Chapter 2 The Management Environment PDF

2 Chapte r The Managem ent Environm ent Copyright ©2011 Pearson Education Learning Objectives(part one) Explain what the external environment is and why it’s imporatant Discuss how the external environment affects managers Define what organizationl culture is and explai...

2 Chapte r The Managem ent Environm ent Copyright ©2011 Pearson Education Learning Objectives(part one) Explain what the external environment is and why it’s imporatant Discuss how the external environment affects managers Define what organizationl culture is and explain why it’s important Describe how organizational culture affects managers Copyright ©2011 Pearson 2-2 Education what the external environment is and why it is important External environment: Refers to factors, forces, situations, and events outside the organization that affect its performance. Components of the external environment Economic demographic technological Socioculture Political and legal global Copyright ©2011 Pearson 2-3 Education How Has the Economy Changed? 1980s – The U.S. economy was growing and tax rates were low – Low inflation and low interest rates fueled consumer spending – Individuals took risks by investing in the stock market, buying homes, and starting their own businesses 2008 – Gas prices hit $4 plus per gallon – Adjustable mortgages adjusted upward with higher monthly payments due, many consumers couldn’t keep up Copyright ©2011 Pearson 2-4 Education The Economic Crisis Began with turmoil in mortgage markets Spread to businesses when broader credit markets collapsed Called the worst since the Great Depression Foreclosures, financial recession, a huge public debt, and widespread social problems from job losses signal that the U.S. and global economic environments have changed and are continuing to change Copyright ©2011 Pearson 2-5 Education What Will the “New” Normal Be Like? The New Normal – “Capitalism will be different” Timothy Geithner, the U.S. Secretary of the Treasury – Increased role of government, especially in financial markets – Government spending is now at levels not seen since World War Two – Public concerns about the growing budget deficit and increased government intervention in the economy. Copyright ©2011 Pearson 2-6 Education Technology and the Manager’s Job Continuing advances in technology make work more efficient and improve available information and communication Technology – Any equipment, tools, or operating methods that are designed to make work more efficient Intranet – A private computer network that uses Internet technology and is accessible only to organizational members Copyright ©2011 Pearson 2-7 Education What role do demographics play The size and characteristics of a country’s population can have a significant effect on what’s able to achieve. Demographics:the charteristics of population used for purpose of social studies,can do have a significant impact on how managers manage. Age is a particularly important demographic for managers since the workplace has different age groups all working together. Four well-known age groups:Baby boomers,Gen X,Gen Y,post-millennials(GEN G),Age can constrain decisions and action taken by manager Copyright ©2011 Pearson 2-8 Education Different generation Those born before 1946 - 6 percent of the workforce Baby boomers , born between 1946 and 1964 - 41.5 percent of the workforce Generation X, born 1965 to 1977 - 29 percent of the workforce Gen Y , born 1978 to 1994 - 24 percent of the workforce. Copyright ©2011 Pearson 2-9 Education How does the external environment affect managers 1.Impact on jobs and employment Millions of jobs eliminated during the most recent economic recession (downturn) and be replaced by other types of work in growing industries. (ALI-PAY,APPALE-PAY) ----- Copyright ©2011 Pearson 2-10 Education  How does the external environment affect managers -----------Creat challenges for managers to balance work demands and have enough people with skills to do the work. -----------new types of job to be created and managed,such as flexible work arrangemant,temporary workers but not permanent employees,individuals sharing job. Which will affect the way manager plan,organize,lead and control Copyright ©2011 Pearson 2-11 Education How does the external environment affect managers 2.Impact on environmental uncertainty Environmental uncertainty: refers to the degree of change and complexity in an organization’s environment which can affect organizational outcome. two dimensions of uncertainty: -----the degree of unpredictable change dynamic environment & stable environment Copyright ©2011 Pearson 2-12 Education  How does the external environment affect managers instruction: students present examples of related industries. ----the degree of environmental complexity the number of components in an organization’s environment and the extent of the knowledge that the organization has about those components. 