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Chapter 02 - The External and Internal Environments
2-2
Test Your Knowledge 23
Expanded PowerPoint Slide Show 55

2-3
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1 Describe how environmental forces influence organizations and
how organizations can influence their environments.
2 Distinguish between the macroenvironment and the competitive
environment .
3 Explain why managers and organizations should pay attention to
economic and social developments.
4 Identify elements of the competitive environment.
5 Summarize how organizations respond to environmental uncer-
tainty.
6 Define elements of an organization’s culture.
7 Discuss how an organization’s culture and climate affect its re-
sponse to its external environment.
KEY STUDENT QUESTIONS
The two questions that come up most often for this chapter are:
1. “Can you explain the difference between the macroenvironment
and the task environment?” (Or a request to explain a particular
element of either environment.)
2. “As a manager, what should I do to respond to a changing environment?”
Fortunately, the text has tools to help you deal with both of these questions more effectively.
The first question is best addressed with examples, and students often find it useful to go
through an example or two for a specific company. Start by discussing the high tech indus-
try, using the information in the text and the “Management Connection” section called “Ap-
ple’s Rocky Relationships.” Next, ask students to name a company with which they are fa-
miliar, and have them identify examples of each of the different environmental factors for

2-4
that organization. If your students can’t think of an organization, try using something with
which they are likely to be familiar, such as Kaiser Permanente (a large national HMO.) A
completed example appears below in the instructions for Experiential Exercise 2.1, “External
Environment Analysis”.
The second question is best addressed by having students work together to complete the con-
cluding case study “Wild Water Gets Soaked.” The brainstorming activity that students
complete for the third discussion question on the case also serves as an excellent introduction
to Chapter 3 - Decision Making.
“Now, create a plan for Wild Water. In your plan, describe what changes the organization
needs to make to its culture to meet the upcoming challenges in the external environment.
Then describe steps that Wild Water can take to compete successfully against the new
amusement park. How can the Salernos keep their loyal customers happy while attracting
new ones?”
CLASS ROADMAP
Management Connection
What Makes Apple a Winner in a Fast-Changing Environment?
In the 1970s consumers fell in love with Apple’s spreadsheets and desktop publishing tools, but
in the 80s and 90s, Apple lost significant market share as consumers got on board in droves with
the Microsoft operating system. As technology advanced, Apple dropped the word “computer”
from the corporate name and focused on providing a wide array of tools to tap into the internet
for entertainment, communication, and expressing creativity. Apple also provides a software de-
velopment kit which will allow any programmer to create new applications which can be pur-
chased online at Apple’s App Store. Over 100 million apps were downloaded in the first two
months. What could Apple do to further enhance their brand and enhance their share of the
technology market?

2-5
Introduction
A. Organizations are open systems (Figure 2.1)
1. Receive raw materials, services, and financial, hu-
man, and information resources from the environ-
ment, called inputs
2. Transform resources into finished goods and ser-
vices
3. Send outputs back into the environment
B. External Environment Influences
1. When resources change, environment influences the
organization
2. When outputs differ, organization influences the en-
vironment
3. The organization operates in a competitive envi-
ronment.
I. The Macroenvironment
4. Macroenvironment is defined by the most general ele-
ments in the external environment that can potentially in-
fluence strategic decisions
A. The Econonmy (Figure 2.3)
a. The economic environment dramatically affects
companies’ ability to function effectively and in-
fluences their strategic choices.
b. Interest and inflation rates affect the availability
and cost of capital, the ability to expand, prices,
costs, and consumer demand for products.
c. Unemployment rates affect labor availability
and the wages the firm must pass, as well as
product demand.
B. Technology
a. Technological advances create new products.
As technology evolves, new industries, markets,
and competitive niches develop.
b. New technologies provide new production tech-
niques. Sophisticated robots perform jobs with-
out suffering fatigue.
c. New technologies also provide new ways to
manage and communicate. Computerized man-
LO 1: Describe how environ-
mental forces influence or-
ganizations, and how organi-
zations can influence their
environments
E.G.
Use Example 2.1 – Environment
Influences here
LO 2: Distinguish between
the macroenvironment and
the competitive environment

2-6
agement information systems (MIS) make in-
formation available when needed.
C. Laws and Regulations
1. U.S. government policies both impose strategic con-
straints and provide opportunities.
2. Government can affect business opportunities
through tax laws, economic policies, and interna-
tional trade rulings.
3. Regulators are specific government organizations in
a firm’s more immediate task environment.
4. Regulatory agencies have the power to investigate
company practices and take legal actions to ensure
compliance with the laws are:
i. Occupational Safety and Health Administra-
tion (OSHA)
ii. Interstate Commerce Commission (ICC)
iii. Federal Aviation Administration (FAA)
iv. Equal Employment Opportunity Commis-
sion (EEOC)
v. National Labor Relations Board (NLRB)
vi. Office of Federal Contract Compliance Pro-
grams (OFCCP)
vii. Environmental Protection Agency (EPA)
D. Demographics
a. Demographics measures of various characteris-
tics of the people comprising groups or other so-
cial units.
b. Work groups, organizations, countries, markets,
or societies can be described statistically by re-
ferring to their members’ age, gender, family
size, income, education, occupation, and so
forth.
E. Social Issues
a. Societal trends regarding how people think and
behave have major implications for management
of the labor force, corporate social actions, and
E.G.
Use Example 2.2 – Laws and
Regulations here
LO 3: Explain why managers
and organizations should at-
tend to economic and social
developments

2-7
strategic decisions about products and markets.
b. Companies have introduced more supportive
policies, including family leave, flexible work-
ing hours, and childcare assistance.
F. The Natural Environment
a. Prominent issues in today’s press pertain to nat-
ural resources.
b. The protection of the natural environment is im-
portant to managerial decisions.
II. The Competitive Environment
A. Competitors
LO 4: Identify elements of the
competitive environment
a. As a first step in understanding their competitive
environment, organizations must identify their
competitors, which may include:
i. small domestic firms
ii. overseas firms
iii. new domestic companies exploring new
markets
iv. strong regional competitors
v. unusual entries, such as Internet shopping
b. The next step is to analyze how they compete.
B. New Entrants
a. Barriers to entry are conditions that prevent
new companies from entering an industry.
b. Some major barriers to entry are government
policy, capital requirements, brand identifica-
tion, cost disadvantages, and distribution chan-
nels.
C. Substitutes and Complements (Table 2.1)
a. Technological advances and economic efficien-
cies are among the ways that firms can develop
substitutes for existing products.
TEXT REFERENCE
Management Connection –
Progress Report
As part of its innovation, Apple has
needed to forge new relationships with
creators of online content which includes
recording companies. More recently,
magazines publishers are joining the App
Store to provide their products to con-
sumers in a digital format. Publishers
must pay 30% of revenues to Apple, so
they are reducing their income per sub-
scription, but the iPod and other Apply
devices are so popular that publishers are
afraid not to jump on board. With so
many applications and devices coming
into the market, these complex relation-
ships can get stormy. In some cases
Apply and its competitors are buying
components from the same suppliers,
such as with Samsung.
• How do you think things will work out
between the Google Android platform
and the Apple platform with regard to
cell phones and tablet computers?
• Which company has the most power
and leverage in Apple’s supply chain?
Why?

2-8
D. Suppliers
a. Suppliers provide the resources needed for pro-
duction and may come in the form of people,
raw materials, information, and financial capital.
b. Suppliers can raise their prices or provide poor
quality goods and services.
c. Labor unions can go on strike or demand higher
wages.
d. Workers may produce defective work.
E. Customers
a. Customers purchase the products or services the
organization offers.
b. Final consumers are those who purchase prod-
ucts in their finished form.
c. Intermediate consumers are customers who
purchase raw materials or wholesale products
before selling them to final customers.
i. Customer service means giving customers
what they want or need, the way they want
it, the first time.
ii. Actions and attitudes that mean excellent
customer service include:
a.) Speed of filling and delivering normal
orders.
b.) Willingness to meet emergency needs.
c.) Merchandise delivered in good condi-
tion.
d.) Readiness to take back defective goods
and re-supply quickly.
e.) Availability of installation and repair
services and parts.
f.) Service charges (that is, whether services
are “free” or priced separately).
III. Environmental Analysis
a. Developments outside the organization can have a
profound impact on the way managers operate.
b. Example: if little is known about customer likes and
dislikes, organizations will have a difficult time de-
signing new products, scheduling production, or de-
veloping market plans.
c. Environmental uncertainty means that managers do
Teaching Tip:
Have students review and give
feedback on each others’ respons-
es to the pre-class assignment
(Experiential Exercise 2.1) at this
point in the lecture. The best way
to do this is in pairs. Each student
reads the other’s paper, and then
both students talk about environ-
mental factors that have been mis-
classified, and other environmen-
tal factors that could be added.
Students should correct their own
papers before turning them in, and
if possible, students should get
feedback from the professor or
teaching assistant about both the
paper and the corrections.
LO 5: Summarize how organ-
izations respond to environ-
mental uncertainty
E.G.
Use Example 2.3 – Environmen-
tal Complexity here

