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Administrative Studies.docx

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York University
Administrative Studies
ADMS 1000

Administrative Studies Sept 10 2013 The Challenges of Understanding Business  Lack of external goals over large scale businesses  Gullible and greedy investors corrupt organizations and management An Organization Is?  Agroup of people  Common goals  Interacting with environment Gareth Morgan suggests that images are very important in organizations  Machine (more closed system)  Living Organisms (more open)  Political school (power/conflict)  Theatre (roles/drama/act)  Team (collaboration/ common goal) Variety of Systems  Mom and Pops stores  The U.S government  Hospital for sick kids  Hell’sAngels Bikers  Catholic Church  The Mafia 3 Broad Categories 1. Private Sector 2. Private for Profit Sector 3. Private not for profit sector (organizations and unions) Success Story  Blackberry  Cirque Du Soleil  Magna Corporations Great Strategies= great strategic management Specific Environment Union, Creditors, media, government, local public etc General Government  Primary: resource based- if non renewable  Secondary: manufacturing; much demonstrated by foreign owners  Tertiary: health, education, financial *Each organization has a different interaction with each environmental factor, including political. th Chapter 1&8 Sept 17 2013 Society + Business Roles in Society What is the role of business in our large society?  Business: Private, commercially oriented organizations (includes publically traded corporations)  Society: a nation or large group of people with common values, history, tradition, institution, activities, and interests. CSR= Corporate Social Responsibility What is a Steak? It is an interest or share in an activity  Aright- a legal right/ moral right  Ownership- a legal title to an asset/ property Steak holder Definition: Asteak holder is any individual or group who can affect or is affected by the actions decisions, policies, practices or goals of organizations (freeman ‘84) Community Employee Owners Business Gov’t Customer/ Consumer  Certainly provides goods and services which society demands and is normally prepared to pay for.  Can think of all organizations as part of the organic “web” constituting society as a whole- touch one part, and all web is affected to some extent.  ‘Subject Organization” will be at the center of wed on which we are focusing attentions. Corporate Scandals  Bribery and Corruption (Enron)  Workplace Conditions (Workers locked inAsian Sweatshops)  Multinationals and sweatshops (Nike)  Political Influences (Construction and Roads in PQ)  Product Liability (Chrysler Tailgates & Monsanto set up a website forcing people to respond. They spray seeds with chemicals that are poison and then sell them to people because they know that they will buy them because they are cheap- killing people). The obligation of decision makers to take actions which protect and improve the welfare as society as a whole. 1. Philanthropic Responsibility: employees and wider community 2. Ethical Responsibility- consumers, employees, and all stake holders groups 3. Legal Responsibilities- Owners, employees and customers 4. Economic Responsibility- employees and owners CSR Against For  Main responsibility is to make a proitBusiness should conform to society expectations  Agame with different rules  Being socially responsible  Business should not dictate morality Responsibility to other stake holders  Who will be accounted?  CSR provides long term benefits  Cost of CSR will be passed onto  Could use the power for CSR customers Woman Values 1. See changes in values since last century since the suffering of women 2. Lack of universalism in those changes 3. The Context of Business: A Framework for Study Sept 18 2013 Learning Objective: 1. Understanding the notion of organizations as open system. 2. Identify the forces that comprise the specific and general environmental organizations. 3. Discuss 7 forces confronting organizations. 4. Explain the forces of each of the external forces within the Canadian business context. 5. Describe the framework that this text will use to examine the environment of business. What is an Organization? : 1. Public/ gov’t organizations that provide goods and services without getting $. 2. Private non-government goods and services making $. 3. Private organizations that produce goods making $ for benefits of owners. Different Types of Organization: 1. Organizations are social entities: Made up of people. They are entities that have been generated and have been maintained by people. They involve some level of human interaction. 2. Organizations are created to achieve goals: are goal detected. Whether it is a profit making organization or a non-profit organization, all organizations have some kind of goal or objective they were designed to achieve. 3. Organizations Interact with the Environment: an organization obtains input are transformed by the organization and become outputs: the goods, services or knowledge that the organization generates. Forces:  Economic Forces: whether it is a recession or a strong economic health in Canada, the economic environment acts as a strong influence on the present and future prospect of any organization.  Global Forces: are forces that could be embedded in general economic, political, technological, or societal forces but are international in nature *The term Social Responsibility refers to the obligations or responsibility of an organization that involves going beyond:  The product of goods and services at a profit  The requirements of competition, legal regulations or customs. ENVIRONMENT INPUTS PROCESS OUTPUTS  Technology  Transformations to  Goods and services  Human Resource goods and services generated. generated by the (people + knowledge) organizations.  