MGMT 3000 Ch 1-3

interpersonal relationships

focused on living up to social expectations and roles, there is an emphasis on conforming being nice and considering how choices influence relationships

strategic perspective: will discuss ways in which business leaders.... ability to understand what is important

o Will discuss ways in which business leaders develop strategies and positions to differentiate their operation in a competitive landscape o Ability to understand landscape and position in it depends on the development of well-honed conceptual abilities

management involves what? managers generally focus their efforts on?

o Working with and through a group of people to accomplish a desired goal or objective in an efficient and effective manner o Managers generally focus their efforts on planning and budgeting, organizing and staffing resources, and controlling and problem solving

middle level manager focus on?

o interpersonal skills, developing teams and using conceptual skills o Sometimes must use leadership skills such as motivating and developing teams while at same time using managerial skills like working with senior executives to provide analysis for the development or refinement of the organizations strategy

Pre conventional mortality includes

obedience and punishment individualism and exchange

World Trade and Free Trade Associations: • World trade stumbled following the 2008 global financial crisis: declined about ___% in one year • Growth in global GDP was ____% in 2013 way below 20 year average of 5.3% (1983-2013) ○ Developed economies saw a 1.1% increase in GDP while emerging/developing economies posted 4.4% increase led by china at 7.5% and India at 5.4%

12% 2.2%

• Since NAFTA's inception total trade between US and NAFTA partners has increased by

208%

GATT negotiating rounds: tariffs from ___ to ___ but multiple open issues such as...

40% to 5%, but multiple open issues such as agriculture, intellectual property, pharma etc ○ Still a lot of open issues involving intellectual property with software and movie creating

The Global Business Environment to remain competitive companies can no longer...

sell only to their domestic markets

Kantianism: Ex: some corporations do the right thing only when it is profitable or when they expect to receive good publicity. By kantian standards these decisions are? Kyocera did what? steve jobs did what?

these decisions are prudent, not moral § Ex: Kyocera: □ Employees are rewarded for their intent as well as their actions and results □ Regard the process as a very important factor. § Steve jobs: □ Developed great products, satisfied consumer needs, and shareholder interests □ Also considered temperamental and an inflexible leader Is he a great business leader? Many would say yes. For them, the end justifies the means.

low vs high uncertainty avoidance

the extent to which members of a society cops with anxiety by minimizing uncertainty. countries with high uncertainty avoidance such as the majority of latin american countries prefer more rules planning and structure. countries with low uncertainty avoidance are more comfortable with ability and include ireland sweden denmark and singapore

The global business environment: Managers can no longer only pay attention to the US economy, must develop a better understanding of

the global economy

long vs short term orientation

the importance attached to the future and the criteria that should be considered when making a business decision. asian countries usually have long term orientation and western nations short term

When companies make decisions about the utilization of natural resources they often have to weigh

the short term efficiency and profitability against long term sustainability. □ Many cases companies and managers make choices that favor the short term

While the contextual landscape can shape and availability and viability of certain opportunities, managers can influence the context through a number of actions including

their ability to commercialize technology, support or oppose govt action and capitalize on demographic movements.

VUCA: Complex situation is ______________. doing what will help managers cope with complexity?

A situation that is based on the interconnection of various business elements Separating interconnections and structuring individual responses help managers cope with complexity

Strategic CSR: is? must be what 3 things? can be source of opportunity investment and competitive advantage and investment in companies future: panera cares example

Corporate social responsibility activities that are directly related to their business activities so that they can combine social welfare with financial welfare ○ must be planned specifically to support core business activities ○ Supervised carefully to create value for the community and the firm ○ Evaluated regularly to ensure that CSR activities benefit society while also benefiting the business ○ Ex: panera and panera cares locations § Operates on donation basis asking patron to pay what they can set up in communities that are economically troubled but also diverse so some customers can donate more than other.

WTO oversaw almost 300 regional trade agreements with _______ representing the largest

EU, NAFTA, ASEAN, MERCOSUR

· Three pillars of managing organizations: Strategy encompasses an understanding of what? what key questions will be addressed?

Encompasses an understanding of the environmental landscape in which businesses compete and the elements of strategy that help organizations align their resources for success in a changing context. Key questions that will be addressed: -How should a business compete? -How does the competitive landscape shape the potential for its success or failure?

ethical frameworks: legal but not ethical examples

Ex: Asbestos ○ During 1950s was used in building materials bc of its strength, durability and fire resistance § Producers knew could lead to devastating diseases like cancer. ○ More than 100 million working americans exposed to asbestos through construction or living in houses built with it • Lawful but not ethical: ○ Racial segregation was legal for nearly a century after the civil war.

Different styles of leadership: leaders are?

Extroverted / introverted Quick and impulsive / cautious Vain / humble

What forms the largest trading bloc in the world in terms of its members combined GDP

NAFTA

The interplay of the three pillars of management operates within

a broad contextual landscape

Why are there so few light trucks available? what is the reason?

The Chicken Tax: • The Chicken Tax is a 24% tariff on potato starch, dextrin, brandy and light trucks imposed in 1963 under President Lyndon B. Johnson • Only the light truck tax is still in place to protect the US automakers from foreign light truck production • Trucks produced outside the USA (incl. Canada and Mexico) by any manufacturer (including ford, GM, and chrysler) are subject to this tariff. ○ Including ford and dodge most companies do not make these anymore

Individual Leadership: must have what types of skills requires development of what?

-Must have strategic abilities needed to understand a situation, -the social skills to know what to do in that situation, -and the behavioral skills to act. o Requires development of a broad set of skills and capabilities needed to act in a variety of situations o Very important to focus on development of personal leadership skills.

Globalism will affect you if you work for one of these types of companies

-foreign companies employing people in the US - foreign or domestic companies importing into the US - foreign or domestic companies sending jobs for the US to other countries - foreign or domestic companies exporting goods from the US to other countries - foreign and domestic employees in the US

The challenge of management/leadership

-harnessing technological advances -managing and leading a diverse workforce -competing on a global scale -operating in a socially responsible manner -responding to change and uncertainty

The role of the individual in confronting moral dilemmas: • Individuals usually rationalize the decisions that they make using one of three common arguments:

1) Everyone is already doing it. What difference does it make if I go along as well? 2) The impact of this organization is not that big of a deal. It is so small that it is immaterial and wont really hurt anyone 3) I am just doing what I have been told • May make individual feel better but can easily lead to making poor judgement calls

examples of high volume US exporting companies

1) Georgia pacific: i. Big employer at UGA. Huge exporter 2) Gulfstream aircraft i. Located in savannah ga 3) International paper (hammermill) 4) Weyerhauser lumber

examples of international centers of excellence

1) India: i. Software coding, call centers 2) Russia i. Software coding 3) Israel i. Cybersecurity ii. Army unit in isreal for hacking 4) China i. Manufacturing, electronics 5) Mexico, canada, southeast USA i. Automotive assemble

Hofsteads 5 cultural dimensions

1) Power distance: 1) Difference bt the superior and the subordinant i. Russia or france if you are the boss you are very high on the pedestal ii. Some corporations like that also 2) Individualism vs collectivism 3) Cooperative vs competitive 4) Low vs high uncertainty avoidance 1) Engineering 5) Long term vs short term orientation

Creating a strategic CSR program: 4 step process

1) Should identify the inside out and outside in linkages 2) Choosing what social issues to address 3) Should create a corporate social agenda that supports both inside out and outside in dimensions. 4) Should use their social agenda to add a social dimension to their value proposition

Success for organizations in VUCA environment requires a strong knowledge of...

1) Strategic positioning 2) Organizational design 3) Individual leadership 1) Dynamic and interactive process.

Kantianism: One framework that can be helpful in evaluating leaders assesses three components

1) The intent or objectives to the leader 2) The means by which the leader sought to realize his or her intent to achieve their objectives 3) The outcomes that were actually produced by this effort.

top 5 US exports by value What is one of the most regulated industries

1) Transportation equipment 2) Chemicals 3) Computers and electronic products 4) Machinery 5) Business, professional, and technical services agriculture

sample code of ethics: what types of things does it include

1. Employment practices 2. Employee, client and vendor information 3. Public information/communications 4. Conflicts of interest 5. Relationships with vendors 6. Environmental issues 7. Ethical management practices 8. Political involvement

Three pillars of managing organizations: Individual Leadership about what? leaders must know what about themselves to be successful? key questions would be?

About you and how you can be a more effective leader in the global organizations of tomorrow. Leaders must first know who they are and what impels them to effectively motivate and influence others Key questions: -How should managers wield power and influence? -How do managers make critical decisions and navigate conflict?

Additional moral dilemmas faced by organizations: Privacy: Facebook ex:

Consumer reports reviewed facebooks privacy policies and learned facebook receives a report every time an individual visits a website with a facebook "like" button regardless if they have clicked the button or is a facebook member

How the external environment can impact your career: diary industry (+most grocery items) diamond industry (+ construction) console industry (+ fashion and high tech)

Diary industry (+ most grocery items) § Low growth - low promotions o Diamond industry (+ construction) § Ups and downs with the economy o Console industry (+ fashion and high tech) § Biggest bet of your life ú Poverty if you fail ú Wealth if you succeed

First line managers focus on?

Financial reporting, planning, recruiting of talent and team development

The Global Business Environment what is the only firm that has been included on the DOW since 1896

GE: continued reinventing their company to match the time

GATT stands for

General Agreements on Tariffs and Trade

Shareholder view in early 1980s: ford: frank lorenzo and continental airlines

Huge increase in M&A activities and corporate takeovers Ford: Acquired Jaguar (luxury cars) and Ashton Martin (high end sports cars) Frank Lorenzo and Continental Airlines Pushed newly acquired texas international airline into bankruptcy to break the power of the union and reduce airline cost structure: ◊ Worked. And profits soared. ®Acquired three airlines in 2 years and made continental one of largest airlines in the US ®Ran airline as financial model and focused on profitability and shareholder value ◊ Ignored impact on employees and consumers Believed organization owed allegiance only to shareholders and that employees, communities and customers were secondary. Shareholder value resulted in short term orientation leading to a lack of investments in new products and erosion in quality standards Lack of investment in the company, the inattention to customer needs, and the erosion of trust between management and employees resulted in lorenzo's early departure. LATER ON: ◊ Gordon bethune took the helm and developed a comprehensive change plan to address the needs of customers, employees investors and suppliers ◊ Key to ultimate success was broad stakeholder view

Walmart example of stakeholder mapping process

Has tried to improve its reputation by investing more in employee health benefits (key concern of unions) and by launching efforts to reduce the environmental impact of its operations (key concern for environmentalists and community organizers)

Three pillars of managing organizations: Organization involves what? organizational perspective will define what? key questions would be?

