MGMT 371 Chapter 1 Book and Lecture Notes
MGMT 371 Chapter 1 Book and Lecture Notes MGMT 371 001
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This 14 page Class Notes was uploaded by Savannah Baron on Saturday February 13, 2016. The Class Notes belongs to MGMT 371 001 at University of Mississippi taught by Dr. Danielle Ammeter in Winter 2016. Since its upload, it has received 56 views. For similar materials see Principles of Management in Business, management at University of Mississippi.
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Date Created: 02/13/16
Chapter 1—Book Notes I. Intro A. 3 Pillars of Management 1. Strategic Position Often dictates organization Needs to adapt and change Will encompass an understanding of the environment in which businesses compete and the elements which help organizations align their resources for success 2. Organizational Design Defines how a business is aligned and structured to compete in the changing contextual landscape 3. Individual Leadership Managers must know who they are/what motivates them to effectively motivate/influence others II. Management and Leadership A. Managers Generally focus their efforts on planning and budgeting, organizing and staffing resources, and controlling/problem solving Management: act of working with and through a group of people to accomplish a desired goal or objective in an efficient and effective manner B. Leaders Set a direction for a firm, align people to focus on the organization’s vision, and motivate/inspire people Leadership: ability to drive change and innovation through inspiration and motivation C. In Business Organizations need to develop and nurture leaders and managers throughout the organization (not just at the top) Organizations tend to evolve based on input from individuals several levels below the CEO Skills required for success in business are different depending on a person’s level and responsibilities o Leadership skills become more important as you move up in an organization, but even lower-level managers are expected to operate and think like leaders o Mid-level managers tend to spend more time on interpersonal skills (motivating/developing teams) and work with senior execs to provide analysis o Managers higher up tend to focus on tasks (i.e., financial reporting, planning, talent recruiting, team development) o Senior executives are expected to set the vision and agenda for the organization as well as oversee strategic execution Must balance short and long-term expectations while planning for certain contingencies o Supervisor = TECHNICAL, Mid-tier = INTERPERSONAL, Exec = CONCEPTUAL Each individual can have a very unique style and still be successful Managers must have the abilities needed to recognize a situation, the social skills to know what to do in that situation, and the behavioral skills to act III. Changing Perspectives in Management A. Bureaucratic Organization Structure (Max Weber, early 1900’s) Ideal bureaucracy includes: o Clear differentiation of tasks and responsibilities among individuals o Coordination through a strict hierarchy of authority and decision rights o Standardized rules and procedures o Vertical separation of planning and execution so that plans are made in the upper ranks and executed in the lower o Use of technical criteria for recruitment and promotion Most modern organizations have based their structures on this form Ex) US military B. Scientific Management (Frederick Taylor, 1910’s) Focused on how jobs, work, and incentive schemes could be designed to improve productivity using industrial engineering methods o Organization was like a machine Manager prescribed certain actions based on scientific study that were expected to produce definitive outcomes Employees are economically driven and rational in their motives C. Human Relations Movement (1930’s) Emphasized the importance of informal social relations at work Organizations must be understood as a system of interdependent human beings who share a common interest in the survival and effective functioning of the firm Emphasis shifted from the output of the firm to the informal and social side Organizations served as a means for people to interact and learn, as well as produce a profit D. 1950’s Theories shifted to examine the differences between organizational structures and how a comprehension of the reasons for these differences could be used to guide firms on how to adapt to new situations or contexts Organizations often differ based on whether they were designed to execute certain stable tasks or uncertain innovative tasks o Nature of environment/tasks should drive their structure Firms that emphasized efficiency should maintain stable, mechanistic structures Firms that emphasized innovation should maintain informal structure E. Contingent View (1960’s) Effective organizational structure was based on fit/alignment between the organization with various aspects in its environment Social, political, and business environment play a large role in shaping the way effective organizations are structured Organization’s structure should fit firm’s environment F. Current Research In general, there is no “one size fits all” approach to organizational design Managers must evaluate their strategic objectives in relation to the contextual environment and their internal resource capabilities IV. Changing