Term Mid Study Guide
Chapter 1
Chapter I The Breakdown of Management
1. Organizations Groups of people that collaborate together and synchronize with each
other to accomplish a range of shared goals and desired future results.
1. A manager is one of the members of the in the organization that have the ultimate
responsibility of utilizing the other members of the group and the resources to achieve these outcomes.
2. Management - The process of planning, leading, organizing and controlling the
organizations most effectively and efficiently.
2. A Managers Goal is to Achieve High performance 1.
Organizational performance An evaluation of a managers performance in achieving the highest performance for its organization in terms of customer satisfaction and use of resource. This is measured in terms of efficiency and effectiveness.
2. Efficiency A measure of whether or not resources are used to their full capacity.
It is generally shown through the productivity of a company.
1. The input to resource ratio can help evaluate the efficiency of an
organization
2. Managers are responsible in making sure that their team performs all their
tasks with the highest possible efficiency
3. Effectiveness A measure of whether or not managers have chosen
appropriate goals for an organization and the extent of accomplishment of those goals.
1. Organizations are considered effective when the goals made by the managers are
achieved.
3. Studying Management 1.
In any society, resources are considered to be scarce. The scarcity of these resources relate directly to the well being of the society itself. In order to use the resources most effectively and efficiently, we have managers to decide how to allocate these resources.
2. Although not everyone is interested in being a manager, they should study it
because it teaches them about the relationships between managers and their associates. This understanding will enable people to be able to work together more efficiently and effectively.
3. Someone who has had experience with management courses is seen as more
promotable.
4. Essential Management Tasks
1.
Planning, Organizing, Leading, Controlling All managers responsible for these four tasks Execution of these four tasks determine the effectiveness and efficiency of a manager.
2. Planning This is the step where managers develop and choose goals that they
deem appropriate for the organization. They create strategies for the highest performance rate in this stage.
1. Three steps to planning 1. Choosing the goals the organization wants to achieve 2. Choosing the strategies that best fit those goals 3. Choosing how to use resources most efficiently with those strategies 2. Planning determines an organizations performance level. 3. At the end of a plan, a strategy is formed. 1. A strategy is a collection of decisions that depend which courses of action an
organization will pursue and how resources will be used in order to attain their goals.
3. Organizing This is the step in which managers structure the
interaction and cooperation between and organizations members in order to attain the organizations goals.
1. Managers organize by allocating certain job skills to specific tasks. This is also
where managers allocate resources.
2. After organizing, an organizational structure is formed. A formal
evaluation system of task and reporting relationships that can coordinate and motivate members so that they work together in order to achieve the organizations goals.
3. This evaluation helps determine how resources can best be used to create
goods and services in an organization.
4. (Manager Question) [How to you tell an employee that they are not good
at a certain task and may be fitted for a different task?]
4. Leading This step includes the articulation of an organizations goals to
the members. Managers need to give a detailed and clear vision to the employees so that they know specifically what part they play in the organizations plans to achieve the goals.
1. The qualities of power, personality, influence, persuasion, and communication
skills to coordinate people and groups are important for a manager at this step. Managers have to ensure that all the activities and efforts of the members are in harmony with each other.
2. Good leadership involves motivating the organizations members to
perform at a high level to aid the organization in achieving its final goals.
3. A result of good leadership would be a workforce that is highly committed
and motivated.
5. Controlling This involves determining how well an organization has
achieved their goals and whether or not they need to take action in order to maintain or improve the performance of the company.
1. The managers evaluate the performance of the organizations members in order to
see whether or not they are meeting the standards that were set prior.
2. Results from the controlling process include the ability to measure the
members performances as well as regulate the company effectiveness and efficiency.
3. Managers must dictate which goals they want to measure and design
control systems in order to assess performance.
4. This step enables managers to evaluate their own performance and how
well they are executing the planning, organizing and leading steps. This way, they can decide whether or not they need to change anything.
6. These four steps are essential to management at all levels of the
management hierarchy. In order to have an effective and essential organization, managers must be able to perform all of these tasks successfully.
5. Manager Skills and Levels 1.
Managers are generally separated by either hierarchy levels or their skills sets
1. There are three levels of managers: first line, middle and top. First-line managers
report to middle managers and middle managers report to top managers.
2. Skill sets are separated through different expertise and experiences:
engineering, marketing, sales
3. Department: A group of managers and organization members that possess
the same kind of knowledge, tools or techniques in order to perform specific tasks. Examples include manufacturing, accounting, engineering, sales, etc.
1. The three levels of management apply to the departments 2. Management Levels 1. First-line Managers Typically called the supervisors, they have the
responsibility of managing the members that perform specific activities that produce the goods and services. This is supervision for the daily performance of the employees and these managers work in all the functions and departments of the company.
2. Middle Managers Their responsibilities include finding the most efficient
and effective way to organize resources and members in order to achieve an organizations goals. These managers help first-line managers and employees find strategies to reduce manufacturing costs and better utilize resources. More responsibilities include evaluating whether or not goals are appropriate for the organization, suggesting changes in order to better
efficiency and effectives of strategies to improve organizational performance, developing and fine-tuning skills, etc.
3. Top Managers They are responsible for all departments of an
organization (a.k.a. cross-departmental responsibility). They determine the organizations ultimate goals. This includes deciding the goods and services offered by the company, determining the interaction between departments and evaluating the performance of middle managers in their management of people and resources. They have the responsibility of the success or failure of the organization. Their employees and investors constantly scrutinize them based on their decisions.
4. (Manager Question) As a top manager, your performance is constantly
evaluated internally and externally. How do you manage to keep both employees and investors happy?
5. Top-management team The CEO (chief executive officer), COO (chief
operating office), the president and department heads. This team is the most responsible for helping the organization achieve its goal.
6. Dependent on a managers level, the importance of each management task
changes
7. (Manager Question) How do you differentiate non-managerial employees
versus managers?
3. Skills in Management 1. Education and experience help managers develop conceptual, human, technical or
job-specific skills.
