Unit 3 Assingment

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Word Count is 1200 words or more. Everything must be in own words. Must have 2 or more References. Also will need to be cited correctly and in APA format. There will be 2 Attachments one is the Assignment and the other one is the Reading.

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Select the link to read Case C - I'm from the Government -- and I'm Here to Help You Case Summary 1. In a narrative format, discuss the key facts and critical issues presented in the case. 2. Explain the dilemma for organizations that have particularly serious regulatory issues. How should Jay resolve the differences in requirements from the Federal agency, OSHA, versus the state? 3. Employing Porter's Five Forces model, analyze the industry niche of care for the intellectually disabled. What specific conclusions can be drawn from your analysis? Case Analysis 4. Jay believes the required vaccinations would cost almost $30,000 a year, primarily due to his staff turnover rate, which is approximately 40%. Are there any suggestions you might have for Jay as to how he could reduce that turnover rate? Does the general environment model's socio-cultural segment offer any clues? Managing the External Environment Chapter Outline: 3-1 The Organization’s Industry 3-2 The Organization’s Macroenvironment 3-3 Managing Environmental Uncertainty 3-4 Environmental Scanning 3-5 Forecasting the Environment 3-6 Crisis Management Summary Review Questions Endnotes Key Terms boundary-spanning buffering crisis crisis management culture Delphi technique environmental scanning W I L L I S , K A S S A N D R A 2 1 6 1 T S gross domestic product (GDP) imitation industry life cycle judgmental forecasting macroenvironment multiple scenarios population ecology self-reference criterion time series analysis uncertainty 3 An organization cannot function effectively unless its managers understand the forces outside of the organization that influence its performance and survival. There are two components of the organization’s external environment: the industry—the collection of competitors that offer similar products or services—and the complex network of political-legal, economic, social, and technological forces known as the organization’s macroenvironment. This chapter addresses each of these components. 3-1 The Organization’s Industry Each business unit operates among a group of companiesW that produce competing products or services known as an industry. Although Ithere are usually some differences among competitors, each industry has “rulesLof combat” governing such issues as product quality, pricing, and distribution. This L is especially true in industries that contain a large number of firms offering standardized products and I services. For example, most service stations in the United States generally offer S regular unleaded, mid-grade, and premium unleaded gasoline at prices that do not differ substantially from those at nearby stations. If a rival,attempts to sell different grades, it may experience difficulty securing reliable sources of supply and may also confuse consumers by deviating from the standard. K macroenvironment the general environment that affects all business firms in an industry, which includes political-legal, economic, social, and technological forces industry a group of competitors that produces similar products or services In a perfect world, each organization would operate in oneA clearly defined industry. In the real world, however, many organizations compete inSmultiple industries, and it may be difficult to clearly identify the industry boundaries. S As such, the concept of primary and secondary industries may be useful in A defining an industry. A primary industry may be conceptualized as a group of close competitors, whereas N a secondary industry includes less direct competition. The distinction between D primary and secondary industry may be based on objective criteria such as price, R call. similarity of products, or location, but is ultimately a subjective A 3-1a Porter’s Five Forces Model 2 performance of many Industry factors have been found to play a major role in the 1 leaders or failures.1 companies, with the exception of those that are its notable As such, one needs to understand these factors at the outset 6 before delving into the characteristics of a specific firm. Michael Porter proposed 1 a systematic means of analyzing an industry’s potential profitability known as T Porter’s “five forces” model. As aforementioned, this model is based on IO economics and suggests that S industry structure is the primary determinant of firm performance. According to Porter, an industry’s overall profitability depends on five basic competitive forces, the relative weights of which vary by industry: 1. The intensity of rivalry among incumbent firms: Competition intensifies when a firm identifies the opportunity to improve its position or senses competitive pressure from other businesses in its industry, which can result Organizational Theory 3-2 in price wars, advertising battles, new product introductions or modifications, and even increased customer service or warranties.2 2. The threat of new competitors entering the industry: Unless the market is growing rapidly, new entrants intensify the fight for market share, lowering prices and, ultimately, industry profitability. 3. The threat of substitute products or services: Firms in one industry may be competing with firms in other industries that produce substitute products, offerings produced by firms in another industry that satisfy similar consumer needs but differ in specific characteristics. Wof an industry’s outputs can lower that 4. The bargaining power of buyers: The buyers I quality or more services and playing industry’s profitability by bargaining for higher one firm against another. L L can extract the profitability out of an 5. The bargaining power of suppliers: Suppliers industry whose competitors may be unable to Irecover cost increases by raising prices. S , K A S S A N D R A Figure 3.1 Porter’s Five Forces Model 2 Each of the five forces suggests that potential profits within an industry may be high, moderate, or low. Analyzing the five forces for an organization’s1industry can help managers understand 6 the potential for superior performance within that industry. It does not guarantee high or low performance, as there are usually substantial performance differences among organizations 1 in the same industry. Porter’s five forces model, however, provides a useful framework for T thinking about the effects an industry has on an organization. S There are other valid perspectives on organizations and industries besides