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CHAPTER 3 The Environment and Culture of Organizations END OF CHAPTER QUESTIONS Questions for Review 1. Consider the three environments of a firm. Which of the environments has the most direct and immediate impact on the firm? Which of the environments has a more diffuse and delayed impact? Explain. The internal environment, because it consists of various groups within the organization, has the most direct and immediate impact on the firm. The task environment consists of those who interact closely with the firm, such as customers and suppliers, and therefore, has a fairly direct impact on the firm. The general environment has the most diffuse and delayed impact. It consists of trends and events that are impacting all firms, not just one particular firm. 2. Describe the organization’s general environment. For each dimension, give at least one specific example, other than the examples mentioned in your text. The general environment has five dimensions. The international dimension includes events such as the formation and expansion of the European Union. The technological dimension refers to innovative products, such as robotics. The political-legal dimension consists of events such as the change of leadership in Congress from Republican to Democratic. The sociocultural dimension is made up of trends such as the increasing patriotism of many Americans. The economic dimension reflects events and trends including the sharp decline in the value of the U.S. stock market. 3. What are the major forces that affect organization-environment relationships? Describe those factors. Environmental factors that affect an organization include the degree of uncertainty that exists (as defined by the degree of change and the degree of homogeneity), Porter’s five competitive forces, and environmental turbulence. 4. Describe the four approaches to organizational effectiveness. Give a specific example of something that a company should measure in order to evaluate its effectiveness under each approach. The systems resource approach concentrates on the successful acquisition of raw materials and other inputs. Under this approach, a firm should measure, for example, the price it pays for inputs relative to its competitors. The internal process approach focuses on efficient and problem-free operations. Firms using this approach should measure waste from production operations, among other things. The goal approach asserts that firms that meet their goals are effective. Thus, firms using the goal approach should state measurable goals and then assess the extent to which those goals were reached. The strategic constituencies approach equates effectiveness with satisfied stakeholders. This approach requires that firms measure satisfaction of the various stakeholder groups. Questions for Analysis 5. Elements from the general environment affect all organizations, but they may not affect all organizations in the same way. Choose an industry and discuss the impact of at least two different elements from the general environment on firms in that industry. Are all firms affected equally? Explain. Students’ answers will depend on the industry they choose. Here’s an example answer: “In the auto manufacturing industry, the aging of the population (a sociocultural trend) has resulted in a move away from inexpensive, small, and sporty models towards larger, more conservative designs that include many safety, comfort, and luxury features. However, some auto makers are focusing on the desire to appear more youthful that some aging drivers feel. These manufacturers’ designs provide a sporty, young look and driving experience, while still offering luxury features.” 6. Which of the firm’s environments is most readily changed by the firm? Which of the firm’s environments is least amenable to change by the firm? How does this influence the actions that firms take? Firms have the most control over the internal environment, some degree of control over the task environment, and little ability to impact the general environment. Therefore, when a firm is faced with the necessity of change, they most often change factors in the internal environment, such as their workforce, governance, facilities, finances, or culture. Firms will also at times work to change their task environment, such as when companies attempt to influence customers through the use of advertising. Firms do attempt to change their general environment through political lobbying, for example. However, these efforts often receive a relatively small share of resources because the outcomes are so uncertain. Questions for Application 7. Go to Hoover’s Online at www.hoovers.com. Enter a company name in the Search boxes. When that company’s profile is shown, go to “Top Competitors.” Here you can learn who the firm’s top competitors are. Were you surprised by the list? How do you think Hoover’s determines the list? If, for example, a student searched for the competitors for Boeing, Hoover’s Online would identify Airbus and Lockheed Martin. For the most part, students should not be too surprised–they typically will recognize and understand the logic behind the list of competitors. Among other things, Hoover’s uses NAICS codes (the updated version of the SIC codes) to choose competitors. If students are unaware of NAICS codes, you can educate them. One good source for information about NAICS is at the U.S. Census Department, which creates the codes. Students can begin at the web site http://www.census.gov/epcd/www/naics.html. 8. Go to the library or online and research a company. Characterize its level of effectiveness according to each of the four basic models. Share your results with the class. However, I guide you on how to conduct such research and provide general examples of how different companies might fit into each of the four basic models of organizational effectiveness. 1. Rational Goal Model : In this model, effectiveness is measured by how well an organization achieves its stated goals and objectives in a rational and logical manner. Companies that closely adhere to this model focus on setting clear objectives, developing detailed plans, and systematically executing strategies to accomplish those goals. For example, a company like Google, known for its data-driven approach and focus on innovation, could be considered to align with the rational goal model if it consistently meets its targets for product development, market share growth, and financial performance. 2. Internal Process Model : Organizations following this model prioritize efficiency, internal coordination, and smooth operations as indicators of effectiveness. They emphasize factors such as internal communication, resource allocation, and adherence to quality standards. An example could be Toyota, famous for its Toyota Production System (TPS), which emphasizes continuous improvement, waste reduction, and standardization of processes to achieve operational excellence. 