4 cells represents different degree of uncertainty which is challenge to an organization’s effectives. Copyright ©2011 Pearson 2-13 Education How does the external environment affect managers 3.Impact on managing stakeholder relationships Stakeholders are any constituencies in an organization’s environment that are affected by that organization’s decisions and actions. Vice versa the stakeholders can influence the organization. Instruction:what are internal and external stakeholder in EXHIBIT2-3 Copyright ©2011 Pearson 2-14 Education How does the external environment affect managers The more caring about stakeholders,the more desirable outcomes can be obtained by organization. -----------improved predictability of environment changes, more successful innovations, greater degree of trust among stakeholders,great flexibility to reduce the tmpact of change. -----------stakeholdes are usually considered to be source of inputs or otlets for outputs. -----------finding prove that managers of high performance companies tend to consider the interests of stakeholders as they make decisions - Copyright ©2011 Pearson 2-15 Education How does the internal aspects affect managers Organization culture:encompass a unique personality that influences the way the organization act and interact A:Which can be perceived by employees on the basis of what they experience in organization B:Which can be concerned with how members perceive and describe C:Which can be shared by all employees even though they have different background and experence Copyright ©2011 Pearson 2-16 Education How does the internal aspects affect managers 1.7 dimensions of organizational cultures Attention to detail/outcome orientation/people orientation/team orientation/aggressiveness/stability/innovatio n and risk taking 2.How does organization culture affect mangers -------------affect employees do and how they behave(strong culture( substitute for the rules and regulations that formally guide employee VS weak culture(no dominant shared value are presented))/ Copyright ©2011 Pearson 2-17 Education How does the internal aspects affect managers --------------affect what managers do Organization culture constraint what they can and cannot do,and how they manage,all managers quickly learn how to do and not do. The organization culture affect the manager’s leadership in some degree. The organization culture influence and constrains the way manager plan ,organize ,lead and control Copyright ©2011 Pearson 2-18 Education Learning Objectives(part two) Explain globalization and its impact on organizations Discuss how society expectations in fluencing mangers and organizations Discuss the factors that lead to ethical and unethical behavior in organization Describe how the workforce is changing and its impact on the wayorganizations are managered Copyright ©2011 Pearson 2-19 Education What Is Globalization and How Does It Affect Organizations? Global Village – The concept of a boundaryless world where goods and services are produced and marketed worldwide What should managers do while facing to the Global Village context? Multinational Corporation (MNC) – Any type of international company that maintains operations in multiple countries. Multidomestic Corporation – An MNC that decentralizes management and other decisions to the local country where it’s doing business. Copyright ©2011 Pearson 2-20 Education Other Types of Global Organizations Global Corporation – An MNC that centralizes management and other decisions in the home country Transnational (Borderless) Organization – A structural arrangement for global organizations that eliminates artificial geographical barriers. Copyright ©2011 Pearson 2-21 Education How Do Organizations Go Global? Global Sourcing – Purchasing materials or labor from around the world wherever it is cheapest Goal:take advantage of lower costs in order to be more competitive Global sourcing may be the first step to going international for many companies ,they often continue using this approach because of the competitive advantages it offers. Update situation:the trends of bringing manufactureing back home Copyright ©2011 Pearson 2-22 Education How Do Organizations Go Global? Exporting – Making products domestically and selling them abroad Importing – Acquiring products made abroad and selling them domestically The next step in going global is exporting and inporting.both usually entail minimal investment and risk Copyright ©2011 Pearson 2-23 Education Going Global (cont.) The third step for going global Licensing – An agreement primarily used by manufacturing businesses in which an organization gives another the right, for a fee, to make or sell its products, using its technology or product specifications. Licensing is primarily used by manufacturing organization that make or sell another company’s products. Copyright ©2011 Pearson 2-24 Education Going Global (cont.) Franchising – An agreement primarily used by service businesses in which an organization gives another organization the right, for a fee, to use importing its name and operating methods Franchising is primarily used by service organization that want to use another company’s name and operating methods. Copyright ©2011 Pearson 2-25 Education Going Global (cont.) The fourth step for going global is making a direct investment 1.Global Strategic Alliance – A partnership between an organization and a foreign company partner(s) in which resources and knowledge are shared in developing new products or building production facilities Copyright ©2011 Pearson 2-26 Education Going Global (cont.) 2.Joint Venture(specific type of strategic alliance) – A specific type of