Forces Affecting Organizational Behavior 1

How Internal & External Forces

Impact Organizational Behavior

Tim Claflin

David Knight

Katrina Portis

Chenista Straubel

Vartan A. Terian

Management 331

Stephan W. Daniel

27 April 2004
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How Internal & External Forces Impact Organizational Behavior

Purpose

The purpose of this paper is to look at how internal and external forces impact

organizational behavior within different organizations. Organizations are different just as

people are and how they interpret organizational behavior is reflected it the company

reviews. The topics that we present for review include organizational mission, restructuring,

fiscal policies, competition, economy, customer demands, and globalization.

Internal and External Forces of Pfizer Inc.

Organizational mission

Pfizer’s mission is to become the world's most valued company to patients,

customers, colleagues, investors, business partners, and the communities where employees

work and live.

Pfizer has the broadest portfolio of new and innovative medicines that have helped to

improve and save the lives of countless people. Whether it is Lipitor, the number one selling

cholesterol-lowering drug that has been shown to actually reverse the effects of arterial

sclerosis in some patients to Zyvox the first new gram-positive antibiotic to emerge in over

thirty-five years, Pfizer is the leader in innovation for its patients.

Pfizer’s focuses on customer satisfaction by delivering all orders on time 100 percent

of the time! We continue to seek new ways to improve our services and to meet our

customer’s needs.
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Pfizer offers excellent employee benefits such as profit sharing, access to excellent

investment opportunities, free prescriptions of Pfizer products, and many other opportunities.

We are referred to as not an employee but rather as colleagues. This simple difference gives a

glimpse of how Pfizer treats their people.

Upon acquisition of Pharmacia, Pfizer promised to cut operational costs by two

billion dollars in the first year. Achieving this goal secured the confidence of stakeholders.

Pfizer stock is on the best to buy list on the New York Stock Exchange.

Pfizer is committed to improving the communities were they function. Since Pfizer

has come to Kalamazoo it has given over twelve million dollars to local institutions, most

recently donating over two million dollars worth of analytical equipment to Western

Michigan University.

Restructuring

In today’s business world, mergers and acquisitions are tools companies can use to

gain a competitive advantage or a greater market share.

Pfizer, Inc. bought Pharmacia Corp. in August of 2001. Aggressive restructuring

included eleven hundred job cuts in Kalamazoo County, Michigan within the first six

months. Pharmacia’s buildings will be sold and several aging product lines will be

discontinued. This news sent a shockwave through the production division of remaining

employees at the Kalamazoo location.

Communication is vital to restore employee confidence and morale at this time.

Anxiety resulting from the lack of information and a solid foundation causes widespread fear.

Weekly e-mails announce the new structure and management of units and divisions around

the globe. HR policy changes and new uniforms are helping to create a consistency among
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the facilities. Changes in corporate communication include the use of e-mail, corporate

newsletter, and mailings that help readers stay abreast of the changes that are on horizon so

that employees can be better prepared for the shape of things to come.

Pfizer acquired Pharmacia Corp’s largest production facility, world head quarters for

animal health and agricultural R& D, and a workforce of fifty-six hundred dedicated and

hard working colleagues are very excited about working for the largest and best

pharmaceutical corporation in the world.

Competition

Pfizer has the most diverse portfolio of existing medicines and treatments in it the

pharmaceutical industry offering a robust pipeline of new medicines; five new products are

in third stage trials. Pfizer is the world leader in cardiovascular disease, oncology, pain, and

inflammation. Lipitor was the first drug in history to make over ten billion dollars in sales in

one year. Both Celebrex and Bextra produce over one billion dollars in sales each every

year.

Pfizer also has an extensive over-the-counter product portfolio consisting of thirty-

nine products ranging from Actifed to Zyrtec. Many of Pfizer’s top products have many

years of production before their patents run out and it is legal for generic drug makers to

make generic versions.

Pfizer has the largest R&D budget in the industry equaling eight billion dollars in

2004.

