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Concepts of Management

by: Joey Wisozk Jr.

Concepts of Management MGT 331

Joey Wisozk Jr.
GPA 3.53

Samir Ishak

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Samir Ishak
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This 36 page Class Notes was uploaded by Joey Wisozk Jr. on Saturday September 26, 2015. The Class Notes belongs to MGT 331 at Grand Valley State University taught by Samir Ishak in Fall. Since its upload, it has received 12 views. For similar materials see /class/214390/mgt-331-grand-valley-state-university in Business, management at Grand Valley State University.

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Date Created: 09/26/15
Chapter 7 The Nature of Managerial decision making Decision making the process by which managers respond to opportunities and threats that confront them by analyzing the options and making determinations or decisions about specific organizational goals and courses of action Good decisions result in the selection of appropriate goals and courses of action that increase organizational performance bad decisions result in lower performance Decision making in response to opportunities occurs when managers search for ways to improve organizational performance to bene t customers employees and other stakeholder groups Decision making in response to threats occurs when events inside or outside the organization are adversely affecting organizational performance and managers are searching for ways to increase performance 0 Example Liz Claiborne making clothes for women going into the workforce and bill gates buying the computer operating system and selling it to IBM Programmed and Nonprogrammed Decision Making Programmed decision making a routine Virtually automatic process They have been made so many times that the manager has developed rules or guidelines to be applied when certain situations inevitably occur Example when an office manager orders new of ce supplies They can rely on long established decision rules such as these 0 Rule 1 when the storage shelves are empty order more paper 0 Rule 2 when ordering paper order enough to fill the shelves Nonprogrammed Decision Making nonroutine decisions that are made in response to unusual or novel opportunities and threats 0 Example start a new business enter a new market Intuition feelings beliefs and hunches that come readily to mind require little effort and information gathering and result in on the spot decisions Reasoned judgmen a decision that takes time and effort to make and results in careful information gathering generation of alternatives and evaluation of alternatives The Classical Model Classical model a prescriptive approach to decision making based on the assumption that the decision maker can identify and evaluate all possible alternatives and their consequences and rationally choose the most appropriate course of action Optimum decision the most appropriate decision in light of what managers believe to be the most desirable future consequences for the organization The Administrative Model Administrative model an approach to decision making that explains why decision making in inherently uncertain and risky and why managers usually make satisfactory rather than optimum decisions It is based on the 3 Important Concepts 1 Bounded rationality too much info to evaluate it and make a decision 2 Incomplete information don t have enough information 3 Satisficing Bounded rationality cognitive limitations that constrain one s ability to interpret process and act on information Incomplete information information is incomplete because of risk uncertainty ambiguity and time constraints Satisficing Searching for and choosing an acceptable or satisfactory response to problems and opportunities rather than trying to make the best decision Not the best Have constraints but still don t have the optimal but how can you make the majority of people satisfied with your decision EX Obama Health Care Will not be able to arrive at the optimum decision because they have incomplete information Risk and Uncertainty Risk degree of probability that the possible outcomes of a particular course of action will occur Uncertainty is unpredictability Ambiguous information Information that can be interpreted in multiple and often con icting ways undefined I don t know and is hazy this is the worst type of managers Need brains and time to get it done 0 EX Not dumping you today Satisficing searching and for and choosing an acceptable or satisfactory response to problems and opportunities rather than trying to make the best decision The steps in decision making Recognize the need for a decision Generate alternatives Assess alternatives Choose among alternatives Implement the chosen alternative Learn from feedback Cognitive biases and decision making Heuristics rules of thumb that simplify decision making Gut feeling and intuition Systematic error errors that people make over and over and the result in poor decision making The different cognitive biases Prior Hypothesis Bias cognitive bias resulting from the tendency to base decisions on strong prior beliefs even if evidence shows that those beliefs are wrong 0 Q how a person feels about different people of hair color Representativeness Bias A cognitive bias resulting from the tendency to generalize inappropriately from a single vivid event or episode 0 Q Experience with a boss lSt thing that comes to your mind Illusion of Control source of cognitive bias resulting from the tendency to overestimate one s own ability to control activities and events Escalating Commitmen source of cognitive bias resulting from the tendency to commit additional resources to a project even if evidence shows that the project is failing Be aware of your biases Group Decision Making Groupthink This sways everyone to think a certain way Just following other people and nobody has their own opinion Wants people to not think in these terms Devils Advocacy and Dialectical Ingui Devils advocacy the critical analysis of a preferred alternative to ascertain its strengths and weaknesses before its implemented Dialectical Ingui this goes a step further than devils advocacy it is a critical analysis of two preferred altematives in order to find an even better altemative for the organization to adopt Diversity among Decision Makers Organizational Learning and Creativity Organizational Learning process in which managers seek to improve desire and ability to understand and manage the organization and its task environment so that employees can make decisions that raise the organizations effectiveness EX Learn at your own speed this class Learning organization Managers do everything possible to maXimize the ability of individuals and groups to think and behave creatively and thus maximize the potential for organizational leaming to take place EX There to teach you Creativity ability for a decision maker to discover original and novel ideas that leads to feasible alternative courses of action Creating a Learning Organization Peter Senge identified 5 principles for creating a learning organization H Personal mastery empower employees to experiment create and explore Complex mental models sophisticated ways of thinking that challenges them 3 Team learning more important than as an individual Building a shared vision common mental model that all organizational members use to frame problems or opportunities 5 Systems thinking recognize the effects of one level of learning to another N J Promoting Individual creativity People must be given the opportunity and freedom to be creative and have new ideas Creativity happens when they have an opportunity to experiment and people aren t looking over their shoulders They also shouldn t be critisized They also need to give back