2. Conceptual skills The ability to distinguish the cause and effect of a
situation and ability to analyze and find the solution to a situation.
1. Top managers need to have the best conceptual skills because their main
duties are to plan and organize
2. This skill enables managers to see the big picture of a situation and this is
important so that they do not get caught up in the details
3.
Human Skills This set of skills includes the ability to lead, understand, alter, lead and control the behavior of individuals and groups.
1. This skill can be distinguished with the ability to communicate, coordinate
and motivate people. It also involves the ability to structure individuals into a cohesive team. This skill can help distinguish effective and ineffective managers.
2. The ability to manage human relationships can help understanding problems
and viewpoints. Feedback helps the development of human skills.
4.
Technical Skills This is geared towards more specific skills to perform a particular task or type of work at an effective and efficient level.
1. In order to be effective, managers should have a wide range of technical skills.
Their group of technical skills usually depends on their positions in their organizations.
5.
(Manager Question) What are some specific qualities that you look for in your employees?
6. Core Competency This is the specific set of departmental skills,
knowledge and experience that distinguishes an organization from its competitors and give it an advantage. This advantage is called a competitive advantage.
4. Managers need all three skills: human, technical, conceptual in order to
have an effective and efficient organization the lack of any one of these skills can end up as failure
6. Recent Changes in Management Practices 1.
Global competition and advances in information technology lead the recent changes in management practices. The struggle for local and international resources has put more pressure on managers to be more effective and efficient. Information technology aids in the development skills for management tasks (planning, organizing, leading, controlling).
2. Restructuring and Outsourcing Recently organizations have been restructuring
and outsourcing specific organizational activities. This helps reduce the number of employees on payroll and make more use of the workforce thats left.
1. Restructuring The downsizing, shrinking or simplifying of an organizations
operating costs and operations. This has been steadily increasing after the start of the recession in 2008. This downsizing generally takes the form of layoffs. It often results in the decrease of human resources in all levels of management and non-managerial employees.
1. Due to increase in efficiency and effectiveness of information technology 2. Can bring negative feedback if employees are overworked or quality of
products and services declines
2.
Outsourcing This is when organizations seek services, usually abroad, at a low cost and goes into a contract with a company that provides services that used to be done in house. This strategy can help increase the efficiency of the organization by freeing up extra money that can be invested in other activities.
3. Empowerment and Self-Managed Teams 1. Empowerment The act of allocating a larger amount of responsibility to the
employees so they have a higher authority in how they perform their duties
1. By giving an employee more responsibility, it usually motivates them to
perform more efficiently. Many times, this motivation is encouraged by improved information technology.
2.
Self-managed Team A group where each member is responsible for organizing, controlling and supervising their own activities.
1. Since these members assume the responsibilities, they usually take that
responsibility off of the first-line managers.
7. 1.
Global Environment Management Challenges Global Organizations Companies that compete in more than one country
1. This has forced organizations to be more effective and efficient in their ways of
utilizing resources.
2. Five major challenges in the global environment: building a competitive
advantage, maintaining ethical standards, managing a diverse workforce, utilizing new information technology, practicing global crisis management
2. Building Competitive Advantage 1. Competitive Advantage When a company is more efficient and effective in
producing goods and services than its competitors.
1. Four building blocks: efficiency, quality/speed, flexibility and innovation,
responsiveness to customers
2. Efficiency is increased when companies use less resources to produce goods
and services
3. A companys speed is how fast they can bring new products to the market and
their flexibility is how easily they can alter the way they perform their activities to respond to the actions of their competitors - They are agile competitors if they have speed and flexibility
2.
Innovation A process of developing new and improved goods and services or creating better ways to produce and provide goods and services
1. Managers strive to create an environment where employees are encouraged to
be innovative
2. Typically a small team is assigned where the control of work is decentralized
to team members and it creates an environment where risks are rewarded
3.
Turnaround Management the planning and organizing of new strategies to help an organization utilize its resources at a higher efficiency and effective rate.
1. This is to help a company survive and hopefully eventually, prosper. 2. Turnaround management is generally needed the most during times of great
uncertainty where an organization has become both ineffective and inefficient
3.
How to Maintain Ethical and Socially Responsible Standards
1. Each level of management has their share of pressure in terms of creating revenue
for the organization
2. Pressure can be good for helping managers find new and better ways to
plan, organize, lead and control.
3. A negative side would be the promotion to behave unethically if there is
too much pressure.
4. How to Manage a Diverse Workplace
1. (Manager Question) How does NT promote diversity? 2. The workforce now consists of members with different age, race, gender,
ethnicity, religion, sexual preference and socioeconomic makeup. This creates an added pressure on managers to manage their workforce extremely well.
3. Managers that embrace diversity and use it to the advantage of their
corporations usually gain the most success in achieving their goals
5. IT and E-Commerce 1. Information has become a large part in a managers responsibilities. In order to
have a effective and efficient organizations, managers need to know how to utilize the technological advances.
6. Practicing Global Crisis Management 1. Three topic causes of global crisis management: natural, man-made, international
terrorism and geopolitical conflicts
2. Natural cause examples: hurricanes, tsunamis, earthquakes, famines,
diseases
3. Man-made: global warming 4. Geopolitical tensions: rising oil prices
Chapter 3
Chapter 3 Managing Ethics and Diversity
1. Nature of Ethics 1. Ethical Dilemmas 1. Ethical dilemma A situation where people find themselves questioning
their own actions and whether or not they should help another person or do the right thing even if it might go against their own self-interest. Another case where there could be an ethical dilemma would be when a person has to decide between two different courses of action when knowing that choosing either one would bring harm to the other party or individual.
2. Moral scruples Part of a persons ethics, the thoughts and feelings that
help a person decide what is right and what is wrong.
3. Ethics internal moral principles, values and beliefs that are used by
individuals to analyze and interpret a situation and decide the course of action they would take. This decision is usually considered right in their minds or the course that causes the least damage to the present situation.
