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In the general environment there are six components: international, technological, natural, sociocultural,

economic, legal/political. The following questions focus on the general environment.


- Within the general environment is the international dimension. Currently there is quite a bit of uncertainty in this area. Read section 2.2b Adapting to the Environment and select one of the methods to mitigate uncertainty described in the section. Describe the method you have selected and why you believe it would be effective in reducing the level of uncertainty.


-What strategic issues have the potential to create environmental uncertainty in the automobile industry? Refer to as many dimensions in the general environment as you can. These can be brief descriptions but be sure they are clear to the reader.


this is the section 2.2b


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2.2b Adapting to the Environment
Environmental changes may evolve unexpectedly, such as shifting customer tastes for video
and computer games or social media sites, or they may occur violently, such as the
devastating Japanese earthquake and tsunami in 2011. The level of turbulence created by
an environmental shift will determine the type of response that managers must make in
order for the organization to survive. Managers continuously scan the business horizon for
both subtle and dramatic environmental changes, also called strategic issues, and identify
those that require strategic responses. But sometimes those conclusions on environmental
changes are biased in favor of some natural inclination of the managers, as shown in this
chapter's Business Blooper on NBC's Today Show.
Strategic issues_(Strategic issues are "events or forces either inside or outside an
organization that are likely to alter its ability to achieve its objectives.") are "events or forces
either inside or outside an organization that are likely to alter its ability to achieve its
objectives." As environmental turbulence increases, strategic issues emerge more
frequently. . Managers use several strategies to adapt to these strategic issues, including
business intelligence applications, attempts to influence the environment, creating
interorganizational partnerships, and mergers or joint ventures.
Business Intelligence
Organizations depend on information, and companies that most effectively acquire,
interpret, disseminate, and use information come out as winners. Managers have learned
the importance of not only being aware of what's going on inside the organization, but also
getting a handle on what's going on in the external environment. Boundary spanning
(Boundary-spanning roles link to and coordinate the organization with key elements in the
external environment. Boundary spanners serve two purposes for the organization: They
detect and process information about changes in the environment, and they represent the
organization's interests to the environment.) links to and coordinates the organization with
key elements in the external environment. 3.
One area of boundary spanning is the use of business intelligence, which results from using
sophisticated software to search through internal and external data to spot patterns, trends,
and relationships that might be significant. The fastest-growing segment of business
intelligence is big data analytics. As described earlier in this chapter, big data analytics
refers to searching and examining massive, complex sets of data to uncover hidden
patterns and correlations and make better decisions. .25.
Big data analytics is becoming a driving force in many organizations, with 85 percent of
Fortune 500 companies reporting in 2012 that they have launched big data initiatives. .*
One of the best-known examples of the use of data analytics among the general population
is in the sports world. The popular book Moneyball: The Art of Winning an Unfair Game,
later made into a movie starring Brad Pitt, tells the story of how the Oakland Athletics

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general manager Billy Beane built a winning team by analyzing previously ignored player
statistics. .3 Today, most sports teams use sophisticated data analytics programs to
analyze player statistics. Similarly, businesses use big data analytics to gain insights that
can improve performance. Some airlines use a service called FlightETA, from PASSUFi
Aerospace. a provider of decision support technologies for the aviation industry, to eliminate
gaps between estimated and actual flight arrival times. PASSUB collects a wide range of
multidimensional data and can analyze patterns spanning more than a decade to
understand what happens under specific conditions. The company says that enabling
airlines to know when planes are going to land and plan accordingly can save several
million dollars a year. 1'. Banks such as Capital One analyze customers based on credit
risk, usage. and multiple other criteria to match customer characteristics with appropriate
product offerings. Kaiser Permanente collects petabytes of health data on its 8 million
members. Some of that data was used in a study sponsored by the U.S. Food and Drug
Administration (FDA) that identified a greater risk of heart attacks among users of the pain
medication 'v‘ioxx. 1?. Business Blooper
NBC’s Today Show Brought in with much fanfare from ESPN, Jamie Horowitz was named top executive
and general manager of the Today Show at NBC in September 2014. He put himself
at odds immediately with the managers who hired him by suggesting for too many
changes too quickly. NBC executives said Mr. Horowitz did not grasp the fine
nuances of the “Today" culture. When he was hired, Horowitz was considered as a
replacement for the President of NBC News, Deborah Furness, who had actually
hired him. Instead, he got fired a mere 10 weeks after he started. SOURCE Bit! Gamer, “Executive's Aggressive Push to Revamp Today’ Prompts His Dismissal, '
November 19, 2014, p. 33. Business intelligence and big data analytics are also related to the growing area of
boundary spanning known as competitive intetiigence (Ci), which refers to activities to get
as much information as possible about one’s rivals. 3?. Influence the Environment Boundary spanning is an increasingly important task in organizations because
environmental shifts can happen quickly in today's world. Managers need good information
about their customers, competitors. and other elements to make good decisions. Boundary
spanning also includes activities that represent the organization's interest in the
environment and attempt to influence elements of the external environment. .1 General
Electric (G E) spends more than $39 million on political lobbying to influence government
officials to take actions that positively affect the company’s business performance. GE's
political lobbyists span the boundary between the organization and the government, a
critical aspect of the external environment. .15.