constructive criticism so that they keep coming up with new ideas Promoting Group Creativity Brainstorming a group problem solving technique in which managers meet face to face to generate and debate alternatives to make a decision Get outline of problem Groups share ideas Not allowed to criticize Encouraged to piggyback and build on suggestions When all altematives are heard then they debate the pros and cons and develop best list of alternatives Don t pick the highest Production blocking loss of productivity in brainstorming sessions due to the unstructured nature of brainstorming Nominal Group Technigu more structured way of generating alternatives in writing and gives each manger more time and opportunity to come up with potential solutions this may be useful when working with controversial issues Problems are addressed and each group is given 30 minutes to make up some ideas for alternatives Managers take turns reading suggestions to their group Then they are discussed and are given pros and cons Rank most preferred to least and pick highest ranking Delphi Technigue written approach to creative problem solving State problem and give questions for them to respond to It is sent to managers that have a background in the problem and then they are asked to answer and send back Top managers record and summarize ideas then send back and ask more questions about their alternative It is repeated until the consensus is reached Entrepreneurship and Creativitl Entrepreneur individual who see an opportunity and decide how to get resources to produce their good or service Social Entrepreneur individuals who pursue initiatives and opportunities to address social problems and in needs in order to improve society and well being such as reducing poverty increasing literacy protecting natural environment or reduce substance abuse Intrapreneu manager scientist or researcher who works inside an organization and notices opportunities to develop new or improved products or ways to make them Entrepreneurship and New Ventures Characteristics of Entrepreneur openness to experience internal locus of control self esteem and a need for achievement Entrepreneurship and Managemen can start business from scratch in which they take advantage of IT and they usually hire people to help them run their business Entrepreneurship the mobilization of resources to take advantage of an opportunity to provide customers with new or improved goods and services Intrapreneurship and Organizational Learning Product Champion a manager who takes ownership of a project and provides the leadership and vision that take a product from the idea stage to the final customer Skunk works group of intrapreneurs who are deliberately separated from the normal operation of an organization to encourage them to devote all their attention to developing new products Coined at Lockheed corporation underground and secret Rewards of Innovation to encourage managers you have to tell them the rewards so that they don t think about the risk and uncertainty associated with it intrapreneurs are given large bonuses for their work and they are given stock options You want to have rewards so they won t leave the company and take their ideas with them who might create their own competitive venture Lesson Learned I want to own my own health food store39 I learned thatI would be a social entrepreneur Iwould be like an entrepreneur because I am starting my own business and a social entrepreneur in a way because I will be helping the environment by selling products that are eco friendly I would also be helping people better themselves because I will be helping them eat better too Chapter 8 Planning Strategy and Competitive Advantage Planning and Strategy Flaming identifying and selecting appropriate goals and courses of action for an organization Strategy a cluster of decisions about what goals to pursue what actions to take and how to use resources to achieve goals Mission statement a broad declaration of an organization s purpose that identifies the organization s products and customers and distinguishes the organization from its competitors 1 Find out who customers are 2 What needs are being satisfied 3 How is your company satisfying those needs Three Steps in Planning 1 Determining the Organization s Missions and Goals Define the business Establish major goals 2 Formulating Strategy Analyze current situation and develop strategies 3 Implementing Strategy Allocate resources and responsibilities to achieve strategies Why Planning is Important 0 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 and divisions of an organization to ensure that they all pull in the same direction and work to achieve its desired future state Time Horizons of Plans Time horizon The intended duration of a plan 0 Long term plans are usually 5 or more 0 Intermediate term plans are l to 5 years 0 Short term plans are less than 1 year Types of Plans Standing Plans use in programmed decision situations SingleUse Plans developed for a onetime nonprogrammed issue Standing Plans Policies general guides to action Rules formal written speci c guides to action Standard operating procedures g SOP specify an exact series of actions to follow Types of Plans Programs integrated plans achieving specific goals Project specific action plans to complete programs Determining the Organization39s Missions and Goals Establishing Maj or Goals 0 Provides the organization with a sense of direction 0 Stretches the organization to higher levels of performance 0 Goals must be challenging but realistic with a definite period in which they are to be achieved Strategic leadership the ability of the CEO and top managers to convey a compelling vision of what they want the organization to achieve to their subordinates The Five Forces Level of Rivalg increased competition results in lower profits Potential for Entg easy entry leads to lower prices and profits Power of Suppliers if there are only a few suppliers of important items supply costs rise Power of Customers if there are only a few large buyers they can bargain down prices Substitutes more available substitutes tend to drive down prices and profits Formulating BusinessLevel Strategies LowCost Strategy driving the organization s total costs down below the total costs of rivals Differentiation distinguishing an organization s products from the products of competitors on dimensions such as product design quality or aftersales services quot Stuck in the Middlequot Attempting to simultaneously pursue both a low cost strategy and a differentiation strategy Difficult to achieve low cost with the added costs of differentiation Focused LowCost serving only one market segment and being the lowestcost organization serving that segment Focused Differentiation serving only one market segment as the most differentiated organization serving that segment Concentration on a Single lndustg reinvesting a company s profits to strengthen its competitive position in its current industry Vertical Integration expanding a company s operations either backward into an industry that produces inputs for its products or forward into an industry that uses distributes or sells its products Diversi cation Diversification the corporate level strategy of expanding a company s business operations into a new industry in order to produce new kinds of valuable goods or services Related diversi cation entering a new business or industry to create a competitive advantage in one or more of an organization s existing divisions or businesses Unrelated diversification entering a new industry or buying a company in a new industry that is not related in any way to an organization s current businesses or industries International Expansion Basic question to what extent do we customize products and marketing for different national