Forces reshaping business management, operations, and stakeholder expectations

Business

How forces in and outside of business firms are changing the management task, altering business operations, and modifying stakeholder expectations?

Business, particularly those heavily emphasizing technology, are constantly changing. In many instances these changes are occurring due to a combination of internal and external factors. These factors often modify stakeholder expectation because the fundamental business itself has shifted. A very dynamic force that is changing the management task is that of globalization. Globalization is particularly contentious because it has no geographic limits. Competition can now come from anywhere at anytime. As such, management must be cognizant of the changing dynamics prevailing in their respective industries. The auto industry, for example, has directly felt the impact on globalization and stakeholder expectations. The auto industry prior to foreign competition was characterized by large fixed asset costs, hefty legacy and pension obligations, and slow innovation. However, through globalization the Japanese's were able to enter the market and product high quality lower cost cars to the market. Eventually it took a near bankruptcy event for the industry to finally change the manner it which it produces cars. Through this instance of the external global force, management tasks in the industry changed to a more nimble quality oriented focus. The business operations were altered to reflect the changing consumer demand for higher quality more fuel efficient vehicles. And stakeholder expectations were altered as the Japanese had now become a more viable competitor in the market place.

Internal forces are also just as dynamic as the external forces mentioned above. Internal sources are arguable more damaging because habits, customs and cultures become so entrenched within the organization. An internal force that could alter a business firm is a restructuring. Restructurings often occur due to external forces prevailing in the market. This could include price wars, an obsolete product, and the introduction of new products, a severe economic downturn and so forth. Restructurings change management tasks because the must undoubtedly terminate and lay off workers. This can be difficult as layoffs can result in key personnel leaving to the competition. It also lowers employee moral and cause angst and confusion amongst employees. It alters business operations as employees are not as productive. They are often more concerned with their personal jobs as they are about the work needed to be done. These same occurrences also arise when firms are also merged or acquired by competitors in the same industry.

How influential ideas in the business environment shape the business-government-society relationship?

Ideas are always shaping the relationship between business, government, and the rest of society. Capitalism in particular, is predicated on the notion of ideas that occur due to profit incentives. Ideas such as the internet, television and radio all influenced the manner in which business was conducted. Government's roles are to help establish and foster an equally competitive playing field within the capital markets. Government must ensure that everyone within the business industry is operating fairly and ethically in accordance with applicable law. This allows society overall to grow and flourish. Government organizations such as the FDA and CDC are designed primarily to protect the overall consumer for business practices that will ultimately harm society. Business, through operating within these laws can then begin to innovate and use ideas to compete in the overall marketplace.

Ideas influence the relationship mentioned above when new industries appear, or when unexpected occurrences arise. Influential ideas about the internet, internet security, and government's role in the application of that security are very recent example. The ideas centered on privacy and the role business and government play in protecting the privacy of society is a very contentious issue. To what extent should government honor privacy if national security issues are paramount? What should businesses do with private consumer information over the internet to adequately protect it from hackers? All three entities are tied to the application of these ideas. All three are also responsible for making the ideas fair for all parties involved. The ideas centered on this notion of privacy will alter how products are produced, how products are offered, and ultimately pricing of products. As such all three entities are correlated in many respects. If for example, governments require more rigorous security requirements, business may pass the increased cost on to consumers. Consumers will then end up paying for the security elements imposed by the government. As consumers pay more, they may purchase fewer products, which impact the overall economy. As such, the ideas of all parties will affect the overall relationship between business, government and society.

Measure the importance of law and government regulation as a force guiding business behavior.

Government involvement in a market economy is necessary only when the industry is systemically important to the overall functioning of the economy. These systemically important institutions, if default occurs, could threaten the economic system of America. These industries, including energy and banking require extensive government oversight in addition to intervention if needed. In many instances, little government involvement is beneficial to the market economy as it allows competitive forces to dictate operating results. The lack of government intervention, the private sector can handle many of the problems that occur within the industry in a process known as "creative destruction." If a large company defaults, then other private enterprise can better serve the market with products that are demanded. This occurs primarily through a lack of government intervention within the economy. For one, government involvement occasionally undermines the competitive climate of industry. Capitalism is predicated on innovation and profit motives to drive business results from a private perceptive. Those who innovate should therefore be rewarded accordingly. With government intervention, this incentive is dramatically abated as firms are reluctant to innovate. However, in the case of systemically important institutions, government oversight is indeed needed to insure innovation does not hamper the overall economic system of America. This occurrence of innovation hindering the progress of society occurred with the financial crisis of 2008. Due primarily to greed, misaligned incentives, and financial innovation, consumers lost nearly half their net worth. In this particular instance, government intervention was needed to insure the stability and confidence within the market economy as consumers panicked due to the overall pessimistic outlook. As confidence in the market declines, so too does the prevalence of capital. Overly pessimistic views of a market economy can cripple much need liquidity in the system. As a result, government involvement is needed to instill confidence within the overall system. This true in regards to nuclear energy, financial instructions, healthcare, autos, and other vitally important aspects of society. In regards to the banking industry example, capital requirements have been implemented by government to insure the safety and viability of the market economy as a whole.

Evaluate the modern trends related to ethical and philosophical basis for making business decisions.