Management Presentation Chapter 2

Management Presentation Chapter 2 Management Presentation Chapter 2 Management Presentation Chapter 2 Management Presentation Chapter 2 Management Presentation Chapter 2 Management Presentation Chapter 2

The Organization’s Environments • External Environment: Everything that is outside an organization – General environment is a set of broad dimensions and forces in an organization’s 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 passwordprotected website for classroom use 2–2 The Organization and Its Environments The general environment consists of broad dimensions and forces in Technological an organization's context dimension The task environment is the specific organizations or groups that have a direct impact on a firm Competitors The internal environment consists of conditions and forces within the organization Owners Regulators Customers Employees Physical environment Board of directors Culture Political- Economic legal dimension Strategic dimension Suppliers partners 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 passwordprotected website for classroom use 2–3 The External Environment • The General Environment – Economic dimension: Overall health of the economic system in which the organization operates – Technological dimension: Methods available for converting resources into products or services – Political-legal dimension: Government regulation of business and the relationship between business and government 2–4 The External Environment (cont’d) • Dimensions of the Task Environment – Specific groups affecting the organization • Competitors: The other organizations that compete for the same resources • Customers: Pay money to acquire an organization’s products or services • Suppliers: Provide resources for other organizations 2–5 The External Environment (cont’d) • Dimensions of the Task – Environment Regulators: Have the potential to control, regulate or influence an organization's policies and practices • Regulatory agencies are created by the government to protect the public from certain business practices or to protect organizations from one another • Interest groups: are groups organized by members to attempt to influence organizations – Specific groups affecting the organization • Strategic partners (also called strategic allies): Two or more companies work together in joint ventures 2–6 FIGURE 2.1 McDonald’s Task 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 2–7 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 2–8 Individual Ethics In Organizations • Ethics – An individual’s personal beliefs regarding what is right or wrong or good or bad • Ethical Behavior – Behavior that is acceptable in the eye of the beholder – Behavior that conforms to accepted social norms • Examples of Unethical Behavior – “Borrowing” office supplies for personal use – Spending most of the work time browsing Facebook and personal websites Question: Does an organization have ethics? 2–9 Determinants of Individual Ethics Family Situational Values and Influences Factors Morals Experiences Peer Influences Individual Ethics © 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 passwordprotected website for classroom use 2–10 Managing Social Responsibility: Informal Organizational Dimensions • Organizational Leadership and Culture – Leadership practices and the culture of the organization 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 organization’s stance on social responsibility Question: Will you “blow the whistle” if it meant the possible loss of a job? 2–17 Managing Social Responsibility Formal Organizational Informal Organizational Dimensions Dimensions Legal compliance Organization leadership and culture Ethical compliance Whistle Blowing Philanthropic giving © 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 passwordprotected website for classroom use 2–18 Trends in International Business • Economic Recovery – Europe and Asia have rebuilt their economic systems devastated in WWII • Decreasing Isolation from Foreign Competition – U.S markets are open to overseas competitors • US firms dominate in some industries, including auto making and fast food, but many other industries are dominated by non-US firms, including chemicals, steel, banking, and electronics • Increasing Globalization of World Markets – Volume of international trade has increased more than 3,000% from 1960 to 2010 – Larger percentages of U.S firms’ profits are now earned in international markets 2–19 International Business Activity Exporting Types of International Business Activity Importing Licensing Direct Investment Alliances and Joint Ventures © 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 passwordprotected website for classroom use 2–20 Levels of International Business Activity • Exporting – Making a product in the firm’s domestic market and selling it in another country • Importing – Bringing a good, service, or capital into a home country from abroad • Licensing – Is an arrangement whereby one company allows another to use its brand name, trademark, technology, patent, copyright, or other assets in exchange for a royalty based on sales Franchising is a special form of licensing 2–21 Levels of International Business… (cont’d) • Strategic Alliance and Joint Ventures – Firms jointly cooperate for mutual gain, by sharing costs and/or sharing