This concept also gives people an idea of what actions would be unethical to bestow on other people.
4. (Manager Question: Has there ever been a time where NT had to
reevaluate their morals or ethics in business?)
5. There is no absolute or set rules that say whether something is ethical or
unethical
2. Ethics and the Law 1. The rule of thumb to determining the appropriate behavior when dealing with
others laws created provide a legal and political process that helps determining ethical behavior
1. Helps rule actions and determines punishments if the behavior is inappropriate 2. Important thing to remember: Neither law or ethics has fixed
principles. The ethics of society changes over time and laws are reflected in lieu of those changes.
3. Golden rule: Do unto others as you would have due unto you 3. Time and Change in Ethics 1. Through time, people change their beliefs and this causes people to question the
law. Many laws were disputed among different groups of society in the past and this remains the same today. Although ethical beliefs formed the laws that we have today, a change in belief can still alter those existing laws.
2. There is a relationship between ethics, law and business. Although
something may not be illegal, it does not mean that it is not ethical and even though an action is legal, it does not make it ethical.
3. In conclusion, managers are the ones who have to ultimately decide
whether an action is appropriate or not appropriate. They have the responsibility of how to approach the products and services offered to customers.
2. Ethics and Stakeholders collide 1.
Stakeholders People who have a claim to the company because they provide productive resources.
1. Ethics generally holds a significant importance to stakeholders because it should
generally coincide with what they believe is ethical. The ethics of a company can directly harm or benefit a stakeholder.
2. Major stakeholders: stockholders, managers, employees, suppliers and
distributors, customers, community, society, and nation-state
3. (Manager Question) How much impact do stakeholder decisions have on
your corporation?
2. Stockholders 1. Stockholders People who own the stocks and shares of the company. This in
turn means that they own a part of the company. Usually this is dependent on a
founders decision to publicly incorporate the company to raise the capital of the business or corporation by issuing stocks and shares. They are interested in the way a company operates because they want to ensure that they have a return on their investment.
2. Another concern for stockholders are whether or not their managers are
behaving ethically. They want to know that managers are not engaging in unethical measures that can tarnish their investments reputation.
3. Managers 1. Managers are considered as one of the major stakeholders in the company because
they are responsible for the companys financial capital and human resources and their use. They strive to increase its performance and help raise the stock price. They have a stake in the corporation because they managers offer their skills, expertise and experience.
2. Managers can expect good returns because they are voluntarily investing
their own human capital to the success of the company. Their returns usually consist of good salaries, benefits, prospected promotion and careers, and stock options and bonuses tied to the companys performance.
3. Managers have the responsibility of deciding the goals and use of
resources that will most benefit stakeholders and bring in the most profit. This often brings in a conflict of interests between stakeholders and managers.
4. Managers constantly debate ethics because the decisions they make can
cause them to hurt one group or another dependent on the situation.
5. Managers are often given incentives and are motivated to please
stockholders. They must be constantly evaluated so that they do not act unethically or illegally when pursuing goals because if they do, it can threaten the well being of the stockholders and other stakeholders.
6. Personal capital and wealth has a history of creating corrupt managers but
the Securities and Exchange Commission is reworking rules that govern a companys relationship with its auditor. The SEC also helps to regulate rules. They plan to turn unethical behavior to being illegal.
7. (Manager Question) What incentives do your company offer your
employees to enhance their performance?
8. CEO and manager salaries are constantly debated because people question
whether or not they deserve to earn that much.
4. Employees 1. These are the people who work in the several departments of the corporation
itself. The departments are typically research, sales, and manufacturing. They should be rewarded for the human resources that they provide for the company. Companies have an obligation to offer recruitment, training, performance evaluation and reward systems for employee performance.
5. Suppliers and Distributors 1. Companies rely on the relationships that they have on other companies in order to
operate. Each company is generally tied to distributors and suppliers that provide components to the products and services that the company offers. There are always intermediaries that the companies will have to work with in order to provide the goods and/or services of their organizations
2. Ethical issues can arise due to the relationships that are formed between
certain companies and these issues are usually dependent on the money being transferred between companies. Organizations often have to take a stance on their ethical beliefs and it is usually placed in their central message.
6. Customers 1. They are possibly the most critical stakeholders in an organization 2. Customers are crucial to helping a company stay in business. If there are
no customers, the company will more than likely end in failure.
3. Companies strive for effectiveness and efficiency in order to attract new
customers and build a good rapport with the old ones
7. Community, Society, and Nation 1. When companies and managers make decisions, the effects of those decisions are
permeated by the communities, societies and nations where they operate
2. A community refers to a location like towns, cities, social milieus (i.e.
ethnic neighborhoods, etc.) where the companies offer their products and/ or services.
3. A community creates a structure where an organization can operate both
politically and socially. It is determined by its utilities and labor force, the residency of managers and employees, the services that the company members use, etc.
4. The prosperity or decline of the community usually depends on the
salaries, wages, and taxes that the company contributes to the economy.
5. Business ethics is crucial to the development of a company because it
could possibly destroy a community. Pollution is a prime example. If a company engages in activities that can add to pollution, the community could be in danger.
8. Rules for Making Ethical Decisions 1. When it comes to making decisions, managers should consider all groups of
stakeholders in order to offer the best possible return on profit. This will ensure that in the long run, the majority is benefitting from the decisions.
2. There are four category of rules that can determine the way businesses
treat their stakeholders: utilitarian, moral rights, justice, and practical
3. Utilitarian Rule This rule states that a decision is made based on trying to
achieve the greatest good for the greatest amount of people.
4. Moral Rights Rule This rules states that decisions are made based on
how well rights and privileges are protected and maintained
5. Justice Rule This rule is when both harm and benefit is distributed
evenly to the people who will be affected by the decisions
6. Practical Rule This rule is where a manager does not have trouble
making their objectives clear to a normal person outside of the company.
7. (Manager Question) How does family play a part in NT? How important
are employees values in the company?
