Environmental Overview

September 6, 2004

The Organization and Its Environments

OwnersEmployees

Physical environmentBoard of directors

Culture

Competitors

Internationaldimension

Political-legal

dimension

Technologicaldimension

Socioculturaldimension

Economicdimension

Regulators Customers

Strategicpartners

Suppliers

Internal environment

Task environmentExternal environment

General environmentFigure 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-LegalDimension• Government

food standards• Local zoning

climate• General posture

toward businessregulation

TechnologicalDimension• Improved information

technology• More efficient

operating systems

Sociocultural Dimension• Demographic shifts in

number of single adultsand dual-income families

• Growing concerns abouthealth and nutrition

EconomicDimension• Strong economic

growth• Low unemploy-

ment• Low inflation

Internal environment

Task environmentExternal 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

ExchangeCommission

• EnvironmentalProtectionAgency

Internal environment

Task environmentFigure 3.3

Strategic Partners

+ =

The Internal Environment

OwnersEmployees

Physical environmentBoard of directors

Culture

Internal environment

Task environmentExternal environment

General environment

Environmental Change, Complexity, and Uncertainty

Simple

Complex

Stable Dynamic

Moderateuncertainty

Mostuncertainty

Moderateuncertainty

Leastuncertainty

Degree of Change

Deg

ree

of

Ho

mo

gen

eity

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 resourcesneeded from theenvironment…

making it easier toacquire futureresources.

(Combined approach)

and satisfies thestrategic constituentsin the environment, . . .

(Strategic constituencies approach)

and combining themin an efficient andproductive manner…

(Internal processes approach)

OrganizationalSystem

Feedback

(Goal approach)

facilitates the attainmentof organizational goals…

Inputs

Transformation

Outputs

1 2 3

5 4

Figure 3.6

Examples of Organizational Effectiveness

RankFortune's Most Admired (2000)

Fortune's Most Admired (2003) Rank

Business Week's Best Performing (2000)

Business Week's Best Performing (2003)

1 General Electric Wal-Mart 1 Microsoft Forest Laboratories2 Microsoft Southwest Airlines 2 Time Warner Wellpoint Health Networks3 Dell Computer Berkshire Hathaway 3 Cisco Systems United Health Group4 Cisco Systems Dell Computer 4 Oracle Johnson & Johnson5 Wal-Mart General Electric 5 EMC Progressive6 Southwest Airlines Johnson & Johnson 6 Citrix Systems Amerisourcebergen7 Berkshire Hathaway Microsoft 7 Morgan Stanley Dean Witter Lowe's8 Intel FedEx 8 Gap Pfizer9 Home Depot Starbucks 9 Warner-Lambert Dell Computer

10 Lucent Technologies Proctor & Gamble 10 Lucent Technologies St. Jude Medical

SOUTHWEST AIRLINESOrganizational 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

FamilyFamily

IndividualIndividualEventsEvents

Individual Individual EthicsEthics

PeersPeers

ValuesValues and Moralsand Morals

Employees Organization

• 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. 1990.

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

TheOrganization

Localcommunity

Localgovernment

Owners/investors

Tradeassociations

Interestgroups

Courts

Employees

Suppliers

Foreigngovernment

Colleges anduniversities

State/federalgovernment

CustomersCreditors

Figure 4.3