Physical Resource (plants) Feed Back Responsibility To Stakeholder Respons. To Employees Resp. to owners and Respons. To customer and Stakeholders consumers Organization Respons. To Respons. To creditors competitors Chapter Summary: This chapter underscores the social context of organizations. Globalization has generated much more challenges from a CSR (corporate social responsibility) perspective. Economic Context Sept 24 2013 Economics is dismal science  To every pair of hands there is a mouth to feed and that’s why economics got a bad name  Page 5- food bank users are in most of the GTA reported the number of food banks visited surpassed 1 million.  1 third of the adults that attend these food banks hadn’t had a meal in over 24 hours. What does economic business refer to?  Refers to the conditions of the economic system in which business operates. Canada reducing into provinces, transfer of jobs so that growing businesses recruit from outside Canada to fill the gap while other provinces experience high levels on unemployment. MNR = Resources (Nature): coal, oil, gas, fuel. This can be sold as a form of energizing. Renewables= wind, sun, tide, hydro-electricity (Niagara falls) Semi-Renewable= water, food, trees 5 Factors of Production 1. Natural Resources (Land and raw materials) 2. Labor (workers) 3. Capital (assets) 4. Info resource (knowledge workers with specialized training) 5. Entrepreneurs (individuals who startup businesses) Different types of Economic Systems 1. Command/ communist 2. Socialism 3. Marketing Economy 4. Mixed Economy Market Mixed Socialist Communist 1. Communist: exist when the gov’t owns all the countries resources and makes economic decisions centrally. Based on Ideology or Marx, where ownership of capital world held by the gov’t from the common good. Because of communists regimes and the collapse of the USSR, ideology has fallen into much dispute among much of Western World. (Cuba) 2. Socialism: was intended as a compromise between the ills of capitalism and the centralist’s authoritarian tendencies of most communist regimes. Government has large ownership of its control on major industries essential to the country’s economy, the attempts to maintain stable systems. (Germany) 3. Market Economy***:Private enterprise typically has four elements: (US) • Right to own and use private property and transfer ownership • Freedom of economic choice, to buy and sell etc. • Acceptability of economic sector to make PROFITS • Competition among different terms. 4. Mixed Economy: An economy that uses more than one economic systems (Uk). For example Canada, India. The Law of Supply and Demand Demand: the result of the decision from buyers. Supply: the result of the decisions from sellers. Competition and the Economy 1. Perfect: Competition. Large number of buyers and sellers acting independently. 2. Monopolistic: Products and services are differentiated usually in a small way and market sets the price (McDonalds) 3. Oligopoly: When only a few competitors dominate the industry. High barriers of entry.A price setter. 4. Monopoly: only when there is one produced in the given market. No substitute product therefore company sets price. Significant barriers to company. Economic Stability and Economic Growth 1. The Business Cycle (recession/depression) 2. Aggregate Output (real vs. nominal per capital) 3. Productivity (index of production) 4. The balance of trade (exports less imports) 5. Inflation (the great depression) 6. Unemployment (frictional, seasonal, cyclical, structural) Economic environment refers to the conditions of the economies. • Gross domestic product (GDP) How much product in a country • Gross national product (GNP) How much produced by countries capital Threats to Economic Stability 1. Inflation 2. Deflation 3. Unemployment Interest Rates Cost of financial and capital funds. Liquid capital as essential resource of capitalist’s economy. 1. Spend the credit (consumers) 2. Invest (businesses) 3. Buy homes, cars, long term durables with long term finances *** All of the above will boost activity in economy st Strategic Management October 1 2013  Cannot be a stand-alone subject: visions, missions, goals, policy, strategy, and tactics.  Even if the organization does not have goals that are noted, it doesn’t mean that the organization doesn’t exist. For example: accountants, lawyers, illegal drug rings. Why are some films more successful then others?  Strategic management attempts to explain different performances. External and internal models for explaining competitive average.  Mitzberg suggests that strategic planning for long term goals is almost impossible because there is too much unpredictability. Roots of Strategy Archetype Organizations: 1. Military (fall of Troy) 2. Political (strategic alignment and alliance) 3. Religious (Holy Roman Empire) Strategic Option 1. Competition 2. Co-operation 3. Collaboration 4. Cooptation Relative vs. Productive Strategies Imperial oil became the biggest oil company. Watching and waiting for others to take bigger risks. Counter Strategies Formulate new strategic plans Economics: Analyzing External Environments  Essential and economists perspective offered in text  The porter 5-focus model attempts to evaluate the attraction or otherwise of an industry Threat of new Entrants Bargaining power for Industry Bargaining power of supplier buyers Competitors Threat of sustainable product Barriers to Entry  Economies of scale  Capital requirements  High switched costs  Difficult access to disturbing channels  Outsider’s disadvantages unrelated to scale. (cost: intellectual property and other: gov’t licenses) Bargaining Powers of Suppliers Are there many suppliers for this industry? Ex Intel andAMD for computer chips Threats of Substitutes 1. Air vs. rail travel 2. Movie theaters vs. DVD rentals 3. CD and their makers vs. Mp3 downloaders 4. Note newspapers free @ York for a reason, why? Because they are having a hard time getting them out there. SWOT= Strength, Weakness, Opportunities, Threats. 