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THE ENVIRONMENT

Knowing what the various components of the environment is important to the manager,
as it affects managers through the degree of environmental uncertainty and the various
stakeholder relationships that exist.
Environmental uncertainty is determined by two dimensions:
1. Degree of change, and
2. Degree of complexity in the organizations environment.
A dynamic environment is one where the components change frequently.
A stable environment is one where change is minimal; this may include no new
competitors, or advancement in technology, or even pressure groups influencing the
organization.
The degree of complexity refers to the number of components in an organizations
environment and the extent of knowledge about the components.
Complexity is also measured in terms of the knowledge an organization needs to have
about its environment.
Stakeholders are any constituency in the environment that is affected by an organizations
decisions and policies and that can influence the organization.
Stakeholder groups include: employees, unions, shareholders, communities, suppliers,
media, government, competitors, customers and , action groups
EXTERNAL ENVIRONMENT
The external environment includes all elements outside the organization that could affect
it - forces and institutions that potentially can affect the organizations performance.
The organization must adapt to the organizational environment, which includes
competitors, resources, technology, and economic conditions.
This environment is divided into two layers: the task and general environments.
GENERAL ENVIRONMENT
The general environment has indirect impact on the organization.
The general environment also referred to as the macro-environment includes the external
factors, such as inflation and demographics, that usually affect indirectly all or most
organizations.

Some of the forces in the general environment are: International, Technological,


Sociocultural, Economic, and Legal/Political.

INTERNATIONAL DIMENSION
The international dimension is that portion of the environment that represents events
originating in foreign countries as well as opportunities for Guyanese companies in other
countries.
It provides a context that influences all other aspects of the external environment, as
todays businesses operate in an increasingly borderless world.
Changes in the international domain can abruptly turn the domestic environment upside
down. It also represents an ever-changing and uneven playing field.

TECHNOLOGICAL DIMENSION
The dimension of the general environment that includes scientific and technological
advancements in the industry and society at large.
SOCIOCULTURAL DIMENSION
This dimension represents the demographic characteristics, norms, customs, and values
of the population within which the organization operates.
-Also geographical distribution, age, education levels, and population density are
important characteristics, which can impact workforce and consumers.
ECONOMIC DIMENSION
-This dimension represents the overall economic health of the country or region in which
the organization functions.
-Consumers purchasing power, unemployment rate, and interest rates are part of an
organizations economic environment.
-LEGAL-POLITICAL DIMENSION
-This dimension includes central, regional and local government regulations and political
activities designed to control company behaviour.
TASK ENVIRONMENT
-This is the layer of the external environment that directly influences the organizations
operations and performance.

-Some of the elements of this environment include: Customers, Labour market,


Competitors, and Suppliers.
-The sectors in this environment conduct day-to-day transactions with the organization
TASK ENVIRONMENT
-Customers are people and organizations who acquire goods or services from the
organization.
Competitors are other organizations in the same industry or type of business that provides
goods or services to the same set of customers.
-Suppliers are people and organizations who provide the raw materials the organization
uses to produce its output.
-The labour market are the people available for hire by the organization.
INTERNAL ENVIRONMENT
-The Internal Environment is the boundaries within which the organization operates and
consists of elements such as Employees, Management, and Culture.
MANAGING IN A GLOBAL ENVIRONMENT requires an understanding of the foreign
assignment including the sociocultural environment such as the social values, power
distance, uncertainty avoidance, individualism as against collectivism, and masculinity
and femininity.
SOCIAL VALUES
-Power distance the degree to which people accept inequality in power among
institutions , organizations, and people.
-Uncertainty avoidance a value characterised by peoples intolerance for uncertainty
and ambiguity and resulting support for beliefs that promise certainty and conformity.
-Individualism a preference for loosely knit social framework in which individuals are
expected to take care of themselves.
SOCIAL VALUES
-Collectivism A preference for a tightly knit social framework in which individuals look
after one another and organizations protect their members interest.
-Masculinity A culture preference for achievement, heroism, assertiveness, work
centrality, and material success.
-Femininity A cultural preference for cooperation, group decision-making, and quality
of life.

MANAGING CROSS-CULTURALLY
-Some of the challenges that Global managers are likely to face include leading, decision
making, motivating, and controlling.
ETHICS
-The code of moral principles and values that govern the behaviours of a person or group
with respect to what is right or wrong.
-Ethics fall between the domains of codified law and free choice, and have no specific
law but based on shared principles and values about moral conduct.
-An ethically acceptable decision is both legally and morally acceptable to the larger
community
-One should not conclude that if it is not illegal, it must be ethical.
-Ethical dilemma is a situation that arises when all alternative choices or behaviour have
been deemed undesirable because of potentially negative ethical consequences, making it
difficult to distinguish right from wrong.
-Most ethical dilemmas involve a conflict between the needs of the part and the whole
the individual versus the organization or the organization versus society as a whole.
ETHICAL DECISION MAKING
-Several approaches can be used to guide ethical decision making:
-Utilitarian approach
-Individualism approach
-Moral-rights approach
-Justice approach
APPROACHES
-Utilitarian approach holds that moral behaviour produces the greatest good for the
greatest number.
-The individualism approach contends that acts are moral when they promote the
individuals best long-term interest, which ultimately leads to the greater good.
People learn to compromise or accommodate each other, which leads to honesty and
integrity because that works best in the long run.
-Moral rights approach asserts that moral decisions are those that best maintain the
rights of those people affected by them..