Porter’s view. As Porter suggests, organizations functioning in a given industry generally possess a number of similarities that are not typically shared by those in other industries. Fast-food restaurants, for example, tend to be labor-intensive and cost-conscious, with established systems to provide fast, efficient service to customers. However, new organizations may “buck the trend” from to time by taking different approached designed to respond to changes in the environment more Organizational Theory 3-3 effectively. Whereas Porter’s five forces model emphasizes similarities among organizations within an industry, the population ecology perspective emphasizes organizational diversity and adaptation.3 According to this view, organizations can be better understood by examining when and how they are formed, why new organizations might vary from existing ones, and ultimately why some survive when others fail. Some insight into this view can be obtained by considering the life cycle through which an industry passes. 3-1b Industry Life Cycle Like organizations, industries develop and evolve over time. W Not only might the group of competitors within an organization’s industry change constantly, but the I nature and structure of the industry can also change as it matures and its markets L become better defined. An industry’s developmental stage influences the nature 4 L In theory, each of competition and potential profitability among competitors. I life cycle. industry passes through five distinct phases of an industry S , Figure 3-2 K population ecology a perspective on organizations that emphasizes the diversity among organizations that perform similar functions and utilize common resources industry life cycle the stages (introduction, growth, shakeout, maturity, and decline) through which industries are believed to pass A young industry that is beginning to form is considered to be in the introduction A stage. Demand for the industry’s outputs is low because product and/or service S awareness is still developing. Most purchasers are first-time buyers, and tend to be affluent, risk tolerant, and innovative. Technology S is a key concern in this A stage because businesses often seek ways to improve production and distribution efficiencies as they learn more about their markets. Organizations emerging in N this stage often attempt to capitalize on first-mover advantages, similar to the D prospector strategy discussed in a previous chapter. R Normally, after key technological issues are addressed and A customer demand begins to rise, the industry enters the growth stage. Growth continues during this stage but tends to slow as the market demand approaches saturation. Fewer first-time buyers 2 remain, and most purchases tend to be “upgrades” or replacements. Some of the industry’s weaker competitors may not survive. Those that1do establish distinctive 6 competencies that can help distinguish them from their competitors. 1 Shakeout occurs when industry growth is no longer rapid enough to support the increasing number of competitors in the industry. As a T result, an organization’s S growth is contingent on its resources and competitive positioning instead of a high growth rate within the industry. Marginal competitors are forced out, and a small number of industry leaders may emerge. Maturity is reached when the market demand for the industry’s outputs is completely saturated. Virtually all purchases are upgrades or replacements, and industry growth may be low, nonexistent, or even negative. Industry standards for Organizational Theory 3-4 quality and service have been established, and customer expectations tend to be more consistent than in previous stages. The U.S. automobile industry is a classic example of a mature industry. Firms in mature industries often seek new uses for their products or services or pursue new markets, often through global expansion. Because the field has become crowded and customers have become more sophisticated, many successful organizations begin to emphasize efficiencies in order to offer greater value. The decline stage occurs when demand for an industry’s products and services decreases and often begins when consumers begin to turn to more convenient, safer, or higher quality offerings from organizations in substitute industries. Some firms may divest their business units in this stage, whereas others may seek to “reinvent themselves” and pursue a new wave of growth associated with a similar product or service. The life cycle model is a useful tool for evaluating an Windustry’s development and the types of organizations that may be most likely to succeed. The key problem Iwith the model, however, is that identifying an industry’s precise position is often difficult, and not all industries follow these exact stages or at predictable intervals.5 L For example, the U.S. railroad industry did not reach maturity for many decades and extended over a hundred L years before entering decline, whereas the personal computer industry began to show signs of maturity after I only seven years. S , 3-2 The Organization’s Macroenvironment The second component within an organization’s external K environment is the macroenvironment and consists of political-legal, economic, social, and technological forces. Ultimately, the effects of these forces create A opportunities and threats for an organization. In general, forces in the macroenvironment affect all competitors S within a given industry, although the nature of the effects can differ among firms. For example, a sharp economic S decline may threaten the livelihood of a luxury automobile manufacturer, while at the same time creating an A opportunity for a carmaker with substantially lower costs. Most organizations have little, if any influence overN the macroenvironment. On occasion, a large, dominant firm such as Wal-Mart may be able to exert someDdegree of influence over one or more aspects of the macroenvironment. For example, the giant retailer’sR political action committee contributed about $1 million to candidates and parties in the United States in both A 2003 and 2004, presumably in an effort to influence 6 regulation that might affect the organization. However, most organizations must seek to join with others in trade and other associations in an attempt to exert 2 some degree of influence on a particular factor in the 1 macroenvironment. 