ORGANIZATION AND MANAGEMENT

ACTIVITY #1
How does a mother apply the different function of management in daily situations? Can you
safely say that your mother is a good mother? Defend your answer.
How do you apply management in your daily life? Write your explanation.

ACTIVITY #2

Name:
Year and Strand:

Starbucks Environmental Scan

Starbucks is a company in which purchases and roasts high quality whole bean coffees
and sells them along with fresh, rich-brewed, Italian style espresso beverages, a variety of
pastries and confections, and coffee- related accessories and equipment (starbucks.com). During
my environmental scan in which took place at the Starbucks on the corner of Fair and Newport
across the street from vanguard, I noticed many things in which where never brought to my
attention in prior stays and visits at Starbucks; such as the many social groups in which choose to
have their meetings at Starbucks. Thus, in this essay we will discuss things in which many
people do not really notice when going to Starbucks.
The first question in which is asked of me for this assignment is, what is the demographic
make-up of their customers? During my scan at this particular Starbucks the average age of each
customer was from the low to mid-twenties, but then there are the occasional older folks in
which would bring in their children of which where the ages of twelve and younger. When asked
about the ethnicity of which the customers are, Starbucks holds no boundaries to that question.
During my stay there where many races in which where there such as Hispanics, Caucasians,
African-American, and there were also other races in which I do not even know the name of in
which where there. The socio-economic level of most customers seemed very high, it seemed as
if everyone there is well educated and it seemed as if most people in which where there are
attending college our have attended college.
Another question in which was asked of me was; what do the customer’s order? Since my
scan was done at night most drinks that where ordered where hot. Also, some people would order
a pastry with their drinks in which could be a coffee cake, or a chocolate espresso brownie, or
one of the other pastries in which where offered. People ordered many different types of drinks
such as hot chocolate, vanilla crème, and coffee. An item in which people also order but was rare
is the sandwiches in which Starbucks makes daily. While listening to what people order there
was a coffee language in which was used a lot and one that every customer knew, this language
was the language in which told the employees what size of drinks they wanted. The words in
which they spoke where tall, grande and venti; tall stood for small, grande was for medium and
venti was for a large drink. This language was spoken by every customer and each spoke it
fluently.
 What is dećor of the store? The store was decorated with many modern and urban
furniture and lights; there are also many pictures and posters of bean plantations, and other
places around the world in which they have received coffee beans from. All of the furniture in
the store was oversized and are all very comfortable before even taking a seat in it, but once you
sat down you would not want to get out of your seat because the chairs are very relaxing. The
merchandise of the store is very well placed, they are placed in an area in which has easy access
to and it most often is the first thing in which you see when you walk into the store. The
merchandise is placed both on shelves on the wall and in different places while you are walking
through the store.
The employees at Starbucks are very nice and they will answer any questions that you
may have either about the store or about the drinks in which they offer. The thing about the
workers is that they are all upbeat and like their jobs. Since they like their jobs it shows through
the way they work. The people working there were all upbeat, made drinks at a rapid paste, and
they never got a single order wrong while I was there. Since most of the people that work there
are very knowledgeable it is very easy to have a conversation with them. Furthermore, since all
of the people have very good communication skills and show care for all of their customers may
tend to develop a relationship with the people that go there on a daily basis. Even with me, even
though I was only there for a little more than an hour they all were talking and joking around
with as if they have known me for months and did not just meet me that day. Thus, through my
experience it seems as if Starbucks has the best employees when it comes to interaction with
their customers. Also, all of the staff members seem as if they all like each other, because they
all work very well together and it seems as they are having a fun time while they are at work,
since they all get along with and joke with each together.
When it comes to whether people take their drinks to go or drink them in the store, on the
most part it seemed as if everyone that got a drink stayed and drank there in the store. The reason
why most people were getting drinks and staying at the store was because of the people in which
came during that time where college students and they were all having their study groups inside
since it is worm and quiet. Also, when people came to Starbucks most came in a group and keep
conversation within their group, but then there was the occasional person in which came by
themselves but in that case they either took their drink to go or they have had a book with them
in which they sat down and read it while having a cup of coffee.
On a side note something that I realized is that Starbucks is known worldwide as a place
in which you can come get a cup of coffee and relax. For example, while doing my scan there
was a group of around a six people in which you could tell that they were from out of town and
most likely out of state, and the reason why these people came into Starbucks was so that they
could get a drink and relax for an hour or so and then get on with their trip.

Identify the following.

STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS
ACTIVITY #3
1. How would you portray the present economic status of the Philippines? Describe
briefly.

2. From among the phases of economic development, where do you think is the
Philippines now?

3. What do you think are the hindrances for the Philippines to attain the last phase of
economic development? Name them. Explain.

ACTIVITY #4
Direction: Read the article below and answer the questions below it.

Philippines in a New Era of Global Uncertainty

There is a growing sense that the world is at a major crossroad. Critical global trends and
developments indicate that the path ahead will be fraught with challenges of sluggish economic
growth and geopolitical uncertainty.