Internal and External Force of Ace Hardware

Organizational mission
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With the changes taking place within Ace Hardware our mission is to be the most

efficient and productive distributor. Our goal is to be an excellent retail organization. You

cannot be excellent without great distribution centers. We changed the name of our

distribution centers to “Retail Support Centers.” Our mission to be the best at retail forced us

to improve ourselves at every level. We improved productivity in distribution channels,

project management, pricing, and image.

Restructuring

Ace Hardware restructures every few years due to many external factors taking place

in the economy as well as within the competition. In 1980 Ace was primarily a wholesale

company with a focus on creating sales and selling more hardware. By the 90’s we saw the

increase of “big box” activity meaning that as the big box stores increased, markets seemed

to decrease sparking restructuring.

Ace responded to restructuring by realigning staff to support retail and increasing

field staff. When I first started with Ace, I was responsible for around 60 stores and now I

have around 40. Increased support staff reduced store counts enabling field staff to focus our

attentions with increased visits productivity of the stores began to soar enabling stores to

remodel and to expand their operations. As productivity increased, stores remodeled and

expanded their stores causing another restructuring. It became clear to Ace that we needed

more project type people.

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As a result, our highly skilled and well-trained staff can handle any type of retail

problem or project. We are now the largest hardware wholesaler in the world, but only

because fourteen years ago we changed our focus to retail.

Fiscal policies

By keeping debt low, profits increased, and our retailers enjoyed reaped rebates in

addition to rewards from their reorganization efforts. This past year alone we added over

$100 million dollars to the bottom line and this goes right back to the retailers in the form of

rebates.

Competition

If one word could sum up why we restructured it would be “competition.” In the 80’s

if you wanted to purchase hardware or home improvement items you had to go to your local

hardware store. As the competition came in and opened the “Super stores,” our business

declined.

Thorough market analysis revealed that on 100 items we would be competitive on

most of them; however, the customer perceived Ace to more expensive. Due to strategic

pricing structures some stores lead consumers to believe every item they offer is cheaper.

Ace focused on creating a competitive advantage through cleaner stores and by

offering efficient and helpful staff. This brought customers back. Customers found they

would rather go to smaller friendlier stores such as Ace who have competent and helpful staff
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than fight parking and crowds at larger discount retailers. As the customers return, they are

finding the pricing to be in line

Internal and External Forces of J P Morgan Chase Bank

Organizational Mission

The company’s mission is to create an exceptional relationship with its clients,

employees, and investors by delivering integrated capabilities. This mission is the

foundation of the way we work individually and on a team. We stay focused on our

customers by meeting our requirements. Manager’s track performance using unit surveys,

performance reports, and employee polls recorded at random intervals, forcing compliance.

Managers monitor phone calls to evaluate our job performance.

Restructuring

Transformational changes occur during reorganization that alters organizational

behavior. Changes begin at higher levels and filter down. Employees are uneasy with every

memo in part by the changes in the company, how this might affect their lives, and careers.

Stress causes increased absenteeism in the form of leaves of absences. Grapevine

communications whisper and gossip daily in the lunch and break rooms. Downsizing has cut

jobs and employees turn to their managers for answers with nothing concrete to relieve our

concerns. Workloads increased without additional compensation and management responds

that we are making ourselves more marketable in order to retain current jobs. Feelings of

despair and un-appreciation form in the minds of the employees causing performance issues.

Competition and Customer Demands

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JPMorgan Chase Bank is both an investing and banking firm. This advantage gains

potential clients to do both their investing and banking under one financial umbrella. Product

offerings and company policies fluctuate regularly due to market demands.

Competition goes hand in hand with customer demands. When customers see that a

competitor is offering a product or service we are not, they begin to threaten us with their

loyalty. Customer service policies allow our staff members to empowerment in order to help

employees feel valued and to satisfy customer needs.

Internal and external of BearSoft, LLC.

Organizational mission (internal)

The corporate mission describes who we are and what we do – it defines our focus

and what is important to us. BearSoft, LLC mission is:

“Developing and maintaining leading edge technology in the areas of

imaging and secure data transmission.”
Richard Nanni, our leader follows through on this mission by instilling appropriate

personnel and educating them to manage and to focus while and bringing products to fruition

and match technology to the needs of customers

Restructuring (internal)

Restructuring an organization can consume anywhere from 6 to 18 months but can

prove to be very rewarding in many ways and well worth the effort. During restructuring

both management and the company will experience new advances. Restructuring can save

jobs, investment capital, the livelihood of the creditors, as well as confirm a new economic

value for the company. The following provides an overview of considerations when

restructuring.
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• Begin restructuring by creating and analyzing your financial picture, know the

numbers. Identify profit centers, division, and your most profitable customers.