6 1 T S Figure 3-3 Some factors may be placed neatly into one of these interrelated categories, whereas others may straddle two or more classes. For example, automobile safety has political-legal (e.g., legislation requiring that safety standards be met), social (e.g., consumer demands for safe vehicles), and technological (e.g., innovations that may improve safety) dimensions. For clarity concerns, however, each category of macroenvironmental forces is discussed separately. Organizational Theory 3-5 3-2a Political-Legal Forces Political-legal forces include such factors as the outcomes of elections, legislation, and judicial court decisions, as well as the decisions rendered by various commissions and agencies at every level of government. Military conflicts are also included in this arena and can also influence how a number of industries operate, especially those with tight global ties. In 2003, for example, during the beginning of the war in Iraq, many American firms modified their promotional strategies, fearing that their television advertisements might be considered insensitive if aired alongside breaking coverage of the war. At the same time, others began to plan for meeting the anticipated future needs in Iraq for such products as cell phones, refrigerators, W and automobiles. In late 2003, American firms began to compete vigorously for I lucrative reconstruction contracts, while others prepared for increased business L activity there in the coming years.7 L Industries are often affected by legislation and other political events specific to I their line of business. For example, the Highway Traffic Safety Administration in S the United States constantly tests cars and trucks sold in the U.S. and works with carmakers to improve safety performance.8 Following the , sharp declines in air travel in the United States in 2001, airlines on the verge of bankruptcy campaigned for and received $15 billion in government support in 2002 Kand an additional $2.9 9 billion in 2003. All societies have laws and regulations that restrict or control A business operations. Relatively speaking, free market oriented nations such as the S United States have fewer restrictions, but the level of regulation can be extensive S for hiring and firing in some areas. Many socialist nations have rigid guidelines employees or establishing operations, and some require that A a portion of what is produced in that country be exported to earn foreign exchange. N These regulations are specific to each nation and create opportunities or pose threats D to firms interested in operating across national boundaries. 3-2b Economic Forces R A Every organization is affected by changes in the local, national, and/or global 2 economies. The first economic consideration is that of the gross domestic product 1 (GDP), the value of a nation’s annual total production of goods and services. GDP 6 do not experience the growth among nations is often interrelated, but all nations same rate of growth. For example, while GDP levels in1the West were stagnant during the late 1990s and early 2000s, China’s GDP grewTat a staggering pace.10 gross domestic product the value of a nation’s annual total production of goods and services S economy fueled by Consistent GDP growth generally produces a healthy increases in consumer spending, whereas a decline signals lower consumer spending and decreased demand for goods and services. When GDP declines for two consecutive quarters, a nation’s economy is generally considered to be in a recession. A recession is not detrimental for all organizations. For example, college and university enrollments often increase as undergraduate and graduate students Organizational Theory 3-6 seek to gain an advantage in a tight job market.11 Unfortunately, it is difficult to forecast a recession in advance, and many recessions are identified only after they have occurred. High inflation negatively affects most, but not all businesses. High rates raise many of the costs of doing business, and continued inflation can constrict the expansion plans of businesses and trigger governmental action, such as is the case when the U.S. Federal Reserve Board raises its discount rate during inflationary periods to slow economic growth. However, oil companies may benefit during inflationary times if the prices of oil and gas rise faster than the costs of exploration, refinement, and transportation. Sharp increases in the price of heating oil sparked a resurgence in the market for coal stoves in the winter of 2000–2001.12 Interest rates affect the demand for many products and services, W especially “high ticket” items I whose costs are financed over L an extended period of time, L such as homes, automobiles, I and appliances. At the consumer S level, low short-term interest rates benefit retailers such as , Wal-Mart and J.C. Penney because they also tend to K lower rates on credit cards, A thereby encouraging consumer S spending. At the organizational S level, high interest rates can Recessions can be devastating hinder expansion efforts. A for firms in many industries, but they are difficult to predict. N Organizations that transact a significant amount of business with entities outside of its borders are especially vulnerable to changes in rates of exchange between the Dhome and other currencies. When the value of the dollar increases relative to other currencies, for example, American organizations are at a competitive disadvantage R internationally, as the prices of American-made goods A rise in foreign markets. In addition, American manufacturers tend to locate more of their plants abroad and make purchases from foreign sources. During this time, American consumers are more likely to purchase products produced abroad, which are less expensive than 2 goods produced at home. 1 6 3-2c Social Forces 1 Social forces include such factors as societal values, trends, traditions, and religious practices and can T forces can vary widely among nations, especially substantially influence organizational performance. Social S cars have been the vehicle of choice in European as they are related to other factors. For example, smaller countries since the 1990s. In Europe, roads are more narrow, gasoline is more heavily taxed, and fuel economy is a greater concern. In the United States, roads are wider, gasoline is less expensive, and fuel consumption does not play as strong a role in the purchase decision. As a result, American consumers tend to demand relatively larger vehicles.13 Fashion in China also offers another example, where styles reflect a mix of Asian, American, and European tastes.14 Organizational Theory 3-7 Social forces often reflect societal practices that have lasted for decades or even centuries. For example, the celebration of Christmas in the Western Hemisphere provides significant financial opportunities for card companies, toy retailers, confectioners, tree growers, and gift shops. Some retailers are happy jus ...
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Running Head: ORGANIZATIONAL THEORY