3. Human Relations Model : Effectiveness in this model is determined by the extent to which an organization fosters positive relationships, employee satisfaction, and a supportive work environment. Companies that prioritize employee well-being, engagement, and development would fit into this category. For instance, companies like Zappos, known for their strong company culture, emphasis on employee happiness, and unique management practices, could be considered aligned with the human relations model. 4. Open Systems Model : This model views effectiveness in terms of how well an organization interacts with its external environment, adapts to changes, and learns from feedback. Organizations following this model are flexible, responsive, and proactive in addressing external challenges and opportunities. An example could be Amazon, known for its customer-centric approach, rapid expansion into new markets, and continuous innovation in response to changing consumer preferences and market dynamics. When characterizing a company's level of effectiveness according to each model, it's essential to consider various factors such as organizational structure, culture, leadership style, and performance metrics. Additionally, conducting in-depth research, analyzing financial reports, employee reviews, and industry benchmarks can provide valuable insights into how well a company aligns with each effectiveness model. 9. Interview a manager from a local organization about his or her organization’s internal environment, including owners, directors, employees, the physical work environment, and the organization culture. How do these various elements interact? Answers should include some information about every aspect of the internal environment. Students will find that elements of the internal environment have significant interactions. For example, if the organization begins to hire more young employees (a change in the workforce), then it may experience a change in its organizational culture. It may also have to change its training, compensation, physical layout, products, and processes. 10. Consider an organization with which you are familiar. Outline its environments in detail. Then provide specific examples to illustrate how each dimension affects your organization. Sure, let's consider a fictional technology company called "Tech Innovate" that I'll use as an example. Here's an outline of its environments and how each dimension affects the organization: 1. Internal Environment : • Culture : Tech Innovate fosters a culture of innovation, collaboration, and continuous learning. This encourages employees to think creatively, share ideas, and take calculated risks. • Structure : The company has a flat organizational structure with cross-functional teams, enabling quick decision-making and efficient communication. • Resources : Tech Innovate invests heavily in research and development, providing employees with access to cutting-edge technologies and resources to fuel innovation. • Leadership : The leadership team emphasizes transparency, empowerment, and accountability, setting a tone of trust and respect throughout the organization. 2. Task Environment : • Customers : Tech Innovate's customers include both individual consumers and businesses seeking innovative technology solutions. Understanding customer needs and preferences is crucial for product development and marketing strategies. • Competitors : The technology industry is highly competitive, with rivals constantly launching new products and services. Tech Innovate closely monitors competitor actions and strives to differentiate itself through superior quality, features, and customer service. • Suppliers : The company relies on suppliers for components, raw materials, and software licenses. Maintaining strong relationships with reliable suppliers is essential to ensure a steady supply chain and timely product launches. 3. Industry Environment : • Regulatory Factors : Tech Innovate operates in an industry subject to various regulations, such as data privacy laws, intellectual property rights, and industry standards. Compliance with these regulations is critical to avoid legal issues and protect the company's reputation. • Technological Trends : Rapid advancements in technology drive innovation and shape consumer preferences. Tech Innovate closely tracks emerging technologies, such as artificial intelligence, cloud computing, and Internet of Things, to stay ahead of market trends and maintain its competitive edge. • Market Demand : Changes in consumer behavior and market demand influence product development and marketing strategies. Tech Innovate conducts market research and gathers customer feedback to identify emerging trends and opportunities. 4. General Environment : • Economic Conditions : Fluctuations in the economy impact consumer purchasing power and business investments. During economic downturns, Tech Innovate may experience reduced demand for its premium products, leading to adjustments in pricing and marketing strategies. • Social and Cultural Factors : Social trends, cultural norms, and demographic shifts influence consumer preferences and market dynamics. For example, increasing concerns about sustainability and environmental responsibility may drive demand for eco-friendly technology products. • Political Factors : Political stability, government policies, and international relations can affect business operations and trade relations. Tech Innovate monitors geopolitical developments and regulatory changes to mitigate potential risks and capitalize on new opportunities. By considering each dimension of the environment, Tech Innovate can better understand the opportunities and challenges it faces and adapt its strategies accordingly to thrive in a dynamic and competitive industry landscape. END OF CHAPTER EXERCISES Building Effective Time Management Skills I. Purpose This exercise is designed to help students develop their understanding of time-management skills by asking them to think about the types of tasks that a typical manager would face and then assign priorities to those tasks. II. Format This exercise, focusing on time-management skills, is designed to include both individual and group activities. This exercise should be worked individually by students, and then their answers should be shared with a small group or with the whole class. The entire exercise should take about 20 to 30 minutes. III. Follow-Up There are no follow-up questions for this exercise, but students could be asked to describe what factors they considered as they prioritized items. If any disagreement arose within the group about the priorities, students