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Environmental Overview
September 6, 2004
The Organization and Its Environments
OwnersEmployees
Physical environmentBoard of directors
Culture
Competitors
Internationaldimension
Political-legal
dimension
Technologicaldimension
Socioculturaldimension
Economicdimension
Regulators Customers
Strategicpartners
Suppliers
Internal environment
Task environmentExternal environment
General environmentFigure 3.1
McDonald’s General Environment
McDonald’s
International Dimension• Restaurants in 115
countries• About two-thirds of sales from outside
the United States
Political-LegalDimension• Government
food standards• Local zoning
climate• General posture
toward businessregulation
TechnologicalDimension• Improved information
technology• More efficient
operating systems
Sociocultural Dimension• Demographic shifts in
number of single adultsand dual-income families
• Growing concerns abouthealth and nutrition
EconomicDimension• Strong economic
growth• Low unemploy-
ment• Low inflation
Internal environment
Task environmentExternal environment
General environment
Figure 3.2
International Dimension Video
Sociocultural Dimension: How has the role of the woman in the workplace changed?
Video
In keeping with more than six decades of HP corporate stewardship, and at a time when corporations make up 51 of the 100 largest economies in the world, Fiorina has called for a new era of leadership, one in which corporate leaders have an opportunity to redefine the role of the corporation, to use profit engines to raise the capabilities, extend the hopes, and extinguish despair of people across the globe.
• One in two workers are women.
• Three in five workers at or below minimum wage are women.
• Four in five mothers of school-age children work for pay.
• Two in five working women are managers or professionals.
• One in five working women have administrative support jobs.
• One in two people who work more than one job are women.
• One in two working women provide half or more of their household income.
• Seven in 10 married working mothers work more than 40 hours a week.
McDonald’s Task Environment
McDonald’s
Competitors• Burger King• Wendy’s• Subway• Dairy Queen
Customers• Individual
consumers• Institutional
customers
Suppliers• Coca-Cola• Wholesale food
processors• Packaging
manufacturers
Strategic Partners• Wal-Mart• Disney• Foreign partners
Regulators• Food and Drug
Administration• Securities and
ExchangeCommission
• EnvironmentalProtectionAgency
Internal environment
Task environmentFigure 3.3
Strategic Partners
+ =
The Internal Environment
OwnersEmployees
Physical environmentBoard of directors
Culture
Internal environment
Task environmentExternal environment
General environment
Environmental Change, Complexity, and Uncertainty
Simple
Complex
Stable Dynamic
Moderateuncertainty
Mostuncertainty
Moderateuncertainty
Leastuncertainty
Degree of Change
Deg
ree
of
Ho
mo
gen
eity
Source: Adapted from J.D. Thompson, Organizations in Action. Copyright © 1967 by McGraw-Hill. Reprinted by permission of McGraw-Hill Companies. Figure 3.4
Porter’s Five Competitive Forces
• Threat of new entrants– Extent to and ease with which competitors can enter market.
• Competitive rivalry– Competitive rivalry between firms in an industry.
• Threat of substitute products– Extent to which alternative products/services may replace the
need for existing products/services.
• Power of buyers– Extent to which buyers influence market rivals.
• Power of suppliers– Extent to which suppliers influence market rivals.
A Model of Organizational Effectiveness
(Systems resource approach)
Acquiring the resourcesneeded from theenvironment…
making it easier toacquire futureresources.
(Combined approach)
and satisfies thestrategic constituentsin the environment, . . .
(Strategic constituencies approach)
and combining themin an efficient andproductive manner…
(Internal processes approach)
OrganizationalSystem
Feedback
(Goal approach)
facilitates the attainmentof organizational goals…
Inputs
Transformation
Outputs
1 2 3
5 4
Figure 3.6
Examples of Organizational Effectiveness
RankFortune's Most Admired (2000)
Fortune's Most Admired (2003) Rank
Business Week's Best Performing (2000)
Business Week's Best Performing (2003)
1 General Electric Wal-Mart 1 Microsoft Forest Laboratories2 Microsoft Southwest Airlines 2 Time Warner Wellpoint Health Networks3 Dell Computer Berkshire Hathaway 3 Cisco Systems United Health Group4 Cisco Systems Dell Computer 4 Oracle Johnson & Johnson5 Wal-Mart General Electric 5 EMC Progressive6 Southwest Airlines Johnson & Johnson 6 Citrix Systems Amerisourcebergen7 Berkshire Hathaway Microsoft 7 Morgan Stanley Dean Witter Lowe's8 Intel FedEx 8 Gap Pfizer9 Home Depot Starbucks 9 Warner-Lambert Dell Computer
10 Lucent Technologies Proctor & Gamble 10 Lucent Technologies St. Jude Medical
SOUTHWEST AIRLINESOrganizational Effectiveness/Corporate Culture
“Providing you with the lowest possible fare; heartfelt Customer Service; and reliable, frequent flights aren’t job duties for our People, they are passions and a way of life.”
Colleen Barrett President
Determinants of Individual Ethics
FamilyFamily
IndividualIndividualEventsEvents
Individual Individual EthicsEthics
PeersPeers
ValuesValues and Moralsand Morals
Employees Organization
• Conflicts of interest• Secrecy and
confidentiality• Honesty
• Hiring and firing• Wages and working
conditions• Privacy and respect
Subject to ethical ambiguities• Advertising and promotions• Ordering and purchasing• Bargaining and negotiation• Financial disclosure• Shipping and solicitation• Other business relationships
Economic Agents• Customers• Competitors• Stockholders• Suppliers• Dealers• Unions
Three basic areas of concern for managerial ethics are the relationships of the firm to the employee, the employee to the firm, and the firm to other economic agents.
Figure 4.1
Managerial Ethics
7 Ways to Promote Ethical Behavior
1. Model the behavior you expect from subordinates.
2. Develop a formal, written code of ethics.
3. Punish any and all employees who violate the code of ethics.
4. Conduct training sessions on how to cope with potentially unethical situations.
5. Listen to employees who have grievances before they become “whistle blowers.”
6. Establish selection and promotion standards that reinforce ethical behavior.
7. Establish ethics and morality as an essential ingredient of the corporate culture.
Reference: Deep, Sam and Lyle Sussman, Smart Moves, Addison-Wesley Publishing Co., Inc. 1990.
Committed to High Standards of Business
WellPoint's success is the result of strong internal growth, strategic expansion and an approach to managing and growing our business that is guided by a commitment to leadership, innovation and social responsibility.
Forest Laboratories, Inc.
Areas of Social Responsibility
• Organizational Stakeholders
• Natural Environment
• General Social Welfare
Organizational Stakeholders
TheOrganization
Localcommunity
Localgovernment
Owners/investors
Tradeassociations
Interestgroups
Courts
Employees
Suppliers
Foreigngovernment
Colleges anduniversities
State/federalgovernment
CustomersCreditors
Figure 4.3