9. Reason for Managers to Behave Ethically? 1. If Managers pursued their self-interests, it would encourage others to follow the
example and soon, the company would be headed to the road of failure. More people would be inclined to act selfishly and in time, everyone will be working to service their own needs and ignore the goodwill of others.
2. Trust The willingness of an individual to put faith in another group or
individuals goodwill
3. Reputation An asset that companies or organizations gain when they
behave ethically. This is a safeguard against unethical behavior that gives everyone a sense of what the company is about.
4. An important thing to keep in mind is that organizations or corporations
are part of a bigger social group so if they act unethically, it can only lead them to their failure. People eventually see through twisted ethics and will refuse to deal with offenders.
10. Codes of Ethics Sources of an Organization 1. Societal Ethics This is a standard where people turn to in times of dispute in
fairness, justice, poverty, and the rights of the individual. This is usually embedded into the societys law system. Societal ethics differs between societies.
2. Professional Ethics Based on situations where professionals need to act a
certain way, this standard help to govern people who are in a position to make decisions (i.e. managers, worker, etc.). Within each profession, there is a guideline of professional rules and norms that people follow that eventually become a part of a companys code of ethics.
3. Individual Ethics In social situations where interactions take place, these
personal values and attitudes determine how people act. This varies from one person to another based on their experiences and influences.
11. Ethical Organizational Cultures 1. By integrating ethical values into the organizations culture, managers can
encourage social responsibility and ethical behavior.
2. Managers are the key players in which other employees and workers look
to as examples so if they promote ethical decisions, the employees will follow in suit
3. Ethics ombudsman An officer that enforces ethics who monitors the
ethical practices and procedures of a company. They are responsible for making sure employees know the companys ethics and evaluate how a companys employees are acting in terms of the ethics.
4. Ethical organizations encourage employees to act in a socially responsible
manner
3. Diversity in the Workforce Environment 1.
Diversity Differences between people in terms of age, gender, race, ethnicity, religion, sexual orientation, socioeconomic background, education, experience, physical appearance, capabilities/disabilities, and other characteristics.
1. There are several important ethical and social responsibility issues when it comes
to diversity.
2. There has been a raised awareness of people who are diverse and equality
in the work environment
3. Organization effectiveness can be improved by managed diversity.
Diversity can possibly provide a company with competitive advantage.
2. (Manager Question) What does NT do to promote diversity? 4. Effective Diversity Management 1.
There is research that helps managers understand diversity so that they can develop a way to manage it within their organizations
2. Critical Managerial Roles 1. Managers can promote diversity by acting fair to all of their employees. 2. A manager that commits to diversity can usually influence the rest of their
employees to do the same.
3. Good Business Created by Diversity Management 1. Diversity could provide a company with a competitive advantage so that they can
better service their customers
2. Not only is the workforce becoming more diverse, but the customer base is
also becoming diverse. In order to service customers better, it is important for companies to adjust to their needs and tastes.
3. Retention rate of employees can increase due to diversity in the work
environment. Less employees will see a need to leave and money spent on training new employees can be used for other parts of the company.
4. Sexual Harassment 1. Not only does sexual harassment affect the people in the crime, it also can cause
an organization its reputation.
2. Forms of Sexual Harassment Two basic forms: quid pro quo and hostile
work environment sexual harassment
1. Quid pro quo sexual harassment This is when a higher positioned individual
forces an employee into sexual favors in order to obtain a promotion, stay in their job, gain a raise, or gain a benefit or avoid a demerit in the work field.
2. Hostile work environment sexual harassment This is when a person goes
through offensive language because of their sex.
3. Both are deemed illegal in the courts. Managers could face costly lawsuits if
this action is found or promoted in their organizations.
3.
Eradication of Sexual Harassment Four steps to take action against sexual harassment
1. Top management should develop a clear policy against sexual harassment and
communicate that to the workers
2. In times of sexual harassment, managers should have a system where a case
can be fairly evaluated
3. Corrective actions must be issued as soon as it is determined that sexual
harassment has taken place
4. Devise an educational program on sexual harassment to educate both
managers and other employees
Chapter 4 Chapter 4 Outline
Global environment-The set forces and conditions that operated beyond an organizations boundaries but affect a managers ability to acquire and utilize resources. -When the forces change in the environment, new opportunities and threats are presented to the managers of the organizations. -Managers have to understand the difference between General Environment and Task Environment General Environment-the wide-ranging global, economic, technological, sociocultural demographic, political and legal forces that affect an organization and its task environment Task Environment- The set of forces and conditions that originate with suppliers, distributors, customers, and competitors and affect an organizations ability to obtain inputs and dispose of its outputs because they influence managers on a daily basis.
Four forces of task environment:
1. Suppliers-Individuals and organizations that provide an organization with the input
resources that it needs to produce goods and services.
2. Distributors Organizations that help other organizations sell their goods or services to
customers.
3. Customers- Individuals and groups that buy the goods and services that an organization
produces.
4. Competitors- Organizations that produce goods and services that are similar to a
particular organizations goods and services.
The more competitors there are in the industry, the more prices and profits decrease. The presence of one or more competitors can reduce the prices of goods and services as the companies attempt to gain a larger market share.
Potential competitors-Organizations that presently are not in task environment but could enter if they so choose. Global outsourcing- the purchase of inputs from overseas suppliers or the production of inputs abroad to lower production costs and improve product quality or design. Barriers to entry-Factors that make it difficult and costly for an organization to enter a particular task environment or industry. Three main sources of Barriers to Entry:
1. Economies of Scale-Cost advantages associated with large operations. 2. Brand Loyalty - Customers preference for the products of organizations currently
existing in the task environment.
3. Government Regulations
-Any government regulations
-On the national level-limit imports.
The General Environment - Economic, technological, socialculutral, demographic, political, and legal forces in the general
environment can have profound effects on forces in the task environment, effects may not be evident to managers. Economic Forces- Interest rates, inflation, unemployment, economic growth, and other factors that affect the general health and well-being of a nation or the regional economy of an organization.