Involves developing and aligning the organizational components to achieve strategic objectives -Organizational design, culture, human resource practices, and performance management Organizational perspective will define the manner in which a business is structured to compete in its changing contextual landscape Key questions: -What organizational structure will enable a firm to optimize its resources? -How can the culture of the firm reinforce key values and lay the foundation for strong organizational performance?

Delta is a good example of business leaders managing in difficult times: how?

Open Skies Agreement • Business leaders from American Airlines, Delta Airlines, United Airlines ○ Fighting with US govt saying they don't want certain other airlines here ○ Lobby to influence the government's role in business § Restrict access of carriers such as Emirates, Ethiad Airlines (based in Dubai) and Quatar Airways to airports in the USA § Cited unfair competition based on subsidies ○ No non-stop flight from Atlanta to Dubai (Emirates) § Was Delta, now none (and Emirates did not have a gate....) § Delta main hub is atlanta and dubai main for everyone else but there is no go between the two ○ 1 daily non-stop flight from Atlanta to Narita (Japan) § By Delta

Changing perspectives of management · Human relations structure hawthorne experiment executed by who? study was on? conclusion was?

Prof mayo: o Study: relationship between the level of illumination on the factory floor and productivity of the workers § Increase the level of illumination in the factory ® productivity went up § Decrease the level of illumination in the factory ® productivity also went up o Conclusion: § It was the fact that management was interested in the welfare of the employees as people rather than an appendage to a machine that made productivity go up

Technical skills are important when? More strategic abilities are required as an individual does what?

early in career advances in the organization

How can management respond to the challenges of management/ leadership

VUCA: Volatile Uncertain Complex Ambiguous

Failing to understand the complexity of various stakeholders can have disastrous consequences o Walmart's Business Environment: example

Worlds largest retailer, followed trajectory of growth and expansion since inception in the 1960's Historical strategy was to open stores in semirural markets to provide variety and competitive prices to customers who previously relied on a host of smaller stores for shopping needs. Despite its growth walmart has struggled with expansion especially in vermont and california -Several small vermont cities launched aggressive anti walmart campaigns in the state, concerned will erode success of local retailers and take away small town charm Similar resistance in california -Planned to open supercenter in Inglewood -City council attempted to pass legislation in 2002 to prevent stores of walmarts size from building new units in their town. ◊ Would have created around 1200 jobs and 5 million in tax revenue -As walmarts proposition hit headlines, many competitors in california responded by dropping prices 3-5% and attempted to lower employees wages and healthcare coverage in an effort to remain cost competitive with walmart. Many argued walmarts arrival would continue to cause wage decreases across the city. City already suffered from high unemployment rates and lower income levels relative to LA -Company moved forward with efforts regardless and voters rejected the initiative, walmart was forced to leave inglewood. Critics said walmart would hurt local citizens bc of wage and healthcare programs kept employees below poverty line. Said would destroy jobs and force competitors to pay lower wages Opposite conclusions came to by LA county economic development corporation (funded by walmart) said households shopping at walmart saved on groceries which allowed consumers to spend more on other items, leading to job growth. Case Highlights the complexity of managing and leading in todays business environment.

• Case study one: credit card use • A 'Big Four' accounting firm supplied all its employees with corporate credit cards. ○PricewaterhouseCoopers, ○ Deloitte, ○ Ernst & Young, and ○ KPMG. • This credit card was to be used for all expenses made on behalf of the firm. • If the consultant was on a billable project, these expenses would be billed through to the corporate client. • The 'Big Four' accounting firm would get an x% cashback from the credit card company / hotel / airline as an incentive for the use of its services. ○ The firm would not pass that cashback to the clients § it would go to the Big Four firm's profit and loss account. • Court Case: ○ "Whistleblower" alerted the government ○ "All Big Four" had been doing it ○ Whistleblower filed under False Claims act § And could possibly get a 15% cut of the recovered taxes and penalties "Big Four" Companies agreed to

agreed to pay penalties of $40 million+ § Without admitting innocence or guilt □ Federal govt needs big 4 and big 4 needs federal govt □ Whistleblower gets 6 million • Most likely, this behavior would now be unethical and / or illegal ○ if the client is a federal governmental agency and ○ if not disclosed in advance

Organizations need to develop and nurture managers and leaders at what level?

all levels, not just the top

Kant argued people should be treated as an end rather than a means to an end. Respect for the human is not just necessary but ________ believed that universal rules or laws should also govern the way rational humans behave. meaning? southwest airlines?

an obligation. □ People should envision their actions as if they became a universal rule □ Only those actions that remain logical and good under universal conditions are considered moral § Mission "respect the individual" § Employees felt free to express themselves and became extremely loyal to the company § Following 9/11 attacks employees worked overtime without pay to save the company money, which enabled the airline to continue operations under severe economic uncertainty.

Globalization: international trade accelerated as.....

as european imperial powers traded with their colonies but broke down after WW1. ○ Caused many countries to look inward and focus on self reliance.

universal principles

based on universal principles and abstract reasoning, people follow these internalized principles of justice even when they conflict with laws and rules

VUCA: a volatile situation is characterized by __________ and requires managers to be ____________

by unpredictability and requires managers to be agile and flexible.

examples of foreign employers in the US

budweiser citgo trader joes shell oil holiday inn

Most modern organizations have explicitly or implicitly based their structures on the basic principles of

bureaucratic organizational structure: ex military

individualism and exchange

children account for individual points of view and judge actions based on how they serve individual needs

Global scale: morals developed in one society often

clash with another

One company that has been able to build a consistently successful global presence in a constantly changing business environment is _______ explain this company

coca cola. ○ In 2014 celebrated its 128th birthday. And was ranked third best brand in the world § Was best brand in the world from 2000-2012 ○ Coke has concentrated on the proliferation and expansion of a core product line for most of its history. John S Pemberton founded the company is 1886 when he combined a unique syrup with carbonated water to sell at a pharmacy ○ Coke was bought by asa candler ○ By 1895 coke was sold and drunk in every state and territory of the US ○ First expansion out of the US was in 1906 when bottling operations were opened in canada, cuba and panama. § Also the year coke hired D'arcy Advertising Company: □ Relationship lasted 50 years ○ Cokes big push on the world stage came during WW2 when woodruff (their president) announced that coke would be available to any soldier serving overseas for 5 cents a bottle. § Gave coke secure access to sugar which was severely rationed during the war § Rationing could be lifted if a company demonstrated that their product fulfilled a vital military function. § Used the connection between the solider and the slice of americana to advance his case. § Company received govt subsidies to build 64 bottling plants throughout the world which resulted in consumption of over 5 billion bottles of coke. ○ When the war ended the company had a ready made global infrastructure and a giant head start on its global positioning. § End of 1950's foreign sales accounted for approx 1/3 of revenue ○ 1955 fanta orange was introduced in naples italy. § Followed by sprite, TAB, fresca, Mr. Pibb, mellow yellow, and diet coke. ○ Established operations in china in the 1920s and forced to leave in 1949 when the communist party came to power. § Changed in 1979 when coke became the first US company tp return to china. ○ Companies biggest success on a global stage: mexico: § Per capita consumption of soft drinks is one of the highest in the world. § Major growth came from 1990s when govt regulation was lifted on the sale packaging and distribution of soda. § Distribution essential in mexico bc they bought and consumed on the spot not at home. □ Having a strong distribution network was critical for coca cola to regularly and systematically replenish supplies at small local retail shops ○ By 2014 coca cola had expanded to over 600 brands, 7 of which generate more than 1 billion in revenues each. With consumers in 200 countries. ○ In 2013 of the 46.9 billion in revenue, 45% was derived from sales outside north america. ○ During summer of 2014 coke put the 250 most popular names of teens and millennials on 20 oz coke bottles. "share a coke" campaign. § Result was 2% increase in domestic consumption, the first such rise in a number of years

___________ skills consume more of a top executives time ___________ skills are more important for front line supervisors and new employees

conceptual technical

Predicting stakeholder responses and activities can include

contingency planning trend analysis contextual intelligence

Globalization: dutch east india company:

created in 1602 as an association of merchants meant to reduce competition achieve economies of scale, and increase trade throughout the world. ○ First company to issue stock to shareholders

success in the global business environment requires

effective management and skillful leadership

· Southwest Airlines Example: o Vision by CEO: to get passengers to trade their car trips for short flights. o Management team was able to execute with precision and accuracy Organized the resources of the company to focus on

efficiency, speed, and cost-effectiveness.

an effective leader is not someone who uses a specific leadership style but is someone whose style does what

enables him or her to obtain results

best airlines in 2016: american based airlines are very low on the lists: how would the emergence of emirates, qatar airways or other foreign airlines affect american based airline business?

foreign airline businesses named are much much higher on the best airlines list than american ones, would hurt american airline business

following WW2 leading economists and politicians pushed more for

globalization and less protectionism

Example of stakeholder mapping process Cars lawnmowers, and airplanes are large polluters. The EPA has started discussions with airlines to reduce emissions

government --> environmental protection agency --> reducing carbon emissions --> health of all affected individuals

cooperation vs competition

individuals who gravitate to cooperative relationships prefer collaboration and group participation while those who gravitate to competitive relationships prefer individual achievement competition and assertiveness. previous research referred to these dimensions as feminine (cooperative) and masculine (competitive) the US and germany tend to be more competitive and sweden tends to focus on more cooperative aspects of relationships