should discuss the reasons for the disagreement. Building Effective Communication Skills I. Purpose This exercise assigns students the difficult—but realistic—task of persuading a superior that his or her ideas may be inadequate. The task requires students to justify the need to gather more information about the customer segment of the environment. II. Format This exercise is best done outside of class by individual students, and it requires about 20–30 minutes. III. Follow-Up A. Go back to your office (or your dorm room, the library, or your kitchen table) and compose a written proposal for your boss in which you outline your position on developing a customer needs survey. Be sure that your proposal accomplishes two goals: (1) it emphasizes your fundamental concern – namely, that in order to provide products that meet customer needs, the marketing department must better understand what those needs are; and (2) it communicates some good reasons why the marketing department should follow through on your proposal. (Hint: Telling him bluntly that he’s wrong is unlikely to be effective.) [Your Name] [Your Position] [Company Name] [Date] [Boss's Name] [Boss's Position] [Company Name] Subject: Proposal for Developing a Customer Needs Survey Dear [Boss's Name], I hope this message finds you well. I am writing to propose the development of a comprehensive customer needs survey as a strategic initiative for our marketing department. As we continue to innovate and enhance our product offerings, it is imperative that we have a deep understanding of our customers' needs and preferences to ensure our products align closely with their expectations. Fundamentally, my concern is centered on the vital importance of customer-centricity in our approach to product development and marketing strategies. By gaining insights directly from our customers through a well-designed survey, we can bridge the gap between their expectations and our offerings, ultimately leading to higher customer satisfaction, loyalty, and business success. I believe there are several compelling reasons to support the implementation of a customer needs survey: 1. Enhancing Product Development: Understanding customer needs allows us to tailor our product features, functionalities, and design to better meet their requirements. By collecting feedback on what features are most valued and what improvements are desired, we can prioritize product development efforts more effectively. 2. Improving Marketing Strategies: A deeper understanding of customer preferences enables us to refine our marketing messages, channels, and targeting strategies. By aligning our marketing efforts with customer needs, we can create more compelling campaigns that resonate with our target audience and drive higher engagement and conversion rates. 3. Strengthening Customer Relationships: Actively seeking input from customers demonstrates our commitment to their satisfaction and fosters a sense of partnership and loyalty. By engaging customers in the survey process and acknowledging their feedback, we can strengthen our relationships and build long-term customer trust and advocacy. 4. Gaining Competitive Advantage: In today's competitive landscape, companies that truly understand and anticipate customer needs have a distinct advantage. By conducting a comprehensive survey, we can identify areas where we excel compared to competitors and areas where we have opportunities to differentiate and innovate. 5. Data-Driven Decision Making: A customer needs survey provides us with valuable data and insights that can inform strategic decision-making across the organization. From product roadmap planning to pricing strategies to customer service improvements, having robust customer data enables us to make informed decisions that drive business growth and profitability. In light of these benefits, I propose that we allocate resources and expertise to develop and implement a customer needs survey in the coming months. This initiative aligns with our overarching goal of delivering exceptional value to our customers and maintaining our position as a market leader in [industry/sector]. I am confident that by investing in understanding and addressing customer needs, we can drive sustainable growth and create lasting value for both our customers and our company. Thank you for considering this proposal. I am available to discuss this initiative further and provide additional details as needed. Sincerely, [Your Name] B. Now review what you’ve written. Do you think your boss will change his mind? If yes, which of your reasons is most likely to persuade him? If no, what might be your next move in trying to get your proposal a fair hearing from management Upon reviewing the proposal, it seems well-structured and presents strong arguments for the implementation of a customer needs survey. Whether or not the boss will change their mind depends on various factors, including their receptiveness to new ideas, budget constraints, and organizational priorities. If the boss is open to persuasion, the most compelling reason to implement the survey might be the potential for gaining a competitive advantage. Demonstrating how understanding and meeting customer needs can differentiate the company from competitors and drive long-term success could resonate strongly with management focused on growth and market leadership. However, if the boss remains unconvinced, the next move could involve gathering additional supporting evidence and building a stronger case for the proposal. This might include: 1. Conducting a Cost-Benefit Analysis: Quantifying the potential return on investment (ROI) of the survey initiative by estimating the costs associated with implementation against the anticipated benefits, such as increased revenue, customer retention, and market share.2. Providing Case Studies or Industry Examples: Sharing success stories or examples from other companies in the industry that have implemented similar customer needs surveys and achieved positive outcomes can help illustrate the potential impact and feasibility of the proposal. 3. Seeking Support from Key Stakeholders: Engaging with other department heads or influential stakeholders who recognize the importance of customer-centric strategies and can advocate for the proposal during discussions or meetings with management. 