strategic alliance in which the partners agree to form a separate, independent organization for some business purpose The partnerships provide a relatively easy way for companies to compete globally. Copyright ©2011 Pearson 2-27 Education  Going Global (cont.) 3.Foreign Subsidiary – A direct investment in a foreign country that involves setting up a separate and independent facility or office The subsidiary can be managed as multidomestic organization or as a global organization.also it will involves the greatest commitment of resources and poses considerable risk. Copyright ©2011 Pearson 2-28 Education Copyright ©2011 Pearson 2-29 Education What Do Managers Need to Know about managing in a global organization? A global world brings new challenges for managers ,especially in managing in a country with a different culture.because it needs manager to recognize the differences that may exist and then find ways to make interations effective. But some managers with parochialistic attitude can not succeed in today’s world. Copyright ©2011 Pearson 2-30 Education What Do Managers Need to Know about managing in a global organization? Parochialism – A narrow focus in which managers see things only through their own eyes and from their own perspective All countries have different values, morals, customs, political and economic systems, and laws, all of which can affect how a business is managed Copyright ©2011 Pearson 2-31 Education Hofstede’s Framework Geert Hofstede – Studied differences in culture and found that managers and employees vary on five value dimensions of national culture: 1.Power Distance 2.Individualism vs. Collectivism 3.Achievement vs. Nurturing 4.Uncertainty Avoidance 5.Long-term vs. Short-term Orientation Copyright ©2011 Pearson 2-32 Education Copyright ©2011 Pearson 2-33 Education GLOBE Findings Global Leadership and Organizational Behavior Effectiveness (GLOBE) – An ongoing cross-cultural investigation of leadership and national culture – Identified nine dimensions on which national cultures differ – Confirm that Hofstede’s dimensions are still valid, and extend his research rather than replace it Copyright ©2011 Pearson 2-34 Education Copyright ©2011 Pearson 2-35 Education from Organizations and Managers? Green Management – When managers recognize and consider the impact of their organization and its practices on the natural environment – The idea of being environmentally friendly or green affects many aspects of business Copyright ©2011 Pearson 2-36 Education How Can Organizations Demonstrate Socially Responsible Actions? Society expects organization and managers to be responsible and ethical. On one side , management ‘s only social responsibility is to maximize profit.(the classical economic) On the other side, management responsibility goes beyond making profits to include protection and improve society’s welware. Social Responsibility – A business firm’s intention, beyond its legal and economic obligations, to do the right things and act in ways that are good for society Copyright ©2011 Pearson 2-37 Education How Can Organizations Demonstrate Socially Responsible Actions? Social Obligation – When a business firm engages in social actions because of its obligation to meet certain economic and legal responsibilities That means the organization does the minimum that the law requires and mandates and at the same time only pursues social goals to the extent that they contribute to its economic goals. Social Responsiveness – When a business firm engages in social actions in response to some popular social need(EX.: recycled package) Instruction: discussing and illustrate the examples for above two concepts Copyright ©2011 Pearson 2-38 Education Should organizations be socially involved? Managers regularly confront decisions where social responsibility is a factor Studies show a small positive relationship between social and company’s performance even though there are some arguments toward this conclusion. Sustainability has become a main stream issue for managers. New requirement to management is not only to managing in an effective and efficient way,but also to responding to a wide range of environment and societal challenges. Copyright ©2011 Pearson 2-39 Education Should organizations be socially involved? Sustainability: A company ‘s ability to achieve it’s business goal and increase long-term shareholder value by intergrating economics, environment, and social opportunities into its business strategies. Following sustainability practices is one way in which organization can show their commitment to being responsible. Manager want to be seen as ethical. Copyright ©2011 Pearson 2-40 Education Copyright ©2011 Pearson 2-41 Education How Can Managers Become More Ethical? Managers want to be seen as ethical. Ethics – Commonly refers to a set of rules or principles that defines right and wrong conduct Instruction:employees work all weekend for rush project and manager permits them to take off two days without any compensation.DO You think it is ethical? Utilitarian view of ethics Vs rights view of ethics Copyright ©2011 Pearson 2-42 Education How Can Managers Become More Ethical? Theory of justice view of ethicals An individual imposes and enforces rules fairly and impartially What factors do affect the manager act ethically or unethically? Individual ‘s morality,values,personality,and experience;the organization culture and the ethical issue Code of Ethics – A formal document that states an organization’s primary values and the ethical rules it expects managers and nonmanagerial employees to follow Copyright ©2011 Pearson 2-43 Education Copyright ©2011 Pearson 2-44 Education How Can Managers encourage Ethical behavior? There are three ways that managers can encourage ethical behavior and create a comprehensive ethics program. 