The much-anticipated global economic recovery had been anemic and the Great
Recession had degenerated into “secular stagnation” and “Greater Depression” – these terms
recently used by renowned economists Lawrence Summers and J. Bradford DeLong respectively
attest to the pervading air of pessimism.

The persistence of the economic malaise has cast doubts on the continuing efficacy of
traditional counter cyclical fiscal and monetary policies now in place for several years.
Keynesian policies are making little headway in restoring growth and reducing unemployment.

In the meantime, the Arab Spring has morphed into the Autumn of upheavals and
internecine strife with ISIS emerging as a new and deadly peril. The crisis in Ukraine heralds
years of confrontation between EU and NATO against a resurgent Russia. There’s also the Ebola
threat in West Africa which is growing exponentially in virulence and scope.

The West Philippine Sea and the East China Sea are wracked by tension over the
territorial disputes between China and Japan, the Philippines and Vietnam. What is the
significance of these developments in a global geopolitical and economic context?
 The current global economic and political uncertainty stands in stark contrast to the
prosperity of the late 20th century and much of the first decade of the 21st century. The 1980s
were comparatively benign and the rapid economic expansion in the 1990s lulled especially
North American managers and technocrats into complacency. In the boom years of the 1990s,
the main agenda for global companies had been exploiting profitable opportunities from the
vigorous US market, the transition economies of East Europe, investment opportunities in China,
and the advent of the Internet.

The demise of the business cycle was one view gaining traction. Many young managers
and professionals of that period had no memory or appreciation of a recession. The Philippines
specifically during the administration of President Fidel Ramos had been proclaimed as the next
Newly Industrialized Country (NIC) in the making. The global economy would stride into the
new millennium with sustained growth and rush headlong into a future of peace and prosperity
guided by free markets and advanced technologies.

The new normal

Uncertainty or volatility is not a novel experience for the world economy which had been
historically characterized by business cycles or the periodic ebb and flow of economic activities.
Indeed, the 1930s was the era of the Great Depression.

The eminent economist, Joseph Schumpeter proposed the idea of a “creative destruction”
or the process where economic progress is achieved through the creation of new and better
technology at the expense or destruction of obsolescent technology. Companies have historically
been confronted by the challenge and opportunities of the emergence of new technologies and
disruptive effects of innovations. Thus, a manufacturer of pagers that do not adapt to the era of
cell phones is doomed to extinction. Economic progress under Capitalism is therefore necessarily
disruptive.

The dotcom bust at the turn of the 21st century was a rude awakening and the 9/11
attacks came as an unprecedented traumatic shock. Though economic recovery returned, there
have always been the heightened national security fears about terrorist plots.

Finally, the prolonged Great Recession ended any semblance of business normalcy for
while the expansions and contractions of the business cycle occur periodically, the economic
weakness and uneasiness since late 2007 had been unusually long and severe. The unsettled
environment has become the new normal. We have entered a new era of global uncertainty.

How can the Philippines cope?

How different is this new era of uncertainty? Profound and extensive interconnectedness
engendered by globalization and advanced telecoms indicates greater potential for depth,
breadth, and speed in the transmission of instability. With the maturation of the Internet and IT,
external shocks will rapidly ripple across global markets intensifying the potential for panic and
knee jerk reactions. Financial risks are magnified due to over leveraging in response to the wave
of deregulation. The spread of globalization has created fierce and more numerous competitors.

It may be tempting to dismiss the relevance of the feeble world economy and the role of
global uncertainty for the Philippines as the country had been achieving heady economic
expansion since 2010. But the Philippines cannot decouple itself from the state of the global
economy in terms of the country’s engagement with world trade, investments, OFW deployment,
reliance on remittances, and the prevalence of conflict and instability may eventually curb the
country’s economic growth.

How can the country cope with the greater uncertainty? In general, a country’s economy
reduces its risks in an unstable environment by adopting more prudent financial and economic
policies. We can analyze the necessary responses from both micro and macroeconomic
perspectives. Let’s start with the micro level which refers in this case to Philippine firms.

How are businesses affected and how would they cope with the highly uncertain business
environment? A sudden bout of volatility will reflect in a decline in stock market prices. A
company stock will be hit as part of a general negative market sentiment and the perceived
specific adverse effects on the company through the operations side or the costs of doing
business (CODB) and via the output side through their revenues and markets.

On the operations side, the CODB that are most susceptible to short run, violent
fluctuations are foreign exchange and interest rates — factors that trigger rapid increases in
prices of oil and raw materials and depreciation of the domestic currency. Inimical effects on
firms depend on their sensitivity or vulnerability to changes in these specific variables. Interest
rates would affect credit costs which impact all firms. For exchange rate fluctuations, the most
vulnerable would be firms dependent on raw materials imports, semi processed products etc.
used in their supply chain and exchange rate losses from off shore operations as well as
companies that use oil or gas for their production. Thus, investors react as the turmoil moves
from the financial markets to the real sector i.e. from Wall Street to Main Street.