4. Offering a Pilot Program: Proposing a smaller-scale pilot program to test the effectiveness of the survey approach and demonstrate its value before committing to a larger-scale implementation. This allows management to assess the potential benefits with minimal risk. 5. Addressing Concerns and Mitigating Risks: Proactively addressing any concerns or objections raised by management, such as resource constraints or implementation challenges, and proposing strategies to mitigate risks and ensure the success of the initiative. By refining the proposal based on feedback, gathering additional evidence, and engaging with key stakeholders, there may be opportunities to garner support and ultimately achieve buy-in for the customer needs survey initiative from management. management at work GOLDMAN SACHS BANKS ON CULTURAL CAPITAL Goldman Sachs, one of America’s largest investment banks, survived and prospered during the recent sub-prime mortgage crisis. It was one of a few financial services firms that did so. Its culture – that fostered aggressiveness and team work, among others – and its flat organizational structure are cited as the main reasons for its continued dominance. Update: For the fiscal year 2010, Goldman Sachs reported revenues of $39.16 billion and a net income of $7.71 billion. Its market capitalization in late August 2011 was $57.4 billion. 1. Case Question 1: What forces in Goldman Sach’s external environment have accounted most for “fortunes of fate” that the company – indeed, the investment banking industry – has experienced since 2008? The current global economic crisis has not left Goldman Sachs unaffected. It had to change from an investment bank to a holding company bank, which means it is subject to greater regulator scrutiny. Also, its profitability (in terms of margins) has also declined and like many other companies, it had to layoff nearly 10 percent of its workforce. 2. Case Question 2: Explain the roles of Goldman’s partners, both as owners and as employees, in forming and managing its internal environment. While Goldman Sachs is a publicly owned company, its partners manage the company. Partners invest their own money in the firm along with those of outsiders and so manage for the long-term. As partners invest their own money in the firm, senior executives tend to value the difference between high-risk investing and overly risky adventuring. Since a Goldman Sachs partnership is extremely valuable, employees work in a highly competitive internal environment. 3. Case Question 3: Which models of organizational effectiveness are evident in Goldman’s approach to management? The four types of organizational effectiveness described in the text are: the systems resource approach, the internal processes approach, the goal approach, and the strategic constituencies approach. Perhaps, more than the other, Goldman Sachs illustrates the goal approach and the strategic constituencies approach to organizational effectiveness. The organization makes its goals very clear and everyone is expected to work toward the organization’s goal. Similarly, the organization pays attention to its strategic constituencies – its partners and its employees, in particular. 4. Case Question 4: In 2008, citing Goldman as one of the “Top 20 Most admired Companies” in the United States, Fortune magazine characterized the firm’s culture as “an impossible-to-replicate mix of extreme aggression, deep paranoia, individual ambition, and robot-like teamwork.” Judging from our case, how valid do you regard this characterization? If you were a top manager at Goldman, how would you deal with the apparent conflict between “individual ambition” and “robot-like teamwork”? The characterization is valid because as Lisa Endlich, a former employee, says, the climb to partnership at Goldman Sachs is “one of the steepest and most challenging corporate climbs.” Doing good work doesn’t get the person anywhere, doing great work gets you noticed but you have to compete with other motivated individuals to climb up the organizational ladder. Individual ambition and teamwork appear to be contradictory and the way to deal with it is to always keep in mind that the organization’s goals supersede individual goals. CHAPTER 4 The Ethical and Social Environment END OF CHAPTER QUESTIONS Questions for Review 4. Define ethical and unethical behavior. Give three specific examples of ethical behavior and three specific examples of unethical behavior. Ethical behavior conforms to generally accepted social norms, while unethical behavior does not. Ethical behavior would include actions such as accepting responsibility for mistakes, telling the truth, and putting the needs of others ahead of one’s own needs. Unethical behavior includes stealing, lying, and winning by cheating. Point out to students, however, that ethics are dependent, by definition, on society’s norms. Ethics are also relative for most individuals. For example, lying may be justified if the lie is a “white lie” told to spare a friend’s feelings. 5. Summarize the basic stances that an organization can take regarding social responsibility. The four stances, in order of increasing positive social responsibility, are the obstructionist, the defensive, the accommodative, and the proactive. 6. Who are the important stakeholders of your college or university? What does each stakeholder group get from the school? What does each give to the school? Stakeholders at most universities would include students, students’ families, professors, staff, unions that represent employees, the school’s ruling body (a state, a church, etc.), regulatory agencies, creditors, and suppliers. For example, students contribute money; their effort, creativity and loyalty; and feedback to their school. In exchange, they expect items such as educational services, value for their money, a diploma, and help in finding employment. 7. Describe the formal and informal dimensions of social responsibility. Formal dimensions of social responsibility include legal compliance—adherence to laws; ethical compliance—adherence to ethical standards of behavior; and philanthropic giving—voluntary contributions to causes and organizations that benefit society. The informal dimensions are organization leadership and culture—a role model set at the highest levels of the organization, and whistle-blowing—public disclosure of an organization’s unethical actions. Questions for Analysis 5. What is the relationship between the law and ethical behavior? Can illegal behavior possibly be ethical? Organizations can act legally but not ethically. Individuals can act in what they feel is an ethical manner while also breaking the law. Some individuals try to block abortion clinics in an effort to stop actions that they believe are harmful. In their eyes, these protests are ethical, but to the police, who may arrest them for trespassing, the protests are illegal. 