Environmental Overview September 6, 2004

The Organization and Its Environments Owners Employees Physical environment Board of directors Culture Competitors International dimension Political- legal dimension Technological dimension Sociocultural dimension Economic dimension RegulatorsCustomers Strategic partners Suppliers Internal environment Task environment External environment General environment Figure 3.1

McDonald’s General Environment McDonald’s 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 Sociocultural Dimension Demographic shifts in number of single adults and dual-income families Growing concerns about health and nutrition Economic Dimension Strong economic growth Low unemploy- ment Low inflation 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 McDonald’s Competitors Burger King Wendy’s Subway Dairy Queen Customers Individual consumers Institutional customers Suppliers Coca-Cola Wholesale food processors Packaging manufacturers Strategic Partners Wal-Mart Disney Foreign partners Regulators Food and Drug Administration Securities and Exchange Commission Environmental Protection Agency Internal environment Task environment Figure 3.3

Strategic Partners + =

The Internal Environment Owners Employees Physical environment Board of directors Culture Internal environment Task environment External environment General environment

Environmental Change, Complexity, and Uncertainty Simple Complex StableDynamic Moderate uncertainty Most uncertainty Moderate uncertainty Least uncertainty Degree of Change Degree of Homogeneity Source: Adapted from J.D. Thompson, Organizations in Action. Copyright © 1967 by McGraw-Hill. Reprinted by permission of McGraw-Hill Companies. 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 (Systems resource approach) Acquiring the resources needed from the environment… making it easier to acquire future resources. (Combined approach) and satisfies the strategic constituents in the environment,... (Strategic constituencies approach) and combining them in an efficient and productive manner… (Internal processes approach) Organizational System Feedback (Goal approach) facilitates the attainment of organizational goals… Inputs Transformation Outputs Figure 3.6

Examples of Organizational Effectiveness

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 Family IndividualEvents Individual Ethics Peers Values and Morals and Morals

EmployeesOrganization Conflicts of interest Secrecy and confidentiality Honesty Hiring and firing Wages and working conditions Privacy and respect 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 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. Figure 4.1 Managerial Ethics

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

Committed to High Standards of Business 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. Forest Laboratories, Inc.

Areas of Social Responsibility Organizational Stakeholders Natural Environment General Social Welfare

Organizational Stakeholders The Organization Local community Local government Owners/ investors Trade associations Interest groups Courts Employees Suppliers Foreign government Colleges and universities State/federal government Customers Creditors Figure 4.3