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Factors Affecting Today’s Business Environment
(called “The Dynamic New Workplace” in Chapter 1)
Business Factors
• Business is impacted by:1. intellectual capital2. globalization3. technology4. diversity5. ethics6. careers7. scarcity of natural resources /
environmental concerns (not in textbook)
Business Factors
• these provide great opportunities and challenges
• Challenges due to the rate of change uncertainty that they cause
• Opportunities for companies that are quick to adapt and take advantage of them
Intellectual Capital
• “the collective brainpower or shared knowledge of a workforce that can be used to create value”
• the combined skills and knowledge of an organization’s workforce
• “people are the ultimate foundations of organizational performance”– people can make or break a company
Intellectual Capital
• post industrialization:– is when the wealth in the economy comes
more from services and post-production, than production
• knowledge worker:– someone whose mind is a critical asset to
employers– more and more important in “post
industrialized” economies
Intellectual Capital
• Opportunities – ideas, experience, better use of human resources
• Challenges– may be harder to motivate, challenge, maintain
good workers– harder to replace highly knowledgeable workers– if there is a scarcity of knowledge workers, salaries
are high (“supply and deman”)
Globalization
• the world is one big marketplace• “the worldwide interdependence of resources,
markets, and business competition “• the national boundaries of world business
have largely disappeared• the world is increasingly arranged in global
economic blocs (e.g. NAFTA, EEC)
Globalization
• Opportunities– bigger market for products– lower costs for some material and labour– wider source for resources– people have greater knowledge of world beyond
their own borders
Globalization
• Challenges– greater competition – especially hard for small
companies– “interdependence” – international companies rely
on each other, and what affects one, might affect the other
– widening the “income gap” of workers?• “haves” vs. “have nots”
– depletion of natural resources
Technology
• equipment and processes that helps an organization to turn inputs into outputs– Makes communication, production, and
transportation faster and easier• information technology has transformed the
workplace• demand for “knowledge workers” with
technology skills continues to increase
Technology
• Opportunities – efficiency, lower labour costs, wider market reach, workplace flexibility
• Challenges• high costs (purchase and maintenance)• high need for worker training (skilled workers
needed)• increased demands to keep up with rate of change• reduces demand for unskilled workers
Diversity of Workforce
• the composition of a workforce in terms of differences among the members
• differences include gender, age, race, ethnicity, religion, sexual orientation, and able-bodiedness
• changing demographics are making the North American workforce increasingly diverse
Diversity of Workforce
• Opportunities– diversity of ideas, experience, perspective– when companies go global people will have
knowledge of other parts of the world• Challenges
– may be hard to have smooth integration of people with diverse backgrounds, languages, and beliefs
– overcoming biases and conflcts– may be language and comm’n barriers
Ethics
• a code of moral principles that sets standards of what is “good” and “right” in the conduct of a person or group
• modern society expects that businesses and other social institutions conduct their affairs according to high moral standards
• “Corporate governance” refers to the active oversight of management decisions and company actions by a board of directors
Ethics• Opportunities
– fairer treatment of employees, customers, other stakeholders
– doing the right thing can reap credibility and respect (way to differentiate from competition)
– doing the “right thing” is always the right thing
Ethics• Challenges
– customers expect businesses to be ethical– mainstream and social media makes unethical
actions visible– more time-consuming and costly– globalization makes particularly complex as ethics
may be cultural
Careers
• large organizations less likely to be source of long-term careers and one’s economic livelihood
• people increasingly relying on alternative forms of careers such as part-time work, contracts, or own businesses
• people should maintain a portfolio of skills that are always up-to-date and valuable to potential employers
Careers
• Challenges for workers - people cannot expect to have a job for life – must be adaptable, skills must be portable, and workers must continuously upgrade skills
• Challenges for businesses – workers may not be as loyal as they once were
Careers
• Opportunities for workers – more variety in career, opportunities to develop new skills; sometimes entrepreneurial incentives
• Opportunities for businesses – providing flexible work arrangements that suit needs of company
Scarcity of Natural Resources
• there is a limited supply and high demand for many raw materials (e.g. – oil, fish, fresh water)• causes: population growth, industrialization of nations, and constant need to growth and consumption
Scarcity of Natural Resource
• Challenges– cost of manufacturing increases– companies must innovate in order to reduce their
reliance on raw materials (petroleum, water, wood, food)
– companies must find ways to conserve resources
Scarcity of Natural Resource
• Opportunities - companies that can provide solutions that reduce our reliance on non-renewable resources have an edge