Discuss how societal forces influence the practice and theory of management. Do you think management techniques are a response to these forces? (Samson and Daft, 2009:78). Management, as defined by Davidson et al. (2006), is “a set of activities including planning, decision making, organizing, leading and controlling directed at an organization’s resources (human, financial, physical and information) to achieve organizational goals in an efficient and effective manner” (p. 5). According to Bartol et al. 2007), societal forces in general environment are factors that impacts on the organizations out of its control. Societal forces are often listed as economical, technological, socio-cultural, political-legal and international forces (Bartol et al. , 2007). Evaluating each of these forces in a business management is crucial for a manager to carry out management theory and practices. Economical: Bartol et al. (2007) define economic element as activities involves profit gaining, buying abilities, spending patterns and distribution of wealth in a system.
Many organizations faces economic influences that beyond their control and predictions. Inflation, recession, interest rates, currency exchange rates and unemployment are few of the important economic forces in business management (Bartol et al. , 2007). Wessels (2006) explain that during inflation, general prices of goods and services will increase. As a result, a company must adjust the prices of its products or services in order to compensate the difference in cost due to higher prices of raw materials (Wessels, 2006).
Company may also need to adjust wages or salaries of its workers to reflect the real cost of living on that period of time unless there is a long term contract that fixed an agreed amount (Wessels, 2006). Davidson et al. (2006) state that when unemployment rate increases, buying power of consumer decreases because less people are working. During economic downturns, it will be a lot harder to find a job and companies tend to redundant some of its workers in order to save cost (Wessels, 2006). Wessels (2006) also mentioned that recession could occur when unemployment rate continues to rise.
Davidson et al. (2006) point out that a company may force to pay the bank a larger sum of money than it expected due to increase in interest rates. This often causes delay in expansion of business (Davidson et al. , 2006). However, some companies may take advantage of the high interest rates in foreign market and shift investment offshore that offers better return (Davidson et al. , 2006). In converse, lower interest rates encourage smaller business to borrow loans from bank for business upgrade and investments (Davidson et al. , 2006).
When economy reaches its full potential, Ford Motor benefits from moderate unemployment in Australia and consumer demands for automobile is strong (Davidson et al. , 2006). There will be no issues in cutting labor cost and production can be maximized. Low inflation rates allow company to maximize its sales due to lower cost in resources and raw materials (Davidson et al. , 2006). The company takes advantages to improve production process with equipments and plant upgrade when the interest rates are low. During the global economic crisis that happened in late 2008, many organizations were being affected.
General Motors Corp. which also known as Chrysler LLC, faced crisis when there was insufficient fund to operate the business (McKee, 2008). The government refused to offer financial assistance and forced the company to face bankruptcy in early 2009 (McKee, 2008). The company managed to survive by filing bankruptcy protection after it made a deal with Fiat and its former owner Cerberus lost its 80. 1% share (BBC News, 2009). Technological: The advance of science and technology nowadays creates much more opportunities to most organizations.
Many organizations with higher vision are willing to invest a large sum of money into research and development. This is because technology not only improves quality of the products but also improves process and production in which, as a result, saves cost in long term. There are some smaller corporate fail to take advantage of the new technology available due to limited financial resources and low profit margin. This often causes failure in commercializing innovative products in smaller companies. Hence, it is crucial to ensure innovations from product developments are market directed.
The invention of the bar code reader is one the best example for this. Marsh Supermarket in Ohio was founded in 1930 with five organization’s goals (Marsh Supermarkets, 2010). According to the company website, these are “first choice shopper”, “market leaders”, “committed to customers and their needs”, “exceptional shopping experience” and “support and improves the community” (Marsh Supermarkets, 2010). In 1974, the Marsh Supermarket in Ohio was the first food retail store that utilized UPC Scanner, which is the barcode scanner in checkout (Marsh Supermarkets, 2010).
With the use of barcode scanner and computer, this facilitates the entire checkout process by giving the sum for customers’ purchases, receipts printing and even inventory control for stock taking. Clearly, the Marsh Supermarket converted this breakthrough innovation into excellence services. In 1995, Marsh Supermarket introduced Marsh Fresh IDEA card to reward its loyal customers by giving discounts electronically at the checkout (Marsh Supermarkets, 2010). Marsh Supermarket also offers home delivery in conjunction with telephone and online shopping.
One of the operating imperatives of Marsh Supermarket is “innovative solutions” (Marsh Supermarkets, 2010). The Supermarket values the advance of technology and readily accepts any positive changes in the organizations. With the implement of innovations and technology, Marsh Supermarket achieved their missions in an efficient and effective way. In this case, technology has become one of the most important components in the success of Marsh Supermarket with 102 Supermarkets across Indiana and Ohio region. Socio-cultural: A successful multinational organization must identify the socio-cultural variables in its environment.
