Understand the diversity of organizations in the economy, as exemplified by the six focus organizations

Organizational behavior always occurs in the context of a specific organizational setting. Most attempts at explaining or predicting organizational behavior rely heavily on factors within the organization and give less weight to external environmental considerations.³⁷ Students can benefit from being sensitive to the industrial context of organizations and from developing an appreciation for each organization as a whole.³⁸ In this vein, six organizations each appear three times for a total of eighteen Thinking Ahead and Looking Back features. CarMax is illustrated in this chapter. We challenge you in each chapter to anticipate what is in the Looking Back feature once you read Thinking Ahead.

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The U.S. economy is the largest in the world, with a gross domestic product of more than $14.2 trillion in 2008. Figure 1.3 shows the major sectors of the economy. The largest sectors are service (43 percent) and product manufacture of nondurable goods (21 percent) and durable goods (7 percent). All together, the manufacture of products and the delivery of services account for 71 percent of the U.S. economy. Government and fixed investments account for the remaining 29 percent. Large and small organizations operate in each sector of the economy shown in Figure 1.3.

The private sectors are an important part of the economy. The manufacturing sector includes the production of basic materials, such as steel, and the production of finished products, such as automobiles and electronic equipment. The service sector includes transportation, financial services, insurance, and retail sales. The government sectors, which provide essential infrastructure, and nonprofit organizations are also important to our collective well-being because they meet needs not addressed in these economic sectors. We have chosen organizations that reflect a broad cross section of business: CarMax, Facebook, Nordstrom, IKEA, Research in Motion, and Deloitte.

Each of these six organizations makes an important and unique contribution to the manufacturing or service sectors of the national economy and/or to our national well-being. These organizations are not alone, however. Hundreds of other small, medium, and large organizations are making valuable and significant contributions to the economic health and human welfare of the United States. Brief examples from many organizations are used throughout the book. We hope that by better understanding these organizations, you may have a greater appreciation for your own organization and others within the diverse world of private business enterprises and nonprofit organizations.

CarMax CarMax is a Fortune 500 company and is the largest retailer of used cars in the United States. Founded in 1992 as a concept for revolutionizing the way Americans buy cars, CarMax opened its first store in 1993 with a fleet of 500 used vehicles. The company recorded its first annual profit in the year 2000 and, five years later, was listed on Fortune magazine's “100 Best Companies to Work For” list. CarMax has earned that distinction each year since debuting on the list in 2005, advancing from number forty-six in 2008 to number thirty-one in 2009.

CarMax prides itself on changing the perception of the used car-buying experience, from the ordinary to the extraordinary. From the moment car shoppers step foot on the lot, they are met with a salesperson that remains with them throughout the entire process, from the greeting to the financing. Customers don't haggle for pricing. They don't have to haggle since the prices of vehicles are disclosed right away. CarMax goes out of its way to ensure customer confidence in the vehicles it sells by inspecting, reconditioning, and backing them with limited warranties. CarMax's goal is to make the car-buying experience painless and fun. According to its CEO, Tom Folliard, “CarMax was founded on the fundamental principle of integrity, reflected in the way we serve our customers, treat each other and deliver our products.” This is evidenced by the company being only one of two North American companies to receive the Better Business Bureau's highest honor in recognition of ethical business practices, the International Torch Award for Marketplace Excellence.

CarMax is headquartered in Richmond, Virginia, and currently operates 100 used-car superstores in 46 markets. The company reported net sales and operating revenues of $6.97 billion and net earnings of $59.2 million in fiscal year 2009.³⁹

Facebook Facebook is the second most-trafficked social networking Web site in the world. The company was founded in February 2004 by Mark Zuckerberg and his classmates from Harvard University, Chris Hughes, Dustin Moskovitz, and Eduardo Saverin. Facebook was first launched in their dorm room and was available for only Harvard students. Throughout 2004, Facebook expanded its network to other colleges and by the end of the year, the site had over 1 million active users. Now, anyone can join Facebook; the site has over 200 million active users and is available in 40 translations with 50 more in development.

