Environmental Overview
September 6, 2004
The Organization and Its Environments
International
dimension
Technological
dimension
Competitors
Regulators
Politicallegal
dimension
Strategic
partners
General environment
Suppliers
Economic
dimension
Sociocultural
dimension
Internal environment
Task environment
Owners
Customers
Employees
Physical environment
Board of directors
Culture
External environment
Figure 3.1
McDonald’s General Environment
International Dimension
• Restaurants in 115
countries
• About two-thirds of
sales from outside
the United
States
Political-Legal
Dimension
• Government
food standards
• Local zoning
climate
• General posture
toward business
regulation
Technological
Dimension
• Improved information
technology
• More efficient
operating systems
McDonald’s
Economic
Dimension
• Strong economic
growth
• Low unemployment
• Low inflation
Sociocultural Dimension
• Demographic shifts in
number of single adults
and dual-income families
• Growing concerns about
health and nutrition
Internal environment
Task environment
External 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
Regulators
• Food and Drug
Administration
• Securities and
Exchange
Commission
• Environmental
Protection
Agency
Competitors
• Burger King
• Wendy’s
• Subway
• Dairy Queen
McDonald’s
Strategic Partners
• Wal-Mart
• Disney
• Foreign partners
Customers
• Individual
consumers
• Institutional
customers
Suppliers
• Coca-Cola
• Wholesale food
processors
• Packaging
manufacturers
Internal environment
Task environment
Figure 3.3
Strategic Partners
+
=
The Internal Environment
Owners
Employees
Physical environment
Board of directors
Culture
Internal environment
Task environment
General environment
External environment
Environmental Change, Complexity,
and Uncertainty
Degree of Homogeneity
Simple
Least
uncertainty
Moderate
uncertainty
Moderate
uncertainty
Most
uncertainty
Complex
Stable
Degree of Change
Source: Adapted from J.D. Thompson, Organizations in Action. Copyright ©
1967 by McGraw-Hill. Reprinted by permission of McGraw-Hill Companies.
Dynamic
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
1
Acquiring the resources
needed from the
environment…
2
3
and combining them
in an efficient and
productive manner…
(Systems resource approach)
facilitates the attainment
of organizational goals…
(Internal processes approach)
(Goal approach)
Transformation
Inputs
Organizational
System
Outputs
Feedback
5
making it easier to
acquire future
resources.
(Combined approach)
and satisfies the
strategic constituents
in the environment, . . .
4
(Strategic constituencies
approach)
Figure 3.6
Examples of Organizational Effectiveness
Fortune's Most
Rank
Admired (2000)
1 General Electric
2 Microsoft
3 Dell Computer
4 Cisco Systems
5 Wal-Mart
6 Southwest Airlines
7 Berkshire Hathaway
8 Intel
9 Home Depot
10 Lucent Technologies
Fortune's Most
Admired (2003)
Wal-Mart
Southwest Airlines
Berkshire Hathaway
Dell Computer
General Electric
Johnson & Johnson
Microsoft
FedEx
Starbucks
Proctor & Gamble
Business Week's Best
Rank
Performing (2000)
1 Microsoft
2 Time Warner
3 Cisco Systems
4 Oracle
5 EMC
6 Citrix Systems
7 Morgan Stanley Dean Witter
8 Gap
9 Warner-Lambert
10 Lucent Technologies
Business Week's Best
Performing (2003)
Forest Laboratories
Wellpoint Health Networks
United Health Group
Johnson & Johnson
Progressive
Amerisourcebergen
Lowe's
Pfizer
Dell Computer
St. Jude Medical
SOUTHWEST AIRLINES
Organizational 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
Peers
Family
Individual
Ethics
Individual
Events
Values
and Morals
Managerial
Ethics
• Conflicts of interest
• Secrecy and
confidentiality
• Honesty
Employees
Organization
• Hiring and firing
• Wages and working
conditions
• Privacy and respect
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.
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
Figure 4.1
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
Forest Laboratories, Inc.
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.
Areas of Social Responsibility
• Organizational
Stakeholders
• Natural Environment
• General Social Welfare
Organizational Stakeholders
Creditors
Customers
Local
government
Local
community
Suppliers
State/federal
government
The
Organization
Foreign
government
Colleges and
universities
Employees
Interest
groups
Courts
Owners/
investors
Trade
associations
Figure 4.3