Understand inventory and accounts receivables.

• Accumulate feedback and control reports. Talk (interview) and listen to everyone

including staff, management, present/former customers, and suppliers/former

suppliers to discover what it is you do well and what it is you need to be doing better.

• Decide what business model makes sense for your organization after analyzing

financial reports and conducting interviews. The chosen model should center on

profit centers, products, divisions, and customers and are likely to be indicative of

what you do well.

• Focus on the new business model and cut everything else. It may be necessary to cut

60 to 80 percent of employees, revenues and assets. This may be difficult but it is

also a necessary step in successful reorganization to save the company.

Our company did not actually experience a re-organization or restructuring. Our

organizer sold his stock in his old company and submitted his resignation. He then left and

started a new organization with the legal structure of a Limited Liability Corporation (LLC)

taking some of the former employees with him. The decision has proven to be a very

successful strategic planning maneuver that actually saved the jobs for many of us while

providing a new opportunity for the company to move forward under new direction without

the controls of the Board of Directors.

Economy (external), Fiscal policies (internal), Customer demands (external)

Monetary policy is a tool used by a national government to influence its domestic

policies. The term fiscal policy refers to expenditures taken to provide goods and services
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and the way expenditures are financed. Those that affect BearSoft include political cycles

and congressional leadership (or lack thereof).

Political and fiscal policies established by the current administration affect

organizations that do business with the government. BearSoft focuses on government

contracting opportunities and therefore we are a stakeholder in policies that affect

government contracting for defense spending, etc.

All organizations are affected by the economic conditions and fiscal policies of not

only the country where they are located, but also globally as in the case with competition.

Organizational fiscal policies must take into consideration the IRS method of

organization, is the company a “C” corp., “S” corp., Partnership, or LLC? Tax laws affect

the bottom line with regards to employee benefits, depreciation, rewards and incentives for

executives, and other write offs.

Other budgetary issues include strategic plans for growth in assets and timing is

essential to take the best advantage of tax laws. These budgetary issues filter down to

different departments that may be in competition for funding dollars.

Competition – external

Strategic planning for research and development entails identifying and researching

new developments and technological advances in target industries of interest. Indications of

future markets and visions for research and development include analysis of the pending

“state-of-the-art” or “cutting-edge” product developments as well an analysis of how or what

may be possible as complimentary products and services. Together with this analysis, R&D

strategic planners attempt to match current resources with the visions or possibilities.
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Fundamental research consists of the possible strategic integration of technology and

tools at the engineering level including breakthroughs or developments and how they are

interconnected. This comprises building upon the achievements and contributions of many

systems as well as identifying defining parallel projects.

Both company and project level S.W.O.T. analysis are frequently made and include

an analysis of the rivalry of competitors, product or service substitutes, the bargaining power

of both suppliers and buyers, and identifying and evaluating the attractiveness of the industry

or opportunity.

Matching resources includes all stakeholders such as current or possible investors or

funding opportunities, current level and skills of employable talent that may be readily

available and where to find the talent required, time studies for project research to launch

(project planning and management), and the final analysis of probability identifies the

possibility of successful completion of the product-to-market phase. A formal presentation is

made to the board of directors who have the final say as to what will or will not be pursued.

Continuous revisions and reconstruction of strategic plans is normal in R&D and it is

necessary for management to put in place the policies and procedures necessary to ensure

that this valuable process is not ignored or discounted for its importance. R&D plans are

only as good as the benchmarks set and the achievement of goals or identifying when a

project should be “scrapped” all together is very important to all stakeholders.

Competitors for BearSoft, LLC include NASA-Boeing, Computer Science

Corporation, DynaCorp, Grunman, and others who focus on defense contracting.

