The Managerial Environment

4 Managerial Environments Internal External Cultural Ethics/Social Responsibility

The Internal Environment Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

The Internal Environment Management and Culture Organizational culture The values, beliefs, and assumptions about appropriate behavior that members of an organization share. Mission A organization’s purpose or reason for being. Top management’s responsibility is to develop a mission with clear measurable objectives. Should be relevant to all stakeholders’ interests. Is an expression of the ends the organization strives to attain. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

The Internal Environment (cont’d) Resources Human resources Physical resources Financial resources Informational resources Systems Process The method used to transform inputs into outputs. Process components Inputs Transformation Outputs Feedback Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

Exhibit 2–2 ● The Systems Process Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

The Internal Environment (cont’d) Structure The way in which resources are grouped to effectively achieve the organization’s mission. Organizations structure resources to transform inputs into outputs. All of an organization’s resources must be structured effectively to achieve its mission. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

The External Environment Task Factors General Factors Chaos and Interactive Management

The External Environment Task Factors Customers Their needs decide what products businesses offer. Competition Competitors’ business practices often have to be duplicated to maintain customer value. Suppliers Poor quality suppliers mean poor quality products. Labor force Quality labor is needed to produce quality products. Shareholders The board of directors monitors management and provides direction for the organization. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

The External Environment General Factors Society Businesses are pressured by societal forces to behave in an acceptable manner. Technology Firms must stay current on technology to stay competitive and provide customer value. The Economy Economic activity has both short and long-term effects on an organization’s ability to provide customer value. Governments Policies, rules, and regulations affect what, how much, and how business is conducted. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

The External Environment (cont’d) Chaos and Interactive Management Reactive managers Make changes only when forced to by external factors. Responsive managers Try to adapt to the environment by predicting and preparing for change before they are required to do so. Interactive managers Design a desirable future and invent ways of bringing it about by trying to prevent, not prepare for, threats and to create, not exploit, opportunities. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

Exhibit 2–5 ● The Organizational Environment Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

Business Ethics Ethics The standards of right and wrong that influence behavior. Government laws and regulations are designed to govern business behavior. However, ethics go beyond legal requirements. Ethical concepts are culturally-bound. What is considered ethical in one country may be unethical in another. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

Business Ethics (cont’d) Does Ethical Behavior Pay? Research shows a positive relationship between ethical behavior and leadership effectiveness. Having strong ethics means having integrity, and people trust others they believe have integrity. Unethical behavior creates a negative image of big business. Mahatma Gandhi called business without morality a sin. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

Factors Affecting Ethical Behavior Personality Traits and Attitudes Moral Development Ethical Behavior The Situation Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

How People Justify Unethical Behavior Moral Justification The process of reinterpreting immoral behavior in terms of a higher purpose. Displacement of responsibility-blaming someone else Diffusion of responsibility-when no one person is held responsible Advantageous comparison-comparing oneself to others who are worse Disregard or distortion of consequences-minimizing the harm Attribution of blame-someone else was unethical so I had to be unethical too. Euphemistic labeling-using “cosmetic” words to make the behavior sound acceptable. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

Simple Guides to Ethical Behavior Golden Rule “Do unto others as you want them to do unto you.” Four-Way Test Is it the truth? Is it fair to all concerned? Will it build goodwill and better friendship? Will it be beneficial to all concerned? Stakeholders’ Approach to Ethics Creating a win-win situation for all relevant stakeholders so that everyone benefits from the decision. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

Social Responsibility Social Responsibility to Stakeholders The conscious effort to try to create a win-win situation for all external stakeholders, as well as internal stakeholders. Does It Pay to Be Socially Responsible? Social responsibility doesn’t guarantee or improve profits, but scandals do hurt corporate reputations. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.

KEY TERMS internal environment organizational culture mission stakeholders systems process quality customer value total quality management (TQM) levels of culture symbolic leaders learning organization external environment global village ethnocentrism international business multinational corporation (MNC) global sourcing joint venture direct investment ethics stakeholders’ approach to ethics social responsibility Copyright © 2009 South-Western/Cengage Learning. All rights reserved.