6. Where do organizational ethics come from? Describe the contributions made by the organization’s founder, managers, and workers as well as laws and social norms. Which do you think is most influential? Why? An organization’s founder sets the tone for the organization’s ethics, just as they establish the foundation of many other areas of culture. Managers, by their behavior, serve as role models for employees. Managers can also create policies or practices that impact ethics. Workers, by their compliance, either support or undermine the ethical or unethical actions of others. Students will have various opinions about the impact of each of these groups on ethics. A founder establishes the initial ethical position of the firm, which can endure for a long time. Managers are also influential, as policy makers and role models. Workers, because they are carrying out the activities of the organization, can have a very significant impact too. 7. There are many worthy causes or programs that deserve support from socially responsible companies. In your opinion, which types of causes or programs are the most deserving? Explain your reasoning. Determining which causes or programs are the most deserving of support from socially responsible companies can be subjective and depends on various factors, including the company's values, industry, and stakeholders. However, several types of causes or programs are commonly regarded as worthy of support due to their broad societal impact and alignment with principles of social responsibility: 1. Environmental Conservation and Sustainability : Given the urgency of climate change and environmental degradation, causes focused on conservation, sustainability, and combating pollution are widely considered deserving of support. Companies can contribute to initiatives such as reforestation efforts, clean energy projects, waste reduction programs, and sustainable supply chain practices to minimize their environmental footprint and preserve natural resources for future generations. 2. Social Justice and Human Rights : Causes that promote social justice, equality, and human rights are often seen as deserving of support, especially in addressing systemic inequalities and advancing marginalized communities' rights and opportunities. Companies can advocate for initiatives such as racial justice, gender equality, LGBTQ+ rights, and access to education, healthcare, and economic opportunities to foster a more inclusive and equitable society. 3. Community Development and Empowerment : Supporting programs that contribute to community development, economic empowerment, and poverty alleviation can have a significant positive impact on local communities and address socio-economic disparities. Companies can invest in initiatives such as job training programs, small business development, affordable housing projects, and community infrastructure improvements to enhance the well-being and resilience of communities where they operate. 4. Education and Skill Development : Investing in education and skill development initiatives is crucial for fostering individual growth, economic mobility, and societal progress. Companies can support programs that provide access to quality education, vocational training, and lifelong learning opportunities, particularly for underserved populations and disadvantaged youth, to equip them with the knowledge and skills needed to thrive in the 21st-century economy. 5. Health and Wellness : Promoting health and wellness initiatives can contribute to improving public health outcomes, reducing healthcare disparities, and enhancing overall well-being. Companies can support programs focused on disease prevention, access to healthcare services, mental health awareness, nutrition education, and promoting healthy lifestyles to empower individuals and communities to lead healthier lives. Ultimately, the most deserving causes or programs for socially responsible companies to support are those that align with their values, mission, and stakeholders' interests while addressing pressing societal challenges and making a meaningful difference in people's lives and the planet. By strategically selecting and actively supporting causes that reflect their commitment to social responsibility, companies can demonstrate authentic leadership and contribute to building a more sustainable, equitable, and prosperous world. Questions for Application 8. Since 2000, a number of corporate scandals have been brought to light. Many organizations have responded by, for example, appointing a chief ethics officer, beginning an ethics training program for workers, writing a formal code of ethics, or setting up a hotline for whistleblowers. In your opinion, are these measures likely to increase organizational ethics in the long run? If so, why? If not, what would be effective in improving organizational ethics? Implementing measures such as appointing a chief ethics officer, initiating ethics training programs, drafting formal codes of ethics, and establishing hotlines for whistleblowers can certainly contribute to enhancing organizational ethics in the long run. Here's why: 1. Increased Awareness : Ethics training programs and formal codes of ethics help employees understand the ethical standards expected of them. This increased awareness can lead to more ethical decision-making across the organization. 2. Accountability : Appointing a chief ethics officer and setting up hotlines for whistleblowers create mechanisms for holding individuals and the organization itself accountable for unethical behavior. Knowing that there are channels for reporting misconduct can deter unethical actions and encourage adherence to ethical standards. 3. Cultural Shift : These measures can contribute to a shift in organizational culture towards one that prioritizes ethics and integrity. When ethics are embedded into the organization's policies, procedures, and everyday practices, it becomes part of the organizational DNA. However, while these measures are valuable, they may not be sufficient on their own to ensure long-term ethical behavior within an organization. Additional steps could include: 1. Leadership Example : Leaders play a crucial role in setting the tone for ethical behavior. They must lead by example and demonstrate a commitment to ethical conduct in all their actions and decisions. 2. Ethical Decision-Making Frameworks : Providing employees with frameworks for ethical decision-making can help guide their actions when faced with difficult choices. These frameworks can clarify ethical principles and provide practical guidance on how to apply them in various situations. 3. Regular Evaluation and Improvement : Organizational ethics initiatives should be regularly evaluated to assess their effectiveness and identify areas for improvement. Feedback from employees and stakeholders can help refine these initiatives and ensure they remain relevant and impactful over time. 4. Incentives and Rewards : Recognizing and rewarding ethical behavior can reinforce its importance within the organization. Incentive structures should align with ethical values and encourage employees to act in accordance with those values. Ultimately, creating a truly ethical organizational culture requires a multifaceted approach that involves both structural measures and a commitment from all levels of the organization to uphold ethical standards in their daily actions and decisions. 