Perspectives on the Purpose of Business A. Today’s Business Environment Includes all contextual forces and elements that shape/impact the internal and external environment of a firm Perceptions have shifted from a managerial view (up to 1960’s), to a shareholder view (1960’s-1980’s), to a stakeholder view (1990’s-present) B. Managerial View Key Focus: Production Saw the firm as a mechanism for converting raw materials into products to sell to customers Managers focused on relationships between the firm and its suppliers, customers, owners, and employees Many firms didn’t consider outside parties (i.e., local governments) as anything more than annoyances Shareholders didn’t hold much power, mutual funds hadn’t been developed, corporate takeovers weren’t popularized Managers didn’t face many threats from shareholders to improve performance or seek business in other industries In this time, many firms stopped growing, profits were stagnating o Several large American companies had assets and cash on their balance sheets that were devalued in comparison to stock (high inflation) o Financial critics blamed senior leaders for failure to maximize shareholder value C. Shareholder View Top managers produce the highest possible stock market valuation of the firm’s assets In this time, antitrust restrictions on mergers and acquisitions were relaxed No firm was immune to the pressures of the market and threat of takeover by a private equity firm, hostile raider, or another corporation Substantial change in thinking about the purpose of business o Managers believed organization owed allegiance only to shareholders; employees, communities, and customers were secondary o Caused many US companies to lose ground in foreign competition and caused pressure from external groups in their environments (activists, etc) Resulted in lack of investment in new products and erosion in quality standards Many firms were forced to address environmental concerns Employee activism was becoming a problem for firms D. Stakeholder View Attempts to organize and analyze multiple groups that interact with the firm o (i.e., firm has relationships with government, local community, owners, advocacy groups, customers, competitors, media, employees, environmentalists, suppliers, etc.) Each firm has a different set of stakeholders that affect its performance in marketplace Level of influence a stakeholder has over a firm may change overtime E. A Different View “Triple Bottom Line” measures the financial (profit), environmental (planet), and social (people) performance of a corporation over a period of time Sustainable corporations that emphasize social and environmental responsibility are increasing profits and often outperforming traditional competitors V. Stakeholder Approach Stakeholder = any group or individual who can affect or is affected by the achievement of an organization’s purpose Stakeholder theory is primarily concerned with who can influence decisions and who benefits from them A. Stakeholder Mapping First step is to map all of the stakeholder relationships of the firm o Stakeholders that control vital resources are particularly important to consider Next step is to define the takes that each group and subgroup seeks through involvement with the firm o Easier to address interests this way Firm’s stakeholders and their interests are not static Many stakeholders on the map have the potential to become interconnected on a specific issue A manager must recognize the potential for these types of linkages to occur B. Stakeholder Management Processes After mapping process is completed, manager should move on to develop mechanisms in the firm that can better identify and respond to new stakeholders and the complexity in the environment Strategic review process = senior leaders of a corporation meet with business unit managers in a formal review session o Managers review performance of their division and present perspective on future prospects o Generally includes info on financial performance and targets, new business prospects, research and development updates, manufacturing capacity, talent management, and competitive threats o Primary goal is strategy formulation and target setting o Merging stakeholder analysis into strategic review process is an attempt to ensure that new proposals are adequately understood and evaluated Environmental Scanning = managers scour the business horizon for key events and trends that will affect the business in the future o Managers who engage in this process tend to produce stronger financial results for their organization than those who refuse to pay attention to the contextual landscape Especially for entrepreneurs who capitalize on emerging trends Scenario Building = manager seeks to forecast the likely result that might occur when several events and stakeholders are linked together Contingency Planning = manager typically assigns probabilities to these alternative futures and begins to map out a series of action steps to prepare firm for a reasonable range of alternative futures Trend Analysis = key variables are monitored and modeled to help predict a change that might occur in the environment o Helps manager better understand how certain environmental variables will affect firm and stakeholders Contextual Intelligence = understanding the impact of environmental factors on their business operations