-Ethically correct decisions are based on the rights of those people affected by them: the
right of free consent , the right to privacy, the right of freedom of conscience, the right of
free speech, the right to due process, and the right to life and safety.
-Justice approach holds that moral decisions must be based on standards of equity ,
fairness, and impartiality.
-Three types of justice are necessary for decision making by a manager, distributive,
procedural, and compensatory.
-Distributive justice requires that different treatment of people should not be based on
arbitrary characteristics. In the case of substantive differences, people should be treated
differently in proportion to the differences among them.
-Procedural justice requires that rules be administered fairly. They should be clearly
stated and consistently and impartially enforced.
-Compensatory justice argues that individuals should be compensated for the cost of their
injuries by the party responsible and also that individuals should not be held responsible
for matters over which they have no control.
ETHICAL DILEMMAS
-Common rationalizations that are sometimes used to help justify actual or potential
misconduct.
-Pretending the behaviour is not really unethical or illegal.
-Excusing the behaviour by saying its really in the organizations or your best interest.
-Assuming the behaviour is okay because no one else is expected to find out about it.
-Presuming your superiors will support and protect you if anything should go wrong.

FACTORS AFFECTING ETHICAL CHOICES


-The managers personality and behavioural traits, as well his or her value system
contribute to ethical decisions.
-Personality characteristics such as ego strength, self-confidence, and a strong sense of
independence are important for the manager when it comes to ethical decisions.
-A managers value system is shaped by personal needs, family influence and religious
background.

-An important personality trait is the stage of moral development, which can be broken
down into three levels: preconventional, conventional, and postconventional the highest
level.
-At the preconventional level individuals are concerned with external rewards and
punishments and obey authority to avoid detrimental personal consequences.
FACTORS AFFECTING ETHICAL CHOICES
At the conventional level people learn to conform to the expectations of good behaviour
as defined by colleagues, family, friends, and society.
At the postconventional level individuals are guided by an internal set of values and
standards and will even disobey rules and laws that violate these principles.
Internal values become more important than the expectations of significant others.
-From an organizational perspective corporate culture can exert a powerful influence on
behaviour in the organization.
-Other aspects of the organization such as explicit rules and policies, the reward system,
the extent to which the company cares for its people, the selection system, emphasis on
legal and professional standards, can also have an impact on ethical values and decision
making.
HOW TO DEAL WITH ETHICAL DILEMMAS
-Recognize and clarify the dilemma.
-Get all the possible facts.
-List all of your options.
-Test each option by asking Is it Legal? Is it right? Is it beneficial?
-Make decision
-Double check your decision by asking How will I feel if my family finds out? How
will I feel if this is printed in the newspaper?
-Then, and only then, take action.
SOCIAL RESPONSIBILITY
-The obligation of organization management to make decisions and take actions that will
enhance the welfare and interests of society as well as the organization.
-Stakeholder any group within or outside the organization that has a stake in the
organizations performance.
-Social responsibility include economic, legal, ethical, and discretionary responsibilities.

-A business responsibility is to produce the goods and services that society wants and to
maximize profits for its owners and shareholders. Economic responsibility carried to the
extreme is called the profit maximizing view.
-Legal responsibility defines what society deems as important with respect to appropriate
corporate behavior. Businesses are expected to fulfill their economic goals within the
legal framework.
-Ethical responsibility includes behaviour that is not necessarily codified into law and
may not serve the corporations direct economic interest. To be ethical, organization
decision makers should act with equity, fairness, and impartiality, and also respect the
rights of individuals.
-Unethical behaviour occurs when decisions enable an individual or company to gain at
the expense of society.
-Discretionary responsibility is voluntary and guided by the organizations desire to make
social contributions not mandated by economics, law, or society.
-It includes philanthropic contributions that offer no payback to the company and are not
expected.
-This is the highest criterion of social responsibility, because it goes beyond societal
expectations to contribute to the communitys welfare.
CORPORATE ACTIONS
-Obstructive response to social demands in which the organization denies responsibility,
claims that evidence of misconduct is misleading or distorted, and attempts to obstruct
investigation.
-Defensive response to social demands in which the organization admits to some errors of
commission or omission but does not act obstructively.
-Accommodative response to social demands in which the organization accepts often
under pressure social responsibility for its actions to comply with the public interest.
-Proactive response to social demands in which the organization seeks to learn what is in
its constituencies interest and to respond without pressure from them.
MANAGING COMPANY ETHICS AND SOCIAL RESPONSIBILITY

-Management can assist organizations to be more responsible through leadership by


example, codes of ethics, ethical structures, and supporting whistle-blowers.
-Managers need to be openly and strongly committed to ethical conduct. They must give
constant leadership in renewing the ethical values of the organization.
-A code of ethics is a formal statement of the organizations values regarding ethics and
social issues. They exist in two forms: principle-based statements, and policy-based
statements.
-Principle-based statements are designed to affect corporate culture; they define
fundament values and contain general language about company responsibilities, quality
of products, and treatment of employees.