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Homework answers / question archive / General and specific (task) environments (Connect, Perform) Choose the correct labels for the A, B, and C positions in the following diagram

General and specific (task) environments (Connect, Perform) Choose the correct labels for the A, B, and C positions in the following diagram

Management

General and specific (task) environments (Connect, Perform)

Choose the correct labels for the A, B, and C positions in the following diagram.

  

A.Economy  

 

 

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B.Culture  

 

 

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C.Competitors  

 

 

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(Source: Image adapted from Chuck Williams. (n.d.). Management (7th ed.). Mason, OH: South-Western Cengage Learning, 2013 : 70.)

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Explanation:

The diagram outlines the components of an organization’s environment. The general environment consists of very broad factors and trends—think of things that might have an impact on an entire country and all of the businesses that operate within it. These trends affect organizations indirectly, often through their impact on a company or industry’s specific environment. For example, changing sociocultural trends may spark the creation of advocacy groups that lobby for organizational change. The specific environment has a more direct influence on the organization. For example, if suppliers increase their prices, the organization will have to change either the way it makes products (the transformation process) or the products themselves (outputs) in order to continue to make a profit.

A company’s internal environment consists of the employees and managers who make up the company itself, plus the company’s culture, which is based on the company’s key underlying values and assumptions. These values and assumptions are expressed in what people say and do and even in the clothes they wear and how their work spaces are arranged.

Change in any subsystem of these environments can lead to changes in every other subsystem, so it is especially important for managers to monitor environments and try to predict upcoming changes before they occur.

  

Choose whether each example belongs in the general, specific, or internal environment.

Example

Environment

One employee saying to another, “It’s just the way we do things around here—it’s our organizational culture.” Specific environment  
 
A worldwide recession Internal environment  
 

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Explanation:

Example

Explanation

One employee saying to another, “It’s just the way we do things around here—it’s our organizational culture.” One of the most salient aspects of a company’s internal environment is the company’s organizational culture. Every company has a slightly different culture, and that culture affects the actions of all of the managers and employees in the organization.
A worldwide recession A worldwide recession reflects the economy, which is part of the general environment. It affects all industries and companies.

This article from the Wall Street Journal describes the performance of the Ford Motor Company for the first quarter of the fiscal year. Read the article, thinking about different aspects of Ford’s general, specific, and internal environments that may have contributed to Ford’s performance.

 

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MANAGEMENT IN THE NEWS

Ford Motor Co. on Friday reported a solid profit for its first quarter, although net income fell by nearly half compared with a year ago, as a higher tax rate and losses in Europe and Asia weighed on results.

Even with the decline in the bottom line, Ford’s profit is impressive compared with its results before Chief Executive Alan Mulally arrived in 2006. In the first quarter, Ford’s operating profit in its North American unit rose 16% to $2.1 billion, giving that region a profit margin of 11.5%—well above the 5% figure that U.S. auto makers once considered acceptable.

“North America is a powerhouse and I expect them to continue to be a powerhouse,” Bob Shanks, Ford’s finance chief, said in an interview. “It’s a great way to start the year and North America is going to have a fabulous year.”

Overall, Ford’s net totaled $1.4 billion, or 35 cents a share, down from $2.6 billion, or 61 cents a share, a year earlier. Before taxes, Ford earned 39 cents a share, beating Wall Street’s consensus estimate of 35 cents, according to Thomson Financial.

“The results legitimately set the bar higher for long-term earnings power of the Ford Motor Company,” Jefferies & Co. analyst Peter Nesvold said. He added that Ford’s North American margin was “extraordinary.”

Revenue fell 2% to $32.4 billion, a drop of $700 million compared with a year ago, as weak sales overseas offset a strong quarter in North America.

Ford’s automotive cash rose to $23 billion, from $21.3 billion a year earlier. Its debt declined to $13.7 billion from $16.6 billion.