Technological forces- Outcomes of changes in the technology that managers use to design, produce, or distribute goods and services. Technology - The combination of skills and equipment that managers use in the design, production, and distribution of goods and services. Sociocultural forces-Pressures emanating from the social structure of a country or society or from the national culture. Sociocultural structure- The arrangement of relationships between individuals and groups in a society. National culture-The set of values that a society considers important and the norms behavior of that are approved or sanctioned in that society. Demographic forces-Outcomes of changes in, or changing attitude toward, the characteristics of a population, such as age, gender, ethnic origin, race, sexual orientation, and social class. Political and legal forces- Outcomes of changes in laws and regulations, such as the deregulation of industries, the privatization of organizations, and the increased emphasis on environmental protection.
The Process of Globalization
Globalization- The set of specific and general forces that work together to integrate and connect economic, political, and social systems across countries, cultures or geographical regions so that nations become increasingly interdependent and similar. The four principal forms of capital flow between countries:
Human capital: the flow of people around the world through immigration, migration, and emigration. Financial capital: the flow of money capital across world markets through overseas investment, credit, lending, and aid. Resource Capital: the flow of natural resources and semi finished products between companies and countries such as metals, minerals, lumber, energy, food products, microprocessors, and auto parts. Political capital: the flow of power and influence around the world using diplomacy, persuasion, aggression, and force of arms to protect a country s or world region or political blocs access to the other forms of capital.
Tariff - A tax that a government imported or, occasionally, exported goods.
Tariffs were especially high during 1920s -1930s
Many countries believed that raising tariffs on imports was the best way to promote their economic well-being. The aim of import tariffs is to protect domestic industries and jobs, such as those in the auto or steel industry, from overseas competition by raising the price of goods from abroad. Countries that raise the barriers to enter, and raise tariffs, they raise the unemployment and undermine economic growth.
Free-trade doctrine-The idea that if each country specializes in the productions of the goods and services that it can produce most efficiently, this will make the best use of global resources. -Reduces some jobs but creates different ones, in what the country specializes in. -GATT-General Agreement on Tariffs and Trade-aims to lower tariff barriers. -Advanced communication results in declining of the barriers to trade.
The Role of National Culture
-National culture includes the values, norms, knowledge, beliefs, moral principles, laws, customs, and other practices that unite the citizens of a country.
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Values-Ideas about what a society believes to be good, right, desirable, or beautiful. Norms- Unwritten. informal codes of conduct that prescribe how people should act in particular situations and are considered important by most members of a group or organization. Folkways-The routine social conventions of everyday life. Mores-Norms that are considered to be central to the functioning of society and to social life.
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Hofstedes Model of National Culture
Reasearches have spend time and effort identifying similarities and diffirences in the values and normas of different countries. This model was developed by Geert Hofstede. A pshuchologist for IBM. He collected data on emloyee values and norms from more than 100,000 IBM employees in 64 countires.
Individualism-A worldview that values individual freedom and self-expression and adherence to the principle that people should be judged by their individual achievement rather than their social background. Collectivism- A worldview that values subordination of the individual to the goals of the group and adherence to the principle that people should be judged by their contribution to the group. Achievement orientation- A worldview that values assertiveness, performance, success, and completion. Nurturing orientation- A worldview that values the quality of life, warm personal friendships, and services and car for the weak. Uncertainty avoidance- The degree to which societies are willing to tolerate uncertainty and risk. Long-term orientation- A worldview that values thrift and persistence in achieving goals. Short-term orientation-A worldview that values personal stability or happiness and living for present
Chapter 6
Chapter 6 Outline Planning, Strategy, and Competitive Advantage Planning and Strategy
Planning is a three step strategy:
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1. Determining the organizations mission and goals- defining the business and establishing major goals 2. Formulating strategy- analyze the current situation and develop strategies 3. Implementing strategy- allocate resources and responsibilities to achieve strategies. Planning is necessary to give the organization a sense of direction and purpose Planning is a useful way of getting managers to participate in decision making about the appropriate goals and strategies for an organization. A plan helps coordinate managers of the different functions/divisions of an organization to ensure that they all pull in the same direction and work to achieve its desired future. A plan can be used as a device for controlling managers within an organization. Corporate level-top management decisions pertaining to the organizations mission, overall strategy, and structure. Think about demographic, sociocultural, and environment. Business level- divisional managers decisions pertaining to divisions long-term goals, overall strategy, and structure. Think about competitors, distributers, suppliers. Functional level- functional managers decisions pertaining to the goals that they propose to pursue to help the division attain its business-level goals. Think about specific tasks, more simpler, and the organizational structural strategy changes.
Why is planning important?
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Levels of Planning-each level thinks differently about strategies
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Formulating Strategy
SWOT Analysis: planning exercise in which managers identify organizational strengths and weaknesses and environmental opportunities and threats.
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Corporate level strategy- a plan of action to manage the growth and development of an organization so as to maximize its long-run ability to create value. Business level strategy- a plan of action to take advantage of favorable opportunities and find ways to counter threats so as to compete effectively in an industry. Functional level strategy- a plan of action to improve the ability of an organizations departments to create value.
Five Forces Model
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The level of rivalry among organizations in an industry The potential for entry into an industry The power of large suppliers The power of large customers The threat of substitute products Low-cost strategy- driving the organizations costs down below costs of its rivals. Differentiation strategy- distinguishing an organizations products from the products of competitors on dimensions such as product design, quality, or after-sales service. Concentration on a single industry- reinvesting a companys profits to strengthen its competitive position in its current industry. Vertical integration- expanding a companys operations either backward into an industry that produces inputs for its products or forward into an industry that uses, distributes, or sells its products. Diversification- expanding a companys business operations into a new industry in order to produce new kinds of valuable goods or services. International expansion- global (selling the same standardized product and using the same basic marketing approach in each national market) multidomestic (customizing products and marketing strategies to specific national conditions) Importing/Exporting: sell products at home that are made abroad/make products at home and sell aboard Licensing/Franchising: allowing a foreign organization to take change of manufacturing and distributing a product in its country or world region in return for negotiated fee/selling to a foreign organization the rights to use a brand name and operating know-how in return for a lump-sum payment and share of profits. Strategic alliances- an agreement in which managers poor or share their organizations resources and know-how with a foreign company and the two organizations share the rewards and risks of starting a new venture. Joint venture- a strategic alliance among two or more companies that agree to jointly establish and share the ownership of a new business. Wholly owned foreign subsidiaries-production operations established in a foreign country independent of any local direct involvement.