conditions Global strategy selling the same standardized product and using the same basic marketing approach in each national market Multidomestic Strategy customizing products and marketing strategies to specific national conditions 0 Helps gain local market share 0 Raises production costs Exporting making products at home and selling them abroad Importing selling at home products that are made abroad Licensing allowing a foreign organization to take charge of manufacturing and distributing a product in its country in return for a negotiated fee Franchising selling to a foreign organization the rights to use a brand name and operating knowhow in return for a lumpsum payment and share of the profits Strategic alliance manager s pool resources with those of a foreign company organizations agree to share risk and reward Joint venture strategic alliance among companies that agree to jointly establish and share the ownership of a new business Wholly Owned Foreign Subsidiag managers invest in establishing production operations in a foreign country independent of any local direct involvement Lessons Leamed 1 Create demand on what customers perceive N Pay attention to competitors and see how they can compete better Find unique ways to add value a Market research U b Surveys c Be proactive or you will lose the market d Related industries spillover effect Sometimes business need to show them that they need this The demonstration effect if you go to an eXpo the sham wow showing visually A Demonstrations affect by Doonesbury everybody sweaty in July wife is very sweaty and neighbor isn t sweating Ex The air conditioning on the next door neighbors house great story Japanese model this is not in the book 1 Characteristics it is a product and function led by history and geography managerial functions are based on the extemal functions When we say that in the US we reward people on individual performance We don t use collectivism This is rooted in the sociological process This came from history Japan has been a very successful county and is very developed Would like to know how they became that developed and successful We can leam from experiences so we can apply them 1 If successful leam from 2 Which one we can apply and why not 3 If some of these could be applicable how can we apply them what we can learn how we can apply it here Japan is an island 4 gets their resources Have mountains earthquakes and volcanoes Less than the size of Michigan with 13 of Ohio s population Not very good agriculture Since they don t have land they don t have a lot of livestock Have to import water or use desalinization that it is very expensive No land and agriculture Have earthquakes every day Cannot have really high buildings and be built on shock absorbers so that the foundation moves with the quake One building is 60 floors that are the highest This room is the size of a house that will hold over 8 people a Japan has no natural resources nothing except the only source is from people knowledge invests everything you have into people Normal people have a brain and this is the only thing that you can invest in What is the method Education It was demolished 1933 and 1934 then in 1972 Japan became one of the leading economies in the world This was because of the people and education Based on all this Japan has the highest rate of private savings in the world 22 28 save 28 out of 100 yen and this is the culture because they do not have a social security system 6 Retire at 55 and live to be 85 and are pushed and conditioned to save 2nd highest longevity in the world They have the lowest rate of divorce in the world The family is extremely important it explains the lowest amount of crime the whole family will be tamished by the association Japan is the net creditor to the world lender to the rest of the world the world owes Japan money Japan exports more than they import Net debtor We owe people from all over the world 1 China 2 Japan 3 Canada 4 EU 5 Saudi Arabia Lowest rate of crime Highest rate of literacy 99 Qatar highest per capita income in the world Japan has one of the highest per capita incomes Export more than they import Largest donor of foreign aid in the world Surplus in balance of trade they have a lot of cash Has purchasing power Has no military forces Has police forces In article of surrender we wrote that the emperor was no longer treated as god and no military ever Don t have to spend money on the military You produce weapons We are involved in 47 wars Till today we don t consider Afghanistan a war All this money could be spent on economy interest rate highways train systems and technology money is invested elsewhere The US is the largest exporter of weapons 2 Political and social characteristics a Very hard to get them mad i They do not argue because they are the concept of loosing face ii They are living on 4 of the island and the room is for 6 people iii Don t have the space to get mad at each other b They are more enthusiastically when meeting each other i Protocol for bowing ii Keep it in front of you the whole time Bows in front of a woman low but not too low and lower for a man or an older person Always respect and do not shame e Lowest infant mortality rate 0 9 Social historical characteristics 3 Japans managerial and administrative practices What do you think the managerial implications are to these 1 WM A O Ancestry genetic characteristics They believe that their ancestors are looking down on them If your ancestry is look down on you would they be looking bad upon you This will limit what they do They do not marry other cultures or races Continuity of history colonizer not being colonized Family this is the extended family the grandparents cousins uncles etc The extended family will hear about what wrong doings that they are doing They do not criticize their family and or government Not going to make you lose your face The word no doesn t exist in Japanese So they dance around ideas and come up with excuses Homogeneity the class are heterogeneous Japan and china will look like each other and they don t intermarry They also behave alike and think alike If they think alike and this is different from us because we do not think alike To say someone s unique is an insult The thumb that sticks out is hammered down And the word 1 doesn t exist in their language and they only use we They also do not brag They say this is my dumb wife like any other 5 The nation all the families comprise the nation 6 Education 7 8 The concept ON this means eternal indebtedness The concept of Giri this means the concept of mutual loyalty An obligation to feel for others lOThe sincerity clause 1 lThe diligence traits 12 Self versus group satisfaction Chapter 9 Value chain management Functional strategies for Competitive Advantage Functional strategies for Competitive Advantage 2 ways a manager can add value to organizations products 1 Lower cost strategy 2 Differentiation strategy 4 ways managers can add lower costs and increase differentiation to gain competitive advantage 1 Achieve superior efficiency fewer inputs to make product a EX Japanese car companies compared to American companies and time it takes to make cars 2 Achieve superior quality goods and services that have design styling performance and reliability that customers see as being superior to competing models provide high quality products Achieve superior innovation speed and flexibility new or better ways an organization does things is the result of innovation and gives an organization something unique to sell Attain Superior Responsiveness to Customers will satisfy their needs and give them what they want treats their customers good provides valuable service They can do this by providing excellent after sales service and provide improved products in the future Functional Strategies and