmental Uncertainty The external environment creates uncertainty for

organization managers. And, managers must adapt to the changes in the environment. If we dont adapt, what does system theory predict will happen to the business? 1. Name a business that has a complex and dynamic and environment: ______________ 2. Name a business that has a certain and stable environment: ____________________ 3. Should you manage the 2 organizations the same? Why or why not? High High Uncertainty Adapt to Environment Dynamism

Rate of Change in Factors in Environment Low Uncertainty Low Low High Number of Factors in Organization Environment Complexity 215 The Internal Environment Conditions and forces within an organization

Owners with legal property rights to a business. Board of directors who oversee management of the firm to best serve stockholders interest. Employees who work for the firm and have a vested interest in its continued operation and existence. Physical work environment of the organization and the work that people do. And the internal environment includes Culture. What is culture? 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 216 The Organizations 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 organizations overall effectiveness and long-term success. 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 217 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. 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 218 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. 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 219

Corporate Culture at SAS 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 220 SAS helps organizations anticipate business opportunities, empower action and drive impact. We do this through advanced analytics that turn data about customers, performance, financials and more into meaningful information. The result? Fact-based decisions for undeniable bottom line impact this is how we transform the way our customers do business. Working at SAS: An Ideal Environment for New Ideas If you treat employees as if they make a difference, they will make a difference. That has been the employee-focused philosophy behind SAS corporate culture since our founding in 1976. At the heart of this unique business model is a simple idea: Satisfied employees create satisfied customers. "We've worked hard to create a corporate culture that is based on trust between our employees and the company," explains SAS CEO Jim Goodnight, "a culture that rewards innovation, encourages employees to try new things and yet doesn't penalize them for

taking chances, and a culture that cares about employees' personal and professional growth." SAS has created an environment that fosters and encourages the integration of the company's business objectives with employees' personal needs. With tremendously low employee turnover that has been consistently well below the industry average, SAS and our customers reap the rewards of employee loyalty. Our work-life programs and unique culture continue to receive wide news coverage and accolades. For 14 consecutive years, the company has been listed on the FORTUNE "100 Best Companies to Work For" list in the US, including being ranked No. 1 in 2010 and 2011, and was inducted into the list's "Hall of Fame" in 2005. 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 221 CEO Jim Goodnight is quoted in the Fortune story as saying the companys policies make good business sense. My chief assets drive out the gate every day, he says. My job is to make sure they come back. Whats so great about SAS? According to Fortune: A gymnasium, weight room, billiards hall, sauna, hair salon, manicurist, aqua

kickboxing in the Olympic-size pool, Swedish and orthopedic massage are available to employees. A massive solar farm that SAS built sells electricity back to the local utility. SAS has the highest salaries in the industry (though there are no stock options or equity grants to any employees, which is not so good). A typical work week is 35 hours, and there is no human resources department to monitor sick days. Two subsidized day-care centers for 600 children, and a summer camp, too. Dry cleaning, car detailing, a UPS depot, a book exchange, a meditation garden, and an in-season tax-prep vendor are other perks. Three subsidized cafeterias serve 500 breakfasts and 2,300 lunches a day and provide takeout to bring home for the family. A free health-care center operates from 8am to 6pm most days, with a staff of 56, including four physicians, 10 nurse practitioners, nutritionists, lab technicians, physical therapists, and a psychologist. Work/life programs cover family issues, adoption, divorce, special-needs children, and raising teenagers. Source: http://www.jeffreyhollender.com/?p=373 222

SAS 1. Analyze the General Environment. 2. Analyze the Task Environment 3. Analyze the internal Environment and Culture. 4. What is the level of uncertainty (dynamism and complexity) in SAS external environment? 5. What type of management is needed at SAS? 6. What type of employees are needed at SAS? 7. Describe the organizational culture of SAS. 8. Are the 3 environments aligned appropriately? 9. Is SAS a successful

organization? Technological dimension Competitors Owners Employees Regulators Customers Physical environment Board of directors Politicallegal dimension Culture

Strategic partners Suppliers Economic dimension Internal environment Task environment General environment External environment 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 223

How Organizations and Environments Interact Environments Change and Complexity Competitive Forces Turbulence Organization Environment Interface Information Management Strategic Response Mergers, Takeovers,

Acquisitions, Alliances Organization Design and Flexibility Direct Influence Organizations 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 224 The Environments of Organizations General Environment What does the manager need to pay attention to?

Task Environment What does the manager need to pay attention to? Can you change the external environment? Can you adapt to the external environment? Internal Environment What is organizational culture? What impact does culture have on your ability to manage?

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