Business Level Strategies
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Corporate Level Strategies
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Choosing a Way to Expand Nationally
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Chapter 7
Chapter 7 Outline Designing Organizational Structure The Organizational Environment In the case of scarce resources:
More change in the environment = more uncertainty = more tough decision making by managers Speed decision making/communication make it easier to obtain scarce resources Organizational choices: -Decentralize authority -Allow more flexible structures and entrepreneurial cultures -Empower lower level employees -Encourage values and norms that place emphasis on change and innovation
In the case of a stable environment:
External environment stable = resources readily available = less uncertainty = less communication and tough decision making Managers make organizational choices that: -Bring more stability/formality to the structure -Establish values and norms -Emphasize formality and obedience
Managers like to make decisions within a clearly defined hierarchy and use predefined standard operating procedures (SOPs) See figure 7.1-Managers think about whats going on in each bubble and then plan their organizational structure accordingly
Strategy
There should be different strategies for different organizational structures/cultures Differentiation strategies, low-cost strategies, international strategies used depending on the situation
Technology
Technology is the combination of skills, knowledge, machines, and computers that are used to design, make, and distribute goods and services
The more complicated the technology, the more difficult it is to regulate or control it; more unexpected situations; the greater the need for a flexible structure and progressive culture The more routine the technology, a formal structure is appropriate 2 factors determine what makes technology routine or complicated: -Task Variety-the number of new or unexpected problems or situations that occurs when performing a task -Task Analyzability-the degree to which programmed solutions are available to solve those problems
Human Resources
More highly skilled its workforce = higher number of employees who work together in groups/teams = more likely organization uses flexible, decentralized structure Highly skilled employees usually want more freedom and dislike close supervision When designing organizational structure, managers should pay close attention to the needs of the workforce, the complexity of the kind of work employees perform Less skilled like structure More skilled dislike structure
Grouping Tasks into Jobs: Job Design Job Enlargement and Job Enrichment
Job Design- how managers decide to divide tasks into jobs Job Enlargement- increasing the amount of various tasks in a given job by altering the division of labor Job Enrichment- increasing the amount of responsibility a worker has over their job Managers who make design choices that increase job enrichment and job enlargement are more likely to increase the amount people behave flexibly as opposed to rigidly/mechanically
The Job Characteristics Model
Every job has 5 characteristics that determine how motivating it is: -Skill Variety-how much a job requires an employee to use a wide arrange of different skills, abilities, and knowledge -Task Identity-How much a job requires a worker to perform every task necessary to complete it -Task Significance-how much a worker feels their job is meaningful
-Autonomy-how much a job gives a worker the freedom needed to do different tasks and how to carry them out Feedback-how much doing a job provides a worker with direct information about how well they performed it
See Figure 7.2
Grouping Jobs into Functions and Divisions: Designing Organizational Structure Functional Structure
Functional Structure-an organizational structure consisting of all departments that an organization needs to produce goods and services Each job inside a function exists because it helps the function perform the activities necessary for high organizational performance Advantages of grouping jobs according to function: -When people who perform similar jobs are grouped together, they can learn from observing one another and can perform at higher levels -When people who perform similar jobs are grouped together, it is easer for managers to monitor and evaluate their performance -Managers appreciate functional structure because it allows them to create the set of functions they need in order to scan the competitive environment and adapt to change
See Figure 7.3 Growing organization = changing strategies Disadvantages of grouping jobs according to function: -Managers in different functions may find it more difficult to communicate and coordinate with one another when theyre responsible for different kinds of products -Functional managers may become too preoccupied with supervising their own departments and achieving their goals that they lose sight of the overall goals of the organization
Divisional Structures: Product, Market, and Geographic
Divisional Structure-a structure consisting of separate business units that contain functions that work together to produce specific products for specific customers 3 forms of organizing divisions:
-According to the type of good or service provided -According to the area of the country or world being operated in -According to the type of customer being focused on
See Figure 7.4 Product Structure-a structure where each product line or business is run by a self contained division See Figure 7.5 Geographic Structure-a structure where each region or area is served by a self contained division Market Structure (Customer Structure)-a structure where each type of customer is served by a self contained division
Matrix and Product Team Designs
See Figure 7.6 Matrix Structure-a structure that simultaneously groups people and resources by function and product Product Team Structure-a structure where employees are permanently assigned to a cross-functional team and report only to that tea manager or a direct subordinate Cross-Functional Team-a group of managers brought together from different departments assigned to perform organizational tasks
Hybrid Structure
See Figure 7.7 Hybrid Structure-the structure of a large organization that has multiple divisions and uses many different structures simultaneously
Coordinating Functions and Divisions Allocating Authority
Authority-the power a manager has to hold workers accountable to their actions and make decisions concerning organizational resources See Figure 7.8 Hierarchy of Authority-the chain of command of an organization
Span of Control-the number of subordinates who report to a manager Line Manager-the person in the direct line or chain of command who has formal authority over people and resources on lower levels See Figure 7.9 Growth = lengthening hierarchy of authority = taller organizational structure Tall organization-many levels of authority relative to company size Flat organization-fewer levels of authority relative to company size Hierarchy becoming taller = problems that make the organizations structure less flexible, slow managers responses to a changing environment To thwart those problems, top managers should figure out whether they are employing the correct number of middle and first line mangers; whether they can redesign their structure to reduce the number of managers Effective managers constantly analyze their hierarchies to find discrepancies Goal = keeping hierarchy flat Decentralizing Authority-allowing lower level managers and non managerial employees to make important decisions about how to utilize organizational resources Decentralizing authority: -Keeps slow and distorted communication problems to a minimum -Allows employees to behave in a flexible way even as the organization grows and becomes taller
Balance between centralization and decentralization of authority is key
Integrating and Coordinating Mechanisms