9. Review the arguments for and against social responsibility. On a scale of 1 to 10, rate the validity and importance of each point. Use these ratings to develop a position regarding how socially responsible an organization should be. Now compare your ratings and position with those of two of your classmates. Discuss your respective positions, focusing primarily on disagreements. Each of the arguments should be given a value from one to ten. Based on the ratings, students should be able to develop positions about how socially responsible firms should be. Because the ratings depend on each student’s individual values and feelings, ratings should differ from student to student. The comparison portion of this question will provide an opportunity for these differences to surface. The results from the discussion of the disagreements can be shared with the class. 10. Give three specific examples of a way in which the government has influenced an organization. Then give three specific examples of a way in which an organization has influenced the government. Do you think the government’s actions were ethical? Were the company’s actions ethical? Why or why not? A sample answer could be: “OSHA regularly inspects the plants at Ford Motors to ensure worker safety. The IRS collects taxes from Ford Motors. The SEC ensures that shares of Ford Motors are sold in an ethical manner and that the company accurately reports its financial position to shareholders. Ford Motors lobbies the federal government for a reduction in pollution control requirements for automobiles. They contributed $1.8 million to federal candidates in 2002—$1.2 to Republicans and $600,000 to Democrats. (Source: http://www.opensecrets.org./) Ford cooperated in providing data to the National Highway Traffic Safety Administration as they investigated crashes related to the failure of Firestone tires installed on Ford SUVs.” Of course, students will have differing opinions about the ethics of each of these items. END OF CHAPTER EXERCISES Building Effective Diagnostic and Decision-Making Skills I. Purpose This exercise aids students in developing their diagnostic and decision-making skills in relation to an ethical business dilemma, focusing on the dilemmas posed by the online publication of music. II. Format This out-of-class exercise could be effective as an individual or as a small-group task, and it should require about 20 minutes to complete. III. Follow-Up A. Start by considering each of the stakeholders in the online music publishing industry—recording artists, recording companies, online file-sharing companies such as Napster, and consumers. Consider the kinds of ethical problems faced by the industry, and explain how each stakeholder is affected by each problem. Students will see that each of the stakeholders has a different viewpoint on the ethical problems in the music industry. Artists, for example, want to obtain fair royalties for their creative works, but they also want their music to have broad public exposure. Consumers, on the other hand, want convenient and inexpensive access to music, and they don’t want to lose their “right” to free exchange of files over the Internet. B. For each problem, determine the best outcome for each stakeholder. The “best” outcome depends on how the ethical problem is defined for each stakeholder. C. For each problem, do you see any way to satisfy the needs of every stakeholder? If yes, explain how this outcome can be brought about. If no, explain why no mutually beneficial solution is possible. Although the needs of differing parties may seem to conflict, there may be an opportunity for satisfying most or all stakeholders. For example, recording companies want profit and consumers want low costs. Yet the recording companies can profit just as much by selling more of less costly items as they can by selling fewer, more expensive items. D. In what ways did your own code of ethics influence your various answers to question 2 and your reasoning in question 3? Students should recognize that their personal ethics will always effect their approach to solving ethical dilemmas. In this exercise, students’ opinions about free speech, free markets, open access to the Internet, and the value of non-tangible goods will all impact their recommended solutions. I adhere to a code of ethics that prioritizes principles such as transparency, fairness, integrity, and respect for human rights. These principles influence the way I provide answers and reasoning to questions related to organizational ethics. In my responses to question 2, my code of ethics guides me to acknowledge the potential effectiveness of various measures in enhancing organizational ethics while also considering their limitations. I strive to provide a balanced assessment, weighing the potential benefits of actions such as appointing a chief ethics officer and implementing ethics training programs against the need for additional steps to ensure long-term ethical behavior within an organization. Regarding question 3, my code of ethics influences my reasoning by emphasizing the importance of leadership example, ethical decision-making frameworks, regular evaluation and improvement, and incentives aligned with ethical values. I prioritize suggestions that promote a comprehensive approach to fostering ethical behavior within organizations, recognizing that ethical considerations should be integrated into all aspects of organizational culture and operations. Throughout my responses, I aim to uphold the principles outlined in my code of ethics by providing thoughtful, balanced, and ethically sound insights into the topic of organizational ethics. Building Effective Interpersonal Skills I. Purpose This exercise is designed to help students develop their interpersonal skills through the analysis of a realistic ethical dilemma. II. Format This exercise is designed so that it can be done individually or in small groups, either inside or outside of class. This exercise should take between 10 and 15 minutes to complete. III. Follow-up A. Jot down some general notes for your conversation with the male employee. students should consider pointing out to the man how his behavior affects others and to try to explain why offensive remarks cannot be tolerated. It may help to draw upon the ethical principle of fairness, to show that it is not acceptable to single out one group of people in an insulting way. In order to reduce tensions, it may also help to assure the man that this incident can be “put behind them,” and that the company will forgive and forget if the incidents