Exam 1
Module 1
The organizational environment encompasses all of the factors, forces, and groups that are both inside and
outside the organization.
A stakeholder of an organization is any individual or group impacted by that organization. Internal
stakeholders are those who work and are responsible for the inner workings of the company. Internal
stakeholders include the company’s owners and/or stockholders, employees, and board of directors.
The internal environment of the organization is created by its internal stakeholders. An organization’s
strategy, culture, technology, policies, procedures, and intellectual capital are just some of the components of
an organization’s internal environment.
For a strategy to be effective in any environment, it must allow the organization to take advantage of
opportunities, avoid threats, and consistently adapt to the challenges and opportunities the environment
presents.
External environment include everything from governmental policies and procedures to various economic
indicators and changing social trends.
The external environment can be divided into the task environment (features a group of sectors that directly
and immediately impact the organization and influence its decision making on a daily basis) and the general
environment (is a far-reaching set of forces that indirectly impact the organization over time.)
Sectors that make up the task environment include customers; suppliers and distributors; competitors;
government; special interest groups such as labor unions; local communities; strategic partners; and the
media.
The control and coordination of inventory through transportation and logistics is called supply chain
management.
One of the most important elements in the task environment is an organization’s competitors.
Developing a competitive advantage involves an organization identifying what it does better than its
competitors and focusing on those factors to gain and maintain an advantage.
One special interest group that has a significant impact on organizations is the labor union. A labor union is a
legal representative of a group of workers.
Depending on the state in which the union operates, new employees may have to sign a union security
agreement. This contract forces new members of the organization to join the union. Right-to-work laws
forbid these union security agreements, thereby disallowing union membership as a requirement for
employment.
Strategic alliances are formed when two organizations must serve the same customer, and each organization
cannot perform this task alone.
Mass media includes all form of communications intended for a large audience. Newspapers, magazines,
television, radio, social media platforms, and Internet websites are all part of the media that provide
information to everyone.
The general environment includes six forces that have an indirect effect on both the organization and its task
environment. These include political, legal, and ethical forces; economic forces; technological forces;
demographic forces; sociocultural forces; and global forces. These conditions are dynamic, uncontrollable, and
influential.
Political forces include governmental (executive) power, regulations, and enforcement. Legal forces include
the creation and interpretation of the law through the legislative and judicial processes. ethical forces create
the foundation upon which most of our laws are created, interpreted, and subsequently enforced.
Economic forces consist of labor and financial issues that affect organizations.
Technological forces are the factors that influence this transformation by making the process more efficient
and effective. Demographic forces highlight the shifts in population composition. Sociocultural forces focus on
the norms, trends, and behaviors that emanate from a country’s social structure and cultural values. Global
forces are the general environmental forces of a foreign country that affect domestic organizations.
environmental observation methods include buffering, boundary spanning, forecasting, and benchmarking.
Buffering occurs when company departments absorb much of the uncertainty from the overall environment
so the organization can perform its primary roles efficiently.
Boundary spanning, however, encompasses not only the organization’s ability to absorb important
information from the environment, but it also includes the organization’s tactical release of internal
information into the external environment so that the organization can be viewed positively
Business intelligence is the process of using complex software programs to gather and analyze large amounts
of internal and external data (often called big data) to detect certain patterns or trends that may exist.
Another name for this practice is called analytics.
Forecasting involves trying to predict what will happen in the future. (quantitative forecasting, Qualitative
forecasting).
Benchmarking involves making ongoing comparisons between an organization and its competitors with regard
to overall process and performance.
Factors that affect the organizational environment may include worldwide financial crises; terrorist activities;
social networking issues; lapses in ethical judgment; sustainability concerns; shifts in modes of communication
and information; e-commerce; outsourcing and offshoring; and global shifts in economic power and status.
Diversity is the different personal characteristics that set individuals apart in the workplace such as gender,
age, race, sexual orientation, and so on.
globalization The increased interaction and integration of economic, political, technological, and sociocultural
systems across different geographic regions.
Innovation involves looking at things differently and being creative in selecting solutions.
knowledge management Assessing and systematizing knowledge resources to find new solutions to ongoing
problems, so that companies can gain a competitive advantage.
Outsourcing involves subcontracting with outside vendors to provide specific services that were previously
done in house.
offshoring is the process of sourcing work, primarily business support services, to organizations in other
countries.
Ethics are principles that dictate right versus wrong while espousing a code of conduct based on these values.
Module 2
Non-managers or worker tend to focus only on performing their jobs or assigned tasks. A manager, however,
is not only expected to perform numerous tasks but also to be responsible for the performance of their
subordinates.
the manager’s job is to lead and motivate subordinates toward attaining the organization’s goals. A manager’s
responsibility is to lead and motivate subordinates in an ethical fashion.
An organization is a group of individuals working in a structured fashion to achieve particular goals. Regardless
of their size and number of employees, all organizations are classified into two major categories: profit and
nonprofit.
For-profit organizations are in business to make money and be profitable, while nonprofit (public, social, and
service) institutions are in business to serve the greater good.
