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PART II THE ENVIRONMENTAL
CONTEXT OF MANAGEMENT
1. The Environment of Organizations
2. The Ethical and Social Environment
3. The Global Environment
4. The Multicultural Environment
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1. THE ENVIRONMENT OF
ORGANIZATIONS
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THE ORGANIZATION AND ITS ENVIRONMENTS
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External EnvironmentGeneral environment:everything
outside an organizations
boundarieseconomic, legal, political, socio-
cultural, international,
technical and natural forces.
Task environment:specific groups
and organizations that affect the firm.
customers, competitors,
suppliers, labour market
Internal EnvironmentConditions and forces present at work
and within an organization
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MCDONALDS GENERAL ENVIRONMENT
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MCDONALDS TASK ENVIRONMENT
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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.
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WHY DO ORGANIZATIONS CARE SO MUCH
ABOUT FACTORS IN THE EXTERNAL
ENVIRONMENT?
Environment creates uncertainty formanagers, and they must respond bydesigning the organization to adapt to theenvironment
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HOW ORGANIZATIONS ADAPT TO THEIR ENVIRONMENTS
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2. THE ETHICAL AND SOCIAL
ENVIRONMENT
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INDIVIDUAL ETHICS IN ORGANIZATIONS
Ethics An individuals personal beliefs regarding what is rightand wrong or good and bad.
Ethical Behavior Eye of the beholder or behavior that conforms togenerally accepted social norms.
Unethical Behavior???Borrowing office supplies for personal useSurfing the Net on company time
Filing falsified or inflated business expense reports
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AGUIDE FORETHICAL 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 aboutthe 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.
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SOCIAL RESPONSIBILITY AND ORGANIZATIONS
Organizational Stakeholders People and organizations directly affected by the
behaviors of an organization and that have a stake in itsperformance.
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
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Arguments for:
Public expectations Long-run profits Ethical obligation Public image Better environment Discouragement of further
government regulation
Balance of responsibility andpower Stockholder interests Possession of resources Superiority of prevention over
cures
Arguments against:
Purpose of the business to earnprofit
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 selectedcases.
Proactive Stance Organization views itself as a citizen and proactively seeksopportunities 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 basicethical/legal standards of behavior.
Philanthropic Giving Awarding of funds or gifts to charities and other socialprograms.
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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 anorganization and its members will adopt.
Whistle Blowing The organizational response to the disclosure by an
employee of illegal or unethical conduct on the part ofothers within the organization is indicative of theorganizations stance on social responsibility.
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3. THE GLOBAL ENVIRONMENT
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LEVELS OF INTERNATIONAL BUSINESS
ACTIVITYDomestic Business acquires all of its resources and sells all of its products or serviceswithin a single country.
International Business is primarily based in a single country yet acquires a meaningfulshare of its resources and/or revenues from other countries.
Multinational Business transcends national boundaries and buys raw materials, borrowsmoney, and manufactures and sells its products in a world-widemarketplace.
Global Business transcends national boundaries and is not committed to a singlehome 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 aworld-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-zonedifferences, 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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