Ch.3Stakeholders: people whose interests are affected by an organizations activitiesInternal: owners, employees (the talent), and board of directorsBoard of directors:Inside directors: top executives of the firmOutside directors: elected from outside the firmExternal Stakeholders: people and groups in the orgs. External environment that are affected by it (task and general environment)Task Environment: 11 groups that present you with daily tasks to handleCustomers, competitors, suppliers, distributors, strategic allies, employee orgs., local communities, financial institutions, govmt regulators, special interest groups, mass mediaStrategic allies: describes relationship of two orgs. That join forces to achieve advantages that they cant aloneGovernment regulators: regulatory agencies that establish ground rules under which organizations may operateSpecial interest groups: groups whose members try to influence specific issues (MAAD, NRA)General Environment: (macroenvironment) includes six forces: economic, technological, sociocultural, demographic, political-legal, and internationalEconomic forces: consists of general economic conditions and trends that may affect an organizations performanceUnemployment, inflation, interests rates, growthTechnological forces: new developments in methods for transforming resources into goods or servicesSociocultural forces: influences and trends originating in a country’s, society’s, or a culture’s human relationships and values that may affect an organization.Demographic forces: influences on an organization arising from changes of populations such as age, gender, or ethnic originsPolitical-legal forces: changes in the way politics shap laws and laws shape the opportunities and threats to an organization.International forces: changes in economic, political, legal and technological global system that affect an org.Ethical Dilemma: situation in which you have to decide whether to pursue a course of action that may benefit you or your organization but that is unethical or illegal.Ethics: standards of right and wrong that influence behaviorEthical behavior: behavior that is accepted as “right”Values: permanent/ deeply held beliefs and attitudes that help determine a persons behaviorValue system: the pattern of values within an organizationValues and value systems are the underpinnings for ethics and ethical behavior4 Approaches to deciding ethical dilemmas:Utilitarian Approach: what will result in the greatest good for the greatest number of peopleOften used to asses financial performance (efficiency, profit)Individual Approach: what will result in the individual’s best long-term interests, which ultimately are in everyone’s self interestAct ethically in short run to avoid harm in the long runMoral-rights Approach: respect for the fundamental rights of human beingsDifficulty occurs when rights are in conflict (employer and employee rights)Justice Approach: respect for impartial standards of fairness and equityInsider Trading: the illegal trading of a company’s stock by people using confidential company informationPonzi Scheme: using cash from newer investors to pay off older onesSarbanes-Oxley Act of 2002: established requirements for proper financial record keeping for public companies and penalties for noncomplianceLaurence Kohlberg (3 levels of personal moral development)Preconventional: follow rules and obey authoritiesManagers- autocratic or coercive- expect obedienceConventional: follow expectations of othersManagers- lead by encouragement and cooperationPost conventional: guided by internal valuesManagers- follow their own values/standards focus on needs of employees; lead by empowering their employeesHow Organizations can promote Ethics:Create a strong ethical climate: managers promote ethical climates through policies, procedures, and practicesEthical climate: employees perception about the extent to which work environments supports ethical behaviorScreening Prospective EmployeesInstitute ethics codes and training programsPurpose is to clearly state top management’s expectations for all employeesCode of ethics: consists of a formal written set of ethical standards guiding an organizations actions.Reward Ethical Behavior: protect whistleblowersWhistle blower: employee who reports organizational misconduct to the public.Social Responsibility: manager’s duty to take actions that will benefit the interests of society as well as of the organizationCorporate social responsibility: notion that corporations should go above and beyond following the law and making profitsCorporate Social Responsibility Pyramid (Archie B. Carroll)1. be a good global corporate citizen2. be ethical in its practices3. obey the law4. make a profitSocial responsibilities:Sustainability – going greenPhilanthropy: making charitable donations to benefit humankindCorporate Governance: system of governing a company so that the interests of corporate owners and other stakeholders are protected.So that directors authority is clearly seperated from the CEOBusiness Plan: a document that outlines a proposed firms goals, the strategy for achieving them, and the standards for measuring success.Strategy: a large scale action plan that sets the direction for an organization“educated guess” for what must be done in the long term for survival and prosperity of the companyStrategic Management: a process that involves managers of the org. in the formulation and implementation of strategies and strategic goalsStrategic Management and Planning important because:1. Provide direction and momentum2. Encourage new ideasstress importance of innovation for long range success3. Developing a sustainable competitive advantageoccurs when companies get and stay ahead in being responsive, innovative, quality, and effectivenessMichael Porter: the most influential and important living strategistStrategic positioning: attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company.Strategy is the creation of a unique and valuable positionStrategic position emerges from 3 sources:Few needs, many customersBroad needs, few customersBroad needs, many customersStrategy requires trade-offs in competingFollowing one narrow strategy holds a trade off of giving up sales based on other aspects that the company could also benefit fromStrategy involves creating a “Fit” among activitiesAll strategic activities that a company performs promote success