Low vs high power distance

individuals who gravitate toward low power distance prefer shared decision making and consensus while those who favor high power distance prefer deference to authority. low power distance refers to more democratic societies such as austria and denmark. high power distance refers to autocratic societies such as china and parts of latin america

Early form of globalization existed during the roman empire when the nation state had

had various far flung territories it had conquered that absorbed the empires culture and products and served as a source of raw materials and precious commodities

CSR four step process: 1) Should identify the inside out and outside in linkages

i. Inside out: all activities in a firms value chain that impact society including a firms hiring and layoff policies, green house gas emissions, and supply chain practices ii. Outside in: social dimensions that can affect a firms ability to improve productivity and execute strategy: industry regulations, access to natural resources, availability of human resources, and competitive rivalry

CSR four step process: 2) Choosing what social issues to address

i. Need to be whether there is an opportunity to benefit society and also the business ii. Should support issues that are directly related to their value chain or they should support issues that can change the competitive context of the business

CSR four step process: 4) Should use their social agenda to add a social dimension to their value proposition

i. Value proposition: unique set of needs a firm can meet for its customers ii. Whole foods: value prop to sell organic natural and healthy food to customers who are passionate about food and care about the environment 1) Allows them to command premium prices

CSR four step process 3) Should create a corporate social agenda that supports both inside out and outside in dimensions.

i. Whole foods example with using buying power to change modern factory farming so animals are treated humanely. Also made largest ever purchase of renewable energy credits from wind farms which was enough to cover all of company's electric consumption

Toyota executive freed in Japan after arrest on drug charges • American toyota executive julie hemp has been released without charge in japan following her arrest in june on suspicion of drug law violations • The 55 year old who resigned last week was arrested on june 18 on suspicion of importing oxycodone, a narcotic pain killer. The drug is tightly controlled in japan • Hamp was appointed three months ago as the head of public relations at the japanese carmaker in a high profile move that was highlighted by the company as promoting diversity Prosecutors said on Wednesday she arranged with her father to have 57 oxycodone pulls sent by airmail from the US to a tokyo hotel in june. They said this act was...

importing a narcotic but deciding not to pursue charges

Additional moral dilemmas faced by organizations: moral reasoning now deals with the transmission of ex: companies now engage in personalized marketing to seek new info about customer and tailor the advertisements they view. problems with this?

information ○ Ex: Companies now engage in personalized marketing to seek information about consumers and tailor the advertisements they view. § Information shared between companies could be very personal and may fall into the wrong hands § In 2012 over 16 million americans experienced some form of identity theft and that number was projected to be close to 20 million in 2014 § IRS has been a recent target (internal revenue service)

Additional moral dilemmas faced by organizations: Environmental: main issues? managers face the question of?

increasing pollution and depletion of natural resources face question of how much they should conserve

individualism vs collectivism

individualism refers to a focus on individual goals and achievements while collectivism refers to a focus on group goals and relationships. the US is mostly individualistic while latin america is strongly collectivistic

conventional mortality incudes

interpersonal relationships maintaining social order

What does a manager do? Mintzberg Managerial Roles: What roles?

interpersonal roles, informational roles and decisional roles

Mintzberg Managerial Roles: Decisional Roles includes

o Entrepreneur (aka: intrapreneur) § Managers adapt to themselves their subordinates and their units to change o Disturbance handler § Managers respond to problems so severe that they demand immediate action o Resource allocator o Negotiator

Changing perspectives of management · Bureaucratic organization structure Weber said that this forms greatest contribution was

its ability to make organizations more rational and efficient

ethics hotlines and whistle blowing organizational culture is key to... management needs to be active in and committed to the ethics program... 3 ways to do so

key to fostering ethical decision making • Management needs to be active in and committed to the ethics program ○ Employees must have outlets to anonymously report questionable behaviors ○ Hotlines are the most common way to report corporate fraud: § Can be telephone web or email based ○ Required by many state and federal laws eg sarbanes oxley

low uncertainty requires

less vigilance of contextual forces and less adaptation

in general: free trade between nations can lead to

lower prices, more employment, higher output, and a higher standard of living for those in developing countries

Changing perspectives on the purpose of business: Before Shareholder view in the 1980's what was increasing in complexity and making it harder on businesses? where was the managers focus?

o External environment increasing in complexity: had to deal with new pressures from their internal environments such as employee activism. o Many US firms such as big three (GM, Ford, Chrysler) faced little foreign competition up until 1980s bc of protectionist measures that isolated the industry o Also began to face mounting pressure from a series of external groups including environmental activists, animal rights groups and local community governments § Many firms simply ignored environmental concerns for most of the 20th century o Managers focus was stretched between dealing with new sources of external and internal complexity and dealing with pressure from shareholders to produce results.

People use _________ and ________ interchangeably when referring to the operation of a business

management and leadership

VUCA: uncertain situations call for managers to

managers to gather and decipher large amounts of information, some of which will be conflicting. Sometimes accompanied by complexity

managers generally face greater uncertainty when

many contextual forces impact an industry and when these same forces are constantly changing

Contingency planning? definition: manager typically does what?

o The systematic assessment of the external environment to prepare for a possible range of alternative futures for the organization § Manager typically assigns probabilities to these alternative futures and begins to map out a series of preemptive action steps to prepare the firm

A vision or direction without a sound plan for execution is

merely just a dream

Internal environment: owners: companies that are publicly owned and traded on the stock market must comply with... mcdonalds example?

must comply with several federal and state policies including the reporting of earnings on a regular basis. ○ McDonalds: § Both individual and institutional shareholders own the company □ Institutional shareholder typically hold thousands - even millions- of shares in a company □ Have greater influence □ Often pressuring firms to change strategies or management when performance does not meet expectations

The Global Business Environment globalization has presented challenges with the emergence of...

new powerful competitors in many industries ○ Dell and apple with chinese lenovo ○ GM with chinese Chery Automotive ○ Home appliance and electronics with Samsung and LG in south korea.

Mintzberg Managerial Roles: Interpersonal Roles includes?

o Figurehead (aka: did I sign up for this?) § Person people look up to. § Managers preform ceremonial duties o Leader § Managers motivate and encourage workers to accomplish organizational objectives o Liaison § Managers deal with people outside of their units § Work with people like tech support, finance, etc. -Managers of different areas must come together to make decisions

organizational perspective focus on ________ once strategy has been developed it is important to move to...

o Focus on structural issues that involve conceptual as well as interpersonal and technical skills o Once strategy has been developed it is important to move to execution and delivery. § Organizational structure, design process and performance management come to play

scenario building

o Forecasting the likely result that might occur when several events and stakeholders are linked together § Extremely useful for identifying a potential scenario that may hurt or help a firm

Changing perspectives on the purpose of business: Stakeholder view: is what? focus is to... typical firm may have relationships or duties to what types of people? what changes at different points in an organizations lifecycle?

o A business framework that attempts to organize and analyze multiple groups that interact with the firm § Helps managers better understand the complex internal and external environment of the firm in todays market place o since 1990's: focus is to serve multiple constituencies o Idea made popular through E. Edward Freeman's 1984 book: Strategic Management, a stakeholder approach. o A typical firm may have relationships or duties to: § Govts, local community organizations, owners, advocacy groups, customers, competitors, media, employees, environmentalists, and supplies. o The importance of various stakeholders also changes at different points in an organizations lifecycle

Changing perspectives on the purpose of business: managerial view is what? focused on what? limited what on managers power?

o A business framework where the firm is seen as a mechanism for converting raw materials into products to sell to customers o up to 1960's: focus = production o Focused on relationships between the firm and its suppliers, customers, owners and employees. § Did not consider outside parties such as local govt or nongovernmental organizations as anything more than annoyances. o Limited checks and balances on managers power

Changing perspectives on the purpose of business: Shareholder view: a business framework where.... 1960s to 1980's focus was on... what happened in early 1980s?

o A businesses framework where the job of top managers is to produce the highest possible stock market valuation of the firms assets o 1960's to 1980's: focus is financial performance o In early 1980s antitrust restrictions on mergers and acquisitions were relaxed and prompted many firms to seek new growth by acquiring companies

Changing perspectives of management · Bureaucratic organization structure factors of this are?

o A clear differentiation of tasks and responsibilities o Coordination through strict hierarchy of authority and decision rights o Standardization of rules and procedures o Vertical separation of planning and execution § Plans are made in the upper ranks of an organization and executed in the lower ranks

Scientific management

o A focus on how jobs, work, and incentive schemes could be designed to improve productivity using industrial engineering methods o The organization was likened to a well oiled machine and the manager was seen as the machine operator. o Taylor believed employees were economically driven and rational in their motives.

environmental scanning: is what? managers who engage in environmental scanning tend to

o A tool that managers use to scan the business horizon for key events and trends that will affect the business in the future § Managers who engage in environmental scanning tend to produce stronger financial results for their organization than the ones who refuse to pay attention to their contextual landscape: ú Especially true for entrepreneurs who often capitalize on emerging trends.

Trend analysis: definition: useful took for helping a manager better...

o A tool where key variables are monitored and modeled to help predict a change that might occur in the environment § Useful tool for helping a manager better understand how certain environmental variables will affect a firm and its stakeholders.

contingent view

o A view of the firm where effective organizational structure is based on fit or alignment between the organization and various aspects in its environment o Approach affirmed that the social, political and business environments play a large role in shaping the way effective organizations are structured. o Organizations structure should fit the firms environment

Leadership is the ability to.... leaders do what for a firm?

o Ability to drive change and innovation through inspiration and motivation o Leaders set a direction for the firm, aligning people to focus on the organizations vision and motivate and inspire people

Theories of management in the 1950s

o Believed the optimal form depended on the nature of the context in which the organization competed. § Believed the form depends on social, psychological, technical and economic conditions o Most profound insight out of this period: § Organizations often differ based on whether they were designed to execute certain stable tasks or uncertain innovative tasks. o Many researchers during this time believed the nature of the environment and the tasks the firm had to accomplish should drive how organizations were structured and managed.