Problems associated with establishing contact among managers in different functions/divisions Integrating Mechanisms-organizing tools that managers can utilize to increase communication and coordination between functions/divisions More complex structures = greater need for coordination See Figure 7.10 Liaison roles: -Help increase coordination among functions/divisions -Give one manager in each function/division the responsibility to coordinate with the other -Provide a way of transmitting information across organizations
Task Force (Ad Hoc Committee)-a group of managers from different functions/divisions who meet to solve mutual problems Task forces: -Are no longer needed once problem is solved
Cross Functional Teams: -Address recurring problems -Involve a great deal of integration -Assume long-term responsibility for all aspects of development
Integrating Roles: -Only function is to increase coordination and integration to achieve performance gains -Typically experienced senior members
Matrix Structure -Used to respond quickly to the task and general environments -Contains many of the integrating mechanisms in one
Strategic Alliances, B2B Network Structures, and IT
Strategic Alliance-an agreement where managers share their organizations resources and know-how with foreign companies and share the rewards and risks of starting a new venture IT is growing and sophisticating, allowing for easier management of strategic alliances Network Structure-a series of strategic alliances created with suppliers, manufacturers, and distributors to produce/market a product/service Outsourcing-using foreign suppliers and manufacturers to produce goods/services Boundaryless Organization-where members are linked by technology and rarely see each other face to face Knowledge Management System-a company-specific information system that allows workers to share knowledge and expertise to help solve problems Business to Business Network (B2B)-Using IT to link organizations to their potential global suppliers to increase efficiency and effectiveness
Chapter 8
Chapter 8 Organizational Control
1. Controlling is a procedure undertaken by managers to improve the effectiveness and efficiency of an organization and its members by use of observation and evaluation. 2. This evaluation is based around the intended improvement of how the company runs and how it could be run better. 3. Reasons Organizational Control is important 1. Controls give the manager the ability to access how efficiently production of their products or services are. With controls they can get feedback including but not limited to the amount of input and subsequent output, time taken to produce this output, quality of output and the costs of creating these outputs. 2. This information can help managers decide which changes are necessary to help improve the organization. For example a customer survey will alert the manager to a lack of customer service skills if this is the case. 3. Information gained from controls helps guide managers decisions regarding changes needed in the organization by giving them timely observable data that they can use to evaluate efficiency. 4. The most successful managers enact control systems that give them constant feedback on quality and efficiency. 5. Controlling can also increase the level of innovation a company has as long as they are set up in the proper way. A strict and centralized control system will not foster innovation while on the other hand a control system that allows an employee his freedom will encourage employees to take risks. 4. Control Systems and IT 1. Control system- Goals, observations, evaluations, and feedback systems that supply a manager with data concerning the effectiveness and efficiency of the organizations current strategy. For a control system to be effective it must contain three characteristics 1. The information provided is accurately depicting the companys current status 2. The information must have a level of flexibility that allows the manager to respond to unforeseen events. 3. The information is supplied quickly as to give the manager the ability to make decisions regarding it. 2. New types of IT- Allow for quicker and easier imputing of information. 5. Three types of Control 1. Feedforward control- Takes place during the input stage. Feedforward control helps managers anticipate potential issues before they come to pass. This can save the organization money and help improve the quality of their products or services before they reach the customer. One issue that can occur with strict feedforward control is the stifling of innovation. 2. Concurrent control- This type of control occurs during the conversion stage. This type of control gives managers instant feedback on the efficiency of current production allowing managers to take immediate action if necessary. This is more focused on keeping the quality of output up to expectations. 3. Feedback control- Occurs during the output stage. Feedback control supplies managers with customers reactions and opinions to their products and services. Learning what the customer wants or does not want helps the manager decide if production should be increased or decreased on certain products.
6. The Process of Control- there are four steps in the control process. 1. Step 1- Create principles of performance, goals, or targets which will be used in future evaluation.- The corporate level of management will choose a standard of performance that they feel is important to improve upon which will then influence the creation of lower managements performance evaluations. Managers must ensure to chose standards of performance that will help them to access their melioration or declination of all four aspects of the competitive advantage. 2. Step 2- Gauge actual performance.- After step one is completed step two tells us that we need to measure performance one of two ways. One way is to measure the outputs being accomplished by employees, the other way is to measure the behaviors being used by the employees. Depending on the type of work these aspects can be extremely easy to measure, extremely hard, or somewhere in the middle. The more complex and nonroutine an employees job is the harder it is to quantifiably measure. On the other hand the easier and more mundane a job is the easier it is to measure. Performance measures are normally easier to measure then behavior. 3. Step 3- Compare the original standards of performance against employees actual performance.- This step is relatively self explanatory. If the actual performance is higher than the original standards management might decide that standards need to be raised for the next time. If they are below the original standards maybe standards need to be lowered. 4. Step 4- Calculate the results and start corrective actions if given standards are not being achieved. - If standards are not met managers must determine why this was. Were the expectations to high? Or was the employee not working up to his full potential? Output Control 1. Financial Measures of Performance- Professor Murphy said equations would not be on the exam which is what this section is about. 2. Organizational Goals- Corporate-level managers create goals for each division that will allow for the achievement of corporate goals. Each divisional manager then in turn creates goals for each of their functions that will ensure divisional goals are met. Lastly functional managers create goals for individual workers that will ensure functional goals are met. For example, if management wants to reduce costs by 10% over the year each level of management will create their own distinct and specific goals that will allow this to become a reality. The creation of goals is an important task. If goals are set to high managers will lose their spirit and stop trying, if goals are set to low managers will become lazy and not work as efficiently as they could and should. 3. Operating Budgets- is a budget that shows in what ways managers plan to use their supplied resources to achieve the goals of the organization. Allocation of company funds is extremely important. Managers need to accomplish tasks they are assigned to do with the money provided to them. 4. Output control contains three components which include objective financial measures, proper goals and performance standards, and suitable operating budgets. 5. Issues arising from output control- Output goals can entice employees to act in their own interest independent from the companys best interests. Managers need to be weary when using output control and therefore need to consistently monitor its effects on the company. Behavior Control