3 Generic Strategies 1. Cost leadership thought: • Economies of scale • Learning curve economies • Low cost access to factor of production • Most effective when business has all 3 Advantages: • Higher margins (more profit) • Ability to adapt to changes in the industrial life cycle and competitive pressures (cushion for hard times) Business level strategies: 2. Product Differentiation through: • Product feature • Links between product function • Location (yorkville) • Product mix and bundling (Canadian tire parts and services) • Links with other firm products (pizza hut) • Customer service Advantages: • Premium price for higher received values • Ability to withstand competitive pressure 3. Focus on Specific Market or Product • Focus differentiation or focused low cost (IKEA) Both 2 and 3 are oriented to marketing strategies. Exemplifies the Conglomerate approach. Types  Related products in markets. • Generate synergies and economies of scope.  Vertical Integration • Backward/upstream= suppliers: product and resource • Forward/downstream= distributers and retailers  Unrelated • Conglomerates and holding companies International Development  Greater control  Longer time frame  Requires major commitment of resources to new development Course website: jacinth.eso.yorku.ca (sectionA)/ course outline/ syllabus in the website text/ exploring the Canadian Business Environment/ sec edition/ karakowsky. L (2013) *DO THE CASE STUDIES th Oct 8 2013 Industrial and Technological Revolution Exam:  Curtis Lecture Hall I (section F- chemistry building)  Right at the back of the lecture hall  Be there for 6:00 pm  Case study, tested for session 1-5  10 multiple choice questions.  40% of final marks Industrial Revolution Number of competitors follows a U shaped curve. Industry sales follow and S shaped curve. Lifecycle stages:  emergence  stakeout/ growth  maturity  decline Each stages effects the completion, organizational structure and strategy of the lifecycle. Industry Emergence and Creation New industries emerge following major innovations: • Technology • Regulatory • Combination (ex. Legislating more green energy, wind and solar power, battery tech for hybrid cars)  Nascent industries are highly uncertain and risky and some never make it past the early stages  Early agents tend to be smaller, entrepreneurial firms with a high degree of technological innovation, as competitors search for the industries dominant design and standard. (ex. Automobiles rejecting 3 wheelers, steam and electric propulsith: industry coalesced around internal combustion gasoline/diesel engine, in early part of the 20 century)  New industries seek legitimacy through collective action and institutional entrepreneurship.  Despite the increased competition, the entry of large incumbent films into new markets help legitimize the new industry (Walmart into internet sales)  Characteristics of the emergence phase: • Low intra-industry rivalry (between the people or organizations in the industry) • Intense R&D • Slow growth • Organic structure Growth and Stakeout  The growth stage begins once there is convergence around a dominant design or technical standard  Organizations whose approach does not conform to the dominant model either change or exit during a stakeout. Ex. Wintel standard (MS windows+ Intel) in PCs Industry Market  Market growth begins to slow down and rivalry becomes very fierce. Products become commoditized and undifferentiated, innovations are incremental and more confined to process improvements. Successful firms are efficient and mechanistic! Shift in successful strategy and structure explains why few firms survive as industry leaders. The Decline Phase Industries begin to go down as a result of changes in any or all of:  Demographics (baby food in the 60s)  Consumer’s needs and tasks (cigarettes)  Obsolescence in existing technology (typewriters and VCR’s) Firms can pursue different strategies to cope:  Maintain industry leadership  Target niche markets (Ferrari, Rolls Royce)  Harvest profits  Exit early  Consolidate the remaining industry players Look at chart in chapter 3-4** Downsizing  “the planning reduction in the breadth of an organizations operations” (k.p.74)  Example. Blackberry shrinking from 20,000 to 10,000, and now planning to shrink again by 50%  Some succeed and others don’t  Strategy is not a panacea- concentrates on cost reduction by firing, getting rid of overheads completely.  Downsizing is always painful Common Methods 1. Cuts across whole organization 2. Offering early retirement and voluntary severance- least painful;:may gain goodwill 3. Delayering- eliminating a level of mid-management and releasing workers 4. Outsourcing or contracting out- legal dept. or payroll 5. Elimination of product lines: no more classical Greek courses at U/V. Texts outline methods 1. Efficient parts of organization hurts as much as inefficient 2. Not usually part of strategic plan 3. Loss of corporate memory 4. Loss of control or expertise 5. Pain to concentrate (where did my other branch go?) Mintzberg Cost benefits are often short term and are outweighed by productivity losses, plus customer alienation through bad performance= revenue losses. Examples? 1. Constraining forces 2
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