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lnterorganiantlonal Partnerships Organizations often join together to adapt to or influence the environment. With tough global competition, constantly changing technology, and shifting government regulations, few companies can compete effectively unless they join with other firms in various partnerships. Organizations around the world are
embedded in complex nefvmrks of confusing relationships—collaborating in some markets,
competing fiercely in others. The number of corporate alliances has been increasing at a
rate of 25 percent annually, and many of those have been between competitors. 1"- For
example, in the auto industry. General Motors (GM) and Honda compete fiercely, but the
two joined together to develop a hydrogen fuel cell that would be shared by both
automakers for vehicles they would produce around the end of the decade. Hyundai,
Chrysler, and Mitsubishi jointly run the Global Engine Manufacturing Alliance to build four-
cylinder engines. Volvo is now owned by Zheiiang Geely Holding Group of China, but it
maintains an alliance with its previous owner, Ford, to supply engines and certain other
components. 1‘: in a partnership, each organization both supports and depends on the
others for success, and perhaps for survival, but that doesn’t mean they don’t still compete
fiercely in certain areas. 3!! Managers in partnering organizations
shift from an adversarial orientation to a partnership orientation. The new Ftead the “Ethical Dilemma”, which pertains
paradigr'ir'ii shown in Exhibit 2-5: is to Cl. DO you have the courage to I13“ your
based on trust and the ability of partners ieb by challenging the posse inappropriate
to work 0m equitabie soiuiio he to use 01 Confidential information ? conflicts so that everyone profits from
the relationship. Managers work to
reduce costs and add value to both sides, rather than trying to get all the benefits for their
own company. The new model is also characterized by a high level of information sharing,
including e-business links for automatic ordering, payments, and other transactions. In
addition, person-to-person interaction provides corrective feedback and solves problems.
People from other companies may be on site. or they may participate in virtual teams to
enable close coordination. Partners are frequently involved in one another '3 product design

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and production, and they are committed for the long term. It is not unusual for business
partners to help one another, even outside of what is specified in the contract. .
Exhibit 2.5
The Shift to a Partnership Paradigm
From Adversarial Orientation
To Partnership Orientation
. Suspicion, competition, arm's length
. Trust, value added to both sides
. Price, efficiency, own profits
. Equity, fair dealing, everyone profits
. Information and feedback limited
. E-business links to share information and
conduct digital transactions
. Lawsuits to resolve conflict
. Close coordination; virtual teams and
people onsite
. Minimal involvement and up-front
. Involvement in partner's product design
investment
and production
. Short-term contracts
. Long-term contracts
. Contracts limit the relationship
. Business assistance goes beyond the
contract
Mergers and Joint Ventures
A step beyond strategic partnerships is for companies to become involved in mergers or
joint ventures to reduce environmental uncertainty. A frenzy of merger and acquisition
activity, both in the United States and internationally, in recent years is an attempt by
organizations to cope with the tremendous volatility of the environment. . Look at the
health care industry, where a sweeping national trend toward joint operating agreements
and mergers reflects the tremendous uncertainty in the industry. More than 100 hospital
deals took place in 2012, twice the number just three years earlier. Moreover, Gary Ahlquist,
a senior partner with Booz & Company, predicts that of the 5,724 hospitals in the United
States in 2013, about 1,000 will have new owners within the next seven years.
Concept Connection
FLOBAL STOCKS SURGE _ NOW APPEAR
Walgreens
Michael Leccisana/Getty Images for Heidi Klum/Getty Images
Michael Loccisano/Getty Images for Heidi Klum/Getty Images
Already the largest drugstore chain in the United States, Walgreens decided to
expand its business through a major acquisition. The company paid nearly $400
million to purchase the online health and beauty care product retailer

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Drugstore.com. Mergers and acquisitions are one way organizations adapt to an
uncertain environment.
A merger (A merger occurs when two or more organizations combine to become one.)
occurs when two or more organizations combine to become one. For example, car rental
conglomerate Avis Budget Group recently bought Zipcar, the popular car-sharing company
based in Cambridge, Massachusetts. ._ A joint venture involves a strategic alliance or
program by two or more organizations. A joint venture typically occurs when a project is too
complex, expensive, or uncertain for one firm to handle alone. Sikorsky Aircraft and
Lockheed Martin, for example, teamed up to bid on a new contract for a fleet of Marine One
helicopters. The joint venture would have Sikorsky building the helicopters and Lockheed
Martin providing the vast array of specialized systems that each one uses. Although the two
companies have previously competed to build presidential helicopters, they joined together
to be more competitive against rivals such as Boeing, Bell Helicopters, and Finmeccanica
SpA's Agusta Westland. ._ Joint ventures are on the rise as companies strive to keep
pace with rapid technological change and compete in the global economy.
Remember This
. When external factors change rapidly, the organization experiences high
uncertainty.
. Strategic issues are events and forces that alter an organization's ability to
achieve its goals. As environmental turbulence increases, strategic issues
emerge more frequently.
. Boundary spanning links to and coordinates the organization with key
elements in the external environment.
. Big data analytics (Technologies, skills, and processes for searching and
examining massive, complex sets of data that traditional data processing
applications cannot handle to uncover hidden patterns and correlations.) uses
powerful computer technology to search and examine massive, complex sets
of data to uncover hidden patterns and correlations so managers can make
better decisions.
. Interorganizational partnerships (Inter organizational partnerships reduce
boundaries and increase collaboration with other organizations.) reduce
boundaries and increase collaboration with other organizations.
. A merger occurs when two or more organizations combine to become one.
. A joint venture is a strategic alliance or program by two or more
organizations.
. Sikorsky Aircraft and Lockheed Martin teamed up to bid on a new contract for
Marine One helicopters.

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