Skills and capacities: · Effective management requires:

o Development of broad set of skills o Capabilities needed to act in a variety of situations

Stakeholder view of the firm: firm consists of?

o Local community o Shareholders o Customers o Advocacy groups o Competitors o Media o Employees o Suppliers o Government

Mintzberg Managerial Roles: Informational Roles includes:

o Monitor § Managers scan their environment for information and receive unsolicited information -Wall street journal, news websites etc o Disseminator § Managers share info with subordinates and others in the company § How to filter data and which pieces go to whom -One company not doing well, and may want to sell division: not great to share - Bonus pool of $250,000 and have to figure out how to give it out: not good to share the whole amount o Spokesperson § Managers share information with people outside of the company § Not to share company information unless it has been cleared by other departments

Changing perspectives on the purpose of business: Lead to shareholder view: 1960s: what was not yet developed and popularized in 1970s american corporations were under siege from?

o Mutual funds not yet developed, corporate takeovers not yet popularized. o 1970's: american corporations under seige from 1) Combination of slow economic growth and high inflation 2) Increased penetration of foreign competition to US o Managerial focus shifted to the interests of shareholders as the primary stakeholder for who they worked.

Setting the Strategy of an Organization · Depends on:

o Nature and context of competitive and environmental landscape § Recognize threats and opportunities § Lead and organize resources to effectively compete in the marketplace o Skills and capabilities of the management team

Soccer example of relevance of skill level: players focus on coaches focus on team owners focus on

o Players: § Focused on exercising technical skills to the best of their ability § Work as members of a team § Need to know team strategies § Mainly focused on own skills o Coaches: § Focused on skills by providing instructions and training § Must ensure players work as a team § Set strategy and create plays o Teams owners: § Must be able to identify and support talent § Spend bulk of time overseeing strategic issues such as revenue generation and long term investment opportunities.

Changing perspectives of management · Bureaucratic organization structure proposed by who? was interested in what? idea was that? seeks to implement?

o Proposed by Max Weber / Frederick Taylor § Was interested in how organizations retain order and get things done as they get bigger. § Idea was that as organizations get larger, they can become unwieldly as they tackle their internal divisions of labor § Seek to implement systems and processes to create order

Changing perspectives of management · Contingent view proposed by who? financially successful manufacturing organizations with different types of work technologies (such as unit or small batch; large-batch or mass-production; or continuous-process) differed in?

o Proposed by Woordward, Garreth Morgan, Fiedler et. al. -the number of management levels, -span of management, -degree of worker specialization. § Differences in organization to firm performance were appropriate for certain types of work technologies.

Case: Martin Shrekeli Born 1983 Bachelor's in Business Administration, 2004 Created hedge fund companies to short biotech shares Feb 2015; Founded Turing Pharmaceuticals Received a license to sell a certain medicine. what happened from here?

o Received a license to sell Daraprim (AIDS patients) o Increased prices per dose: $13,50 to $700 o Critics: HIV organization, Pharmaceutical Research Association o Critics: Donald Trump, Hillary Clinton · Nov 2015: Interview to explain his actions o "My shareholders expect me to make the most profit," Shkreli said, a theme that he returned to again and again. "That's the ugly, dirty truth." · Dec 2015: arrested for securities fraud o Free on $ 5,000,000 bond (out of $45 million assets) o Fired as CEO

stakeholder review process: generally includes? primary goal?

o Senior leaders of a corporation meet with business unit managers to review progress toward specific goals § Generally includes information on financial performance and targets, new business prospects, research and development updates, manufacturing capacity, talent management and competitive threats. § Primary goal is strategy formulation and target setting the leader can use this forum to merge the firms stakeholder map with new strategic projects

senior executives focus on?

o Set the vision and agenda for the organization as well as oversee strategic execution o Must balance short and long term expectations while planning for certain expected and unexpected contingencies o Ability to think conceptually is vitally important

Case: Edward H Bastian · CEO of Delta Airlines since May 2016 o CEO of NWA (Northwest Airlines) o COO (Chief Operating Officer) of NWA o Vice President of Finance of Delta Airlines o Implemented SAP computer system at Delta o Partner with PwC (Price Waterhouse Coopers) · August 2016 outage:

o Small fire caused Delta to cancel 1500+ flights § Caused by multiple old and overlapping IT systems § 10+ systems between 2 and 35 years old · Would you, as the CEO invest $300 million + and 5-10 years to take out all the old systems and replace it with a new (and possibly) more reliable one?

Skills and capacities: · Managers have what types of abilities and skills? (3)

o Strategic abilities to recognize a situation o Social skills to know what to do in a situation o Behavioral skills to act

Organizational Design of a company · Depends on:

o Strategy o Number of products, services and markets o Maturity of the firm o Skills and capabilities of the management team

Contextual intelligence: definition: managers must always look beyond what?

o The ability to understand the impact of environmental factors on a firm and the ability to understand how to influence those factors § Managers must always look beyond the boundaries of their internal operations to prepare for emerging competitive threats or capitalize on new opportunities. ú Need to have peripheral vision: ® The ability to see beyond the boundaries of managing their day to day operations

human relations management

o The belief that organizations must be understood as systems of interdependent human beings who share a common interest in the survival and effective functioning of the firm o Emphasized the importance of informal social relations at work o Emphasis shifted from the output of the firm to the informal and social side of the firm. o Organizations served as a means for people to interact and learn as well as to turn a profit.

the business environment is?

o The combination of all contextual forces and elements in the external and internal environment of the firm

new entry level employees are often tasked with what and what does it require?

often tasked with specific operational roles that require a certain level of proficiency and skills

frontline supervisors must focus on ___________ to ensure that ___________

on technical or process issues to ensure that the company is running smoothly

Is free trade good for the global economy?

overall economic effect has been mostly positive

social contracts and individual rights:

people begin to account for differing values opinions and beliefs of others. while laws are important for maintaining a society members of society should agree on these standards

maintaining social order

people begin to consider society as a whole as they focus on maintaining order by following the rules doing their duty and respecting authority

post conventional mortality includes

social contracts and individual rights universal principles

Ethics policies are driven by management: Improving ethical culture starts at

starts at the top a. Requires ethical and moral leadership from senior management b. Example: Setting realistic goals and objectives

The execution of a plan without a vision often lacks

strategic or competitive advantage

Three pillars of managing organizations includes?

strategy, organization and individual leadership

high uncertainty requires

stronger vigilance of contextual forces and more adaptation

• Supporting core business activities: CSR is strategic when it... important area: labor force: research shows companies with higher CSR are seen as can also use CSR to improve the quality environment where they work: how?

supports activities that contribute to a firms mission vision and strategy ○ Important area: labor force: § Attracting and retaining employees who are skilled creative and driven is essential for satisfying customers and differentiating a company from its competitors ○ Research shows that companies with higher CSR are seen as more attractive placrs to work which means that employees are more willing to stay with them over time. § Employees engaging in CSR activities tend to have a better self image which in turn improves morale and increased company profitability ○ Can also use CSR to improve the quality of the business environment in which they operate. § By investing in education, pollution reduction and economic development in emerging markets they can improve their productivity and generate new business opportunities while promoting social welfare □ Ex: exxon mobile devoting substantial resources to improving basic infrastructure such as roads and rule of law in developing countries where they operate □ Improving business operations and consumer demand in developing regions of the world

the one constant in business is

that it is not constant

Global context can affect all of the elements of the firms general and task environment and forms

the outer layer

Success of environmental scanning and trend analysis is heavily dependent on the managers ability to

to accurately assess the risks and opportunities that are confronting the firm

CSR can improve a companies brand, enabling them to ... 2 components. need to carefully consider whether CSR is ____, ____, _____

to charge more for their products, attract better employees, and ultimately improving their stock price. ○ 2 key components: § Sustainability § Energy efficiency ○ Need to carefully consider whether CSR is appropriate, cost effective, and aligned with overall strategy § Without alignment can be ineffective and costly

Merging of stakeholder analysis into the strategic review process is an attempt to

to ensure that new proposals are adequately understood and evaluated. Through this process leaders can take preemptive action to address potential concerns of various stakeholders.

Corporate Social Responsiveness: is what? behaviors of responsive firms are?

• The practice of businesses responding to pressure from society to engage in socially responsible ways • Behaviors of responsive firms: ○ Monitor and assess environmental conditions on a constant basis ○ Seek to identify the needs of their stakeholders ○ Design plans and policies to respond to changing conditions

obedience and punishment

usually common in children, who see rues as being fixed or obsolete. obeying rules means avoiding punishment

examples of major importers into the US

walmart, target, home depot, dole, lowes, sears etc

three global trade agreements:

world bank international monetary fund GATT (WTO)

the general environment: political dimension: Fiji water example

§ Govt threatened to revoke Fijis water access to the aquifer they use until tax issue resolved § The issue demonstrated the precarious nature of the company with so much dependence on a single product and a single source for that product

the general environment: socio- cultural dimension ikea example

§ Ikea has an issue with this and needed to be sensitive to language and local customs to make sure they are not being offensive or misunderstood □ Had bedframe named after a town in norway but when tried to sell in thailand the name has a sexually explicit connotation

The business environment: general environment includes.... primary external factors that affect a firm are felt differently, elaborate

§ Includes all the technological, economic, political/legal, and sociocultural dimensions that affect a firms external environment § Primary external factors that affect a firm: some will have a stronger impact than others □ Sociocultural and technological: proliferation of social network sites □ Political forces affecting companies that rely on access to affordable raw materials for manufacturing processes (oil, gas and timber)

The business environment: the task environment: includes? example

§ Includes entities that directly affect a firm on a constant basis and include competitors suppliers and customers □ Just one year after the iPad's introduction there were 11 tablets on the market

• Managers will face pressures from their boss, shareholders, customers, and subordinates to satisfy economic, legal and ethical obligations. rarely do these align. ○ Important to weigh the interests of all stakeholders of an organization: shareholders expect: employees expect customers expect public expects

§ Shareholders expect businesses to make profit § Employees expect business to provide a safe workplace and fair compensation § Customers expect businesses to be truthful and transparent about the quality of products and services. § Public expects the business to serve as "good citizens"

the general environment: socio-cultural dimension social values: are what? can affect what two things mcdonalds example

§ The deeply rooted system of principles that guide individuals in their daily choices and interactions □ Can affect the way a firms local employees act and behave □ Can affect the preferences of customers for certain product attributes § McDonalds has stopped serving super size fries and drinks following the fastfood nation and super size me movies and added healthier items to its menu □ The firm operates in over 100 countries and serves 69 million people daily

Stakeholder Approach: definition? at its core its concerned with...? what two steps?