2-9
not have enough information about the environment
to understand or predict the future.
d. Uncertainty arises from two related factors:
1. Environmental complexity, or the number of is-
sues to which a manager must attend, as well as
their interconnectedness.
2. Dynamism, or the degree of discontinuous
change that occurs within the industry.
A. Environmental scanning
E.G.
Use Example 2.4 – Competitive
Intelligence here
a. A process that involves searching out information
that is unavailable to most people and sorting
through that information in order to interpret what is
important and what is not.
b. Competitive intelligence is the information neces-
sary to decide how best to manage in the competi-
tive environment they have identified. (Table 2.2)
B. Scenario Development
a. Scenario is a narrative that describes a particular set
of future conditions.
b. Best-case scenario--events occur that are favorable
to the firm.
c. Worst-case scenario--events are all unfavorable.
d. Scenario development helps managers develop con-
tingency plans for what they might do given differ-
ent outcomes.
C. Forecasting
a. Used to predict exactly how some variable or varia-
bles will change in the future.
b. The best advice for using forecasts might include
the following:
1. Use multiple forecasts
2. Accuracy decreases the farther into the future
you are trying to predict.
3. Forecasts are no better than the data used to con-
struct them
4. Use simple forecasts
5. Important events often are surprises and repre-
sent a departure from predictions
Teaching Tip:
Ask students to image different
scenarios that might impact your
school, and to develop contingen-
cy plans that might address those
scenarios. This can either be
done as a discussion question
with the entire class, or students
can work in groups to answer the
question, and report back. For
example, a possible scenario
might center around a population
boom or bust. In a population
boom, universities might respond
by setting up satellite campuses,
whereas in a bust, universities
might look for additional students
by setting up international pro-
grams and/or programs targeted
to meet the needs of working pro-
fessionals.

2-10
D. Benchmarking
a. Benchmarking is the process of comparing the or-
ganization’s practices and technologies with those
of other companies.
b. Benchmarking means identifying the best-in-class
performance by a company in a given area.
IV. Responding to the Environment
A. Changing the Environment You Are In
1. Strategic maneuvering is the organization’s con-
scious efforts to change the boundaries of its task
environment. It can take four basic forms:
a. Domain selection is the entrance by a company
into another suitable market or industry.
b. Diversification occurs when a firm invests in
different types of businesses or products, or
when it expands geographically to reduce its de-
pendence on a single market or technology.
c. A merger or acquisition takes place when two
or more firms combine, or one firm buys anoth-
er, to form a single company.
d. Divestiture occurs when a company sells one or
more businesses.
2. Prospectors are companies that continuously change
the boundaries of their task environments by seeking
new products and markets, diversifying and merg-
ing, or acquiring new enterprises.
3. Defenders are companies that stay within a more
limited, stable product domain
B. Influencing your environment
1. Independent strategies are strategies that an organi-
zation acting on its own uses to change some aspect
of its current environment. (Table 2.4)
2. Cooperative strategies are strategies used by two or
more organizations working together to manage the
external environment. (Table 2.5)
C. Adapting to the Environment: Changing Yourself
1. Four different approaches that organizations can
E.G.
Use Example 2.5 Independent
Strategies here
LO 6: Define elements of an
organization’s culture
LO 7: Discuss how an organ-
ization’s culture affects its
response to its external envi-
ronment

2-11
take in adapting to environmental uncertainty are:
(Table 2.3)
a. Decentralized bureaucratic (stable, complex en-
vironment)
b. Centralized bureaucratic (stable, simple envi-
ronment)
c. Decentralized organic (dynamic, complex envi-
ronment)
d. Centralized organic (dynamic, simple environ-
ment)
2. Adapting at the boundaries.
a. Buffering is creating supplies of excess re-
sources in case of unpredictable needs.
b. Smoothing is leveling normal fluctuations at the
boundaries of the environment.
3. Adapting at the core.
a. Flexible process allows for adaptation in the
technical core to meet the varied and changing
demands of customers.
D. Choosing a Response Approach
1. Three general considerations help guide manage-
ment’s response to the environment.
a. Change appropriate elements of the environ-
ment.
b. Choose responses that focus on pertinent ele-
ments of the environment.
c. Choose responses that offer the most benefit at
the lowest cost.
V. The Internal Environment of Organiza-
tions: Culture and Climate
A. Organization culture is the set of important assump-
tions about the organization and its goals and practices
that members of the company share.
1. Strong cultures
a. Everyone understands and believes in firm’s
goals, priorities, and practices.
b. An advantage if appropriate behaviors are sup-
ported.
E.G.
Use Example 2.6 Corporate
Culture here
TEXT REFERENCE
Management Connection –
Onward
Apple’s CEO, Steve Jobs, has described
Apple’s culture as “that of a start-up.” A
new company typically is run by the
founder, who has a passion for some new
idea or a desire to create something new
(the organization) to deliver a product or
service better than others do. As noted at
the beginning of this chapter, Apple
ended the previous century with a doubt-
ful future. The customers for its comput-
ers were a loyal but small sliver of the
personal computer market. Investors
were so doubtful about Apple’s prospects
that the company’s stock was trading for
a few dollars per share. Jobs returned to
Apple and made some changes that refo-
cused the company on its start-up cul-
ture. He discontinued projects that were
unrelated to his vision, encouraged active
debate about new ideas, and
forced people in different functions to
work together on strategy—for example,
seeing the retail activities as related to
product design activities. Together, these
efforts enabled the company to drive
innovation as it had when it was a start-
up. Jobs was able to lead this effort be-
cause he was respected as the founder
and as someone with visionary ideas plus
the ability to sell them. In 2011, Jobs lost
his personal battle with pancreatic cancer
and Apple’s chief operating officer, Tim
Cook, was selected to lead the company.
Cook is widely respected, but not
because he is a clone of Jobs. Quite the
contrary—he is known for being calm,
quiet, and serious-minded, managing
processes more than pitching new prod-
ucts. Cook is, however, respected for his
track record.

2-12
2. Weak cultures
a. Different people hold different values
b. Confusion about corporate goals
c. Not clear what principles should guide decisions
B. Diagnosing Culture
1. Culture can be diagnosed through the following:
a. Corporate mission statements and
official goals. (Figure 2.5)
b. Business practices.
c. Symbols, rites, and ceremonies.
d. The stories people tell.
2. Four types of organizational culture (Figure 2.6)
a. Group culture - flexible, internal
focus
b. Hierarchical structure - control-
ling, internal focus
c. Rational culture - controlling, ex-
ternal focus
d. Adhocracy - flexible, external fo-
cus
C. Managing Culture
1. Espouse lofty ideals and visions for the company
2. Give constant attention to mundane, daily details
3. CEO’s need to embody the vision of the company
D. Organizational Climate
• Using the model of cultural types in
Figure 2.6, which type of culture do you
think Apple has? Why?
• How can Apple’s managers reinforce
Apple’s culture in the absence of Steve
Jobs?
KEY TERMS PRESENTED IN THIS CHAPTER
Acquisition One firm buying another
Barriers to entry Conditions that prevent new companies from entering an industry
Benchmarking The process of comparing an organization’s practices and technologies with those of oth-
er companies
Buffering Creating supplies of excess resources in case of unpredictable needs
Competitive environment The immediate environment surrounding a firm; includes suppliers, customers,
rivals, and the like
Competitive intelligence Information that helps managers determine how to compete better
Cooperative strategies: Strategies used by two or more working organizations working together to man-
age the external environment

2-13
Defenders Companies that stay within a stable product domain as a strategic maneuver
Demographics Measures of various characteristics of the people who make up groups or other social
units
Diversification A firm’s investment in a different product, business, or geographic area
Divestiture A firm selling one or more businesses
Domain selection Entering a new market or industry with an existing expertise
Empowerment The process of sharing power with employees, thereby enhancing their confidence in
their ability to perform their jobs and their belief that they are influential contributors to
the organization
Environmental scanning Searching for and sorting through information about the environment
Environmental uncertainty Lack of information needed to understand or predict the future
External environment All relevant forces outside a firm’s boundaries, such as competitors, customers,
the government, and the economy
Final consumer Those who purchase products in their finished form
Flexible processes Methods for adapting the technical core to changes in the environment
Forecasting Method for predicting how variables will change the future
Independent strategies Strategies that an organization acting on its own uses to change some aspect of its
current environment
Inputs Goods and services organizations take in and use to create products or services
Intermediate consumer A customer who purchases raw materials or wholesale products before selling
them to final customers
Macroenvironment The general environment; includes governments, economic conditions, and other
fundamental factors that generally affect all organizations
Merger One or more companies combining with another
Open systems Organizations that are affected by, and that affect, their environment
Organizational climate: The patterns of attitudes and behavior that shape people’s experience of an or-
ganization
Organization culture The set of important assumptions about the organization and its goals and practices
that members of the company share
Outputs The products and services organizations create
Prospectors Companies that continually change the boundaries for their task environments by seeking
new products and markets, diversifying and merging, or acquiring new enterprises
Scenario A narrative that describes a particular set of future conditions
Smoothing Leveling normal fluctuations at the boundaries of the environment
Strategic maneuvering An organization’s conscious efforts to change the boundaries of its task envi-
ronment
Supply chain management The managing of the network of facilities and people that obtain materials
from outside the organization, transform them into products, and distribute
them to customers
Switching costs Fixed costs buyers face when they change suppliers

