1. Discuss the nature of an organization\'s environments and identify the compon
ID: 2815782 • Letter: 1
Question
1. Discuss the nature of an organization's environments and identify the components of its general, task, and internal environments 2. Describe the ethical and social environment of management, including individual ethics, the concept of social responsibility, and how organizations can manage social responsibility. 3. Discuss the international environment of management, including trends in international business, levels of international business activities, and the context of international business.Explanation / Answer
Answer 1)
Organizations have an external and internal environment;
External Environment of Organization
In a simple way factor outside the organization are the elements of the external environment. The organization has no control over how the external environment elements will shape up.
The external environment can be subdivided into 2 layers:
The general environment consists of factors that may have an immediate direct effect on operations but nevertheless influences the activities of the firm.
Let’s see the elements or dimensions of the general environment.
1.Economic Dimension
The economic dimension of an organization is the overall status of the economic system in which the organization operates. The important economic factors for business are inflation, interest rates, and unemployment.
During inflation, the company pays more for its resources and to cover the higher costs for it, they raise commodity prices.
When interest rates are high, customers are less willing to borrow money and the company itself must pay more when it borrows. When unemployment is high, the company is able to be very selective about whom it hires, but customers’ buying power is low as fewer people are working.
2.Technological Dimension
It denotes to the methods available for converting resources into products or services. Managers must be careful about the technological dimension.
3.Socio-cultural dimension
Customs, values and demographic characteristics of the society in which the organization operates are what made up the socio-cultural dimension of the general environment. It indicates the product, services, and standards of conduct that the society is likely to value and appreciate.
4.Political-Legal Dimension
The politico-legal dimension of the general environment refers to the government law of business, business-government relationship and the overall political and legal situation of a country. Business laws of a country set the dos and don’ts of an organization.
5.International Dimension
Virtually every organization is affected by the international dimension. It refers to the degree to which an organization is involved in or affected by businesses in other countries.
Task Environment of Organization
The task environment consists of factors that directly affect and are affected by the organization’s operations. These factors include:
1) Suppliers: A good relationship between the organization and the suppliers is important for an organization to keep a steady follow of quality input materials.
2) Customers: Managers should pay close attention to the customers’ dimension of the task environment because its customers purchase that keeps a company alive and sound.
3) Competitors: Policies of the organization are often influenced by the competitors. Competitive marketplace companies are always trying to stay and go further ahead of the competitors.
4) Regulators: Regulators are units in the task environment that have the authority to control, regulate or influence an organization’s policies and practices.
5) Strategic Partners: They are the organization and individuals with whom the organization is to an agreement or understanding for the benefit of the organization.
Internal Environment of Organization
Forces or conditions or surroundings within the boundary of the organization are the elements of the internal environment of the organization.
The internal environment consists mainly of the organization’s owners, the board of directors, employees and culture.
1.Owners
Owners are people who invested in the company and have property rights and claims on the organization. They have the right to change the company’s policy at any time.
2.Board of Directors
The board of directors is the governing body of the company who are elected by stockholders, and they are given the responsibility for overseeing a firm’s top managers such as the general manager.
3.Employees
Employees or the workforce, the most important element of an organization’s internal environment, who performs the tasks of the administration. If managed properly they can positively change the organization’s policy. But ill-management of the workforce could lead to a catastrophic situation for the company.
4.Culture
Organizational culture is the collective behavior of members of an organization and the values, visions, beliefs, habits that they attach to their actions. An organization’s culture plays a major role in shaping its success because culture is an important determinant of how well their organization will perform.
The environment irrespective of its external or internal nature, a manager must have a clear understanding of them.
Answer 2)
Ethics is what it right or wrong in the workplace and doing what's right -- this is in regard to effects of products/services and in relationships with stakeholders.
The ethics of a particular business can be diverse. They apply not only to how the business interacts with the world at large, but also to their one-on-one dealings with a single customer.
If a company does not adhere to business ethics and breaks the laws, they usually end up being fined. Many companies have broken anti-trust, ethical and environmental laws and received fines worth millions.