· "a stakeholder is any group or individual who can affect or is affected by the achievement of an organizations purpose" · At its core: stakeholder theory is concerned with who can influence a firms decisions and who benefits from those decisions. · 1st step: o Identify important stakeholders for the firm · 2nd step: o Involves designing formal processes and systems to deal with firms various stakeholders.

4 ways to build contextual intelligence?

· Develop appreciation and awareness of history · Stay attuned to trends in the environment · Seize firsthand experiences · Engage in scenario assessment

Management requires what two things?

· Efficiency: o Getting work done with a minimum of effort, waste or expense · Effectiveness o Accomplishing tasks that help fulfill organizational objectives

Managing uncertainty: who needs to appropriately estimate level of uncertainty? if underestimate the nature of uncertainty.... if over estimate the nature of uncertainty...

· Important that managers appropriately estimate level of uncertainty: o If underestimate the nature of uncertainty: they will fail to prepare for competitive threats or to capitalize on potential opportunities. o If overestimate the nature of uncertainty: may become paralyzed and fail to act, assuming that there is nothing that can do to influence their business environment

the roles of leaders vs managers

· Leaders: o Set direction o Align people o Motivate and inspire · Managers: o Plan and budget o Organize and staff o Control and problem solve

BHP's tintaya copper mine: what happens.

· Metal mining company o Maintains business in aluminum, iron ore, coal, lead copper and zinc extractions in 130 locations in 21 countries across the globe · Tintaya copper mine: andean region of peru: o Established in 1985 as a state owned enterprise the mine originally stood on 2368 hectares if land expropriated from 125 families o Peruvian govt offered farmers as little as 10 soles per hectare (approx $3 for 2.45 acres) o Many local families fell into poverty. · Attracted attention of various NGO's and subsequently led to widespread unrest among some of the lower classes of society. · BHP thought it had supported the local community by creating jobs for over 600 locals and voluntarily contributing close to 2 million for a local development fund. o Many locals had grown tired of company bc continued to acquire land cheaply. · Community members began to speak up about perceived environmental degradation o Claimed wastewater from company's processing plant has contaminated pasture lands and rendered water unfit for consumption · 1000 people stormed the mine and took general manager hostage. o Group consisted of people who claimed that the company's tailings reservoir had polluted water sources used in the local dairy farming industry. · BHP negotiated with the group and agreed to set up development fund. o Other groups became angry that they negotiated with the group who stormed the mine o 500 members of left wing political parties and student groups gathered outside mines gates to protest · BHP decided to shut down the mine and evacuate all personnel · BHP failed to recognize the importance of its various stakeholders throughout the entire process. o Did not have stakeholder strategy in place

stakeholder management process

· Once stakeholder mapping process is completed the manager should move on to develop mechanisms in the firm that can better identify and respond to new stakeholders and the complexity in the environment

Contingent View Proposed by who and did what?

· Proposed by Woordward, Garreth Morgan, Fiedler (Contingency Model) et. al. o financially successful manufacturing organizations with different types of work technologies (such as unit or small batch; large-batch or mass-production; or continuous-process) differed in

Stakeholder Mapping process: What four steps?

· Step 1: Map stakeholder relationships with the firm § Some stakeholders will be more important than others ú Stakeholders who control vital resources are very important to consider · Step 2: Identify specific subsets within stakeholders § Not sufficient to identify the "government" § Should expand this group to a greater level of detail by mapping out the specific governmental agencies that affect or are affected by the firm § EPA could be a subgroup: · Step 3: Determine stakes for each stakeholder § If EPA was a subset, their relationship with the firm ay be aimed at reducing carbon emissions from production processes. ú By mapping this one can better understand why the EPA has an interest in the organization and how one can address this interest. · Step 4: Define connections between stakeholders § Firms stakeholders and interests are not static. ú Many stakeholders have the potential to become interconnected. ú Must recognize potential for these types of linkages to occur

VUCA: Ambiguous how? what helps achieve a greater sense of clarity?

ú Cause and effect relationships are not always clear ú Experimentation helps achieve greater sense of clarity

EU was created by what treaty and what did it specify? what was introduced to build a single market? how many member states?

• 1993 Maastricht Treaty ○ Created a single market by a system of laws that apply in all member states, guaranteeing the freedom of movement of people, goods, services, and capital ○ Established legal framework for EU • Introduced a common currency, the Euro 1999 ○ Designed to build a single market • 17 member states ○ Eurozone has about the same economy as USA § GNP 16-18 trillion § 310 - 330 million inhabitants

internal environment: is what and includes who? each of these dimensions can...

• A group of parties or factors that directly impact a firm, including owners, the board of directors, employees and culture • Each of these dimensions can directly impact a firms performance and competitive position

What regional trade agreement had the lowest concentration of trade around the time of the global financial crisis

• Africa has lowest concentration of trade ○ Only 16% of exports stayed within african borders ○ Main export market was EU

EU began when? has roots back to the 1950s when europe was.... organization originally called?

• Began just after the war, had free movement of goods and people. Made almost 1 market. • Roots back to the 1950's when europe was searching for a way to promote political and economic stability in their region. ○ Organization originally known as European Steel and Coal Community

Utilitarianism: Ford Pinto: (1970's) • Can burn when in rear end collision due to gas tank placement benefits: costs:

• Benefits of a design change: ○ Savings: 180 burn deaths, 180 serious burn injuries, 2,100 burned vehicles ○ Unit cost: $200,000 per death, $67,000 per injury $700 per vehicle ○ Total benefit: (180 x 200,000) + (180 x 67000) + (2100 x 700) = 49.5 million • Costs of the design change: ○ Sales: 11 million cars, 1.5 million light trucks ○ Unit cost of the new part: $11 per car $11 per truck ○ Total cost: 12.5 million x $11 = $137.5 million

NAFTA: Came into effect when? who does it involve? maintains trading restrictions on what types of things? industries have benefited from?

• Came into effect in 1994 • U.S., Canada, and Mexico signed the treaty to eliminate tariffs • Maintains trading restrictions on certain agricultural products • Industries have benefitted from the opening of borders

Comparative advantage: says what? free trade leads to what?

• Countries should specialize in producing goods for which they have the lowest opportunity cost of production ○ Specialization in a particular product, helps become an efficient producer • Free trade leads to a more efficient allocation of resources ○ Results in all countries that are involved in trade benefiting from access to cheaper goods

World Bank: created when? main functions are?

• Created by meetings following WW2 from officials from the US Great Britain and Canada Main functions: • Provide funds for development projects ○ Help with setting up communications networks etc • Provide policy advice and technical assistance • Promote investment in developing countries • Extend grants for project preparation and institutional building

IMF: created by? main functions?

• Created by meetings following WW2 from officials from the US Great Britain and Canada • Supervision of member countries economy • Technical assistance ○ Assist in setting up central banking and public finance institutes (For countries who recently became independent countries (ukraine)) • Financial assistance ○ Lend money to member countries with financial problems (§ Last resort. (greece)) ○ Countries usually must § Reduce public expenditure § Tighten monetary policy § Privatize industries

ethics training: 3 ways

• Develop employees awareness of ethics • Achieve credibility with employees • Teach employees a practical model of ethical decision making

The task environment does what? has the ability to do what? consists of?

• Directly affects the firm in a more immediate way ○ Have the ability to exert a greater and more constant influence over the firm competitors, suppliers, and customers

the firms internal environment: google employees diversity issues:

• Employees: ○ Quantitative and marketing driven • Diversity issues: ○ All about productivity, however mainly between 25-35 white or asian male

Ethics vs morality

• Ethics: ○ the study of moral standards and their effect on behavior and conduct • Morality: ○ The standards that people use to judge what is right or wrong, good or evil

What regional trade agreement had the highest concentration of trade around the time of the global financial crisis

• Europe has highest concentration of trade ○ 62% of EU merchandise exports went to EU member countries

CSR case study: subaru of indiana automotive

• First manufacturing plant to achieve a zero landfill status -> All waste is recycled and re-used • Projects created by ○ special engineering teams (paint solvent recovery system) ○ Involvement of all employees (recycle Styrofoam) • Stats ○ Recycle 11,411 tons of scrap steel ○ 1,537 tons of cardboard and paper ○ 965 tons of wood • ROI of the projects ○ 1 year to 7 years • Resulted in significant cost savings that are reinvested in the business while also increasing the profile of the company as an attractive sought after employer

GATT / WTO: formed why? based on what three main principles? aims to do what?