Management includes all of the planning, organizing, leading, and controlling functions aimed at an
organization’s resources so that it can maximize its organizational performance and achieve its goals in an
effective and efficient manner.
Planning Managers determine the course of action for their organization. The vision, mission, core values,
goals, objectives, and strategy of the organization are all addressed within the planning process.
Organizing is the grouping of activities and people so they can perform their tasks effectively and efficiently.
Managers coordinate activities and resources.
Leading Managers supervise and motivate people. refers to the manager’s ability to get employees to work
enthusiastically toward achieving the organization’s vision.
Controlling Managers monitor and evaluate activities. focuses on monitoring the organization’s progress
toward achieving its goals.
the managerial factors that directly contribute to or measure the success of the management functions in
organizations. Managerial factors include organizational performance, resources, effectiveness, and
efficiency.
An organization’s overall performance depends on management’s ability to utilize resources in both an
effective and efficient manner.
Resources are the building blocks of organizations. They are the organization’s “possessions” that are
combined and utilized to gain a competitive advantage over others in the same industry.
Effectiveness chooses the correct goals, strategies, and objectives. can be summed up in four words: “Doing
the right things.”
Efficiency deals with the faster, cheaper, more productive side of the resource equation. “Doing things right.”
Levels of Management
Organizations tend to have three levels of management: upper-level managers; middle-level managers; and
lower-level, or frontline, managers, commonly called supervisors.
Upper-level managers (Develop organization’s mission, vision, strategies).
Middle-level managers (Implement organizational policies and coordinate frontline supervisors).
Lower-level managers (Supervise and coordinate activities of non-managerial employees).
Managerial Skills
Technical skills refer to the level of ability and proficiency a manager possesses to perform subordinates’
duties.
The ability to be flexible, remain calm, and appear in control regardless of the situation signifies a high degree
of adaptation skills.
How well a manager communicates with subordinates or superiors defines the level of his/her interpersonal
or communication skills.
Conceptual Skill. A set of skills that truly separates managers from non-managerial personnel is the manager’s
ability to see the “big picture.”
The ability of managers to amass a power base, improve their status and position in the organizational
hierarchy, and network effectively within the organization depends on their political skills, which includes an
ability to get along with others in the organization.
Managerial Roles
Weber argued there are three primary types of authority prevalent within organizations: traditional,
charismatic, and rational-legal.
Fayol is remembered for articulating the primary functions that successful managers carry out in all types of
organizations.
These five functions include:
1. Forecasting and planning
2. Organizing
3. Commanding
4. Coordinating/leading
5. Controlling
Human relations perspective, recognized the complexity of human behavior and social relationships that exist
within the organization.
management science, a field of study that uses sophisticated mathematical and statistical models to account
for a multitude of variables in order to improve decision making in organizations.
Total quality management (TQM) is a managerial trend that gained substantial momentum in industry in the
1980s and 1990s. TQM represented a fundamental change in philosophy regarding how to improve product
and service quality.
systems perspective. At a general level, this perspective recognizes that organizations function in an
environment that must be considered when making decisions.
Contingency perspective
Theory X presumes employees do not like to work and they tend to avoid responsibility. Therefore, their
behavior at work needs to be actively directed and managed using coercion and control. On the other hand,
Theory Y presumes employees have an innate desire to have autonomy and responsibility, and they can
contribute to the organization through participative and self-directed behavior.
Project management is the systematic process of managing a work-related project from its inception to
conclusion and consists of five steps: initiation, planning/design, execution, monitor/control, and
completion/disbandment of the project team.
Module 4
Ethics is the code of moral principles that governs whether a person’s behavior is right or wrong and reflects
the shared values held in a specific community.
■ Individuals are not born with a particular understanding of a shared ethical makeup; they are born into a
societal ethical system and then learn it as they grow and mature.
ethical egoism, the right behavior is the one that creates the greatest good for the individual.
utilitarian approach to ethical behavior, the individual is replaced with the group and suggests that people
should do what creates the best benefit for the greatest number of people. the focus is on which actions are
likely to result in the greatest good for the most people.
moral-rights approach is the notion that equal respect must be given to all people regardless of whether this
results in greater utility or not.
categorical imperative, a person should consistently take the same morally right action, no matter the
consequences.
The relativist perspective what You Believe Is Good for You; What I Believe Is Good, Is Good for Me.
Rather than focus on rules, actions, or cultural norms, virtue ethics focuses on each person and his or her
behavior.
The justice approach to ethics is grounded in the notion of equality and fairness.
Distributive justice is a principle that refers to individual perceptions of the fairness of outcomes people
receive for what they do.
procedural justice a perception of fairness in the procedures used to make organizational decisions.
An ethical dilemma is a problem or situation for which a person must choose among alternative actions that in
some cases may compromise an ethical principle.
Moral intensity affects every component of the EDM model and refers to characteristics of the ethical issue in
consideration. As moral intensity increases, individuals are more likely to recognize the potential issues that
might affect themselves or others. Several factors impact the level of moral intensity19:
■ Magnitude of Consequences: The degree of harm (or good) an individual may experience based on the
decision maker’s actions.