2-14
LECTURETTES
LECTURETTE 2.1
Being Mindful instead of Mindless: Johnsonville Sausage
As noted in this chapter, excelling at the profession of management takes careful thinking and
learning. Harvard psychologist Ellen Langer calls this “being mindful.” How can a company inspire em-
ployees to adopt this approach to their work? Johnsonville Sausage has managed to craft a company cul-
ture that asks employees to keep their minds engaged at all times. Their company creed makes it clear.
What they call “The Johnsonville Way” is posted on their website, and their success as an organization
suggests that they “walk the talk.”
The Johnsonville Way
Date Posted: 04/08/2007
We at Johnsonville have a moral responsibility to become the Best Company in the World.
We will accomplish this as each one of us becomes better than anyone else at defining, and then serving, the best inter-
ests of all those who have a stake in our success.
We will succeed by setting near-term objectives and long-term goals that will require personal growth and superlative
performance by each of us. We will change any objectives or goals that no longer require personal growth and superla-
tive performance to ones that do.
As an individual, I understand The Johnsonville Way is about my performance and my accountability to the team. My
commitment to stretch, grow and excel is an unending one.
This is The Johnsonville Way and I am committed to it.
The Johnsonville Way also indicates the company’s belief in management science. Their focus on
“setting near-term objectives and long terms goals” suggests that they carefully measure and monitor their
progress toward those objectives and goals.
Johnsonville is more than just an organization that is focused on management science and keeping
employees mindful. Their commitment to “change any objectives or goals that no longer require personal
growth and superlative performance to ones that do” suggests that this organization prides itself on being
a learning organization. As evidenced by the number of concepts this company creed conveys in just a
few lines, “The Johnsonville Way” has been carefully crafted to indicate in a powerful way just exactly
the kind of mindset the organization expects from its employees.
(Source: http://www.johnsonville.com/home/press-room/corp-info/the-johnsonville-way)

2-15
LECTURETTE 2.2
Operations and Human Resources: IBM’s Workforce Management Initiative
As the book explains, one way in which an organization can manage its competitive environment
is through becoming a globally integrated enterprise. IBM has adopted a human capital management ap-
proach to better utilize its talented workforce. Considering labor as an input and IBM products as an out-
put, the company launched its Workforce Management Initiative (WMI) to capture and effectively lever-
age every employee’s skill set and training. All of IBM’s approximately 330,000 employees are captured
in this database. Having this database allows managers to search for employee talent within the company-
--around the world---rather than having to look outside to recruit talent and fill current needs. The
company estimates that this initiative has saved over $500 million. In addition to saving the company
money, applying this supply chain approach allows the company to estimate its talent capacity for future
anticipated needs as well, and to train individuals in a proactive fashion. In 2007, the IBM Institute for
Business Value published seven keys to succeed in a globally integrated world of business, written by
Eric Lesser, Tim Ringo, and Andrea Blumberg. The seven principles are:
1. Understanding the demographics and capabilities of the workforce.
2. Predicting the future labor supply and demand.
3. Utilizing social networks to increase visibility and application of knowledge across the organiza-
tion.
4. Enabling individuals to perform work regardless of location.
5. Facilitating collaboration across traditional organizational boundaries.
6. Driving the rapid development of skills and capabilities to meet changing business conditions.
7. Evaluating employee performance and providing appropriate feedback.
Sources:
http://intelligententerprise.informationweek.com/showArticle.jhtml;jsessionid=FRFIJGEA3BMIXQE1G
HPSKHWATMY32JVN?articleID=175002433 (accessed on December 22, 2009)
http://www.shrm.org/Education/hreducation/Documents/Boudreau_IBM%20Case%20Study%20with%20
Teaching%20Notes_FINAL.pdf (accessed on November 9, 2011)
accessed on December 22, 2009)
DISCUSSION QUESTIONS
.
1. This chapter’s opening quote by Peter Drucker said, “The essence of a business is outside it-
self.” What do you think this means? Do you agree?
Students may ask: What is meant by the word “essence?” It has a number of meanings. How-
ever, according the dictionary, it means “that which makes something what it is.” It is im-
portant to remember that the purpose of a successful business is to get customers and to retain
customers.
Using the definition above, Drucker’s statement can be interpreted to mean that it is the out-
side environments that determine the nature of business. This can be illustrated through the
use of an example. A new automobile manufacturer entering the U.S. market is faced with

2-16
three large domestic companies and a number of well-established foreign firms. The newcom-
er’s strategy has to take this external environment into consideration. This can be contrasted
with a new company entering a business in which the competition is limited to three or four
small firms.
However, one can argue that even though the external environments can have a dramatic im-
pact on a business, it is still management’s responsibility to develop a strategy to enable the
organization to grow and prosper.
2. What are the most important forces in the macroenvironment facing companies today?
In order to answer this question, the student probably needs to recognize that different compa-
nies operate in different industries and a critical macroenvironment force facing one company
may be a minor factor for another. Three examples are given below:
Economy. The economy is always a factor. A booming economy may allow a new
business to grow and prosper while a depressed economy would cause it to fail. Some
businesses do very well in booming economies whereas others (notably the entertainment
industry) seem to flourish during times when the economy is weak.
Technology. Consider the impact of rapidly changing technology on the computer
industry. Most of the early innovators are no longer in business, and many of the current
leaders might not survive another dramatic change in technology. And yet, in other in-
dustries (such as candy making), the technology has been unchanged for many years.
Political/legal. This factor is having a major impact on the televi-
sion/telephone/computer interface. Political efforts to increase competition in the cable
television industry will probably be a major factor for many years to come.
Students should be able to identify industries in which each of the forces in the macroen-
vironment is playing a major role or, at least, have done so in the past.
3. What are the main differences between the macroenvironment and the competitive environ-
ment?
The macroenvironment consists of the major forces (international, economic, social and natural,
demographic, technological, and political/legal) which affect all businesses to some degree.
The competitive environment. While this is also part of the external environment, it is viewed
separately from the macroenvironment in that it focuses on the competitive forces that are specif-
ic to each business.
4. What kinds of changes do companies make in response to environmental uncertainty?
Organizations may adapt to the environment by altering their work structures and work processes
in order to reduce uncertainty. When uncertainty arises due to environmental complexity, many
organizations adopt more decentralized decision-making structures. This allows people with the
most direct knowledge of a particular product or operation to make important decisions rather
than a centralized unit that may be more removed from the daily business activities.
When uncertainty arises due to changes in the environment, many organizations adopt more flex-
ible structures. When technologies, customers, and competitors change rapidly, a highly rigid,
bureaucratized organization is less able to respond effectively, thus responsiveness and innova-
tion become priorities

2-17
Organizations can adapt to uncertainty by buffering at both the input and output sides of their
boundaries. They may do this by hiring temporary workers during rush periods on the input side,
and by maintaining adequate inventory in order to manage a rush of orders on the output side.
Organizations may also adapt at their core by establishing flexible processes such as mass cus-
tomization which allows an organization to produce large quantities at low cost, yet still offer in-
dividual customization.
5. We outlined several proactive responses organization can make to the environment. What
examples have you seen recently of an organization responding effectively to its environment?
Did the effectiveness of the response depend upon whether the organization was facing a
threat or an opportunity?
A number of proactive responses to the environment are identified in the text:
Independent strategies: The firm acts on its own to change some aspect of the current environ-
ment through competitive aggression, competitive pacification, public relations, voluntary action,
legal action, or political action.
Cooperative strategies: The firm collaborates with another organization to either reduce their
costs and risks or increase their power relative to the environment.
Strategic maneuvering: The firm attempts to change the boundaries of its competitive environ-
ment through domain selection (entering new markets with limited competition or regulation), di-
versification (investing in different types of business), mergers and acquisitions, or divestiture.
Challenge students to identify firms that are adopting each of these strategies and whether or not
they are doing so in response to a threat or an opportunity.
6. Select two organizations that you are interested in. Research information about the firms or
talk with an employee if possible. What types of cultures do they have? Write a paragraph
that describes each culture.
EXAMPLE: “Company X seems to really care about their new employees. The employee I
spoke to told me that the company actively encourages employees to move from job to job within
the organization - that sounded great to me. In addition, I found out that people have a lot of flex-
ibility to work on their terms - for example, being in the office at 9am doesn’t matter as much as
whether or not you get the job done. To me, this company looks like it has a group culture.”
7. When you were visiting colleges to decide where to attend, were there cultural differences in
the campuses that made a difference in your choice? How did these differences impact your
decision on which college to attend?
Student responses to this question will differ widely, but if they understand the concept of culture,
they should talk about the “feeling” a place has - organized, productive, friendly, etc. If students
have visited several college campuses, they should definitely be able to talk about difference in
culture for each campus. For example, in California, one might have perceive USC as being very
sports-oriented, Occidental as being very arts-oriented and exclusive, UCSD as a school that pro-
duced “renaissance people”, CalTech as being a place for brains and geeks, and San Diego State
as a party school. Note that all of these perceptions of culture have value judgments attached to
them, and they may or may not be accurate.