Since inception, the company has developed numerous technologies to help the sharing of information through one's social graph, the digital mapping of user's real-world social connections, and has made an enormous impact on the way people communicate all over the world. Facebook has gone far beyond a communication tool for efficiently interacting with friends and families, and is now, for example, a marketing tool, a means to screen job candidates, and a way to rally support for political campaigns and policies. As a forum for over 200 million users and with so many uses, Facebook is navigating uncharted waters with issues such as user privacy and allowable content which they are addressing with innovative solutions such as customer participation in decision making.

Facebook has over 850 employees and is headquartered in Palo Alto, California, with its international headquarters in Dublin, Ireland. Additionally, the company has offices in Atlanta, Chicago, Dallas, Detroit, New York, Venice Beach, London, and Paris.⁴⁰

Nordstrom Nordstrom is a fashion specialty chain with a focus on customer service, generous size ranges, and a selection of fine apparel, shoes, and accessories for the whole family. The first Nordstrom store was opened as a shoe store in Seattle, Washington, in 1901, under the name Wallin & Nordstrom. John W. Nordstrom and Carl Wallin founded this store on the principles of exceptional service, selection, quality, and value. In the late 1920s, both Wallin and Nordstrom sold their stake in the company to Nordstrom's sons, and members of the Nordstrom family have been involved in the company ever since.

Nordstrom also strives to be socially responsible. Every year, the company donates millions of dollars to nonprofits, it prints on Forest Stewardship Council (FSC)-certified paper with 30 percent recycled content, and in 2007, the company decided to pursue a more organized and comprehensive social responsibility strategy focusing on four primary areas: Supporting Communities, Sustaining the Environment, Protecting Human Rights, and Caring for our People.

Nordstrom has a long-standing philosophy for hiring personality and motivation and training the skills. When they find the right employee, they treat them well. They were one of the first companies to offer profit-sharing to employees. The company also has generous 401K, and in 2008, Nordstrom was listed on Fortune magazine's 2008 list of “100 Best Companies to Work For.”

Today, Nordstrom is still headquartered in Seattle and is one of the nation's leading fashion specialty retailers with 177 U.S. stores in twenty-eight states.⁴¹

IKEA IKEA was founded in 1943 by Ingvar Kamprad in Sweden. The name IKEA came from the founders' initials (I.K.) and Elmtaryd (E) and Agunnaryd (A), the farm and village where he grew up. Kamprad started by buying small items such as pens, wallets, and picture frames in bulk and selling them by making individual sales calls. He sold the items for a profit but still at greatly reduced prices. He very quickly outgrew his ability to make sales calls and started a mail-order business using the local milk man to deliver products to the train station. In 1950s, Kamprad discovered the cost-saving and transportation advantages of not fully assembling its furniture. For the next fifty years, “flat-packs” have served IKEA well as the company has expanded throughout Europe, Asia, the Middle East, and North America as well as developed a Web presence.

IKEA takes corporate social responsibility seriously. Despite its low-cost model, IKEA does not cut costs at any price. They do not produce products with hazardous materials, they do not use wood from devastated forests, child labor is unacceptable, and suppliers must have a responsible attitude toward the environment. IKEA coworkers are on-site monitoring suppliers, monitoring forests, and discouraging child labor. Furthermore, IKEA supports initiatives of organizations such as UNICEF, Save the Children, and American Forests. Every new employee at IKEA goes through environmental training and each store has an environmental coordinator who actively works toward saving energy and educating employees and customers on reducing waste. For this focus on responsibility, in 2006, IKEA received the Foreign Policy Association Award for Global Corporate Social Responsibility.

IKEA has been recognized as a good place to work as well. For four consecutive years beginning in 2003, IKEA was on Working Mother magazine's annual list of the “100 Best Companies for Working Mothers.” IKEA was also on Training magazine's annual list of top companies that excel at human capital development for five consecutive years beginning in 2002. Additionally, IKEA was listed on Fortune's “100 Best Companies to Work For” in 2005, 2006, and 2007.

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