Value Chain Management Functionallevel strategy a plan of action to improve the ability of each of an organization s functions to perform taskspecific activities in ways that add value to an organization s goods and services U A Value chain the coordinated series or sequence of functional activities necessary to transform inputs such as new product concepts raw materials component parts or professional skills into the finished goods or services customers value and want to buy Valuechain management the development of a set of functional level strategies that support a company s businesslevel strategy and strengthen its competitive advantage Functional managers develop the strategies that result in increased efficiency quality innovation and responsiveness to customers and this strengthens the competitive advantage 0 Starting point of value chain is development of product product development engineering and scientific research activities involved in innovating new and improved products that adds value Marketing function convince customer that they need the product Materials management function movement from the procurement or inputs to through production to the distribution and delivery of the customer 0 Production function creation assembly or provision of a service for transforming inputs to outputs 0 Sales function locates customers and then informs and persuades them to buy a company s products 0 Face to face selling 0 Stock 0 Customer service function provide after sales service and support 0 Solves problems that they have 0 Customer service controls of what they buy tracking of sales Improving Responsiveness to Customers 0 Define customers needs this comes first What do Customers Want Can generalize this by using these 5 things 1 Lower price to a higher price 2 High quality to low quality products 3 Quick service and after sales service to slow service and bad after sales service 4 Products with many valuable features to products with few features 5 Products that are as far as possible tailored to their needs Managing the Value Chain to Increase responsiveness to customers Desired attributes quality cost and features Customer Relationship Management Customer relationship management CR y g a technique that uses IT to develop an ongoing relationship with customers to maximize the value an organization can deliver to them over time Monitors controls and links functional activities involved in marketing selling and delivering products to customers Improving Quality 0 Superior design features reliability and after sales support 0 Better meet customers requirement Why do managers seek control and improve the quality of their products 1 Prefer high quality products if a company sells a product for the same price as a competitor but has better quality this puts them ahead 2 High product can increase efficiency and thereby lower operating costs and boost profits Total quality management TQM Total quality management TS 2y 2 a management technique that focuses on improving the quality of an organization s products and services i Build organizational commitment to quality Focus on the customer Find ways to measure quality Set goals and create incentives Solicit input from employees Identify defects and trace them to the source Introduce justin time inventory systems IQMLWN Inventog the stock of raw materials inputs and component parts that an organization when they are needed not before NIT just in time inventog system System in which parts or supplies arrive at an organization when they are needed and not before Zero default tolerance not one of the bad products should show up If you do not do well then they fire you In Japan there is zero tolerance where in the USA it is around 10 8 Work closely to suppliers 9 Design for ease of production lOBreak down barriers between functions SiX sigma a technique used to improve quality by systematically improving the way valuechain activities are performed and then using statistical methods to measure how much improvement has been made Uses specific teams to make this happen and look at the totality of the product This includes all parts the manufacturing process packing and the advertising EX GE and how they improved by 250 Improving ef ciency 0 The fewer the input that is required the higher the efficiency of the operating system Facilities Layout Flexible Manufacturing and ef ciency Facilities layout the strategy of designing the machineworker interface to increase operating system efficiency Flexible manufacturing the set of techniques that attempt to reduce the costs associated with the product assembly process or the way services are delivered to customers Fixed position layout product stays in a xed position parts are produced in remote work stations and are brought to the production are for final assembly JIT Just in time inventory and efficiency 0 Gets components to the assembly line just as they are needed and this drives down the costs 0 Component parts travel from suppliers to assembly line in a small wheeled container known as a Kanban 0 They have major implications to efficiency cost savings is from the tumover of inventory and holding costs but this means they won t have as much back stock at their store for a security blanket Self Managed Work Teams and Ef ciency Self managed team consists of 5 to 15 people Can increase efficiency and productivity because they take the place of 1st line managers and the teams themselves hire new people create the work schedule order material and create vacation days Process reengineering and Ef ciency Order fulfillment When an order is received many different functional tasks must be preformed to process the order and then the ordered goods are delivered to the customer Boosts efficiency when the number of order fulfilhnent tasks is reduced and the time it takes is reduced and this in turn reduces the operating costs Process reengineering the fundamental rethinking and radical redesign of business processes to achieve dramatic improvement in critical measures of performance such as cost quality service and speed They take a product and see how it s done and then change what is bad in the process of making The Japanese were very good at that Information Systems the internet and ef ciency Moving different parts of the company online such as ordering and customer service online Dell can customize orders online for its customers and has the customer service online Improving Innovation Quantum product innovation the development of new often radically different kinds of goods and services because of fundamental shifts in technology brought about by pioneering discoveries Incremental product innovation the gradual improvement and refinement to existing products that occurs over time as existing technologies are perfected Strategies to Promote Innovation and Speed Product Development Product development the management of valuechain activities involved in bringing new or improved goods and services to the market 0 Involve both customers and suppliers require certain parts to be a certain way for a product need to input of the supplier and they have to be able to make what you want Need to know what the customer wants before you can make the product The harmonizing of the process from the supplier to the customer 0 Establish a stage gate development funnel O O O Stagegate developmental funnel a planning model that forces managers to make choices among competing projects so that organizational resources are not spread thinly over too many projects EX Flood of ideas pick and choose what is feasible channel ideas that will work Could use brainstorming take best two and incorporate them in your plan Product development plan a plan that specifies all of the relevant information that managers need in order to decide whether to proceed with a