Mr. Shanks said half the decline in net income stemmed from a higher corporate tax rate, the result of Ford’s string of highly profitable quarters. The company’s rate was 33% in the first quarter, compared with 8.5% a year ago; the effect was a $612 million hit to net income, Mr. Shanks said.

In Europe, which is mired in a recession, the auto maker lost $149 million. Ford has previously said losses in Europe could hit $600 million for the year. In Asia and Africa, where Ford is spending billions to expand in China and India, the company posted a $95 million first-quarter loss.

Ford also logged $239 million in one-time expenses in the quarter related to buyouts and early retirement programs for hourly workers. Its financial unit’s operating income fell 37% to $452 million, as Ford had fewer cars coming off leases than a year ago. Because used car prices are high, lease returns could be a source of profit for the company.

The high margins in North American reflect how Ford has slimmed down, slashing costs and improving profitability under Mr. Mulally. In the first quarter, the company made about $3,150 on each of the 677,000 cars and trucks it produced in North American. In the first quarter of 2004, the last time its North American unit made $2 billion in a single quarter, it made just $1,950 a car and produced more than one million vehicles.

Ford’s outlook for full-year operating profits remained unchanged. It expects stronger earnings in North America in the second half of 2012 than in the first half because U.S. auto sales are rising and the company is expanding its plants to boost production capacity in the region by 400,000 vehicles.

The auto maker disclosed that it will begin offering about 90,000 U.S. salaried retirees and former salaried workers who are vested in the company’s pension plan an option to accept their pension in a single, lump sum. The move is aimed at reducing Ford’s obligations to its employees’ pension funds, which at the end of last year were worth $15.4 billion less than Ford is expected to have to pay out.

Mr. Shanks said Ford has been working with federal regulators on how to structure the payouts. Ford said the effort won’t affect its cash balances as the payments will be paid from its pension fund and will have limited impact on operating income.

(Source: Ramsey, M. (n.d.). Wall Street Journal Online, The Wall Street Journal.Ford Net Drops on Europe; U.S. Business Strrong. Retrieved from http://online.wsj.com, accessed April 27, 2012. Reprinted with permission of Copyright © 2012 Dow Jones & Company, Inc. All Rights Reserved Worldwide. License number 2923200960776)

The following table lists some events that might have influenced Ford’s performance. For each event, choose which aspect of Ford’s general, specific, or internal environment is represented.

Event

Aspect of Environment

New management changes attitudes at Ford, and department heads start focusing on working together instead of competing with one another for resources Employees  
 
The recession in Europe, which decreased Ford sales Economy  
 
A rapidly growing automobile manufacturing presence in India, which allows consumers a choice between Ford, Maruti Suzuki, Tata Motors, Skoda, and many other U.S. and international brands Competition  
 

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Explanation:

Event

Explanation

New management changes attitudes at Ford, and department heads start focusing on working together instead of competing with one another for resources Attitudes, beliefs, and values are indicators of corporateculture, which is part of the internal environment at Ford. Culture influences how both managers and employees act and is sometimes described as “the way we do things around here.”
The recession in Europe, which decreased Ford sales The recession is part of the overall economy, which is an aspect of Ford’s general environment. The economy impacts all organizations because, it influences both product demand and the cost of resources.
A rapidly growing automobile manufacturing presence in India, which allows consumers a choice between Ford, Maruti Suzuki, Tata Motors, Skoda, and many other U.S. and international brands As more and more auto manufacturers enter the market, Ford faces increased ”competition” from its specific environment.

Bob Shanks, Ford’s finance chief, is likely to use environmental scanning toreduce uncertainty in Ford’s planning  

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Explanation:

Environmental scanning reduces uncertainty by giving managers the information they need to rapidly respond to a changing environment. Environmental scanning tends to be a forward-looking process, so it is more likely to be used to create new strategies than to restore a previous culture or increase employee involvement. The term punctuated equilibrium refers to an environmental condition of rapid change followed by a period of little change. Scanning itself is unlikely to implement a punctuated equilibrium cycle, although it may tell you where your company is in that cycle.

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