• Formed as a temporary measure to lower tariffs. • Based on three main principles: ○ Most favored nation status § A tariff rate to one member state should apply to all member states ○ National treatment § Foreign firms are subject to the same rules and regulations as domestic firms § Imagine honda: set up factory in mexico. Would be considered a mexican company with all rights as mexican or Japanese. □ Still Japanese company ○ Consensus § Trade disputes will be settled by the unanimous agreement of all parties • GATT/ WTO aims to decrease tariffs and other barriers to international trade

The firms general environment: Google global political legal socio cultural technological

• Global: ○ International data laws • Political / legal: ○ Privacy: how much allowed to collect and who allowed to give it to • Socio-cultural ○ Concern with the switch between googling and going directly to each website with search history apps etc • Technological: ○ Ad blocking

The firms General environment: walmart: global economic political legal socio- cultural technological

• Global: buy more out of china than anyone in the world. ○ Chinese currency depreciated --> can buy more things with American dollar • Economic growth: ○ 2-3% is on the high side. ○ USA in an era of 1.5% economic growth • Political and legal: ○ Push back from societies regarding opening so many walmarts in one certain area. § Athens has own character and wants to keep that character ○ Minimum wage • Socio-cultural: ○ Healthy eating • Technological: ○ Walmart buying jet.com for 3.3 B ○ Personalized pricing: § amazon checks out on your zip code. § Checks what profile you have etc § If appears affluent they can charge you more, if less they charge you less

Kantianism: google • Google can collect data about you anytime you.... -Google sells the (aggregate) data to advertisers -what are

• Google can collect data about you anytime you ○ Click on the google search bar ○ Use gmail, googledocs, goodlegrive, youtube ○ Use chrome, firefox, safari etc ○ Use an android phone, use an iphone • Google sells the (aggregate) data to advertisers ○ Should google allow end users to see what they have on file about them? ○ Should google allow end users to correct mistakes? ○ Should google allow end users to opt out of the data collection? • What are: ○ Good motives regarding the collection of data ○ Universal rules regarding privacy ○ Rules regarding respect for people • "don't be evil"

CSR and financial performance: higher CSR causes... should be viewed as an investment that will lead to... other benefits include

• Higher CSR activity causes lower financial performance in the future • Should be viewed as an investment that will lead to: ○ Improved efficiency ○ Innovation ○ Long term financial success • Other benefits come in the form of making tax deductions, attracting talented employees, avoiding litigation and saving costs.

the firms internal environment: walmart owners employees

• Shareholders are the owners of walmart • Enormous pressure from shareholders to CEO of company to increase growth ○ Stress CEO is under every year • Minimum wage: ○ 7$-15$: shareholders and employees both expecting to preform above and beyond ○ Walmart motto: always low prices § How to keep prices low if have to increase all prices ○ Currently between 7 and 10 per hour

the firms task environment: walmart suppliers? customers?

• Suppliers: ○ China has 25,000 suppliers ○ Everyone tries to sell to walmart • Customers: ○ Avg: 50 year old white person with income around 50,000 per year ○ Target: 10,000 higher than that ○ Dollar stores 10,000 lower

Globalization defintion: advocated by... movement led to the creation of...

• Integration and interdependence of economic, technological, sociocultural, and political systems across diverse geographic regions • Advocated by leading economists and politicians post-World War II • Movement led to the creation of several international trade agreements

NAFTA: main export partners of the US are? US exported more than ______ worth of goods to mexico and ______ to canada What types of industries have moved bc of nafta

• Main export partners of the US are canada which receives 19% of US exports followed by mexico at 14% and china at 7% ○ US exported more than 221 billion worth of goods to mexico and over 280 billion to canada • Many automotive assembly plants are in Canada or Mexico bc of NAFTA ○ Also construction equipment manufacturers and agricultural farms.

violators of ethical standards: 2 consequences

• Management must forcefully discipline all violators of ethical norms and standards • Many business are unwilling to discipline violators

Ethical frameworks: many people believe law should be applied to ___ and ethics applied to ____ laws often reflect: managers need a strong ______: which is what?

• Many people believe the law should be applied to public life while ethics should be applied to private life ○ Some believe law already embodies the ethics of business • Laws often reflect societies minimum standards • Managers need a strong moral compass: ○ A set of guiding principles that help an individual navigate complex ethical challenges § Generally derived from a deep understanding of ones personal values

volkswagon top management examples

• Mr. Piëch, a grandson of Mr. Porsche, is an engineer who made his name shaping Audi to take on BMW and Mercedes-Benz. • His tenure came to be defined by his toughness and willingness to demote or dismiss people who were not performing well. ○ Had a culture of you don't say no to me • Volkswagen had become a place where subordinates were fearful of contradicting their superiors and were afraid to admit failure. • First thing you would have to do as a manager is to say no and slow that down • Volkswagen management culture: confident, cutthroat and insular

Selecting and hiring employees: what two types of integrity tests

• Overt integrity tests: ○ Ex would you steal from our company • Personality based integrity tests: ○ Ex what percentage of people do you think work deliberately slow to reduce the amount of work that is expected of them? ○ How you answer these questions gives you a profile that they guide their decisions on your integrity about

Social responsiveness strategies: reactive defensive accommodative proactive

• Reactive ○ Less than the stakeholders expect • Defensive ○ Admit the problem and do the least required to meet the stakeholder's expectations • Accommodative ○ Accept the responsibility for the problem ○ Do all that can be expected to solve the problem • Proactive ○ Anticipate responsibility for the problem ○ Lead the industry in its approach

the business environment represents what?

• Represents all of the external forces that affect the firms business

Merck and river blindness: what happened:

• River blindness is a disease that afflicts nearly 25 million people in remote villages in tropical regions of africa and latin america. • Tiny parasitic worm that is spread by the bite of a black fly ○ Worms burrow under persons skin and grow up to two feet long ○ Worms reproduce. • Victims experience intense itching (some commit suicide) • Only drugs available were very expensive, has severe side effects, and required lengthy hospital stays: all made treatment impractical for most victims • 1979: Dr William Campbell discovered one of their best selling animal drugs may provide a low cost, safe, and simple cure for river blindness. ○ Cost of developing would top 100 million ○ Even if successful, the victims would be too poor to afford the drug, no easy was to distribute and possibility it would be misused. • Merck faced worsening economic conditions and industry pressures managers were reluctant to undertake an expensive product that showed little economic progress ○ Decided the human benefit of a drug for river blindness was too significant to ignore. ○ Felt morally obligated. • After 7 years of clinical testing and research they succeeded in developing the human version: a single pill taken once a year would completely eradicate the parasite and prevent new infections ○ No one stepped forward to buy it, including the governments of affected regions, the US govt or the WHO • Merck decided to give the drug away for free to potential victims ○ With the WHO they financed an international committee to provide the infrastructure to distribute the drug and prevent it from being sold on the black market • When asked why? ○ They said the only ethical choice was to develop it ○ And people would remember how merck helped them

the firms task environment: google: suppliers: customers?

• Suppliers: ○ Most taiwan area • Customers: ○ One million advertisers ○ Not customers in the sense that we don't pay money to search

Social Values are?

• The deeply rooted system of principles that guide individuals in their everyday choices and instructions

Medicines are cheaper in other countries and illegal to import into the USA • Many foreign countries, including Canada, control the pricing of drugs that are sold and distributed in their territories. this is sometimes tied to the fact that they have.... in US because we do not have _______ many believe _______

• This is sometimes tied into the fact that they have national, universal healthcare and therefore can negotiate the cost of the drugs purchased and sold, keeping the prices very low. • In the United States, because we do not have price controls on drugs and are sold at marketplace prices, many believe we therefore subsidize the lower drug pricing enjoyed in most of the rest of the world, making our drugs much more costly. ○ Basically medicines are one of the most protected products in the United States

CSR and financial performance: zappos example nielsen survey

• Tony heish: Zappos founder ○ Committed to investing 350 million to revitalize the neglected and abandoned dt area of las vegas: ○ Moved zappos offices, bought 60 acres and 100 buildings, invested in new local businesses, built new apartment complexes, relocated and convinced many employees to also, funded a number of start up tech firms. § Believes that these investments will result in significant financial return as well as what he calls "return on the community" • Recent nielsen survey: ○ 55% of global online consumers are willing to pay more for their products and services from companies that are socially and environmentally responsible.

confronting moral dilemmas managers many times must

• many times managers must decide between two wrongs • Ex: accountants develop an attachment to their clients they can become less likely to report faulty information or even notice suspicious behavior, making them more susceptible to the influence of bias.

Corporate Social Responsibility is what? can face pressure from who? business consumer relying on each other how?

○ A business's obligation to pursue policies, decisions, and actions that align with the objectives and values of society ○ Can face pressure from external organizations as well as customers § Fortune global 500 spent almost 20 billion on CSR ○ Businesses rely on customers to buy their products and consumers rely on businesses to provide goods that will sustain their well being § Consumers can choose not to purchase goods from a company they dislike and talented employees can leave a company they do not respect ○ Many believe is a business promotes economic legal and ethical responsibilities they will achieve a fair distribution of wealth to their stakeholders

ASEAN: original members: diverse population how? have agreed to promote what through the creation of the ASEAN Economic Community (AEC)

○ 5 original members included indonesia, malaysia, the phillipines, singapore and thailand § 5 more have joined: brunei darussalam, cambodia, laos, myanmar, and vietnam § Singapore, whose economy is 80 times larger than that of the least developed country in the region, myanmar § Indonesias population of 230 million is 50 times larger than singapores. ○ Have agreed to promote enhanced trade and liberalization through the creation of the ASEAN Economic Community (AEC) § Designed to create freer flow of goods, services, and investments within the region. ○ ASEAN trade with china has more than tripled and trade with US has stagnated

CSR: ethical responsibilities is what? managers use ethical frameworks to understand how to....? ritz camera examples

○ A business's duty to meet the expectations of society beyond its economic and legal responsibilities ○ Managers can use ethical frameworks to understand how to make ethical decisions based on stakeholders expectations. ○ Todays ethical climate calls for businesses to address the issues of sustainability and pollution. ○ Ritz camera example: § Offers customers a free and easy was to properly dispose of their used rechargeable batteries. § Based on idea that recycling improves sustainability and reduces waste

CSR legal responsibilities is what? can maintain responsibilities how? generally laws serve as a

○ A business's duty to pursue its economic responsibilities within the boundaries of law ○ Can maintain this responsibility by: § Complying with laws, anticipating future laws, and avoiding civil litigation ○ Generally laws serve as minimum standard a business should hold

CSR: economic responsibilities

○ A businesses duty to make profit and increase shareholder value § Have a duty to produce goods and services that people want and can sell for a profit. ○ Companies engage in a variety of ways to make profits both directly and indirectly: § Directly: can include decreasing production costs and improving efficiency § Indirect: intangible things that (over time) improve economic performance

Task environment: suppliers: are? in many cases it is not economical to produce everything in house. apple only produces ___% of iPhone McDonalds long list of suppliers:

○ A company that provides resources or services for a firm to help in its creation of products and services Apple only creates 10% of iphones ○ McDonalds has a long list of suppliers: § Gained reputation of being a good consumer to work with from a supplier standpoint § Tends to develop deep long term relationships with suppliers -Company focuses on quality and exact specification of products

internal environment: board of directors: are who? oversee what? firms began to diversify the structure of their boards of directors after...