fullblown product development effort Contract book a written agreement that details product development factors such as responsibilities resource commitments budgets time lines and development milestones 0 Establish cross functional teams 0 Core members the members of a team who bear primary responsibility for the success of a project and who stay with a project from inception to completion Managing the Value Chain Some remaining Issues Boundary Spanning Roles Boundag spanning interacting with individuals and groups outside the organization to obtain valuable information from the environment Need to be aware of the environment around them A way of doing this is using boundary spanning This is the interacting with individuals and groups outside the organization to obtain valuable information from the environment Value Chain Management over Time The second issue is to make sure that the company keeps up its commitment to improving efficiency quality innovation and responsiveness to customers over time So everything needs to be worked at constantly to keep the value chain in order Ethical Implications Third there are ethical implications in which these different techniques can increase efficiency quality and innovation but they may do this at a cost to employees They may see the demand of their job go up with TQM or have them reengineered out of the job Gate keeping deciding what information to allow into the organization and what information to keep out a This can be abused b Have to be rational people c Have to be ethical Chapter 10 Organizing the process by which managers establish the structure of working relationships among employees to achieve goals Organizational Structure formal system of tasks and reporting relationships that coordinates and motivates organizational members so that they work together to achieve organizational goals Organizational design the process by which managers make specific choices that result in a particular kind of organizational structure Job Design J ob Design the process by which managers decide how to divide tasks into specific jobs ob Simplification the process of reducing the number of tasks that each worker performs ob Enlargement increasing the number of different tasks in a given job by changing the division of labor J ob Enrichment increasing the degree of responsibility of a worker has over a job Job Characteristics Model Skill variety employee uses a wide range of skills Task identity worker is involved in all tasks of the job from beginning to end of the production process Task significance worker feels the task is meaningful to organization Autonomy employee has freedom to schedule tasks and carry them out Feedback worker gets direct information about how well the job is done Grouping Jobs into Functions Functional Structure an organizational structure composed of all the departments that an organization requires to produce its goods or services Advantages Encourages leaming from others doing similar jobs Easy for managers to monitor and evaluate workers Disadvantages Difficult for departments to communicate with others Preoccupation with own department and losing sight of organizational goals Divisional Structure an organizational structure composed of separate business units within which are the functions that work together to produce a specific product for a specific customer Types of Divisional Structures Product Structure each product line or business is handled by a selfcontained division Advantages Allows functional managers to specialize in one product area Division managers become experts in their area Removes need for direct supervision of division by corporate managers Divisional management improves the use of resources Geographic Structure each region of a country or area of the world is served by a selfcontained division Global geographic structure managers locate different divisions in each of the world regions where the organization operates39 generally occurs when managers are pursuing a multidomestic strategy Global Product Structure each product division not the country or regional managers takes responsibility for deciding where to manufacture its products and how to market them in foreign countries Market Structure each kind of customer is served by a selfcontained division also called customer structure Matrix Design Structure Matrix Structure managers group people and resources in two ways simultaneously by function and by product Product Team Design Structure Product Team Structure members are permanently assigned to a crossfunctional team and report only to the product team manager or to one of his subordinates Crossfunctional team group of managers brought together from different departments to perform organizational tasks Hybrid Structures Hybrid Structure the structure of a large organization that has many divisions and simultaneously uses many different organizational structures Coordinating Functions and Divisions Authority the power to hold people accountable for their actions and to make decisions concerning the use of organizational resources Hierarchy of Authority an organization s chain of command specifying the relative authority of each manager Allocating Authority Span of Control the number of subordinates that report directly to a manger Line Manager someone in the direct line or chain of command who has formal authority over people and resources Staff Manager someone responsible for managing a specialist function such as finance or marketing Tall and Flat Organizations Decentralizing authority giving lowerlevel managers and non managerial employees the right to make important decisions about how to use organizational resources Types of Integrating Mechanisms Integrating Mechanisms organizing tools that managers can use to increase communication and coordination among functions and divisions Strategic Alliances Strategic Alliance an agreement in which managers pool or share firm s resources and knowhow with a foreign company and the two firms share in the rewards and risks of starting a new venture Outsource to use outside suppliers and manufacturers to produce goods and services Network Structure a series of strategic alliances that an organization creates with suppliers manufacturers and distributors t produce and market a product39 network structures allow firms to bring resources together in a boundaryless organization Boundagless Organization an organization whose members are linked by computers faxes computeraided design systems and videoconferencing and who rarely if ever see one another facetoface Knowledge Management System a companyspecific virtual information system that allows workers to share their knowledge and expertise and find others to help solve problems B2B Network Structures and IT Business to Business B2B Network a group of organizations that join together and use IT to link themselves to potential global suppliers to increase efficiency and effectiveness EXAM 2 REVIEW Chapters 4 5 amp 6 Chapter 4 The Nature of Ethics Ethical dilemmathe situation people find themselves in when they have to decide if they should act in a way that might help another person or group even though doing so might go against their own self interest Ethics the inner guiding moral principles values and beliefs that people use to analyze or interpret a situation and then decide what is the right or appropriate way to behave Ethics and the Law Explain the relationship between ethics and the law Society can use the political and legal process to lobby for and pass laws that say what people can do Neither laws nor are ethics xed principles Ethical beliefs change over time and laws change to re ect those new ethical beliefs A commonly used ethical or moral rule is Do onto others as you would have them do onto you Changes in Ethics over time