and how the can influence or react to those same factors o Can be enhanced by understanding historical precedents and how they have impacted an industry, staying attuned to trends in environment, seizing firsthand experiences, and engaging in scenario assessment C. Managing Uncertainty Building contextual intelligence helps to mitigate some uncertainty and risk High uncertainty requires stronger vigilance of contextual forces and more adaptation Low uncertainty requires less vigilance of contextual forces and less adaptation VI. Summary 3 pillars of management Success in global business environment requires effective management and leadership Differences between management and leadership skills What skills are most important at each level of management and why Stakeholder view has become most popular because of the growth in complexity and how the perspective on the purpose of business has changed Manager must be aware of all different dimensions in company’s external and internal environments Processes of stakeholder approach Key terms: o Bureaucratic organization structure o Business environment o Contextual intelligence o Contingency planning o Contingent view o Environmental scanning o Human relations movement o Leadership o Management o Managerial view o Scenario building o Scientific management o Shareholder view o Stakeholder view o Strategic review process o Trend analysis Chapter 1—Class Notes I. The Challenge of Leadership (& management skills needed to meet challenges) Harnessing technological advances o Flexibility Responding to change and uncertainty o Gather and decipher conflicting information Operating in a socially responsible manner o Experiment Competing on a global scale o Agility Managing and leading diverse workforces o Understanding interconnections and acting accordingly VUCA = Volatile Uncertain Complex Ambiguous, term used to refer to all of the above o Things are going on that are completely out of the manager’s control Global Business Context o 3 Pillars of Management (Strategic Position, Organizational Design, Individual Leadership) o Integrative and dynamic o Strategy—what business? Purpose? Environmental Context? Competitors? o Design—Structure? Culture? How to measure performance? o Leadership—How to use power/influence? Make critical decisions? Navigate conflict? What motivates? Make effective teams? How to communicate? II. Strategy of an Organization Depends on: o Nature and context of the competitive and environmental landscape o Skills and capabilities of the management team Understanding of contextual landscape depends on firm’s ability to: o Recognize threats and opportunities o Lead and organize resources to effectively compete in the marketplace III. Roles of a Leader vs. Managers Leaders o Set Direction o Align People o Motivate and Inspire o Have the ability to drive change and innovation through inspiration and motivation Managers o Plan and budget o Organize and staff o Control and problem solve o Work with and through others to accomplish a desired goal/objective in an efficient and effective manner IV. Leader or Manager? “Chase the vision, not the money; the money will end up following you.” –Tony Hsieh o Leader mentality Can you be a manager without being a leader? o Not effectively Can you be a leader without being a manager? o Yes Can you be a leader and a manager? o Yes, it is best to be both Which is more important? Why? V. Skills Differ according to a person’s level and responsibilities in the organization o Technical (process) skills are important early in career o More strategic abilities are required as an individual advances in an organization o Managers tend to focus on financial reporting, planning, recruiting of talent, and team development o Mid-level managers focus on interpersonal skills, developing teams, and using conceptual skills o Senior executives set the vision and agenda for the organization as well as oversee strategic execution….rely strongly on communication and interpersonal skills to achieve buy-in VI. Different Styles of Leadership Leaders are: o Introverted/extroverted o Quick and impulsive/cautious o Vain/humble An effective leader is not someone who uses specific leadership style o But is someone whose style enables him or her to obtain results ethically/in the right way VII. Skills and Capabilities Managers have: o Strategic abilities to recognize an organization o Social skills to know what to do in the situation o Behavioral skills to act Effective management requires: o Development of broad set of skills o Capabilities needed to act in a variety of situations from big-picture strategy to individual organization VIII. Changing Perspectives of Management a. Bureaucratic Organization Structure Proposed by Max Weber A clear differentiation of tasks and responsibilities Coordination through strict hierarchy of authority and decision rights Standardization of rules and procedures Vertical separation of planning and execution o Plans are made in the upper ranks of an organization and executed in the lower ranks Use of technical criteria for recruitment and promotion Rational and efficient, but sometimes we think “red tape” (too bogged down by rules and steps) Ex) military is a bureaucracy that is very efficient; protects from arbitrary decisions, creates clarity about roles and boundaries, color-blind/gender