○ A group of individuals elected by shareholders and charged with overseeing the general direction of the firm ○ Oversees managers to ensure they serve the interests of a diverse group of shareholders. ○ Firms began to diversify the structure of their boards of directors after scandals in each 2000's like enron and worldcom

Fiduciary: person who is... fiduciary relationship exists when.... responsibilities include?

○ A person who is entrusted with property, information or power to act on behalf of a beneficiary ○ Fiduciary relationship exists when a party- an individual or a business- is entrusted with property, information or power to make decisions on behalf of another party. ○ Responsibilities: § Include candor and disclosure, diligence and care, and loyalty and self restraint. § Obligated to be candid and disclose all relevant information § Have a duty of undivided loyalty which means that they must not only protect and promote their beneficiary's interests but also avoid putting their own interested ahead of the beneficiary's.

• Measures of a virtuous character:

○ A persons ability to recognize the moral elements of a situation ○ How well a person makes moral judgements ○ How consistent a persons actions are with those judgments ○ How well a person can teach others to exhibit character

Additional moral dilemmas faced by organizations: Privacy: defintion: impacts who? over intrusive practices could include...

○ A persons right to determine the type and extent of information that is disclosed about him or her ○ Impacts consumers and employees. § Overly intrusive practices could include listening to phone conversations, installing hidden cameras, or using monitoring systems that can track time spent on phone or the number of key strokes on a computer

procedural justice: is? provides the framework for...

○ A subset of justice claiming that rules should be clearly stated, consistently obeyed and impartially enforced ○ Provides the framework for societies to develop laws and procedures that result in fair or just outcomes

distributive justice: is? people who follow this line of thought are ___ and believe that... . John Rawls said each person should be admitted what but once achieved what happens?

○ A subset of justice that deals with the distribution of wealth and prosperity among members of a society ○ People who follow this line of thought are egalitarians and believe that individual differences are morally insignificant ○ John Rawls: each person should be permitted the maximum amount of basic liberties (moral rights) but once this basic equality is achieved inequalities may exist between members if it will benefit everyone in society.

Internal Environment: employees: amazon does what at holiday rushes? today now than ever the workplace is populated by people of different ______ mcdonalds example:

○ Amazon: § Recruits employees at RV shows and has them come out and live in their RVs by the factories and work as temporary employees during rush holiday seasons ○ Today more than ever the workforce is populated by people of different genders, races, religions and nationalities ○ McDonalds: § 1.9 million employees can be categorized in two groups: □ Corporate functions: sales, marketing, finance, operations etc □ Individual store level: staff who are restaurant managers, hourly employees etc § 40% of executive officers began as crew members working in local McDonalds restaurants

virtue ethics:

○ An ethical philosophy claiming that morality's primary function is to develop virtuous character

Kantianism: is what? Rather than focusing purely on the positive and negative consequences of actions, kant believed...

○ An ethical philosophy claiming that motives and universal rules are important aspects in judging what is right and what is wrong § kant believed that motives are critically important when judging moral action People must make the right decisions for the right reasons.

Virtue ethics:

○ An ethical philosophy that morality's primary function is to develop virtuous character (kohlberg)

justice: is what? the notion that....

○ An ethical philosophy that provides the framework for society to judge what is morally right or wrong, fair or unfair, and establishes ways to evaluate or punish those who behave in morally wrong ways ○ The notion that moral behaviors must be based on standards of equity, fairness, and impartiality to preserve order in society

Task environment: Competitors: they are? auto industry example? mcdonalds example?

○ Any organization that creates goods or services targeted at a similar group of customers § Technological and global changes have fueled competition in industries ○ Automobile industry example: § Biggest areas of growth are in emerging markets like china and india, requiring US manufacturers to design new cars to fit these markets § US auto manufacturers also facing stiff competition from local manufacturers in emerging markets. □ India's tata motors bought jaguar and land rover from ford in 2008 § China accounted for over 55% of the global market for semiconductors and number of major chinese semiconductor companies grew to 50 ○ McDonalds: § Essentially competes with every other restaurant in a local market § Considers other fast food places its direct competition § In traditional burger space: shake shack and five guys § Also considers starbucks a competitor due to their introduction of breakfast sandwiches and the worry that they will get their whole breakfast there

Utilitarianism: is what? operates under what principle? should use a ____ analysis of all possible decisions and select the alternative that results in the greatest utility

○ The ethical philosophy claiming that behaviors are considered moral if they produce the greatest good or utility for the greatest number of people ○ Basically talks about utility and what is best for society § Operates under the "greatest happiness" principle as the foundation to its ethical theory. Should use a cost-benefit analysis

Chiquita: example of when trade restrictions have had serious consequences on companies

○ Bananas one of the most important and popular agricultural products: more than 70 million metric tons of production annually ○ Most of the 20th century chiquita dominated the industry and was valued at 5.1 billion. ○ In 1993 the EU adopted a new banana import regime that established a community wide quota on bananas imported from latin american countries where chiquita imported its fruit. ○ Chiquita lost an estimaed 20-50% of its market share and its stock fell from 40 in 1991 to 13.63 in 1994 ○ In 1996 the WTO ordered the EU to stop imposing quotas bc they were considered restrictive and protectionist. ○ In this case: restrictive tariffs essentially shut the company off from its most important end markets.

• Coca Cola Greece received a $20 million levy for a "Social Responsibility Tax" what happened?

○ Coca Cola used to be one of the top 5 companies in Greece, now listed in London/Switzerland ○ The company, which last year made net profit of 330 million euros on sales of 6.85 billion, has complained of taxes imposed under Greek government austerity measures. ○ A U.S. filing shows it paid about 20 million euros in both 2009 and 2010 for one-off "social responsibility" levies in Greece ○ Greek govt created extra taxes and called it a social responsibility tax of 30 million dollars

internal environment: culture: cultures at firms develop over how long: usually a product of what? a firms culture is important for doing what?

○ Cultures at firms develop over a long period of time. § For many firms culture is a byproduct of the founders personality § In these cases the company is based on the values, beliefs, and assumptions of an individual or a small group of individuals. ○ A firms culture is very important for attracting, developing, and retaining a competent work force and for creating a competitive advantage in the market place.

the general environment: Socio-cultural dimension is what? more prominent forces affecting the firm may be? as US population increases large companies will be faced with?

○ Demographic characteristics as well as the values and customs of society ○ More prominent forces that can affect firms are the aging and changing racial composition of a population. § By 2045 more than 21% of us population will be over 65 ○ Concerned about the economic impact of an aging demography, japan and germany have offered incentives to have more children ○ As US population ages large companies will be faced with replacing a sizeable portion of upper management with younger employees. § Will select from a smaller pool of talent § Firms will likely need to look outside the company to fill key positions □ Different from the traditional hired and promoted from within the organization

Fiduciary Responsibility: investment advisor • An investment adviser that has a material conflict of interest must

○ Either eliminate that conflict or ○ Fully disclose to its clients all material facts relating to that conflict

ASEAN: established when to support what three goals? What was it designed to create?

○ Established in 1967 to support three goals What three goals: § Accelerating economic growth § Promoting social and cultural development § Ensuring peace and stability ○ Designed to create freer flow of goods and services within the ASEAN countries

MERCOSUR: established when to do what? who are the members? what are important components of their export base

○ Established in 1991 ○ Argentina, Brazil, Paraguay, Uruguay, and venezuela. ○ Created to promote economic growth and integration through reduction of tariffs and free flow of goods ○ Fuel and mining products are increasingly important components of MERCOSUR's export base

Ethical Dilemmas faced by individuals Trade secret:

○ Information used in conducting business that is not commonly known by others. It provides a strategic advantage over competitors (NDA, Non Compete) § Especially valuable in r&d as they often provide s strategic advantage for the company over competitors. § Ex: googles search algorithm

Utilitarianism managers should do what when balancing others interests with their own can fall short in some instances how?

○ Managers should seek good outcomes for affected parties, be objective in identifying others interests and the likely consequences of their actions and be impartial when balancing others interests with their own. § Actions are right if they promote happiness, or the absence of pain and wrongdoing ○ Can fall short in some instances: § Greatest good for the greatest number could lead to a tyranny of the majority and a failure to respect individuals such as minorities

the general environment: economic dimension must consider what three things?

○ Must consider resource position of global regions § In US most managers take infrastructure such as communication networks and highway systems for granted. ○ Also needs to investigate currency issues in operating their business across borders. § When local currency devalues significantly relative to the dollar, the firm can lose money if it does not make adjustments in its prices to account for this disparity ○ Also needs to consider labor situation in a global market: § For firms that engage in high tech operations, a steady supply of skilled workers is crucial § Many firms relocate high executives, but large levels of lower level workers is rarely cost-effective. § Current debate in US regarding H1B visas: □ Visa that allows a foreign worker with specific skill sets to come temporarily work in the SU

Ethical Dilemmas faced by individuals insider trading: defintion: ex: steve madden ex: SAC capital

○ Occurs when a manager uses inside information to bet for or against a company's stock before that information is publically available. § Leaders often have access to proprietary information such as earning forecasts, research experiments, or potential lawsuits. ○ Ex: steve madden: § Admitted to helping penny stock firms manipulate more than 20 initial public offerings and resulted in losses to investors that approached 100 million ○ Ex: SAC Capital: § Agreed to a 1.2 billion fine § Involved in the trading of stock from dell and two drug companies: elan and wyeth § Gained access to information about dells third quarter financial performance before it was publically available. § Allowed SAC to reap an enormous profit while avoiding loss by holding dell stock. § Also used insider trading to realize to alzheimer drugs would not worl and bet against the companies □ Avoided losses and yielded profits of 275 million, traded received 9 million bonus. § Trader who orchestrated the deal was sentenced to 9 years in prison and had to return all of bonus

Ethical Dilemmas faced by individuals Bribery: defintion: at govt level bribery undermines _______bc it decreases _______? IBM case

○ Offering something valuable to a party to act on his or her behalf, often to an unfair advantage § Fundamentally about creating a breach of trust. ○ At the govt level bribery undermines economic development bc it decreases efficiency breeds cynicism and distorts international competitio ○ Remains pervasive problem world wide. ○ In many cases financial penalties not very severe ○ IBM case: § 10 million company paid to avoid litigation for having over 100 employees bringing shopping bags full of money to govt officials in exchange for millions of dollars in contracts § Only .06% of company's net income in 2011. § Firms even conduct cost benefit analysis to determine the potential upsides and downsides of engaging in bribery. ○ Transparency international publishes a "corruption perceptions index" § According to 2014 report, 70% of 175 countries world wide scored below a 50 signaling a high problem with corruption

the general environment: socio- cultural dimension what is a particularly attractive segment for many industries? must adjust or develop strategies for the populations changing ______ most global markets still differ widely on important cultural dimensions like....