On the output side, turbulent economies and politics can severely impact the market of
the company. Thus, Greek companies got a double whammy not only from the domestic fiscal
crisis but the tanking of demand for shipping and tourism services — the two major pillars of the
Greek economy as Western European economies went into a tailspin. Across the Mediterranean,
some MNCs operating in Libya and Syria had been forced to leave when those countries were
wracked by civil war. The Canadian company Bombardier’s planned JV to manufacture
airplanes in Russia is on hold due to the deterioration of relations between Russia and the West.

The airline industry illustrates a business that is buffeted by the headwinds on both input
and output side. Battered by the free fall in air travel from the post 9/11 period, airlines then
stalled from a confluence of both high oil prices and the Great Recession. Meanwhile, the
industry deregulation encouraged the growth of budget carriers that challenged the legacy
carriers.
 What can Philippine businesses do in this new era of uncertainty?

1. A strategic mindset: acceptance

In the new era of uncertainty expect the unexpected. Managers and professionals need to
recognize that rare, major, unforeseen events or “black swan” events as conceptualized by
statistician and scholar Nassim Taleb can occur. The classic event to illustrate the black swan
event had been the massive tragedy of 9/11 but they can also refer to the emergence of disruptive
technologies such as the computers and Internet. The acceptance of the likelihood of black swan
events facilitates the planning and response process as it pushes the organization to be dynamic
and open to changes. The organization needs to accept that incorporating seemingly irrational
scenarios is a rational exercise. The strategic mindset of acceptance of black swan events is an
impetus to undertake an uncertainty preparation framework for the organization.

2. Effective environmental scanning

Knowing that the firm is operating in a new era of uncertainty encourages the
organization to undertake a thorough and effective environmental scanning.  There will always
be pure black swan events (e.g. 3/11 tsunami in Japan) but there will also be developments
whose possible outcomes can be incorporated into various scenarios such as the trajectory of the
Eurozone crisis, the rise of mobile devices, Chinese economic growth, the Syrian and Iraqi crisis
etc.

3. Due diligence and analysis

Having engaged in a meaningful environmental scanning, the company can examine in

greater detail, analyze and evaluate various scenarios. Thus, the company can use sensitivity
analysis that focuses on assuming a wide range for specific variables to assess their
consequences on the firm. The strategic mindset of acceptance of the improbable becomes
relevant as e.g. while oil prices may reasonably reach a high of $150 per barrel, incorporating an
unknown extreme event may mean assuming a maximum of $175 per barrel and gauge how it
may affect the firm.

4. Strengthen the business

While management should try to strengthen their company at all times, it becomes an
imperative in an era of uncertainty. A firm with a stronger balance sheet will be able to better
withstand any external shock and to be simultaneously opportunistic such as Apple Computers
with cash of $159 billion in 2013. Such a staggering cash hoard is a defensive strategy to insulate
the company from a liquidity crisis but it is also an arsenal to empower the company to engage in
necessary strategic acquisitions.

A prudent, realistic expansion program is vital especially in the current era of uncertainty.
For example, the downfall of the iconic PanAm can be partly explained by the acquisition of too
many 747s. It ended up with a lot of empty seats when the oil shock of the mid 1970s struck-
certainly a black swan event. Other measures include a tighter monitoring and review of both
suppliers and customers to determine those who are most vulnerable to financial shocks.

5. Enhance competitive advantage

Whether the challenge arose from market contraction, the urgency to supply a new
market, a huge spike in the CODB or a convergence of various elements, the dynamic company
seeks its competitive advantage as the basis for its sustainable position in the economy.

An agile and flexible company will perform well even as it operates in the era of
uncertainty. The nimble firm can act speedily and decisively in responding to quickly unfolding
black swan events. Firms can restructure to become flatter organizations. Often, the lines of
authority and decision making are difficult to reform as they are embedded in the corporate
culture. When Toyota had to grapple with major quality issues in its cars it was criticized for its
slow response though this was in accordance with the Japanese management practice of
consensus management (ringisei). Consensus is time intensive and while it may be optimal
during stable periods, it may become a stumbling block during periods of rapid developments,
uncertainty and volatility.

Some companies rely on subcontracting, outsourcing, and offshoring to keep costs down.
However, improper implementation can hamper the formation of a dedicated in-house pool of
experts and lessen control on the production process e.g. supply chain issues delayed Boeing’s
787 project because of over-reliance on subcontractors.

6. Stay the course but be flexible

With unexpected changes it may appear timely to question the strategy of the
organization, if not its very mission itself. However, unless there’s a fundamental change in the
business environment that adversely affects the competitive advantage of the company it is best
for it to stay the course. The challenge for management is that such clarity of adhering or
changing strategy may only come after some period as the contours of the fluid environment
becomes definite. An optimal approach for the company can be to adopt an “emergent strategy”
which as propounded by business scholar Henry Mintzberg means being flexible and
opportunistic while continuing to stay the course on its main path for as long as a “game
changer” has not occurred.

Questions:
1. What are the significant events around the world? Which ones are positive? Which ones
are negative? Make a list of them.

2. What are the ways in which the Philippines could cope with uncertainty in doing
business? Discuss briefly.