neutral/etc – equity b. Scientific Management Frederick Taylor (Taylorism); considered first efficiency expert, was very interested in engineering Scheduled out how many things could be produced by a worker within an hour; workers hated him for this o How to type faster, how to perform surgery faster, how to have an efficient kitchen Looked at human beings doing work in comparison to a well-oiled machine Can still be seen in firms that utilize the assembly line o Ex) automobile industry, fast food, etc. Con: took away control from workers (dehumanized them) c. Human Relations Movement Bringing human element back into the workplace Hawthorne Studies by National Academy of Science o First scientific study of how to improve worker attitudes, plus first formal employee interviewing program o Experimented with how lighting can effect productivity of workers Assumed productivity would improve if lighting improved o Concluded that light had no effect; rather, women (who were used in the study) were more efficient in general because they could develop relationships with one another o Decided to begin satisfaction surveys/interviews, sharing best practices with one another (biggest contribution still today) d. Contingent View Effective organizational structure is based on fit or alignment between the organization and various aspects in its environment o Efficiency = mechanistic o Innovative = informal Remember, model is integrative and dynamic e. Business environment Combination of all contextual forces and elements in the external and internal environment of the firm IX. Engagement/Enablement Engagement o Direction, confidence in leaders, respect, recognition o Development Opportunities o Commitment o Discretionary Effort o More leadership oriented Enablement o Performance management, authority, training, collaboration o Optimized roles o Supportive environment o More management oriented X. Changing Perspectives on the Purpose of Business a. Managerial View Business framework were the firm is seen as a mechanism for converting raw materials into products to sell to customers Production b. Shareholder View Job of top managers is to produce the highest possible stock market valuation of the firm’s assets Financial Performance Not integrative & dynamic More short-sighted (quarterly reports rather than annual reports, cutting corners to make more money and make shareholders happy) Not integrative & dynamic c. Stakeholder View Attempts to organize multiple groups that interact with the firm and attempts to align organizational practices to satisfy the needs of these various groups Serves multiple constituencies o Recognize who stakeholders are, who is most important, and balancing interests of all o Constituencies include local government, local community, shareholders, customers, suppliers, employees, advocacy groups, competitors, media o Triple Bottom Line: profit, planet, people 4 steps of Stakeholder Mapping Process: 1. Map stakeholder relationships with the firm 2. Identify specific subsets within stakeholders 3. Determine stakes for each stakeholder 4. Define connections between stakeholders Ex) o Government > EPA > Reducing carbon emissions > Health of effected individuals o Ole Miss stakeholders? Oxford community, alumni, parents, students, faculty, ticket holders, SEC, governing bodies, state of Mississippi, future employers, ultimate consumer of goods in future job Students > Business School Students > Valuable degree to prepare for career > Graduates contributing to society/serving others Attracts more students, parents happy , paying taxes—government, employers seek graduates, improved community XI. Stakeholder Management Process Strategic Review Process o Senior leaders of a corporation meet with business unit managers to review progress toward specific goals (financial data, new business, R&D, capacity, talent management, threats...) o Merge with Stakeholder Analysis (stakeholder mapping) Environmental Scanning o Tool managers use to scan the business horizon for key events in the future o Key for entrepreneurs o Scenario Building: forecasting the likely result that might occur when several events and stakeholders are linked together o Contingency Planning: after scenario building, use the systematic assessment of the external environment to assign probabilities to alternative futures and map out preemptive action steps If this happens, take this action Predicting Stakeholder Responses and Activities o Trend Analysis: a tool where key variables are monitored and modeled to help predict a change that might occur in the environment o Success depends on manager’s ability to assess risks and opportunities XII. Contextual Intelligence Contextual Intelligence: the ability to understand the impact of environmental factors on a firm and the ability to understand how to influence those same factors How to build contextual intelligence: o Develop appreciation and awareness of history o Stay attuned to trends in environment If you’re in one particular industry, you need to be sure to look at other industries who have ideas that can be applied to your industry as well o Seize firsthand experiences Internships, international experiences, take tours of other industries, go to networking events o Engage in scenario assessment Think about your contingencies
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