Socio-cultural is defined as “attitudes, values, norms, beliefs, behaviors and typical regional demographic trends” (Bartol et al. , 2007, p. 47). Fast food corporations are often affected by socio-cultural dimensions. It is predicted that there will be 6% increase in household spending on fast foods due to demographic development between year 2000 and 2020 (Stewart et al. , 2003). Social status, occupations and income also affects the consumer behaviors on fast food spending. Stewart et al. (2003) points out that a single manager who work longer hour will spend more on fast foods compare to home-cooked meal due to time constraints.
In contrary, a husband who work 40 hours a week in a typical company will rather have healthy home-cooked meal prepared by his wife than having fast food. Population should also be taken into considerations when operating fast food restaurants. As sensory of older population tends to diminish, foods with bolder flavors are preferable (Stewart et al. , 2003). Steward et al. (2003) also emphasize that a household without dependents will also cause spending to increase by 1 to 2% further per person. There is also slight decrease in fast foods spending per person, which is about 2% per capita, due to aging population (Steward et al. 2003). McDonald, operating more than 30,000 fast food outlets over 120 countries across the world is very well aware of socio-cultural influenced on its corporation. This can be seen while McDonald’s foreign franchisees advertise according to the culture and languages within their regions. Some menu modifications are also used to attract consumers with different religions and cultural background. As a market-oriented organization, McDonald’s Corporation made its commitment to adapt the diversity of the customers around the world (McDonald’s Corporation, 2010).
The corporation introduced McCafe as co-branding to its McDonald’s fast food outlets to attract different target customers and maximizing its sales (Wright, 2007). McDonald’s Corporation achieves its success by understanding the influences of population’s behavior, social, cultural and beliefs. Political-legal (Legislative changes): All organizations affected by political-legal forces. Some laws and regulations are being set by governments to control business activity of organizations.
Legal system is often closely linked to political issues as most government regulations formed under the influences of political pressure (Bartol et al. , 2007). There are food law and regulations in food industry to protect public health and safety as well as facilitate food trades among the world (Freeland-Graves & Peckham, 1996). Government bodies in United States such as USDA (U. S. Department of Agriculture), FDA (Food and Drug Administration), FSIS (Food Safety and Inspection Services) and etc are responsible for regulations concerning food supply to United States.
Yum! Brands Incorporate, which is the parent company of KFC has Supplier Code of Conduct to ensure all its products compliant to food regulations and other legal requirements (KFC, 2010). There are also legislations, organizations and government bodies responsible to protect the rights of workers. In Australia, Fair Work Australia, which is national workplace relations tribunal, is responsible to administer the Fair Work Act and deal with organizations that registered under this Act (Fair Work Australia, n. d. . The Australian Workers Union (AWU) is also formed in 1886 and registered under Fair Work Australia, to represents the workers when dealing with employers concerning the workers welfare (Fair Work Australia, n. d. ). Most companies also have policies in placed to avoid workplace harassment, discrimination, unfair dismissal and etc. iiNet is an internet provider company in Perth and its mission is to provide the best internet services in market with quality, plain-speaking customer service (iiNet, n. d. ).
The company has a series of plans to make sure it achieves its goals by establishing its own network, offering excellent products and services to customers according to their needs (iiNet, n. d. ). In order to ensure products and services are up to standards, iiNet is ISO (International Organization for Standardization) certified (iiNet, n. d. ). In November 2008, seven movies studio and television network filed a lawsuit against iiNet for allowing its customers to download pirated movies and shows (Moses, 2008). Australian Federation Against Copyright Theft (AFACT) involved in investigations on this matter (Moses, 2008).
The lawsuit was dismissed due to insufficient evidence to prove the company authorized its user to download copyright materials and distributing them illegally (Moses, 2008). International influences (Globalization): Managing a business internationally requires managers to deal with larger and broader diversity. This often involves interactions with people from different cultures and backgrounds, different social norms, languages, and legislation. In short, international influences are closely related to socio-cultural and legal-political forces in larger spectrum.
McDonald’s Corporation as discussed above is a multinational organization which successfully indentified the influences of socio-cultural forces to its organization. Its operation of franchised outlets in foreign countries must also comply with the laws and regulations of those foreign countries. Many might think that international forces only affect multinational organizations which operate in more than one country. International forces, in fact, also impact on businesses which operate in only one country (Davidson et al. , 2006). Davidson et al. (2006) point out that a company who provides services and products