1.Code of Ethics – A formal document that states an organization’s primary values and the ethical rules it expects managers and nonmanagerial employees to follow --It shares value such as honesty, fairness, respect, responsibility, and caring --the effectiveness of the code depends on whether management supports and ingrains them Into the organization culture. Copyright ©2011 Pearson 2-45 Education How Can Managers encourage Ethical behavior?. 2.Ethical Leadship – Doing business ethically requirs a commotment from managers – Mangers also set the tone by their reward and punish practices. 3.Ethical Training The training package should be animated and interactive and has more realistic storylines for the industry. Ethical training increases awareness of ethical issue in business Copyright ©2011 Pearson 2-46 Education How Does Today’s Workforce Impact the Way We Manage? Workforce Diversity – Ways in which people in a workforce are similar and different from one another in terms of Gender Age Race Sexual Orientation Ethnicity Cultural Background Physical Abilities and Disabilities Copyright ©2011 Pearson 2-47 Education How Does Today’s Workforce Impact the Way We Manage? Age:prevent to be discriminated against because of age. Develop program and policies that provide for fair and equal treatment of the old employee. Gender:gender pay gap,career start and progress,and misconceptions about whether women perform the job as well as men do. Copyright ©2011 Pearson 2-48 Education How Does Today’s Workforce Impact the Way We Manage? Race and ethnicity:most people identify them selfs as part of a racial group and such racial classifications are an integral part of a country’s cultureal,social,and legal environments. Ethnicity is related to race,but it refers to social traits-one’s cultural background or allegiance. Copyright ©2011 Pearson 2-49 Education How Does Today’s Workforce Impact the Way We Manage? Disability/abilities:In effectively managing a workforce with disabled employees,manager need to create and maintain an environment in which employees feel comfotable disclosing their need for accomodation. Religion: managers need to recognize and be aware of different religions and their beliefs,paying special attention to when certain religious holiday. Copyright ©2011 Pearson 2-50 Education How Does Today’s Workforce Impact the Way We Manage? GLBT-Sexual orientation and gender identity:managers need to look at how best to meet the needs of GLBT employee. Other types of diversity: diversity refers to any dissimilarities or differences that might be present in a workplace.Other diversity include socioeconomic backgroud,team members from different areas,obesity,job seniority ,intellectual abilities. Note: ensure to be treated fairly and given the opportunity and support to do their jobs to the best of their abilities. Copyright ©2011 Pearson 2-51 Education How Are Managers Adapting to a Changing Workforce? Managers have to adapt to the changes taking place in workforce.they are responding with diversity initiatives as flows: Work-life balance programs Family-Friendly Benefits – Benefits that provide a wide range of scheduling options that allow employees more flexibility at work, accommodating their needs for work/life balance Copyright ©2011 Pearson 2-52 Education How Are Managers Adapting to a Changing Workforce? Many organizations have responded by converting full-time permanent job into contingent jobs. Contingent Workforce – Part-time, temporary, and contract workers who are available for hire on an as-needed basis – Contingent worker lack the stability and security of permanent employees, they may not identify with the organization or be as committed or motivated Copyright ©2011 Pearson 2-53 Education How Are Managers Adapting to a Changing Workforce? Generational differences Issues range from appearance to technology and management style: What is appropriate Office attire? What about technology? What about mangement style? Copyright ©2011 Pearson 2-54 Education Can Organizations Improve Customer Service? Creating a Customer –Responsive Culture – Type of employee (friendly, outgoing) – Employees need freedom to meet changing customer-service requirements – Employees must be empowered with decision discretion – Employees must be good listeners Copyright ©2011 Pearson 2-55 Education Copyright ©2011 Pearson 2-56 Education How Can Organizations Improve Quality? Continuous Improvement – An organization’s commitment to continually improving the quality of a product or service Kaizen – The Japanese term for an organization’s commitment to continuous improvement Work Process Engineering – Radical or quantum change in an organization. Copyright ©2011 Pearson 2-57 Education Copyright ©2011 Pearson 2-58 Education Copyright ©2011 Pearson 2-59 Education