3.1 The Community of Stakeholders Inside the Organization

• Managers operate in two organizational environments —internal and external—both made up of shareholders, the people whose interests are affected by the organization's activities. The first, or internal, environment, also includes employees, owners, and the board of directors.

3.2 The Community of Stakeholders Outside the Organization

• The external environment of stakeholders consists of the task environment and the general environment.
• The task environment consists of 11 groups that present the manager with daily tasks to deal with. (1) Customers are those who pay to use an organization's goods and services. (2) Competitors are people or organizations that compete for customers or resources. (3) Suppliers are people or organizations that provide supplies—raw materials, services, equipment, labor, or energy—to other organizations. (4) Distributors are people or organizations that help another organization sell its goods and services to customers. (5) Strategic allies describe the relationship of two organizations who join forces to achieve advantages neither can perform as well alone. (6) Employee organizations consist of labor unions and employee associations. (7) Local communities consist of residents, companies, governments, and nonprofit entities that depend on the organization's taxes, payroll, and charitable contributions. (8) Financial institutions are commercial banks, investment banks, and insurance companies that deal with the organization. (9) Government regulators are regulatory agencies that establish the ground rules under which the organization operates. (10) Special-interest groups are groups whose members try to influence specific issues that may affect the organization. (11) The mass media are print, radio, TV, and Internet sources that affect the organization's public relations.
• The general environment includes six forces. (1) Economic forces consist of general economic conditions and trends—unemployment, inflation, interest rates, economic growth—that may affect an organization's performance. (2) Technological forces are new developments in methods for transforming resources into 95 goods and services. (3) Socio-cultural forces are influences and trends originating in a country, society, or culture's human relationships and values that may affect an organization. (4) Demographic forces are influences on an organization arising from changes in the characteristics of a population, such as age, gender, and ethnic origin. (5) Political-legal forces are changes in the way politics shapes laws and laws shape the opportunities for and threats to an organization. (6) International forces are changes in the economic, political, legal, and technological global system that may affect an organization.

3.3 The Ethical Responsibilities Required of You as a Manager

• Managers need to be aware of what constitutes ethics, values, the four approaches to ethical dilemmas, and how organizations can promote ethics.
• Ethics are the standards of right and wrong that influence behavior. Ethical behavior is behavior that is accepted as "right" as opposed to "wrong" according to those standards.
• Ethical dilemmas often take place because of an organization's value system. Values are the relatively permanent and deeply held underlying beliefs and attitudes that help determine a person's behavior.
• There are four approaches to deciding ethical dilemmas. (1) In the utilitarian approach, ethical behavior is guided by what will result in the greatest good for the greatest number of people. (2) In the individual approach, ethical behavior is guided by what will result in the individual's best long-term interests, which ultimately is in everyone's self-interest. (3) In the moral-rights approach, ethical behavior is guided by respect for the fundamental rights of human beings, such as those expressed in the U.S. Constitution's Bill of Rights. (4) In the justice approach, ethical behavior is guided by respect for the impartial standards of fairness and equity.
• There are three ways an organization may foster high ethical standards. (1) The top managers must support a strong ethical climate. (2) The organization may have a code of ethics, which consists of a formal written set of ethical standards guiding an organization's actions. (3) An organization must reward ethical behavior, as in not discouraging whistleblowers, employees who report organizational misconduct to the public.

3.4 The Social Responsibilities Required of You as a Manager

• Managers need to be aware of the viewpoints supporting and opposing social responsibility, four managerial approaches to responsibility, and whether being and doing good pays off financially for the organization.
• Social responsibility is a manager's duty to take actions that will benefit the interests of society as well as of the organization. An example of social responsibility is philanthropy, donating money to worthwhile recipients.
• For-profit companies generally make a point of "putting something back" into society as well as taking something out, but the idea of social responsibility has opposing and supporting viewpoints. The opposing viewpoint is that the social responsibility of business is to make profits. The supporting viewpoint is that since business creates some problems (such as pollution) it should help solve them.
• There are four approaches to social responsibility. (1) In the obstructionist approach, managers put economic gain first and resist social responsibility as being outside the organization's self interest. (2) In the defensive approach, managers make the minimum commitment to social responsibility—obeying the law but doing nothing more. (3) In the accommodative approach, managers will do more than the law requires, if asked, and will demonstrate moderate social responsibility. (4) In the proactive approach, managers actively lead the way in being socially responsible for all stakeholders, using the organization's resources to identify and respond to social problems.
• Negative ethical behavior and social responsibility can have certain negative financial effects—on the organization's stock price, sales growth, and customer loyalty. Practicing social responsibility can make a company attract more job applicants.

3.5 The New Diversified Workforce

• One of today's most important management challenges is working with stakeholders of all sorts who vary widely in diversity. Diversity represents all the ways people are alike and unlike—the differences and similarities in age, gender, race, religion, ethnicity, sexual orientation, capabilities, and socioeconomic background.
• There are two dimensions of diversity—internal and external. Internal dimensions of diversity are those human differences that exert a powerful, sustained effect throughout every stage of our lives: gender, ethnicity, race, physical abilities, age, and sexual orientation. External dimensions of diversity have an element of choice; they consist of the personal characteristics that people acquire, discard, or modify throughout their lives: personal habits, educational background, religion, income, marital status, and the like.
• There are five categories in the internal dimension and one category in the external dimension in which the U.S. workforce is becoming more diverse: (1) age, (2) gender, (3) race and ethnicity, (4) sexual orientation, (5) disabilities, and (6) educational level.
• There are six ways in which employees and managers may express resistance to diversity: (1) Some express stereotypes and prejudices based on ethnocentrism, the belief that one's native country, culture, language, abilities, or behavior is superior to those of another country. (2) Some employees are afraid of reverse discrimination. (3) Some employees see diversity programs as distracting them from the organization's supposed "real work." (4) Diverse employees may experience an unsupportive social atmosphere. (5) Organizations may not be supportive of flexible hours and other matters that can help employees cope with family demands. (6) Organizations may show lack of support for career-building steps for diverse employees.

3.6 The Entrepreneurial Spirit

• Entrepreneurship, a necessary attribute of business, is the process of taking risks to try to create a new enterprise. There are two types of entrepreneurship: (1) An entrepreneur is someone who sees a new opportunity for a product or service and launches a business to try to realize it. (2) An intrapreneur is someone who works inside an existing organization and sees an opportunity for a product or service and mobilizes the organization's resources to try to realize it.
• Entrepreneurs, who are needed to start a business, and managers, who are needed to grow or maintain a business, differ somewhat. Both have a high need for achievement and a belief in personal control of their own destiny (internal locus of control). Both have a high energy level and action orientation as well as high tolerance for ambiguity, but these characteristics are especially true of entrepreneurs. Entrepreneurs are more self-confident than managers are, and they have a higher tolerance for risk.