2-18
CONCLUDING CASE
Wild Water Gets Soaked
Case Summary:
This case reveals how important it is to organizations of all sizes to be prepared and ready to im-
plement changes in business scope and even product mix in order to combat the effects of external
forces. As the case depicts, external environmental changes – changes in competition and con-
sumers’ preference, to name a few - often strongly impact companies. Changes such as these ne-
cessitate that an organization, desiring to remain profitable, must be willing to modify operations
to better accommodate its changing consumers’ needs.
Chapter Topics Related to the Case:
Discuss how environmental forces impact organizations
Describe the purpose of an environmental analysis
Discuss how organizations like the Salernos operation can conduct environmental analyses
Identify how an organization can better adapt to the demands of its external environment
Identify how an organization can influence its external environment
Differentiate between an organization’s external and competitive environments
Case Discussion Questions:
1. Imagine that you are a management consultant hired by the Salernos to help them navigate
the choppy waters ahead. First, describe the elements of the macroenvironment and compet-
itive environment that affect Wild Water now. Then describe elements that you anticipate
will affect the water park in the next few years.
The elements of the macroenvironment that are going to be affecting Wild Water are de-
mographics (the changing clientele attracted by the new condos), technology (the upscale chain
park), the economy (the price of tickets, along with the costs of running the park), laws and poli-
tics (the new state safety law). Wild Water will also be affected by the competitive environment in
the form of rivals (the chain park), substitutes (golf, deep-sea fishing trips), and a customer base
that is potentially changing.
2. Next, describe the organization’s culture. Discuss how the current culture affects the way it
responds to the organization’s external environment.
Wild Water has a strong group culture. Despite the “hierarchy”, employees at Wild Water are
considered “family”, and there is a sense of cohesiveness, participation, and teamwork. Having a
group culture means that the staff at Wild Water are probably going to care more about loyalty,
tradition, and developing employees than they will about gaining a competitive advantage or mar-
ket superiority. Having a strong culture means that Wild Water can identify and support appropri-
ate behaviors for moving the company forward.
3. Now, create a plan for Wild Water. In your plan, describe what changes the organization
needs to make in its culture to meet upcoming challenges in the external environment. Then

2-19
describe steps that Wild Water can take to compete successfully against the new amusement
park. How can the Salernos keep their loyal customers happy while attracting new ones?
The first thing Wild Water managers will need to do is to understand the changes to their envi-
ronmental and competitive environments. As noted in the text, there are three considerations that
guide the choice of a response approach to the environment: 1) changing the appropriate elements
of the environment; 2) choosing responses that focus on pertinent elements of the environment;
and 3) choosing responses that offer the most benefit at the lowest cost. In this case, independent
action may be the best way for Wild Water to change the environment. If they started working
right away, they would be able to bring their park up to the new safety standard laws. The next
thing they need to do is embark on a public relations campaign - making sure that their best fea-
tures are highlighted in advertising, and that the advertising reaches the right people. They may
not be able to compete head-to-head with the new chain park, but they may still be able to engage
in competitive aggression through the use of aggressive pricing.
EXPERIENTIAL EXERCISE
EXERCISE 2.1: EXTERNAL ENVIRONMENT ANALYSIS
Objective
To give students the experience of performing an analysis of a company’s external environment.
Suggested Responses to Student Questions
1. Laws and Regulations. What are some key laws and regulations under which this company and
the music industry must operate?
Key laws and regulations in the music industry might include copyright regulations, contracts, royalty
practices in retail sales and radio broadcasting, anti-trust, advertising regulations, foreign-trade prac-
tices.
2. The Economy. How does the state of the economy influence the sales of this company’s
products?
The state of the economy has traditionally had less of an immediate impact on the music industry than
on some others. CDs and on-line music sales tend to be low-ticket items and are less likely to be af-
fected too adversely even by a recession. A key driver of sales is the presence or absence of popular
new talent.
3. Technology. What new technologies strongly affect the company you have selected?
New technologies permitting on-line music sales, like iTunes, and recording and playing devices like
iPod and upcoming cellphone technologies, increase the easy availability and sale of music products.
They also allow music companies to avoid the expense of manufacturing and distributing CDs, and
sharing sales revenues with retailers. A major downside is that new technologies permit easy copying
of music without payment. Technology that can provide copyright protection (e.g., preventing unau-
thorized copying) may be one solution to this problem.

2-20
4. Demographics. What changes in the population might affect the company’s customer base?
Demographics affecting the company might include changes in the population of young people who
are the primary purchasers of pop music (conversely, the gradual decrease in classical music sales as
the demographic for that segment ages) and the growing importance of the Hispanic market.
5. Social Issues. What changes in society affect the market for your company’s music products?
Social issues affecting the company include not only the increased tolerance for illegal copying of
music, but also the increased fragmentation of public tastes and interests. Objections to obscenity in
lyrics and the rising influence of the religious market, are other social factors influencing the music
business.
6. Suppliers. How does your company’s relationship with suppliers affect its profitability?
The lower the cost of supplies, the more profit the company will make. In the music industry, sup-
plies are both tangible (the cost of CDs and jewel cases, for example) and intangible (the money paid
to artists.) Companies that introduce new artists may take bigger risks, but also have smaller costs
than companies that record and distribute the music of established acts.
7. Competitors. What companies compete with the firm you have selected? Do they compete on
price, on quality, or on other factors?
Key competitors in the industry include Bertelsmann, EMI, Sony, Universal, and Warner Music. In
the past, many more companies existed, but the industry has experienced considerable consolidation.
(There might be even more consolidation but for anti-trust regulations in the U.S. and Europe.) The
companies do not compete on price at all, or even on the quality of their products per se; the main
sources of competitive advantage are the companies' backlist - the music copyrights they own - and,
even more important, the new talent they are able to find and sign. Most music buyers do not know
or care which company is selling the music they are buying.
8. New entrants. Are new competitors to the company likely? Possible?
Traditionally, new entrants were extremely unlikely; given the large capital investment the music
business requires (millions to launch a new album, for example). That may still be the case, but today
potential new entrants include music distributors themselves, like Apple, who can decide to bypass
music companies and sign new talent on their own. This is unlikely, as companies like Apple current-
ly do not have the expertise, experience, or perhaps even interest in the business. But it remains a
possibility that music companies need to take into account, particularly as on-line distributors become
an increasingly important part of the supply chain. In addition, the ability to sell music on-line may
reduce the need for some well-known artists to rely on the marketing and distribution capabilities of
music companies, and to sell directly to consumers on their own.
9. Substitutes. Is there a threat of substitutes for the music industry’s existing products?
There are many substitute delivery systems for music, and the music industry is constantly being
threatened by non-paying delivery systems. Music itself is more difficult to replace, however time
spent on other forms of entertainment may decrease the amount of time and money spent on music.

2-21
10. Customers. What characteristics of the company’s customer base influence the company’s
competitiveness?
Customers in the industry are characterized mainly by the fickleness, volatility, and unpredictability
of their tastes. Only a small fraction of new releases succeed - and these are new releases issued by
extremely experienced, knowledgeable companies, in an extremely competitive industry. Even sales
of new albums by well-known groups are difficult to predict, and very few stars maintain their lon-
gevity. In addition, many customers think there is nothing wrong with making free copies of music
for their friends, nor do they have great affection or respect for music companies.
Suggested Responses to Discussion Questions
1. What has the company done to adapt to its environment?
To adapt to the environment, music companies are taking over more of the supply chain, manufactur-
ing their own CDs and managing their own music clubs. They are making deals with on-line music
distributors to sell individual songs. They are also increasing their on-line marketing efforts, as in let-
ting AOL offer its customers music video and song samples.
2. How does the company attempt to influence its environment?
To influence the environment, music companies pay slotting fees to retailers to gain shelf space, and
pay fees to ensure play time on radio stations. They heavily market new releases. They are aggres-
sively seeking to enforce copyright laws forbidding illegal copying - their success in shutting down
Napster is an example of that. They are also enlisting the artists themselves in an effort to educate
and influence the public on the illegal copying issue. In the U.S., they are also asking the government
to pressure China to reduce the widespread music piracy in that country.
EXERCISE 2.2 - CORPORATE CULTURE PREFERENCE SCALE
Objectives
To expose students to different types of corporate cultures.
To help students identify the kind of organization in which they would most
like to work.
To help students see how classroom cultures can differ along the same lines
as corporate cultures.
Case Discussion Questions:
1. Review the four types of corporate cultures outlined in the exercise. Working in small
groups, give examples of classes you have taken that correspond to each of the different
types of corporate culture dimensions.
Student responses will vary, but in general, you can expect to see the following differences
across different types of classrooms:
Control Culture - These classes have professors that are firmly in charge of the class and they
let students know it. Typically, professors in a control culture will take roll, have large
amounts of homework (which may or may not be meaningful to the students), and will give