■ Social Consensus: The degree of agreement in a social group that the decision maker’s potential actions are
bad or good.
■ Probability of Effect: The probability the act will take place and whether it will cause harm or benefit.
■ Temporal Immediacy: The length of time from the decision maker’s action to the consequences experienced
by others.
■ Proximity: How close the decision maker is to those affected by his or her actions.
■ Concentration of Effect: The number of people affected by the decision maker’s actions.
Cognitive Moral Development
Locus of control refers to the extent to which individuals feel they have control over events in their lives. A
person who has an internal control orientation believes that outcomes are a result of one’s efforts, while a
person with an external control orientation views events in life as beyond their control and based on fate,
luck, or destiny.
A whistleblower is a person who reports misconduct by an organization or other employees to the public or a
higher authority.
A code of ethics is a formal statement of expected behavior that serves as the rules of conduct in an
organization. However, the code of ethics must be more than just a few key words written in a document.
Ethical leadership, which involves conforming to laws and regulations, being honest, treating others fairly and
with respect, and not abusing power to exploit others or to serve a leader’s self-interest,30 is important for
establishing an ethical culture.
corporate social responsibility (CSR)
stakeholder theory expands that approach and focuses on all the parties impacted by organizational actions—
the stakeholders—and suggests that those affected by organizations have a right to participate in directing
them.
Module 5
Globalization is the increased interaction and integration of economic, political, technological, and
sociocultural systems across different geographic regions.
Internal Environment
The home country is the country in which the parent organization is currently registered or headquartered,
and the host country is the country in which an organization operates a manufacturing facility or is conducting
other business activities such as sales or marketing.
The parent organization may send managers and/or employees from the home country who are familiar with
their practices and processes to set up and run these operations in the host country. These individuals are
called expatriates, or expats.
The Major Players
There are still three major groups that engage in most of the international activity
1. Multinational corporations (MNCs) build facilities and sell products in a number of different countries.
2. Multinational enterprises (MNEs) sell their services in a number of different countries.
3. Nongovernmental organizations (NGOs) are nonprofit organizations that function independently of any
government and serve the world’s population
In order for a company to go through this decision-making process successfully, without any pitfalls, they must
be aware of the political, economic, sociocultural, technological, legal, and environmental factors that exist in
a particular country. This strategy is referred to as a PESTLE analysis
From Internationalization to Globalization
Outsourcing involves subcontracting with outside vendors to provide specific services that were previously
done in house.
Offshoring involves sourcing work to other countries, which may include working with a third party or basing
part of the company’s operations overseas.
Franchising is the process in which companies provide foreign businesses with a complete package of
materials and services to use in exchange for a fee.
A joint venture is a business entity created by two or more separate parties, in which the parties share
ownership and responsibility for the new entity. This type of business sometimes occurs when countries have
restrictions on foreign ownership of capital within their borders.
A wholly owned foreign subsidiary is one where the parent company owns the entire foreign company. The
subsidiary may operate independently of the parent organization, but the parent organization controls the
strategic planning and direction of the foreign company.
Tariffs (taxes on imported goods) and import quotas (limits on the number of goods coming into a specific
country), as well as other barriers, have been reduced or eliminated to facilitate trade between organizations
in different countries.
culture as the values, orientations, and beliefs that affect individuals in a society and impact their world view.
Ethnocentrism is the tendency to believe that your culture’s way of doing something is the best way to
accomplish these tasks.
Parochialism, on the other hand, believes that “our way is the only way.”
Hofstede’s Cultural Dimensions
Individualism is the tendency for people to look after themselves and their immediate family, with less
importance given to society as a whole.
Collectivism pertains to how people in certain cultures subordinate their individual needs for the greater good
of a group.
The second dimension is power distance. This cultural dimension measures the extent to which people accept
there should be an unequal distribution of power across institutions, organizations, and people
The third dimension is masculinity versus femininity. This value focuses on traditionally masculine values in
contrast to traditionally feminine ones. Aggressiveness, assertiveness, materialism, and a lack of empathy are
all considered masculine traits. Feminine traits include value, quality of relationships, and passivity.
The final dimension in Hofstede’s original research was uncertainty avoidance. This is a culture’s comfort level
with risk and ambiguous situations.
GLOBE Project
A stereotype is a preconceived notion about an individual or a group of individuals. However, the stereotype
does not take into account the cultural heterogeneity, or the differences, of the individuals within that group.
An ethnocentric staff approach involves filling key managerial positions with home country nationals because
they understand the inner workings of the organization.
■ A polycentric approach seeks to fill key positions with host country nationals.
■ A regiocentric approach seeks to recruit candidates for an overseas management position from within a
specific geographic area.
■ A geocentric approach seeks to recruit the very best candidate for the position, regardless of where they
might live.
■ Cross-cultural training helps prepare expatriates for culture shock in their international assignments, and
repatriation training helps expats experience a successful re-entry to jobs back home.
Expatriate Selection. Matching the individual’s skill set, motivation, and family situation with the right
assignment is the primary objective when selecting an expat manager.