As ethical beliefs change so do the past laws that were set in place because they no longer re ect the beliefs at the time being EX Marijuana use in the United States Ethical beliefs lead to development to laws and regulations to prevent certain behaviors or encourage others EX Enron they used illegal means to defraud investors Took money from investors they put into the company and used it on themselves Other companies have done unethical things too like finding loopholes in law to their advantage Stakeholders and Ethics Stakeholderspeople and groups that supply a company with its productive resources and so have a claim on and stake in the company These are the Stakeholders of an organization L Stockholders People who buy companies stocks or shares so they become its owners Stockholders are interested in the way a company operates because they want to maximize the return in investment Also they want to make sure that the managers are acting ethically and not risking the investor s capital Managers They are vital stakeholder because they re responsible for using a companies nancial capital and human resources to increase its performance and its stock price They have a claim on the organization because they bring their skills expertise and experience to the company Decide what goals they want to accomplish How to make the most ef cient use of resources Have to juggle interests of different stakeholders 1 Employee They are the hundreds of thousands of people who work in various departments and functions such as research sales and manufacturing They expect that they will receive a reward consistent to their performance i Suppliers and Distributors A network of relationships that supply it with inputs that they need to operate Also depends on intermediaries such as wholesalers and retailers to distribute goods to the customer Suppliers expect to be paid fairly Distributors expect to get high quality products The code of vendor conduct is a way in which they can develop monitoring systems to asses and assure compliance to ethical and legal guidelines 2 Customers This is the most critical stakeholder because if a company cannot attract them then they cannot stay in business Must work with efficiency and effectiveness in order to create loyal customers and attract new ones Laws exist to protect the customer from companies that sell shoddy products They can sue the company for damages Ex a car tire Q Community Socie and Nation The effects of the decisions that manager and companies make also permeate all the aspects of the communities societies and nations in which they operate a Community The physical locations like towns and cities that provide a company with physical and social infrastructure b Contributes to the economy by the salaries wages and taxes that it pays Rules for Ethical Decision Making Utilitarian Rule an ethical decision is a decision that produces the greatest good for the greatest number of people Moral Rights Rule an ethical decision is one that best maintains and protects the fundamental or inalienable rights and privileges of the people affected by it Justice rule an ethical decision is a decision that distributes the benefits and harms among people and groups in fair equitable or impartial way Practical Rule an ethical decision is one that a manager has no reluctance about communication to people outside the company because the typical person in a society would think is acceptable Why should managers behave ethically The relentless pursuit for self interest can lead to a disaster when one or more people start to profit from being unethical because this encourages others to act the same way Trust willingness of one person or group to have faith or confidence in the goodwill of another person even though this puts them at risk Reputation The esteem or high repute that individuals or organizations gain when they behave ethically Ethical and Social Responsibility Societal Ethics standards that govern how members of a society should deal with one another in matters involving issues such as fairness justice poverty and the rights of the individual Occupational Ethics Standards that govern how members of a profession trade or craft should conduct themselves when performing work related activities Individual Ethicspersonal standards and values that determine how people view their responsibilities to others and how people view their responsibilities to others and how they should act in situations when their self interests are at stake Organizational Ethicsthe guiding practices and beliefs through which a particular company and its managers view their responsibility toward their stakeholders Approaches to Social Responsibility Social responsibility the way a company s managers and employees view their duty or obligation to make decisions that protect enhance and promote the welfare and well being of stakeholders and society as a whole Four Different Approaches l Obstructionist Approach companies and their managers choose not to behave in a socially responsible way and instead behave unethically and illegally 2 Defensive Approach companies and their managers behave ethically to the degree that they stay within the law and abide strictly with legal requirements 3 Accommodation Approach companies and their managers behave legally and ethically and try to balance the interests of different stakeholders as the need arises 4 Proactive Approach companies and their managers actively embrace socially responsible behavior going out of their way to learn about the needs of different stakeholder groups and utilizing organizational resources to promote the interests of all stakeholders Why be socially responsible 1 Being socially responsible helps them build a good reputation 2 The quality of life for society will as a whole increase 3 The way that you behave to your employees determines many society s values and norms and the ethics of its citizens The Role of Organizational Culture Instead of just having a code of ethics a company can go even farther and make sure that these ethical values and norms are key features in the organizations culture When these ethical values and norms are part of an organization s culture they help organizational member resist self interested action because they know that they are a part of something bigger than themselves Ethics Ombudsman a manager responsible for communicating and teaching ethical standards to all employees and monitoring their conformity to those standards Chapter 5 The increasing diversity of the workforce and the environment Diversity differences among people in age gender race ethnicity religion socioeconomic background and capabilitiesdisabilities There is a strong ethical imperative in many societies that diverse people receive equal opportunities and be treated fairly and justly It is also illegal Effectively managing diversity can improve organizational effectiveness Diverse individuals continue to experience unfair treatment in the workplace as a result of biases stereotypes and overt discrimination Glass Ceiling A metaphor alluding to the invisible barriers that prevent minorities and women from being promoted to the top corporate positions Ag The median age is the highest it has ever been it is currently at 362 years of age The age discrimination in employment act of 1967 and the title VII act of 1964 prohibit age discrimination Gender Women and men are almost equally represented in the U S workforce yet women s median weekly earnings are estimated to be 572 compared to 714 for men The gender gap is still alive and well Race and Ethnicity ethnicity refers to the grouping of people based on some shared characteristic such as national origin language or culture the US census bureau treats ethnicity in terms of whether a person is Hispanic or non Hispanic Religion