1. There are three types of behavior control that managers can use to keep employees on the right track while using their organizational structures they way it was designed to act. 1. Direct Supervision- this technique has the most instantaneous effect on the person and can create the most effective form of behavior control. By having managers personally supervise employees this can create a powerful motivating force and can also help them acquire skills that would be passed on to them through the manager. 1. Issues of direct supervision1. The cost of having a manager directly supervise employees is astronomical 2. Employees can become discouraged if they feel all of their decisions are under constant surveillance. 3. In situations where the employees job is complex this method is not viable unless a manager has specific expertise in the field of the employee which is unlikely. 2. Management by Objectives- A process in which a manager and employee discuss specific goals and objectives that the employee will be expected to achieve over a certain time period. This method includes three steps. 1. Step 1- Using goals set by higher levels of management as a guide first-level managers and employees cooperatively set goals that will aid to achieving the aforementioned goals. 2. Step 2- Managers and workers discuss in specific detail and create goals that the employee will be expected to achieve. By allowing the worker to have a say in his own goals they feel more responsibility toward them and will work harder to achieve them. 3. Step 3- Periodic meetings between the manager and employee to evaluate the progress of their goals. 3. Bureaucratic Control- A wide-ranging system of policies and operating procedures that will ultimately control the behavior of employees. When a problem arises the employee will consult the already in place rules to tell them how to act. The stricter and therefore predictable employees behavior is the less necessary it is to measure outputs because uniform behavior will lead to uniform outputs. A main field that uses bureaucratic control is the food industry. 1. Issues arising from bureaucratic control 1. As easy as it is to establish a rule is as hard as it is to get rid of one. This leads to way to many rules which slow down employees making them less productive. 2. With an excess of rules employees can become used to just following instead of thinking for themselves. This reduces the level of learning and innovation that would otherwise occur in a non bureaucratic organization. 4. Both output control and behavioral control have their positives and negatives. Organizational Culture and Clan Control 1. Organizational Culture- The controlling factors of how groups and individuals act towards each other including morals, norms, standards of behavior, and expectations. This is a internally created system that guide how people in an organization behave. This type of control is imperative for two main purposes. One is that this type of control can have power in an organization even if output or behavior control cannot be. Two is that when powerful principles and norms are present in a company, workers will pay more attention to the long term needs of
the organization. Not only will they be aware of these needs though but they will also make a conscious effort to make choices that will help fulfill these needs. 2. Clan Control- the control placed upon individuals and groups in an group by way of morals, norms, standards of behavior and expectations. 3. Adaptive Cultures versus Inert Cultures 1. Adaptive cultures- Culture that guides the attitudes of employees toward the betterment of the company. One way this culture is brought about is with encouraging companies that show they want their employees to be happy and succeed. This can be accomplished by investing in employees futures, reducing lay-offs and firings, supplying opportunity for advancement etc. By ignoring employees needs to be nurtured and appreciated, inert cultures can arise. 2. Inert cultures- culture that are unsuccessful in inspiring employees. This can be very detrimental to a companys well being. This type of culture is often a sign of a companys eventual failure. Organizational Change 1. The control process has two opposing forces that must be properly balanced in order to have a successful control system. These include the need to improve operations and the need to respond to new events. If either one of these is given to much weight problems will most likely occur. The more efficient operations are through routine and predictability the less able the company is to respond to new events and change. Yet if a company is overly concerned with its ability to respond to new events its efficiency will suffer. It is thought that companies that have experience changing between the two are the most successful because they have become experienced at a necessary ability needed to survive. 2. Organization change- the ways an organization change in the pursuit of a more efficient and effective future. 3. Assessing the Need for Change1. Organizational learning- managers methods for trying to improve members of the organization to understand and respond to changing conditions. 2. Two activities are essential in assessing if there is a need for change in the organization. 1. First people in the organization must recognize a problem that is present and necessitates change. 2. Second they need to discover the cause of that problem. When accomplishing this step managers need to look not only internally but externally as well. 4. Deciding on the Change to Make1. In order to decide what change the organization should make they first need to determine what their ideal future situation is. 2. After they decide their ideal future they need to identify obstacles that they need to alter to achieve this ideal future. Top management also needs to realize that any changes they make even small ones can have a profound effect on the organization. 5. Implementing the Change1. Management needs to decide whether change in the organization will come about from the top down or the bottom up. 1. Top-down change- A quick innovative approach to change where top managers identify essential changes and then rapidly employ these changes throughout the organization.
2. Bottom-up change- A much slower and cooperative approach where managers at all levels unify to create a detailed plan for change. 2. Introduce and manage change 6. Evaluating the Change1. Comparing the companys performance before the changes with the companys postchange performance. 2. The use of benchmarking can be very helpful in evaluating the companys new position 1. Benchmarking- the process of comparing two different companys performances based on certain specific dimensions. 7. Organization control vs. Organizational change 1. These two aspects are closely linked because environments are constantly changing which cases managers to constantly be on their toes in order to change their strategies and structures for the betterment of the organization. Entrepreneurship, Control, and Change 1. Entrepreneurs- People who are aware of possible opportunities and take responsibility for using the resources essential to produce original goods and services. Entrepreneurs can often be taking risks through the endeavors they attempt but if successful can be rewarded substantially. 2. Intrapreneurs- sharing many of the traits of entrepreneurs, intrapreneurs are already employed individuals who are aware of possible opportunities for improvement of products or services and are therefore in charge of managing the development process of them. 3. Entrepreneurship- taking advantage of possible opportunities through mobilization of resources in order to provide customers with new or improved goods and services.