2-22
difficult tests that may or may not be related to the work done previously in class. Control
culture classes often place a lot of emphasis on memorization as a learning tool.
Performance Culture - These classes have professors that are interested in learning and who
foster a learning environment with their students. Class assignments are typically relevant
and give students new skills, and although tests may be difficult, they are clearly related to
what has been presented in class. Students often describe these classes as challenging, but
fair and interesting. In a performance culture, the primary emphasis is on learning and
growth.
Relationship Culture - These classes have professors that become ‘friends’ with students.
Students feel that their opinions count, that their voices are heard, and that they contribute to
learning, along with the professor.
Responsive Culture - This class is constantly changing to keep up with the latest changes in
the field. It may be taught online or it may evolve as students bring in additional information.
2. How do you know what kind of culture a class has? What do you look for that tells you
how the class is going to be?
Again, student responses will vary, but students are likely to talk about professor behavior
(business practices), the class syllabus (corporate mission statement and official goals), ritual-
ized behaviors such as distributing paperwork and taking roll (symbol, rites, and ceremonies),
and student reviews of the class (the stories people tell.)
EXAMPLES
Example 2.1 – Environment Influences: In February, 2001, the last typewriter repair shop
closed in New York City.1
Did it close because its employees didn’t do good work? Because of a
poor organizational structure? No, the typewriter repair store simply fell victim to a changing en-
vironment - changes in technology decreased demand for services and finally shut the business
down.
Example 2.2 – Laws and Regulations: The macroenvironment is composed of international, le-
gal and political, economic, technological and social forces that influence strategic decisions.
Many of these factors affect a manager’s ability to function effectively and influence their strate-
gic choices – interest and inflation rates, unemployment rates, rising energy costs, rising health
care costs and changes in the value of the dollar to name a few. In Malaysia when the cost of do-
ing business is artificially inflated, the customer bears the charge without any real gain in value.
One such example was The Private Healthcare Facilities and Services Act 1998 and Regulations
(2006). This act stipulate higher charges by private medical practitioners to which must be added
the cost of registration.2
Example 2.3 – Environmental Complexity: Recently, more and more Americans are becoming
aware of the environment - specifically the air that they breathe. With concerns about global
1 “TECH.Tuesday”, February 20, 2001, Vol. 13, #23. Retrieved August 15, 2005 from
http://web.dexter.k12.mi.us/tech_resource/tec_tue/tt110.html.
2
Singh, Beldev. “Keep cost of doing business low.” New Straits Times (Malaysia). August 21, 2006, pg. 25.

2-23
warming and pollution at an all-time high, people want to be sure that they and their companies
are acting in environmentally responsible ways. Americans spend 90% of their time indoors and
much of that at work. According to the EPA, air pollution is up to five times worse inside than
outside. Harsh cleaning chemicals contribute to the problem. Approximately 37 million Ameri-
cans suffer from chemical sensitivity, leading to increased absenteeism and health costs. Manag-
ers who promote the use of eco-cleaners, which do not evaporate harmful materials into the air,
can reduce their costs, make the workplace safer for their workers, and improve their reputation
as part of the “green movement”.3
Example 2.4 – Competitive Intelligence: Faced with declining customer-service ratings and
prices higher than competitors, Michael Dell recently resumed the role of chief executive at the
company he founded. His initial steps to be more competitive focused on eliminating redundan-
cies throughout the business. He began by eliminating eight senior executives, suspending bo-
nuses and providing limited discretionary awards to exceptional performers. Dell urged employ-
ees to work quickly to turnaround the company. He said “There is no luxury of time. The com-
petitors are fierce.” 4
Example 2.5 – Independent Strategies: As global warming is threatening the viability of As-
pen’s famed ski resort, companies there are responding by becoming pioneers in corporate envi-
ronmentalism. Aspen uses biodiesel fuel in its bulldozer-sized snowcats, uses a speck of dust to
seed artificial snowflake which consumes less water and energy, vehicle shop is partly heated
with used motor oil, Coke machines run on motion sensors, toilets have two different flush set-
tings—half flush and full flush, and resorts add $2 a day to the bill of every hotel guest donating
it to the Aspen Valley Land Trust to preserve open space. Aspen managers must complete an en-
vironmental impact assessment for each request for capital spending. Auden Schendler, Aspen’s
director of environmental affairs, wants “Aspen to be a thought leader – not just to be doing it,
but talking about how we do it.”5
This is a good example of both the public relations and voluntary action approaches to changing
the environment. (Table 2.4)
Example 2.6 – Corporate Culture: Jeff Bezos, the founder of Amazon.com, is adamant about
his company’s culture. In a recent interview with the Harvard Business Review, he says, “First,
we are willing to plant seeds and wait a long time for them to turn into trees.” He also says that
he pays as much attention to what’s NOT going to change in the next five to ten years, as he does
to what’s going to change. In this way, he believes he can create a stable, long-lasting strategy,
rather than a strategy that has to be constantly reinvented. At the same time, he is totally custom-
er-focused. He says that when a decision is “too hard”, the way to answer it is to say “Well,
what’s better for the consumer?” One of the business practices that best defines Amazon.com’s
corporate culture is that every person in the organization, no matter what their job title, has to
spend two days doing customer service in a call center every two years.6
3
Boulden, Jennifer. “The air in there.” Fast Company, September 2007, Iss. 118, pg. 64.
4
Techweb Newswire. “Dell suspends bonuses, streamlines management.” February 5, 2007
5 Fishman, Charles. “Degree of difficulty.” Fast Company, February 2007, Issue 112, pg. 94
6
Kirby, Julia and Stewart, Thomas A. “The institutional YES.” Harvard Business Review, Oct. 2007, Vol. 85, Issue 10, pp 74-82.

2-24
SUPPLEMENTAL FEATURES
Please see the following materials in the Asset Gallery on the text website.
CHAPTER VIDEO
Pikes’ Place Fish Market: Something Fishy
Days start early at Pike’s Place Fish Market with workers handling smelly fish for long 12 hour days.
Somehow they never get crabby working in an outdoor market that is cold and busy. When someone
buys a fish, workers throw them through the open air market to other workers who catch the fish and
wrap them up for the customer to take with them. People arrive from all over the world to watch the
action. John Yokoyama is owner and man in charge who decided they would become world famous.
He encouraged an environment and work culture of fun and pleasure. He wants his workers to look
forward to coming to work, so he encouraged throwing fish. You may not be able to throw your pa-
perwork or work equipment like they throw fish, but there are ways that you can laugh and play at
work. Yokoyama’s staff quickly grew from six to a team of 21. He teaches that working together is
an opportunity to “be in relationship” with one another. Today, companies are paying thousands of
dollars for videos and live training from these fish market workers who believe in the philosophy of
making work fun.
MANAGER’S HOT SEAT (MHS)
There are no Manager’s Hot Seat clips for this chapter
SELF-ASSESSMENT
Corporate Culture Preference Scale
TEST YOUR KNOWLEDGE
Macro Environmental Forces

2-25
EXPANDED POWERPOINT SLIDE SHOW
Expanded PowerPoint Slides include most Basic PowerPoint slides, along with additional material that
can be used to expand the lecture.
EXPANDED POWERPOINT
SLIDE 1
Chapter Title
EXPANDED POWERPOINT
SLIDE 4
Figure 2.1: Organization Inputs
and Outputs
EXPANDED POWERPOINT
SLIDE 7
External/Competitive
Environment
EXPANDED POWERPOINT
SLIDE 2
LO 1 – LO 4
EXPANDED POWERPOINT
SLIDE 5
Open Systems: Definition.
EXPANDED POWERPOINT
SLIDE 8
Macroenvironment
EXPANDED POWERPOINT
SLIDE 3
LO 5 – LO 7
EXPANDED POWERPOINT
SLIDE 6
Open Systems: Inputs & Outputs
EXPANDED POWERPOINT
SLIDE 9
Figure 2.2: The External
Environment

2-26
EXPANDED POWERPOINT
SLIDE 10
The Economy: The economic
environment…
EXPANDED POWERPOINT
SLIDE 13
Technology
EXPANDED POWERPOINT
SLIDE 16
Demographics: trends
EXPANDED POWERPOINT
SLIDE 19
Competitors
EXPANDED POWERPOINT
SLIDE 11
Figure 2.3: Twelve month
comparison of stock markets
EXPANDED POWERPOINT
SLIDE 14
Laws and Regulations
EXPANDED POWERPOINT
SLIDE 17
Social Issues and the Natural
Environment
EXPANDED POWERPOINT
SLIDE 20
New Entrants
EXPANDED POWERPOINT
SLIDE 12
The Economy: publicly held
companies…
EXPANDED POWERPOINT
SLIDE 15
Demographics: defn.
EXPANDED POWERPOINT
SLIDE 18
Figure 2.4: The Competitive
Environment
EXPANDED POWERPOINT
SLIDE 21
Substitutes and Complements

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EXPANDED POWERPOINT
SLIDE 22
Question
EXPANDED POWERPOINT
SLIDE 25
Customers
EXPANDED POWERPOINT
SLIDE 28
Environmental Scanning and
Intelligence
EXPANDED POWERPOINT
SLIDE 31
Benchmarking
EXPANDED POWERPOINT
SLIDE 23
Suppliers
EXPANDED POWERPOINT
SLIDE 26
Environmental Analysis
EXPANDED POWERPOINT
SLIDE 29
Development and Forecasting
EXPANDED POWERPOINT
SLIDE 32
Changing the Environment
EXPANDED POWERPOINT
SLIDE 24
Supply Chain Management
EXPANDED POWERPOINT
SLIDE 27
Environmental uncertainty
EXPANDED POWERPOINT
SLIDE 30
Question
EXPANDED POWERPOINT
SLIDE 33
Changing the Environment: contd.