Title VII of the civil rights act prohibits discrimination based on religion As a manager you have to be aware of the different religions and what day their holidays fall on CapabilitiesDisabilities American with disabilities act of 1990 prohibits discrimination against people with disabilities and organizations need to make accommodations for them Socioeconomic Background refers to a combination of social class and income related issues from a manager s perspective a manager should be sensitive and responsive to the needs and individuals who might not be as well off as others Sexual Orientation no federal law prohibits discrimination based on sexual orientation 20 states have laws 1998 executive order prohibits discrimination of sexual orientation in federal offices Other kinds of diversity need teams and member with diverse backgrounds Teams that develop new products need to each know about the different aspects of creating and selling the product Managers and the effective management of diversity Critical Managerial Roles Managers can promote effective management of diversity or they can prohibit it They are critical to this process In their interpersonal roles they can make diversity a valued goal and objective Institute policies and procedures leader role Cooperate with inside and outside of the organization liaison 2 Factors why managers are central to mgmt of diversity 1 Women African Americans and Hispanics start out with a slight disadvantage because of how they are perceived 2 Slight differences in treatment can build up over time and result in major disparities The ethical Imperative to Manage Diversity Effectively The two morals that provide managers with guidance to meet the imperative are l Distributive Justice a moral principle calling for the pay raises and resources to be based on meaningful contributions that people have made 2 Procedural justice moral principle calling for the use of fair procedures to determine how to distribute outcomes to the org members Effectively Managing diversity makes good business sense Diversity can give a company a competitive advantage Diverse members are more attuned to the wants and the dislikes of the market and customers Effective management increase retention of valued employees which decreases the costs of training new employees This also makes the employees more motivated Profitability will suffer if diversity is not effectively managed And in this way it also helps to not get involved in costly lawsuits Perception the process in which people select organize and interpret what they see hear touch smell and taste give meaning and order to their surroundings The interpret sensory input to give meaning and order to the world around them When perceptions are inaccurate 1 Don t hire qualified people 2 Fail to promote top working people 3 Promote people who are performing poorly Factors that in uence managerial perception Several managers will have a different perception of the same person because they differ in personality values attitudes and moods Schema abstract knowledge structure that is stored in memory and makes possible the interpretation and organization of info about a person event or situation Gender schemas preconceived beliefs or ideas about men women and their traits attitudes behaviors and preferences Perception as a determinant of unfair treatment Stereotype inaccurate beliefs about typical characteristics of particular groups of people mouse and cheese Bias systematic tendency to use info about others in ways that result in inaccurate positions similar to me effect is an example of this Overt discrimination Knowingly and willingly denying diverse individuals access to opportunities and outcomes in an org and this is unethical and illegal How to manage Diversity effectively Steps to manage diversity effectively i Secure top management commitment develop attitudes and values Strive to increase the accuracy of perceptions open other points of view Increase diversity awareness awareness programs the managers and the people in the organization Increase diversity skills interaction and ability to work with diff people Encourage exibility open to new ways of doing things Pay attention how employees are evaluated less affected by biases Consider the numbers shows problems and see what they need to fiX wk OUIJgt 00 Empower employees to challenge discriminatory behavior actions and remarks speak up create a culture Reward employees for effectively managing diversity pay is interactive with diversity goals 10Provide long term training multipronged approach films papers and exercises to show hidden biases and stereotypes ll Mentoring of diverse employees helps networking with mentors and contacts 0 Mentoring process which experienced member helps give advice and guidance to a person less experienced Sexual Harassment damages people involved and the reputation of the company Forms of Sexual Harassment Quid pro guo sexual harassmen if you do this for me I will do this for you Hostile work environment sexual harassment more subtle offensive work environment due to their sex lewd jokes and porn Steps managers can take to eradicate sexual harassment 1 Communicate a policy for sexual harassment by the top mgmt 2 Fair complaint procedure to investigate charges of SH 3 If has taken place make changes 4 Provide education to all members of organization Chapter 6 Global environmentconditions from the outside world outside org boundary that affect the way it operates and shapes its behavior They change over time and present managers with opportunities and threats Inside circle ZTask environmen pressure that affect the manager everyday immediate and direct and are a set of forces that and conditions that originate with global suppliers distributors customers and competitors Outside of the circle General environment wide ranging economic technological sociocultural demographic political and legal forces that affect the organization and its task environment The task environment Supplier individuals and companies that that provide the company with the raw materials input resources to make the final product Example dell has many suppliers of labor supply a lot of places with the computer systems that are to be used in banks and such A major supplier related threat is when suppliers bargaining position is so strong that that they raise the price of the inputs they supply to the organization Supplier bargaining power is very strong when l Supplier has monopoly over the input product 2 Input is Vital to the organization NutraSweet and diet pop Organizations can use their power to get the suppliers to lower the price also Boeing works with many suppliers that are the best in the world so that the final product will be high quality Global Outsourcing process by which organizations purchase inputs from other companies or produce inputs themselves throughout the world to lower their production costs and improve the quality or design of their products Example GM builds engines in one country transmissions somewhere else and brakes in another Global supply chain managemen Overseas intermediaries are used by companies to find suppliers globally Specialization being focused on just one aspect of a product can reduce costs even more by splitting apart operations to different overseas suppliers in different countries Distributors organizations that help other organizations sell their goods or services to customers Can bring opportunities and threats to managers Examples UPS and Federal express and postal service are vital for buying items online WalMart will buy from suppliers competitors if the price is too high made all suppliers to use new technology to reduce costs It is illegal for distributors to collaborate to keep prices high and thus maintain power over the buyers but it