don’t continue. • Begin by greeting the employee warmly and establishing rapport. • Inquire about how they're doing and if they have any concerns or questions. • Address any specific topics or issues they may have mentioned previously. • Offer support or guidance on work-related matters, such as projects or tasks. • Discuss any recent updates or developments within the company or their department. • Encourage open communication and feedback on their experiences and suggestions for improvement. • Provide recognition or praise for their contributions or achievements if applicable. • Offer assistance with any challenges they may be facing and suggest potential solutions. • End the conversation on a positive note, expressing appreciation for their time and contributions to the team. B. Jot down some general notes for your conversation with the female employee. • Begin by greeting the employee warmly and showing interest in her well-being. • Create a comfortable atmosphere for open communication. • Ask about her work and if there are any projects or tasks she needs assistance with. • Inquire about her career goals and any support or resources she may need to achieve them. • Offer feedback or guidance on her work performance, if appropriate. • Discuss any recent updates or changes within the company or her department. • Encourage her to share any concerns or feedback she may have about her work environment or projects. • Provide recognition or appreciation for her contributions to the team. • Offer assistance with any challenges she may be facing and suggest potential solutions. • End the conversation by expressing gratitude for her time and contributions to the organization. C. Make sure that you have a handle on the ethical issues in this situation. Precisely what are they? On one side, the woman deserves a workplace that is free of harassment and insensitivity. This is an issue that draws together rights, justice, and caring. If the company ignores the harassing behavior, they may be legally liable if any lawsuits result, and that would not be optimal for the firm, which raises issues of utility. On the other side, in fairness (justice), the man deserves one more chance. Now that he has been warned of the serious consequences, if he again chooses the inappropriate behavior, the firm would finally have no choice but to terminate him. D. Consider the options of having the two employees work closely together or keeping them separated. Which will you choose? Why? The decision to have the two employees work closely together or keep them separated depends on various factors such as their personalities, work styles, the nature of their tasks, and the dynamics of their relationship. Here are some considerations for each option: 1. Working Closely Together: • Collaboration: If the employees have complementary skills or expertise, working together could enhance collaboration and productivity. • Synergy: Close collaboration may foster creativity and innovation as ideas are exchanged and built upon. • Team Cohesion: Working closely together can strengthen team cohesion and build a sense of camaraderie among team members. • Mentorship Opportunities: One employee may have the opportunity to mentor or support the other, fostering professional growth and development. 2. Keeping Them Separated: • Conflict Avoidance: If there is tension or conflicts between the employees, keeping them separated may prevent further issues from arising. • Focus: Separating the employees may allow them to focus better on their individual tasks without distractions or disruptions. • Minimize Disruption: If the employees have incompatible work styles or preferences, keeping them separated could minimize disruptions to their workflow. • Respect Personal Boundaries: Respecting the employees' preferences for autonomy or privacy by keeping them separated may contribute to a positive work environment. Ultimately, the decision should be made based on a careful assessment of the specific circumstances and the potential impact on both the individuals involved and the overall team dynamics. If there are clear benefits to collaboration and the employees are able to work together effectively, encouraging close collaboration may be the preferred option. However, if there are concerns about conflicts or disruptions, keeping them separated may be more appropriate to maintain a harmonious work environment. Regular communication and flexibility in adjusting the arrangement based on feedback from the employees can also help ensure a positive outcome. management at work sex, drugs, and reckless controls Minerals Management Service (MMS) is an U.S. government agency charged with collecting royalties paid by companies to extract oil and gas from public lands and also approving drilling for oil. A 2008 investigation indicated that MMS officials had gotten too cozy with oil industry executives by partying with them. As a consequence of this, U.S. taxpayers lost about $4.4 million. A revamp of the industry did not change things. A BP application for off-shore drilling in the Gulf of Mexico received approval over the phone. In light of the disastrous oil spill, the agency was disbanded. 1. Case Question 1: The section on “Managerial Ethics” highlights three sets of relationships involved in the exercise of managerial ethics – the relationship of the organization to its employees, of its employees to the firm, and of the firm to other economic agents. Explain how each of these relationships was a factor in the ethical failings of the Minerals Management service. In your opinion, which of the three was the biggest factor? Explain your answer. An organization has to set the right policies for its employees. In turn, employees have to consider the impact on the organization in terms of issues such as conflict of interest. Finally, employees and their organization have a responsibility to behave ethically toward other economic agents. The key failings in MMS were in the second and third relationships. Clearly, MMS employees saw no conflict of interest in partying with oil industry executives when their role was to monitor royalty payments from the industry. In turn, MMS employees did not fulfill their ethical obligation to protect U.S. taxpayers in ensuring that royalty payments and approvals were properly done. 2. Case Question 2: It’s too late now, but if you had been drafted to fix MMS in the wake of the BP oil spill, how would you have applied the approaches to “Managing Ethical Behavior” discussed in the text? On which of these approaches would you have focused the most time and energy? Is it likely that you’d have been successful? Why or why not? If I were drafted to fix the Minerals Management Service (MMS) in the aftermath of the BP oil spill, I would apply various approaches to managing ethical behavior to address the systemic issues that contributed to the disaster. These approaches include: 1. Structural Changes: I would prioritize implementing structural changes within the organization to create a more robust framework for ethical behavior. This might involve restructuring the MMS to separate regulatory functions from revenue collection, thereby reducing conflicts of interest. 