Organizational Theory
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ORGANIZATIONAL THEORY

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In a narrative format, discuss the key facts and critical issues presented in the case.

Historically, mentally retarded patients were often taken care of by family, or they were
placed in state hospitals for the mentally ill. They were treated with chemical restraints to
control their aggressive behavior and to protect them from the public. However, in the mid1970s, the national attitude towards these individuals started to change. Social service
professionals realized that the mentally retarded were capable of living a fuller life (Mercer &
Open University. 1992). This was followed by the creation of industries that focused on
providing specialized behavioral treatment in a normalized home that had an environment for
the retarded. This move influenced Jay and Leigh Carlos to build a home for the mentally
retarded as a business venture.
Being the head of East Hampshire’s medical services, Leigh Carlos was responsible for
ensuring that the company complied with the federal, state and local safety and health
requirements. Thus she was always careful, and she took into consideration the risks
associated with blood-borne pathogens and with hepatitis B in particular. To improve
standards and control exposure to the pathogen, Leigh ensured that all residents were
immunized. All new residents were also tested or Hepatitis B before being admitted to an y of
the East Hampshire facility. The company had the policy to immunize residents those who
tested positive during application was denied acceptance. This lowered the risk for infections
at the facility.

Leigh and Jay owned a number of homes for 15 years, and they were preparing t...

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