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EXPANDED POWERPOINT
SLIDE 34
Table 2.4: Influencing your Envi-
ronment
EXPANDED POWERPOINT
SLIDE 37
Adapting to the Environment
EXPANDED POWERPOINT
SLIDE 35
Table 2.3: Independent Action
EXPANDED POWERPOINT
SLIDE 38
Organization Culture
EXPANDED POWERPOINT
SLIDE 36
Table 2.5: Cooperative Action ma-
neuvering…
EXPANDED POWERPOINT
SLIDE 39
Figure 2.6: Competing Values Model
of Culture
EXPANDED POWERPOINT
SLIDE 40
Video: Pike’s Place Fish Market

Exploring the Variety of Random
Documents with Different Content

The Project Gutenberg eBook of The Iron Boys
on the Ore Boats; or, Roughing It on the Great
Lakes

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Title: The Iron Boys on the Ore Boats; or, Roughing It on the
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*** START OF THE PROJECT GUTENBERG EBOOK THE IRON BOYS
ON THE ORE BOATS; OR, ROUGHING IT ON THE GREAT LAKES ***

The Iron Boys on the
Ore Boats
OR

Roughing It on the Great Lakes
By
JAMES R. MEARS
Author of The Iron Boys in the Mines, The Iron
Boys as Foremen, The Iron Boys in the Steel
Mills, etc.
Illustrated
PHILADELPHIA
HENRY ALTEMUS COMPANY
Copyright, 1913, by
Howard E. Altemus

Both Boys Were Hurled Forward
Frontispiece

CONTENTS
Chapter Page
I. To the Inland Seas 7
II. The Iron Boys as Cargo 20
III. A Surprised Skipper 31
IV. The Boys Stand the Test 42
V. Trouble in the Stoke Hole 54
VI. The First Step Upward 63
VII. The Iron Boys on Deck 70
VI. The Crash in the Fog 82
IX. A Tragedy of the Lakes 93
X. Tossed Up by the Waves 104
XI. By Pluck Alone 113
XII. On the Road to Conneaut 122
XIII. In the Grip of a Giant Shell 129
XIV. Steve Saves the Captain 135
XV. At the Wheel 151
XVI. Through the Rocky Cut 163
XVII. The Blow in the Dark 172
XVIII. Visitors on the "Richmond" 181
XIX. In the Grip of the Waves 190
XX. An Exciting Rescue 202
XXI. A New Hand at the Wheel 210
XXII. Leading a Lively Chase 219
XXIII. The Wireless Message 223

The Iron Boys on the Ore Boats

"W
CHAPTER I
TO THE INLAND SEAS
HAT are we to do?"
"The first duty of an inspector is to inspect, I should say,"
answered Steve Rush, with a soft laugh, in answer to his
companion's question.
Bob Jarvis made a wry face.
"You think you are very smart this morning, seeing that you have
been complimented by the president of the mining company,"
grumbled Jarvis. "I don't know whether I like this new job or not.
We were making pretty good money in the mines and we were
bosses at that. Are we going to do any bossing when we get on the
lakes?"
"I think not. We shall be ordinary seamen. Somebody else will do the
bossing in this instance and we shall be the victims. Mr. Carrhart will
tell us all about it in a minute. He is arranging for our work now. It
will be a great change, and while we shall be working pretty hard we
shall be adding to our store of knowledge, Bob. We are lucky to
possess so fully the confidence of our superiors. Let's try to show
that we are worthy of their confidence in our new places."
"When do we start?"
"I don't know. Mr. Carrhart is looking that matter up now."
The lads were sitting in the private office of the president of the
mining company, whither they had been summoned from their work
at the mines. Mr. Carrhart, the president, stepped briskly into the
office at that juncture.

"Well, lads, I have arranged for your transportation."
"May I ask on what ship we are to sail, sir?" questioned Steve.
"The 'Wanderer.' She is not one of our newest ships, but she is a
staunch old vessel with about as many conveniences as are to be
found on the newer and more modern boats. I sometimes think we
are getting further away from what a ship should be—but then, I am
not a sailor. I am not supposed to know anything about ships,"
laughed the president.
"When do we sail?"
"Some time to-night. The 'Wanderer' is not yet in. She passed the
Soo nearly forty hours ago and should dock some time this
afternoon. She is coming up light this time, for a change."
"How long does it take to load the ship with ore?" asked Steve, his
active mind already in search of knowledge along the line of their
new calling.
"Eight hours or so."
"That is quick time," nodded Jarvis.
"It strikes me as being a long time," remarked Rush.
"That is the point exactly," agreed Mr. Carrhart. "If you boys can find
a way to shorten the loading time you will have served your purpose
well. That is exactly why we are sending you out on this inspecting
tour—that is, it is one of the reasons. We want to know where we
can save money and time in the shipment of ores to the furnaces."
"But, sir, we know nothing about this branch of the business,"
protested Steve. "Are there not others better qualified than
ourselves?"
"They think they are," answered the president reflectively. "We have
tried them out. Most of them are wedded to old methods. What we
want is new methods as well as new blood. Besides, you lads have

expressed yourselves as being anxious to learn everything about the
mining and steel business. I am taking you at your word. You are
thoroughly posted on the mining end. I do not believe you could be
much more so were you to spend three years more underground.
The shipment of the ore is the next step. You have followed the ore
down from the mines to the shipping point, here in Duluth. Now I
am going to have you spend a few months on the Great Lakes."
"That will be a fine experience, sir."
"I think so."
"Is the purpose of our going to sea on the lakes known, or is it not
to be known to any one outside of ourselves?"
"Certainly not. The mission might fail of its purposes were such to be
the case. To all intents and appearances, you two boys will be plain,
everyday sailors. You will find many hardships in the life of a Great
Lakes sailor, but then, if I know you, I do not believe you will mind
these very much," added Mr. Carrhart, with an indulgent smile.
"We certainly shall not," answered Rush, with emphasis. "The harder
the work the better it seems to agree with me."
"But not with me," retorted Jarvis.
The president laughed.
"That doesn't agree with what the reports show. For industry and
attention to duty you are a close second to your friend Rush. I
presume, Rush, that we shall be losing you one of these days?"
"What do you mean, sir?"
"You will wish to go on to the mills, eh?"
Steve thought briefly.
"Yes, sir; that is our ambition."

"I thought so. You may depend upon me to use my influence to
further your ambition, though I shall very much dislike to lose you."
"You are very kind, sir."
"What I hoped you would do was to remain with the mining end of
our business, where one of these days you would rise to the grade
of general superintendent. Perhaps after you have had your
experiences at the other end of the line, you will decide to come
back. If I am still president of the mining company you will be well
taken care of, should you return."
"Thank you, sir; perhaps we shall be back sooner than you think."
"And now for the subject at issue. Here is a letter to the master of
the 'Wanderer,' Captain Simms, stating that you are to be taken on
board his ship as seamen. He does not know that it is your first
cruise, but I have an idea that he will learn the truth soon enough."
There was a grim smile on the face of the president.
"You will find Captain Simms a gruff old seadog. He is one of our
oldest and most trustworthy masters, and after you come to know
him I am sure you will like him very much. You have a fairly clear
idea of what is expected of you by the company. You boys are both
keen and resourceful and I expect a great deal from you. I know
that you will see all there is to be seen, and no doubt will see some
things that have been overlooked by older heads than yours."
"Have you any further directions to give before we leave you, sir?"
inquired Steve.
"None whatever. I wish you success, which I am sure you will have.
You need not go to the ore docks until this evening, unless you wish
to, as you probably will have some things to do in town."
After bidding the president good-bye, the boys took their leave. It
seemed only a few weeks since Steve Rush had first entered the
office of the president of the mining company looking for a job. The

same office boy with whom he had had trouble at the start of his
career was on guard at the door, but Steve had grown away from
him. Steve, who with his companion, Bob Jarvis, will be recognized
at once as one of the Iron Boys, was tall for his age and muscular.
His manner of life had done much for his physical well-being, and he
was not the same boy who had fought his way into the president's
office, the account of which is set forth in "The Iron Boys in the
Mines."
It was there that Steve Rush and Bob Jarvis first became friends,
after they had met and fought a battle in a lonely drift in the Cousin
Jack Iron Mine; it was there that both lads proved their heroism by
saving the president and several other officials of the company,
when the entire company was threatened with death from a burning
bag of dynamite.
It was in the Cousin Jack Mine that Steve and his newly found friend
saw the need of and invented a new tram railroad system, by which
the mining company was saved many thousands of dollars a year.
Again in "The Iron Boys as Foremen," was told how the lads proved
themselves by saving the powder magazine from blowing up while
the mine was burning and the flames were creeping toward the
deadly explosives. It will be recalled that it was mainly through the
heroic efforts of the Iron Boys that the Red Rock Mine was saved
from almost total destruction, and that through their further efforts
many lives were undoubtedly saved. From then on they continued to
distinguish themselves, playing a conspicuous part in the great
strike, in the end exposing and unmasking a wicked and
unscrupulous man who was leading the miners on to commit deeds
of violence.
They were the same boys who were now starting out on a new
career for the same company. In this instance the lads were to
become sailors on the inland seas, known as the Great Lakes. The
lads were taking up this new calling for the twofold purpose of
learning still another branch of the great corporation's business and