2. Leadership and Culture: I would focus on cultivating ethical leadership and fostering a culture of integrity within the organization. This would entail appointing ethical leaders at all levels of the MMS who lead by example and prioritize ethical considerations in decision-making. 3. Ethics Training and Education: I would develop comprehensive ethics training programs to educate employees about their ethical responsibilities and provide them with the knowledge and skills to make ethical decisions in their roles. 4. Accountability Mechanisms: I would strengthen accountability mechanisms within the MMS by implementing clear policies and procedures for reporting unethical behavior, conducting regular audits and inspections to detect misconduct, and imposing strict penalties for violations of ethical standards. 5. Transparency and Communication: I would promote transparency and open communication within the MMS by establishing channels for employees to voice concerns and provide feedback, as well as increasing transparency in regulatory processes to enhance public trust. Given the severity of the issues within the MMS and the public scrutiny following the BP oil spill, I would focus the most time and energy on implementing structural changes and strengthening accountability mechanisms. These approaches are crucial for addressing the root causes of unethical behavior within the organization and ensuring that there are consequences for misconduct. Success in fixing the MMS would depend on various factors, including the level of commitment from leadership, the willingness of employees to embrace cultural change, and the support of external stakeholders such as government agencies and the public. While implementing these approaches would be challenging and require sustained effort over time, it is possible to achieve success with the right strategies and resources in place. However, success is not guaranteed, as organizational change is complex and may face resistance from entrenched interests or bureaucratic inertia. Ultimately, the effectiveness of these approaches would depend on their implementation and enforcement within the MMS and the broader regulatory environment. 3. Case Question 3: According to Earthjustice, a non-profit environmental law firm, the BP disaster happened because “managers weren’t managing, oil companies and regulators were colluding, and high risk was acceptable risk.” Obviously, problems like those that led up to the BP spill can be extremely complex. In light of this fact, what, in your opinion, should be the primary responsibilities of managers at regulatory agencies such as MMS? Of managers at oil companies such as BP? In regulatory agencies such as the Minerals Management Service (MMS), managers have a primary responsibility to ensure the effective regulation and oversight of the industries they oversee, while prioritizing public safety, environmental protection, and compliance with laws and regulations. Specifically, the primary responsibilities of managers at regulatory agencies such as MMS include: 1. Enforcement of Regulations: Managers must enforce regulations governing the industries they regulate, including oil and gas drilling operations. This involves monitoring compliance, conducting inspections, and taking enforcement actions against companies that violate regulations. 2. Risk Management: Managers should assess and manage the risks associated with industry activities to minimize the potential for accidents, spills, and other disasters. This may involve implementing safety protocols, conducting risk assessments, and requiring companies to adopt best practices for risk mitigation. 3. Transparency and Accountability: Managers should promote transparency in regulatory processes and decision-making to enhance public trust and accountability. This includes disclosing information about industry activities, regulatory decisions, and enforcement actions to the public. 4. Conflict of Interest Avoidance: Managers must avoid conflicts of interest and maintain independence from the industries they regulate to ensure impartiality in decision-making. This may involve implementing policies to prevent regulatory capture and addressing potential conflicts among staff members. 5. Continuous Improvement: Managers should strive for continuous improvement in regulatory processes and standards to keep pace with technological advancements, emerging risks, and changing industry practices. This may involve updating regulations, conducting research, and collaborating with stakeholders to identify areas for improvement. On the other hand, managers at oil companies such as BP have a primary responsibility to prioritize safety, environmental protection, and corporate responsibility in their operations. Specifically, the primary responsibilities of managers at oil companies such as BP include: 1. Safety Culture: Managers must foster a culture of safety throughout the organization, emphasizing the importance of safety in all aspects of operations and decision-making. 2. Environmental Stewardship: Managers should prioritize environmental protection and sustainability in their operations, minimizing the environmental impact of oil and gas exploration, production, and transportation.3. Compliance with Regulations: Managers must ensure that the company complies with all applicable laws and regulations governing its operations, including those related to safety, environmental protection, and corporate governance. 4. Risk Management: Managers should assess and manage the risks associated with company activities to prevent accidents, spills, and other incidents that could harm employees, communities, and the environment. 5. Accountability and Transparency: Managers should be accountable for the company's actions and decisions, communicating transparently with stakeholders about safety, environmental performance, and corporate responsibility initiatives. Overall, managers at regulatory agencies and oil companies alike have a shared responsibility to prioritize safety, environmental protection, and regulatory compliance in their respective roles. By fulfilling these responsibilities, they can help prevent disasters like the BP oil spill and contribute to a safer, more sustainable future. Solution Manual for Management Ricky W. Griffin, Robert Kreitner, Charlene Cassidy 9781111969714, 9781111221362

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