Globalization (external)
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Global managers must strive to become cosmopolitan and to develop cultural

empathy consistent with their environment. Business ethics in a global economy requires

management to identify behaviors that both the business and their employees should and

should not engage in by identifying a guidance source that goes beyond enforceable laws.

This may include hiring local or native consultants or management personnel who are

familiar with the local cultures and acceptable behaviors. Success factors for international

managers include:

• Cross-cultural sensitive and adventurous

• Business knowledge and a willingness to learn

• Courage – the ability to take risks

• Ability to motivate others and to seek and use feedback

• Personal integrity yet open to criticism

• Insight

• Commitment to success while maintaining flexibility

Communications in a global environment can be exceptionally challenging. Often

local translators bridge the gap and to help management understand how they need to

transform their own thoughts and actions about the work environment in order to gain the

respect and cooperation of the local workforce as well as to motivate staff.

Minimizing management layers can help retain the influence of directives resulting in

more communications that are efficient and hence, better planning and control production

processes.

Richard Nanni is the CEO of BearSoft, LLC, a research, and development company

specializing in advanced imaging, encryption and compression, and secure data transmission
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technology and software development. His current responsibility is to managing 62

employees in 12 different countries. Four group managers track projects in progress and act

in the advisory capacity.

Internal & External Forces on the U.S. Navy

Organization Mission

The primary mission of the Navy is to maintain, train, and equip combat-ready

naval forces capable of winning wars, deterring aggression and maintaining freedom of the

seas.

The Navy’s mission is taught on a daily basis for eight weeks at Naval Recruit

Training Center, Great Lakes, Illinois. During the same time the Navy’s core values are

taught which are Honor, Courage, and Commitment.

• Honor- "I will bear true faith and allegiance ..."

• Courage- "I will support and defend ..."

• Commitment- "I will obey the orders ..."

The Navy is full of old traditions and values which express the tone of the Navy

today. The Navy’s core values are open-ended so that you can insert what you might be

doing at that time and self-evaluate to see if you are following core values.

Between the Navy’s mission and core value, a new sailor can understand that they

are a part of a team that has over 300,000 members and what they do during training effects

what happens in battle.

Fiscal Policies

Every organization in the world has fiscal policies that are governed by a corporate

office. In the Navy the types of restraints that come up during the fiscal year have to do with
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funding. Usually there is not enough money for procurement, proper maintenance, or fuel of

tactical missions. The difference between a corporation and the Navy is that the funding for

the military has to come from the years past review of the annual budget and approval by

congress.

October of 2003 is the start of the new fiscal year for the military. For the 2003-

2004 fiscal year budget the amount of money set aside for the Department of Defense was

379 billion dollars. That figure is the largest budget increase since World War II. If the

threat to terrorism did not exist, I believe that the budget would be the same as is was when

the previous administration was in office.

The billions of dollars to be set aside go to all of the branches of the military with

each branch receiving according to needs. Surplus funds are icing on the cake.

As the President and Congress decide what the Department of Defense needs, many

projects come to a halt due to lack of funding. This does not affect the military directly but if

the government decided that they are going to pump up the war machine as they have done,

the uncompleted projects become waste causing extra expenditures.

Competition

The competition that the Navy faces is not the same as a business corporation might

face. The competition is real, life endangering, and to the present within the moment.

To stay ahead of the competition or adversary the Navy makes it a point to train

harder and longer, so that actions are precise and calculated. One of the Navy’s motto is,

“the more we train in peace time, the less we bleed in wartime” is a great example of how

much training has to do with the success of the Navy.

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The competition that the Navy faces on a day-to-day basis is new technology

designed to seek and destroy ships from a long range. As the war draws on, the scare of

something happening can become a reality. Staying ahead of the game helps the Navy

combat this problem.

The Navy’s direct competition right now is the countries that support terrorist acts.

No country in the world can provide the assistance that the Unites States Navy can provide.

Whether the enemy is 10,000 miles away or if it is a long the shores, the Navy will be there

to protect and defend.

Summary

With all the different organizations covered in this review, we can see the major types

of forces that impact organizational behavior whether within confides of a building or on a

global scale. The one thing that can remain a constant is the hard work from a dedicated

workforce and management staff that is both flexible and well trained in leadership.