they fondly hoped their work would prove of importance to their
employers.
The office of the president was located in Duluth, many miles from
the Iron Range where the boys had been working for the last two
years.
Their first act after leaving the offices was to make their way down
to the water front to the ship canal, leading from the harbor out to
Lake Superior. Steve pointed out the äerial bridge to his companion.
This was a car carried through the air suspended from a giant truss
over the river, by which passengers were transferred across to
Superior on the other side. Bob had never seen this wonder before
and was deeply interested in it. To Steve Rush it was of particular
interest, for he had acquired no slight knowledge of engineering
during his experience in the mines up on the range.
Boats were moving in and out, huge lake freighters, ore boats and
passenger ships, for the lake traffic was in full cry now. After
strolling about for a time, Steve took his companion home with him,
and the rest of the afternoon was spent with Steve's mother. Supper
finished, the lads decided that they would get down to the ore
docks, as the ship would likely be in by that time.
Darkness had set in when they reached the docks. These docks, as
those who have had the misfortune to have to make their way over
them are aware, consist of tiers upon tiers of trestle. Over the tops,
high in the air, ore trains rumble in by day and by night, discharging
their cargoes of red ore into huge hoppers, from which the ore is
loaded into the boats, or Great Lakes ore carriers, as they are called.
Neither boy had ever been out on one of these trestles before, and
the task looked to be rather formidable.
"How are we going to do it?" demanded Bob, surveying the great
structure apprehensively.

"I guess the only way will be to keep going until we get somewhere
or fall off. I don't see the ship, but we shall see it when we get to
the top of the trestle."
Both boys narrowly missed being run down by an ore train as it was
shunted out on the trestle. The lads were in a dangerous place, but
they did not feel at all disturbed about it. Men were flitting about in
the dim light of half a dozen electric globes distributed along the top
of the trestle that loomed all of seventy-five feet above the water.
"There's a ship down there," cried Steve.
"Yes, and there's one on the other side," answered Bob. "Why, there
are ships at all of the docks along here. Are you sure we have hit the
right dock?"
"I am not sure of anything, except that we are likely to break our
necks if we don't look sharp," answered Rush, with a laugh. "We will
ask the first man we meet where the 'Wanderer' is. There comes
some one now."
Rush hailed the man, a foreigner. The latter neither answered nor
paid the slightest attention to the question put to him.
"Thank you," murmured Rush.
"Mighty sociable lot of men up here," jeered Bob. "But then I
suppose they have to keep their minds on their work or fall off the
trestle. I prefer to work underground. In the mines, there's no
danger of falling down."
Ore was being shot down through the chutes into boats on each side
of the great trestle. There was the roar as of a great cataract as the
red dirt went hurtling down into the hold of the ships many feet
below.
"Let's get down on one of the other levels, Steve. Then we'll drift
over to the heading at the other end."

"Anybody'd think you were down in a mine. These aren't levels; they
are tiers. You remind me of one of our miners who came down here
to Duluth. He went to a hotel, and in telling some of the boys about
it, he said: 'We got in a swell cage with looking glasses all around
the inside. The cage tender jerked us up to the sixteenth level. We
went along this till we came to a crosscut; then they led us into a
swell drift an' we struck the heading and sat down.' What do you
think of that?"
"That sounds like a lumber-jack more than it does a miner. He must
have had a sky parlor. I wonder what hotel he got into."
Suddenly a great shouting was set up far below where the boys
were standing, and further on toward the end of the trestle.
"Now what's the matter?" wondered Steve. Two long blasts of a
steamship's whistle sounded.
"There goes a ship. They're pulling out. I'll bet that's the 'Wanderer,'"
shouted Bob.
"If if is, she will pull out without us. No, it can't be the 'Wanderer,'
for she did not come in until after sundown and it is not possible
that the ship could be loaded by this time. We'll simply have to find
our way down through the trestle somewhere and locate our ship. If
we knew which side the boat lay it would be easier for us. Can you
see which boat is leaving, Bob?"
"I think it is a boat from one of the other piers. I don't see anything
going away near us."
"Suppose we move out toward the end. Then we shall be able to see
where we are and what we are doing."
"And fall off?"
"Certainly not. We will walk along by the side of the track. There is a
railing here. No danger at all of falling."

The boys had their suit cases in their hands. They carried little
baggage, having been informed that there was no room on board for
trunks or luggage. Besides, the lads needed few clothes outside of
several suits of underwear.
As they stepped along, walking side by side, Steve pointed up at a
bright star.
"I wonder if we had better lay our course by that one——Grab me,
Bob—I'm falling!" suddenly cried Steve Rush.
Jarvis stretched out a quick hand, fastening upon Steve's collar. But
the movement threw Jarvis off his balance. He, too, toppled forward.
Rush had stepped into an open chute through which the red ore was
roaring down into the hold of the ship seventy-five feet below them.
Steve struggled valiantly to prevent himself from going in, and Bob
tried his best to keep from going in after.
"Let go, Bob; you'll go in, too!"
The warning came too late. Steve shot out of sight, leaving a
fragment of his coat collar in the hand of his companion. Then Bob
went in, head first.
Neither lad uttered a cry. They were not of the crying kind, and even
had they uttered a shout their voices would have been drowned in
the roar of the ore thundering into the hold of the big ship awaiting
it down in the slip.

T
CHAPTER II
THE IRON BOYS AS CARGO
HROUGH some fortunate twist of his body, Jarvis righted himself
while going through the big hopper into which the ore was
shooting. He landed feet first at the bottom of the hopper.
In the meantime Steve Rush, with a few seconds' start of his
companion, had gone on down through the hopper. He hit the long
wooden ore chutes that led down into the ship; he struck the chute
with a heavy bump and then went on at a speed that took his breath
away. Steve was in a sitting posture. Jarvis followed him at the same
rate of speed, lying flat on his back.
There was ore on all sides of them; in fact, they were riding on the
swift-moving ore; all about them was darkness, and even had there
been lights it is doubtful if the Iron Boys would have seen them,
because of the speed at which they were traveling.
Steve's mind was working with its usual rapidity. Had he known
exactly what awaited them below he might have been able to plan
with more certainty. He did reason, however, that they would
probably have to pass through a small opening when they reached
the bottom of the chute. In this he was wrong, though right across
the chute where it entered the ship was a heavy iron brace dividing
the chute in half, which was placed there to give the ship more
rigidity.
"Lie flat!" shouted Rush, with quick instinct, himself dropping on his
back. He did not know whether Bob were following him or not. Jarvis
was, but he was in no need of the admonition to lie flat. He was as
flat as it was possible for him to be and he could not have
straightened up had it been to save his life.

Jarvis was close enough, however, to hear the warning cry. He
opened his mouth to answer, getting it full of red ore as a result. The
ore got down in his throat, sending him into a paroxysm of choking,
sneezing and growling that was lost in the noise about him.
Suddenly Steve felt himself shooting through space. He realized, in
that instant, that he had left the chute. A few seconds more and he
struck heavily on his feet, bounded into the air, then plunged
forward head first.
The lad landed on his stomach, slipped down a conical pile of ore to
the bottom, his head striking the side of the ship, doubling him up
and leaving him stunned and unconscious.
Jarvis, who was not far behind him, went through very much the
same experience, save that he turned a somersault when he left the
chute, landing flat on his back on the pile of ore. His feet drove
against the side of the ship with the force of a battering-ram, backed
by the full weight of the lad's body. The effect was nearly the same
as it had been in the case of Rush. Bob was stunned. He, too, lay
still, after curling up against the vessel's side.
"Hey, what's that?" a voice had shouted as the boys disappeared
through the hatches.
"What's what?"
"I thought I saw something besides ore go through the chute in
number seven hatch."
"You're seeing things!"
"Maybe I am."
"Close number seven hatch!" shouted the second mate, and the two
deck hands, after the chute had been hoisted a little above the deck,
slid the heavy hatch cover into place. All the ore that was needed
had gone in through that hatch. The ship was nearly loaded. All that

was now required was a few car-loads at the ends to trim the ship
properly, after which she would be ready to sail.
Within the next ten minutes the rest of the ore had been shipped.
With loud crashings, interspersed with hoarse shouts, harshly-
uttered commands and an occasional toot of warning from the ship's
whistle, the hatch-covers were put in place and the ship made ready
for her journey down the Great Lakes.
There followed a moment of inactivity; then came a blast of the
whistle fully a minute in duration. It was the signal that the ship was
about to back out of her slip, warning all other craft to keep clear.
The propeller began to churn the waters of the harbor and the ore
carrier, with its cargo of ten thousand tons of iron ore, backed slowly
out into the stream.
Bob Jarvis rolled over until he was practically standing on his head
and shoulders. He toppled over on his back with a jolt that woke him
up. The lad gave a kick and some one grunted.
"Hey, there, take your foot out of my stomach, whoever you are. Is
that you, Bob?"
"I—I don't know. Hello, Steve, that you?"
"I guess it's both of us. Ugh! My mouth is so full of ore that I can
hard—hardly talk."
"I've got a dark red taste in my own mouth. I've swallowed enough
ore to make a steel rail. Do you know where we are?"
"We have fallen into the hold of a ship, and we are lucky that we are
not dead."
"Maybe we are and don't know it," jeered Jarvis, pulling himself up.
He tried to get to his feet, but the ore slipped from under him,
leaving him at the bottom against the side of the vessel again.
"Quit it!" shouted Steve. "Are you trying to bury me?"

