The Organization’s Environments

external environment

internal environment

a.    The external environment is everything outside an organization’s boundaries that might affect it. It consists of the general environment and the task environment.

b.    An organization’s internal environment consists of conditions and forces within the organization.

a.    The Economic Dimension

b.    The Technological Dimension

c.     The Political-Legal Dimension

The Economic Dimension

                                           i.      The economic dimension of an organization’s general environment is the overall health and vitality of the economic system in which the organization operates.

The Technological Dimension

   The technological dimension of the general environment is made up of the methods available for converting resources into products or services.

                                           i.      The political-legal dimension of the general environment consists of government regulation of business and the relationship between business and government.

                                        ii.      First, the legal system partially defines what an organization can and can not do.

                                      iii.      Second, pro- or antibusiness sentiment in government influences business activity.

                                      iv.      Finally, politically stability has ramifications for planning.

competitors

customer

Suppliers

Regulators

Strategic Partners

a.    An organization’s competitors are other organizations that compete with it for resources

a.    A second dimension of the task environment is a customer, or whoever pays money to acquire an organization’s products or services.

a.    Suppliers are organizations that provide resources for other organizations.

a.    Regulators are elements of the task environment that have the potential to control, legislate or otherwise influence an organization’s policies and practices.

                     i.      Regulatory agencies are created by the government to protect the public from certain business practices or to protect organizations from one another.

                                        ii.      Although interest groups lack the official power of government agencies, they can exert considerable influence by using the media to call attention to their positions.

a.    strategic partners (aka strategic allies) – two or more companies that work together in joint ventures or other partnerships.

a.    The owners of a business, of course, the people who have legal property right to that business.

b.    A corporate board of directors is a governing body elected by the stockholders and charged with overseeing the general management of the firm to ensure that it is being run n a way that best serves the stockholders’ interests.

c.     An organization’s employees are also a major element of its internal environment.

d.    A final part of the internal environment is the actual physical environment of the organization and the work that people do.

a.    Ethics is an individual’s personal beliefs about whether a behavior, action, or decision is right or wrong.

a.    Ethical behavior is in the eye of the beholder, the term usually refers to behavior that conforms to generally accepted social norms.

a.    Unethical behavior is behavior that does not conform to generally accepted social norms.

a.    Managerial ethics consist of the standards of behavior that guide individual managers in their work.

a.    conflict of interest occurs when an employee’s decision potentially benefits the individual to the possible detriment of the organization.

who establishes the organization’s culture and define what will and what will not be acceptable behavior.

top managers

a.    Codes of ethics are written statements of the values and ethical standards that guide the firms’ actions.

a.    The Sarbanes-Oxley Act requires CEOs and CFOs to vouch personally for the truthfulness and fairness of their firms’ financial disclosures.

a.    The board of directors of a public corporation is expected to ensure that the business is being properly managed and that the decisions made by its senior management are in the best interest of the shareholders and other stakeholders.

a.    Social responsibility is the set of obligations an organization has to protect and enhance the societal context in which it functions.

a.    Legal compliance is the extent to which the organization conforms to local, state, federal, and international laws.

a.    Ethical compliance is the extent to which the members of the organization follow basic ethical standards of behavior.

a.    Philanthropic giving is the awarding of funds or gifts to charities or other worthy causes.

a.    Whistle-blowing is the disclosure, by an employee, of illegal or unethical conduct on the part of others within the organization.

a.    The volume of international trade increased more than 3,000% between 1960-2000.

Exporting

Importing

Licensing

Strategic alliance

joint venture

Direct investment

Maquiladoras

a.    Exporting, or making a product in the firm’s domestic marketplace and selling it in another country, can involve both merchandise and services.

a.    Importing is bringing a good service, or capital into the home country from abroad.

a.    is an arrangement whereby a firm allows another company to use its brand name, trademark, technology, patent, copyright, or other assets. In return the licensee pays a royalty.

a.    Strategic alliance is where two or more firms jointly cooperate for mutual gain.

a.    A joint venture is a special type of strategic alliance in which the partners actually share ownership of a new enterprise.

a.    Direct investment occurs when a firm headquartered in one country builds or purchases operating facilities or subsidiaries in a foreign country.

a.    Maquiladoras are light assembly plants built in northern Mexico close to the U.S. border. The plants get special tax cuts form Mexican government and the area is populated with workers willing to work for cheap.

a.    Maquiladoras are light assembly plants built in northern Mexico close to the U.S. border. The plants get special tax cuts form Mexican government and the area is populated with workers willing to work for cheap.

The Context of International Business

a.    Difficulties can arise when there is little overlap between the home culture of a manager and the culture of the country in which business is to be conducted.

a.    A tariff is a tax collected on goods shipped across national boundaries.

a.    A quota is a limit on the number or value of goods that can be traded. It is designed to ensure that domestic competitors will be able to maintain a certain market share.

a.    Export restraint agreements are designed to convince other governments to limit voluntarily the volume or value of goods exported to or imported form a particular country.

a.    “Buy national” legislation gives preference to domestic producers through content or price restrictions.

a.    An international economic community is a set of countries that agree to markedly reduce or eliminate trade barriers among member nations.