still happens Customersbuy goods and services that organization produces Organizations success depends on the response of the customers to the product Managers need to be able to identify the customers target market to be able to succeed When expanding to the global environment you are going to be able to reach more customers Competitors one of the most important forces that an organization confronts they are organizations that produce goods amp services that are similar to a particular organizations goods and services In other words competitors and companies are ghting over the same target market This is the most threatening force that a manager has to deal with Unethical companies may drive down prices and profits with fierce competition Boeing had been acquiring proprietary competitive information about bidding intentions and since they knew how much they were going to bid they could undercut the price to win the auction Potential Competitors organizations that presently are not in a task environment but could enter if they so choose Example amazoncom is not in the retail and appliance business but they could enter into that line of business if management decided it could profit from it Barriers to Entg factors that make it difficult amp costly for an organization to enter a particular task environment or industry Example the more difficult and costly it is to enter a task environment the higher the barriers of entry are And the higher the barriers of entry there are going to be fewer competitors to compete with Three main sources of Barriers to entry 1 Economies of scale cost advantages associated with large operations a Manufacturing in large quantities buying in bulk more effective use of employees skills and knowledge 2 Brand loyalty customers preference for the products of organizations that currently exist in the task environment New companies that enter the market have trouble getting their product well known and spend a lot of money on advertising so that they can compete Govemment regulations that impede entry companies need to work more efficiently to get tasks done well or they may be put out of business Japan has restrictions on imports and this lessens the amount of competitors in their market U The General environment This is the outside of the circle Economic Forces interest rates in ation unemployment economic growth and other factors that affect the general health and well being of a nation and or regional economy of an organization Example low levels of unemployment and interest rates give more people more money to spend and as a result an organization has an opportunity to sell more goods and services A bad economy can limit a manager s ability to resources Technological Force outcomes of changes in technology that managers use to design produce or distribute goods and services Technology combination of tools machines computers skills information and knowledge that managers use for design production and distributions of goods The advancement in computers in the past few years has accelerated technological change Example computers that are now used in hospitals Sociocultural Forces pressures emanating from the social structure of a country or society or from the national culture Social Structure the arrangement of relationships between individuals and groups in society Caste systems in India National Culture the set of values that a society considers important and the norms of behavior that are approved or sanctioned in society Example USA individualism is valued where as in china and Japan they want people to conform Demographic Force outcomes of changes in or changing attitudes toward the characteristics of the population such as age gender ethnic origin race sexual orientation and social class See chapter 5 Political and Legal Force outcomes of changes of laws and regulations such as deregulation of industries the privatization of organizations and the increase emphasis on environmental protection Example EU and which has changed laws that affect international commerce by lowering the barriers of free trade of goods and services between member nations The Changing Global Environment Globalization the set of specific and general forces that work together to intergraded and connect economic political and social systems across countries cultures or geographical regions so that nations become increasingly interdependent and similar Human Capital ow of people through immigration migration and emigration Financial Capital ow of money and capital around the world through investment credit lending and aid Resource Capital ow of natural resources and semi finished products Political Capital ow of power and in uence around the world using diplomacy persuasion aggression and force of arms Declining Barriers to Trade and Investment Tariff tax that the govemment imposes on imported and exported goods GATT and Rise of Free Trade free trade was best way to foster healthy economy and low employment Freetrade Doctrine if each country specializes in production of the goods and services that it can produce most efficiently this will take advantage of the resources Declining Barriers of Distance and Culture Barriers that were made by distance and differences in culture closed the global economy and made the market more domestically based Effects of free trade on managers It created opportunities to expand their product market through exports and imports Regional Free trade Agreements NAFTA North American free trade agreement abolish tariffs between Mexico Canada and USA CAF TA Central American free trade organization 2005 abolish tariffs between USA and Central America These create opportunities and threats for managers The Role of national culture Cultural Values and Norms W idea about what society believes is 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 Moresmore established not necessarily written but understood As individuals you have the right to make the right decision Norms that considered being central to the functioning of society and to social life Folkways routine social conventions of everyday life Hofstede s Model ofNational Culture Individualism versus collectivism Individualismpeople should be judged by their individual achievements rather than by their individual achievements rather than by their social background Collectivism goals of the group and adherence to the principle that people should be judged by their contribution to the group Power Distance the degree to which societies accept the idea that inequality in the power and well being of their citizens are due to differences in individual s physical and intellectual capabilities and heritage Achievement versus Nurturing Orientation Feminine versus masculinity society Masculine is more achievement orientated and women are more so nurturing and for quality of life Achievement Orientation a worldview that values assertiveness performance success and competition Nurturing Orientation worldview that values the quality of life warm personal friendships and friendships and services and care for the weak Uncertainty Avoidanc doesn t want to take risks and want to be very certain Certain societies like to take risks and others don t Long term versus Short term orientation Long term orientation thrift and persistence in achieving goals Example The budget plan in Japan is done 25 years ahead of time Short term orientation living in the present personal stability or happiness and living in the present Example very short term oriented in the USA National Culture and Global Management Differences in cultures have implications for managers because some mgmt practices work well in one country but don t work well in another and they must be sensitive to a countries value systems and norms


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