The latter was on his feet too, brushing the dirt from mouth, eyes,
nose and ears. Bob had sent a quantity of it sliding down the chute.
"I can't help it. What's the matter with you? What do you think
about this business?"
"I don't think, I know. We are in a nice fix."
"Think so?"
"I told you I didn't think," retorted Steve in a tone of slight irritation.
"Glad you admit it."
"We have been dumped into the hold of an ore vessel. I don't know
whether or not there is any way to get out, and it is sure that the
hatches will not be opened again until the vessel reaches her
destination."
"How long will that be?"
"That depends upon where they are going. If they are bound for any
of the Lake Erie ports I should imagine it would take a week or
more."
Bob groaned.
"I'm going to yell."
"Yell, if you can. I've too much ore in my mouth to make much of a
noise."
Jarvis raised his voice in a shout. It did not seem to attract any
attention. The lad shouted again and again. By this time the ship
was trembling from stem to stern under the jar of the propeller that
was beating the water at many hundred revolutions a minute.
"Nobody on this ship, I guess," muttered Bob. "Come, suggest
something. You've always got something to say," urged Jarvis.

"I was about to say that you might as well save your breath. No one
can hear us through the thick decks; in fact, I presume every one
has turned in except those on watch forward, and the engine room
crews at the rear end of the ship."
"Then I am going to lie down and go to sleep," declared Jarvis.
"Don't do anything of the sort. The ore is likely to slide down and
bury you. The less disturbance we make here the better it will be for
us."
"Why didn't you think of that before we fell in? I suppose we are
pretty deep down in the ship, aren't we?"
"About as close to the bottom as we can get without drowning. We
will keep as quiet as possible until we can plan some way of helping
ourselves out of this predicament."
Bob grunted unintelligibly. For some time after this the Iron Boys
leaned against the side of the ship, Steve trying to plan some way
out of the difficulty, Bob growling inwardly over the hard luck that
had befallen them.
All at once the ship gave a quick, sudden lurch. Jarvis lost his
balance, falling over on his face. The ore came down in a deluge,
covering him from head to feet before he had sufficient time to
scramble out of the way. Steve, bracing himself against the side of
the ship, stooped over and helped his companion to his feet.
"The old tub's going to tip over," gasped Jarvis. "What's the matter
with her?"
"Nothing is wrong. We have gotten out of the ship canal and into the
open water of Lake Superior. There must be considerable sea. Don't
you hear the waves smashing against the sides of the ship?"
"It isn't what I hear, but what I feel," answered Bob faintly. "I feel
queer. My head's spinning like a top. Is yours?"

"No; I can't say that it is. Are you getting seasick?"
"How do I know? I have never been seasick. How does it feel to be
that way?"
"I have heard that when people are seasick they don't care very
much whether they live or die."
"Then—then—I wish I could die right here, if it would make me
forget that awful goneness under my belt. Ugh!"
Bob settled down against the side of the ship, moaning.
"Don't be a baby. Get up and be a man."
"I—I don't want to be a man. I—I'd rather be a wooden image, then
I wouldn't care what happened. In case the ship went down I could
float and——"
Bob's words were lost in an anguished moan. Steve felt far from
comfortable, but he set his teeth and made a resolve not to give up.
"The sea is coming up, Bob," announced Rush after a long period of
silence.
"The—the sea——? It's my opinion that something else will be
coming up soon if things don't stop moving around the way—the
way they are doing now."
Steve laughed.
"Remember, Bob, that we are not likely to get anything in our
stomachs for some days. Be careful."
Bob groaned.
"If I ever get anything solid under my feet I'll take it out of you for
that! That's a mean trick to play on a fellow when he's in the shape
I'm in at this minute. How long do you suppose the noise outside
will keep up?"

"I don't know. Probably all the way down Superior."
"And how far is that?"
"Let me see. I think Mr. Carrhart said the trip to the—the Soo took
thirty-six hours."
"Help!" muttered Jarvis faintly.
"Now, I want you to brace up. Come on, get up. If you don't I'll
trounce you and make you forget your troubles."
"Yes, you can talk, but if you felt as badly as I do, you wouldn't
spout that way. You; couldn't without—without——"
"Perhaps I do feel badly, but I may have the will power to fight it
out."
Steve reached down and pulled Jarvis up beside him. The latter
protested, but it did him no good, for he was apparently unable to
offer any resistance. Rush threw an arm about his companion and
began talking about other subjects in order to divert Bob's mind
from his sufferings, for his was a real case of seasickness.
In the meantime the sea seemed to be rising, though as a matter of
fact there was little sea on. The short, sharp waves of the lake were
moving the big, flat-bottomed steamer almost as roughly as they
would have moved a little row boat, for the ore carriers are
proverbial rollers.
After a time Jarvis began to feel easier, and the lads, lulled by the
motion of the ship, grew sleepy. Steve did not dare allow himself to
go to sleep. He knew, full well, that such a thing would be
dangerous. A lurch of the vessel might cover their heads with dirt
and smother them to death before they were able to extricate
themselves. Then again, they might be buried too deeply to dig their
way out at all.

"Lean up against me, Bob. No need of our both standing here
suffering for sleep. If you get too heavy I'll let you drop; then I
guess you will wake up."
Bob leaned heavily on his companion. He would have done so in a
moment more at any rate, for his eyelids seemed to weigh a ton.
The lad was asleep almost instantly. After a time Steve's eyelids also
drooped. He could hold them up no longer. Then he went to sleep,
braced against the wall of the hull, his companion sleeping soundly
in his arms.
There could be but one result of this. They had been asleep but a
few moments before, in a lurch of the ship, Rush toppled over with
Jarvis on top of him, a ton or more of ore banked up about them.
"Get up! Get up!" shouted Steve, as soon as he was able to get his
mouth free of the red ore.
Jarvis muttered, and Steve was obliged to push his companion off by
sheer force. The lad pinched and pounded himself, to awaken his
dulled senses thoroughly, then he began to punch Jarvis about with
his clenched fists.
"Leggo! Quit that, or I'll——"
Bob tried to strike Steve, but instead, he measured his length on the
ore pile.
"I'm trying to get you awake, and if you don't want to be roughly
handled you'd better pull yourself together," warned Steve.
"I'll get even with you for this one," growled Jarvis. "What's the use
in trying to keep awake?"
"I've answered that question already. Besides, I am going to try to
find some way out of this hold."
"You'll have a nice time doing it," growled Jarvis.

"I expect to have. But I know there must be some way. You keep
close to me."
"What are you going to do?"
"Feel my way along the side of the ship to see if I can get hold of a
ladder or something that we can climb up."
"I couldn't climb a step ladder without falling off, the way I feel
now," objected Jarvis.

N
CHAPTER III
A SURPRISED SKIPPER
o use!" groaned Jarvis. "There isn't a ghost of a chance of our
getting out of this until the old tub gets to some place or other.
We're done for, this time. I wish I had stayed in the mines, where I
belong, instead of following along after you. You can get into more
trouble than any other fellow I ever knew."
"Never mind," laughed Steve. "We're the Iron Boys. Why shouldn't
we travel as part of the iron ore cargo? The only thing that troubles
me is that we have lost our ship. The 'Wanderer' will sail to-night
with two men short, and—but I care more about what Mr. Carrhart
will think when he hears that we missed our boat. He will think us a
couple of stupid boys, and he will be justified in so thinking."
"I don't care what he thinks," growled Bob. "What's bothering me
now is my stomach, and the thought of how I'm going to get out of
this."
Steve did not reply. An idea had occurred to him. Gathering up a
handful of soft ore he tossed it up over His head. Some of the stuff
showered down over Bob Jarvis, causing that young man to protest
vigorously. A large portion of the stuff, however, did not come down.
Steve heard it drop on metal, roll a little way then stop.
"Quit that, now," protested Jarvis. "What on earth are you trying to
do? I can't appreciate a joke to-night."
"This is not a joke," answered Steve, gathering up another handful.
"I am saving your life."
"Huh! Pleasant way you have of doing the trick."

Introduction to Compressible Fluid Flow 2nd Oosthuizen Solution Manual

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