○ Older segment of the population § PGA: boomers made up nearly 40% of all golfers. § Plastic surgery: more beauty conscious: 352% increase in surgeries and 300% increase in breast augmentation for individuals 65 years and older. ○ Companies must adjust or develop strategies for the populations changing racial composition § Hispanic population expected tp reach over 26% of the population by 2045 § Home depot launched a campaign in 2005 called colores origenes: □ 70 vibrant colors to reflect hispanic culture § Mall developer and real estate broker joined together to convert vacant or underutilized malls in california and arizona into destination shopping centers for hispanics □ Immediate 30% boost in bottom line performance of the mall ○ Most global markets still differ widely on important cultural dimensions § Religious beliefs, race, social norms, language.

internal environment: board of directors: one of the boards main functions is: sarbanes oxley is...? mcdonalds example:

○ One of the boards main functions is to provide oversight of the firms strategies and management practices ○ By 2002 sarbanes oxley was passed: § Board members now mandated to prepare financial statements and ensure sound reporting. § While established more stringent rules for public companies it also ncreased costs for items such as audit fees, legal fees, board compensation, and insurance premiums ○ McDonalds: § Board consists of executives, nonexecutive members and various individuals from other companies who have an understanding of McDonalds business and its customers

internal environment: culture: is what? at its core embodies what? some people can define culture based on?

○ Pattern of basic assumptions about the way in which an organization and individuals in it should work and interact with each other ○ At its core culture embodies who and what an organization is or represents. ○ Some people can define culture based on tangible factors such as the firms physical environment § Physical space, the way people dress, hours and patterns of work schedules etc

Global financial crisis of 2008:EU who faced severe declines in economies who were key players in helping stabilize the crisis and how did they do it

○ Poland, italy greece and spain faced severe declines in their economies. ○ Various Eurozone leaders and european central bank have been key players in helping to stabilize the crisis by encouraging more favorable loans and promoting fiscal reform policies throughout europe. ○ In 2013 overall unemployment in the EU was 10.5% but more than 16% in portugal and higher than 25% in greece and spain ○ Public debt as a percent of GDP was over 120% in greece, ireland, italy and portugal.

• Most seminal research on moral development was done by lawrence kohlberg ○ Outlined 6 stages spread across three levels of moral development. pre conventional: conventional: post conventional:

○ Preconventional: usually occurs earlier in life during childhood (also adults can exhibit this moral reasoning) ○ Conventional mortality: develops as people transition from highly dependent children to more independent adolescents (level of reasoning also exhibited by many adults) ○ Postconventional mortality: exhibited by those with a higher awareness for moral values, who can understand where values come from and compare the values of different cultures. • Leaders must also consider the overall moral obligations of their firm and the legal environment in which It operates

the general environment: political dimension: refers to... political unrest can directly affect a firm when.... can indirectly impact a firm by?

○ Refers to the political events and activities in a market that affect a firm § Local govt policy makers have the power to change competitive landscapes. ○ Political unrest can directly impact a firm when civilian unrest leads to the destruction of the firms property: § BHP Copper Mine ○ Can also indirectly impact a firm by destroying consumer confidence in the country

Additional moral dilemmas faced by organizations: Privacy: requires managers to strike a balance between... should follow what three rules when seeking info from subordinates? what would make private activities become more relevant at work

○ Requires managers to strike balance between respecting privacy and learning about their subordinants § If you own an iphone is your manager allowed to go through your corporate email on there? § Managers should follow three rules when seeking information from subordinates: 1) Information should be directly relevant to the issue at hand 2) Employees must have the opportunity to give consent 3) Methods of learning information should be ordinary and reasonable § However, as employees move higher in the organization their more private activities many become relevant: □ Ex: VP of company with drinking problem: not okay

Managing in difficult times: business leaders must do what?

○ Respond to changes in the global business environment and try to change it § Lobby to influence the government's role in business § Visit the people you need to keep tabs on, cannot miss anything as a CEO ○ Identify growing market niches or target consumer segments and invest in research and development § Are proactive in adapting their strategies to an ever-changing global marketplace § Deal with a broader array of stakeholders including public advocacy groups, community forums, and the media

the general environment: economic dimension is what? particularly important for who? developed countries such as canada australia japan and germany are marked by high levels of ....

○ The general economic environment in the markets where the firm performs activities § GDP, inflation, unemployment, consumer sentiment, and interest rates ○ Particularly important for any manager looking to conduct business abroad: § Structure, resource position, currency and labor issues in all countries doing business ○ Developed countries such as canada australia japan and germany are marked by high levels of free market principles similar to US § Stable economic conditions with lower variability than developing countries in terms of inflation and interest rates

Internal environment: owners: are who? what makes up the majority of businesses in the US? some firms avoid public ownership why?

○ The people or institutions that maintain legal control of an organization ○ Sole proprietorships make up the majority of businesses in the US § More than 79% of US firms employ fewer than 10 employees ○ Some firms avoid public ownership to escape the pressures and scrutiny that come from wall streets expectation of achieving quarterly earning estimates

task environment: Customers: are? to managers the customer represents... many firms have different sets of customers: examples? Mcdonalds tries to please customers how?

○ The people or other organizations that buy a firms products or services ○ To many managers the customer represents the most important aspect of the firms environment ○ Many firms have different sets of consumers: § Staples has both retail and commercial customers. □ Commercial being local businesses etc that use staples for office supply needs § Relationships and sale processes involved in the two are vastly different ○ McDonalds: § Offers convenience and consistency § Also happy meals and indoor playgrounds □ Trying to serve customers who value speed and convenience as well as customer who seek a destination dining experience. § Offering mcarabia across the middle east, etc □ Modifications made world wide to adapt to local customers tastes

Internal Environment: employees: who? without a capable and motivated employee base a firm cannot expect to... permanent vs temporary employees:

○ The people who make the products and provide services that allow the firm to exist ○ Without a capable and motivated employee base a firm cannot expect to generate competitive advantage in the marketplace. ○ Permanent employees are those whose work contract doesn't expire on a certain date ○ Temporary employees are used for things like holiday rushes

the general environment: technological dimension: is what? successful companies are able to? example?

○ The processes technologies or systems that a firm can use to produce outputs ○ Successful companies are able to capitalize on new innovations ○ Ex: McDonalds § To help McDonalds introduce a series of specialty coffee drinks such as espressos and cappuccinos, the firm relied on new technology. § Performs essentially all of the functions in the brewing and flavoring process automatically.

the general environment: legal dimension is what? congress recently increased what regarding cars in the US Mcdonalds under scrutiny for...

○ The regulations and laws that a firm encounters in its markets § In some places dictates a way the firm must process its products or market to consumers. ○ Congress recently increased fuel efficiency standards for all cars sold in US § Must increase from 27 mpg to 35.5 by 2016 ○ McDonalds under scrutiny for high calorie high fat items. § Company now puts calorie information next to the product items and has sought to be more transparent.

Ethical Dilemmas faced by individuals Whistle Blowing definition 3 examples how they pay for their acts of dissent

○ The release of information by a member of an organization that is evidence of illegal or immoral conduct to executives in a company or regulating agencies outside a company ○ Ex: enron: Sherron watkins: § Warned chairmen, ken lay, that the company was using improper acocunting methods to inflate the value of assets and earnings ○ Rowley: staff attorney at FBI: § Wrote memo to director about how the bureau failed to act on information from the minneapolis field office about Zacarias moussaoui who was later indicted as co-conspirator for 9/11 attacks ○ Cheri hunt: citimortgage: § Spoke up about banks mortgage fraud. Unsuccessful in getting executives attention and reached out to US dept of justice. ○ Whistle-blowers act ethically but usually pay a high price for their acts of dissent: § Blacklisted, fired, threatened, and treated unfairly. Usually encounter financial hardship § Have difficulty finding other jobs bc seen as unloyal to the company

Fiduciary Responsibility: investment advisor • Stockbrokers do not have a fiduciary duty:

○ Their advice is incidental to the sale of the products ○ If you are going to ask for a strategy to take over a company and you think they shouldn't you still must even if they have already informed the public • All about imagining what you can do for your clients

Fiduciary Responsibility: investment advisor • The fiduciary duty requires an investment advisor, by law

○ To act in the best interest of the client ○ Ahead of his/her own interests § Need to look at what is appropriate for the client and what is best for them

what is considered intellectual property and what relies heavily on these laws to protect their assets

○ Trade secrets along with patents, copyrights and trademarks are considered intellectual property which means they are treated the same as tangible property. § Owner has the right to sell license or assign ownership of a trade secret to others. ○ Pharmaceutical industry relies heavily on IP laws to protect its intellectual assets and to secure financial longevity § Not only lobby for longer patent protection domestically, but also ask US govt to protect their IP abroad by reducing pharmaceutical fraud in countries that have more lax IP laws.

Ethical Dilemmas faced by individuals • Conflicts of interest:

○ conflicts that occur when employees or managers engage in activities on behalf of the company and have personal interest in the outcome of those activities § Particular problem when their own interests oppose the companys or if their judgement is biased against their duty to the company