Managing Ethics Programs in the Workplace
Organizations can manage ethics in their workplaces by establishing an ethics management program. Ethics programs convey corporate values, often using codes and policies to guide decisions and behavior, and can include extensive training and evaluating, depending on the organization.
Social responsibility
Social responsibility is the idea that businesses should balance profit-making activities with activities that benefit society. It involves developing businesses with a positive relationship to the society in which they operate.
Social responsibility means that individuals and companies have a duty to act in the best interests of their environments and society as a whole. Social responsibility, as it applies to business, is known as corporate social responsibility (CSR). Many companies, such as those with "green" policies, have made social responsibility an integral part of their business models.
The key ways a company embraces social responsibility includes philanthropy, promoting volunteering and environmental changes. Companies managing their environmental impact might look to reduce their carbon footprint and limit waste. There's also the social responsibility of ethical practices for employees, which can mean offering a fair wage, which arises when there are limited employee protection laws.
Answer 3)
International business includes any type of business activity that crosses national borders.
The international environment is very important from the point of view of certain categories of business. It is particularly important for industries directly depending on imports or exports and import-competing industries. For example, a recession in foreign markets, or the adoption of protectionist policies by foreign nations, may create difficulties for industries depending on exports.
For example, The Great Depression in the United States sent its shock waves to a number of other countries.
Before examining foreign markets, you have to be aware of the major trends in international business so you can take advantage of those that might favor your company.
Growing Emerging Markets
Developing countries will see the highest economic growth as they come closer to the standards of living of the developed world. If you want your business to grow rapidly, consider selling into one of these emerging markets. Language, financial stability, economic system and local cultural factors can influence which markets you should favor.
Demographic Shifts
The population of the industrialized world is aging while many developing countries still have very youthful populations. Businesses catering to well-off pensioners can profit from a focus on developed countries, while those targeting young families, mothers and children can look in Latin America, Africa and the Far East for growth.
Speed of Innovation
The pace of innovation is increasing as many new companies develop new products and improved versions of traditional items. Western companies no longer can expect to be automatically at the forefront of technical development, and this trend will intensify as more businesses in developing countries acquire the expertise to innovate successfully.
More Informed Buyers
More intense and more rapid communications allow customers everywhere to purchase products made anywhere around the globe and to access information about what to buy. As pricing and quality information become available across all markets, businesses will lose pricing power, especially the power to set different prices in different markets.
Increased Competition
As more businesses enter international markets, Western companies will see increased competition. Because companies based in developing markets often have lower labor costs, the challenge for Western firms is to keep ahead with faster and more effective innovation as well as a high degree of automation.
Four Basic Levels of International Business Activities:
1) Domestic Business
A domestic business operates within one country, buying its resources and selling its products and services in the national or local market. Most small businesses are examples of domestic businesses, including hair salons, restaurants and grocery stores.
2) International Business
An international business is based in a single country but imports part of its resources or receives part of its revenues via export to other countries. A good example of an international company is Sears, which operates in the United States but imports many of its products from foreign countries.
3) Multinational Business
A multinational business typically has its national headquarters in its country of origin but operates worldwide through several subsidiaries. It buys its resources, manufactures and sells its products, and borrows money from and invests in foreign markets. An example of a multinational business is Coca-Cola.
4) Global Business
The highest level of international business activities is global business. A global business has operations worldwide, and it does not identify any home country. A good example of a global business is Philip Morris International.
To summarize, the globalization of businesses and markets results in the global business environment, this is concerned about the context of the international trade transaction. In international business, there are many issues like language barrier, economic policies of particular nation, cultural differences and higher complexity, of risk and uncertainty because organizations is not operating in recognizable environment but rather with an international environment. In spite of various issues, International business environment has many positive aspects such as it contributes new technology, managerial skills, infrastructure development, creating jobs and bringing in investment capital from other countries by exporting products and providing better services. Global business demands that companies manage their worldwide operations efficiently and on the basis of honesty, corporate integrity, following ethical standards and understanding the sense of responsibility.
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