ownership of a new enterprise • Direct Investment – Occurs when a firm headquartered in one country builds or purchases operating facilities or subsidiaries in a foreign country (e.g Coca-Cola invested $150 billions to build a new bottling and distributing network in India) – Maquiladoras • Light-assembly plants in northern Mexico which are given special tax breaks by the Mexican government A large population of workers is willing to work for low wages 2–22 Table 2.1 Advantages and Disadvantages of Different Approaches to Internationalization Approach to Internationalization Importing or Exporting Licensing Strategic Alliances or Joint Ventures Direct Investment Advantages Disadvantages 3 2 Small cash outlay Little risk No adaptation necessary Tariffs and taxes High transportation costs Government restrictions Extended profitability Quick market entry Shared ownership Access to materials and technology (limits control and profits) Increased profitability Enhanced control Existing infrastructure Inflexibility Competition Complexity Greater economic and political risk Greater uncertainty © 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 2–23 The Context of International Management Political/Legal Environment Economic Cultural Government stability Environment Environment Incentives for international trade Economic system Values, symbols, beliefs, and language Controls on international trade Natural resources Individual differences across cultures Economic communities Infrastructure International Management Functions © 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 passwordprotected website for classroom use 2–24 The Cultural Environment • Cultural: Cultural values and beliefs are often unspoken Managers need to take special caution on this For example: – Different value of time between US and middle east – Different family structure between US and China • Language: – General Motors’ brand name “Nova” pronounced as “no va” in Spanish means “doesn’t go.” • Culture Quiz! 2–25 Controls on International Trade • Tariffs are taxes collected on goods shipped across national boundaries – Import tariffs can be levied to protect domestic companies or raise money for the government) • Quotas are limits placed on the number or value of goods that can be traded as exports or imports – The quota amount is designed to ensure that domestic competitors will be able to maintain a certain market share 2–26 Controls on International Trade • Export restraint agreements are voluntary limits on the volume or value of goods exported to, or imported from, another country – This is, in fact, export quotas – E.g Japanese steel producers voluntarily limit the amount of steel they send to the US each year • “Buy National” legislation gives preference to domestic producers through content or price restrictions – E.g Brazil requires that Brazilian companies purchase only Brazilian-made computers 2–27 The Structure of the Global Economy • Economic Communities – Sets of countries that engage in high levels of trade with each other through the elimination of trade barriers such as quotas and tariffs • European Union (EU) – 27 countries work together to eliminate most trade barriers (e.g eliminate their home currencies and adopted the euro • North American Free Trade Agreement (NAFTA): To ease the trade between US, Canada, and Mexico © 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 passwordprotected website for classroom use 2–28 The Role of the GATT and the WTO • General Agreement on Trade and Tariffs (GATT) (It was first ratified in 1948) – A trade agreement that promoted international trade by lowering trading barriers and tariffs • World Trade Organization (WTO) (It was ratified in 1995 It replaced the GATT and absorbed its mission) It includes 140 member nations and 32 observer countries – To promote trade flows by encouraging nations to adopt nondiscriminatory and predictable trade policies – To reduce remaining trade barriers through multilateral negotiations – To establish impartial procedures for resolving trade disputes among its members 2–29 The Organization’s 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 organization’s overall effectiveness and longterm success E.g Employees at JC Penney are still called associates rather than employees (to reflect partnership) 2–30 Managing Organization Culture • Understand the current culture and decide whether to maintain or change it • Articulate the culture through slogans, ceremonies, and shared experiences – Ceremonies: New hire trainings, new hire welcome lunches, annual corporate conferences, offsite meetings – Slogans: Customer first! • Reward and promote people whose behaviors are consistent with desired cultural values – Employee of the month 2–31 ... its main goal? 2 14 FIGURE 2. 2 Arguments for and against Social Responsibility Arguments for Arguments against Social Responsibility Social Responsibility Social Responsibility © 20 14 Cengage Learning... breaks by the Mexican government A large population of workers is willing to work for low wages 2 22 Table 2. 1 Advantages and Disadvantages of Different Approaches to Internationalization Approach... ethics 2 12 Emerging Ethical Issues Ethical Leadership Corporate Governance (Integrity) (Sarbanes-Oxley Act) Ethical Issues in Organizations Ethics and Information Technology (Privacy) 2 13 Social