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Chapters 1-5
Chapter 1 The Management Process Today
All managers work in organizations and are responsible for supervising the use of organizations
human and other resources to achieve its goals.
Organization collections of people who work together and coordinate their actions to achieve a
wide variety of goals.
Resources include assets such as people and their skills, know-how, and knowledge;
machinery; raw materials; computers and information technology; and financial capital.
Management the planning, organizing, leading, and controlling of human and other resources
to achieve organizational goals efficiently and effectively.
One of the most important goals that organizations and their members try to achieve is to
provide some kind of good or services that customers desire.
Ex: Hospitaltaking care of patients, McDonalds.producing burgers
3. Leading articulating a clear vision and energizing and enabling organizational members so
that they understand the part they plan in achieving organizational goals.
- The outcome of leadership is a high level of motivation and commitment among organizational
members.
4. Controlling evaluating how well an organization is achieving its goals and taking action to
maintain or improve performance.
- the outcome of the control process is the ability to measure performance accurately and
regulate organizational efficiency and effectiveness.
*how well managers perform these functions determines how efficient and effective their
organizations are.
Department- a group of people who work together and possess similar skills or use the same
knowledge, tools, or techniques to perform their jobs.
Types of Managers
To perform efficiently, organizations employ 3 types of managers
(1) First line managers often called supervisors, is a manager who is responsible for the daily
supervision of non-managerial employees who perform many of the specific activities necessary
to produce goods and services.
(2) Middle managers a manager who supervises first line managers and is responsible for
finding the best way to use resources to achieve organizational goals. They help to increase
efficiency, better utilize resources, reduce manufacturing costs, and improve customer services.
A major part of the middle managers job is to develop and fine tune skills.
(3) Top managers a manager who is responsible for the performance of all departments. They
establish organizational goals, decide how departments should interact, and monitor the
performance of middle managers. They are ultimately responsible for the success or failure of an
organization and devote most of their time to planning and organizing.
Top management team a group composed of the CEO, the COO, and the heads of the most
important departments.
CEO chief executive officer, most senior and important manager
COO chief operating officer, second in command
Conceptual skills the ability to analyze and diagnose a situation and to distinguish between
cause and effect.
Human skills the ability to understand, alter, lead, and control the behavior of other individuals
and groups.
Technical skills the job-specific knowledge and techniques requires to perform an
organizational role. Examples include a managers specific skills such as manufacturing,
accounting, marketing, and increasingly, IT skills.
Competencies the specific set of skills, abilities, and experiences that allows one manager to
perform at a higher level than another manager in a particular setting.
Global Organizations
Global organization organizations that operate and compete in more than one country.
** Managers who make no attempt to learn and adapt to changes in the global environment find
themselves reacting rather than innovating. Four major challenges stand out for managers in
todays world:
(1) building a competitive advantage
- competitive advantage the ability of one organization to outperform other organization
because it produces desired goods or services more efficiency and effectively than its
competitors. There are four building blocks of competitive advantage:
1. increase efficiency
2. increase quality
3. increasing speed, flexibility, and innovation
4. increasing responsiveness to customers
(2) Maintaining ethical standards managers at all levels perform under pressure to increase the
level at which their organizations perform. Pressure to increase performance can be healthy for
an organization because it causes managers to think outside the box; however, too much pressure
can be harmful. It can lead to unethical behavior to get ahead.
(3) Managing a diverse workforce managers must establish employment procedures and
practices that are legal, fair, and do not discriminate against any organizational members.
(4) Utilizing new information systems and technologies new technologies such as computer
controlled manufacturing and information systems that link and enable employees in new ways
are continually being developed.
Needs for affiliation the extend to which an individual is concerned about establishing and
maintaining good interpersonal relations, being liked, and having other people get along.
Needs for achievement the extent to which an individual has a strong desire to perform
challenging tasks well and to meet personal standards for excellence.
Needs for power the extent to which an individual desires to control or influence others.
Values
- What managers are trying to achieve through work and how they think they should behave.
Terminal value a lifelong goal or objective that an individual seeks to achieve
Examples a comfortable life, equality, inner harmony, true friendship
Instrumental value a mode of conduct that an individual seeks to follow.
Examples honest, ambitious, polite, intellectual, forgiving
Norms informal rules of conduct for behaviors considered important by most members of a
group or organization.
Attitudes
- a collection of feelings and believes.
Job satisfaction the collection of feelings and beliefs that managers have about their current
jobs.
managers who have high levels of job satisfaction believe that their jobs have many
desirable features, feel that they are being treated fairly
Levels of job satisfaction tend to increase as one moves up the hierarchy in an
organization.
In general, it is desirable for managers to be satisfied with their jobs, for at least two reasons.
1. They will be more likely to go the extra mile.above and beyond the call of duty
organizational citizenship behaviors (OCB) behaviors that are not required of organizational
members but that contribute to and are necessary for organizational efficiency, effectiveness, and
gaining a competitive advantage.
2. They will be less likely to quit.
Organizational commitment the collection of feelings and beliefs that managers have about
their organization as a whole.
Managers who are committed to their organizations believe in what their organizations
are doing, are proud of what they stand for, and feel a high degree of loyalty to their
company.
Mood a feeling or state of mind.
When people are in a positive mind they feel excited, enthusiastic, active, or elated.
When people are in a negative mood they feel distressed, fearful, hostile
Ethical dilemma the quandary 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 other people use to analyze or
interpret a situation and then decide what is the right or appropriate way to behave.
** the essential problem dealing with ethical issues, and thus solving moral dilemmas, is that
there is no absolute or indisputable rules or principles that can be developed to decide if an
action is ethical or unethical.
It is important to realize that ethics/laws change over passing time as peoples opinions and
outlooks alter.
Stakeholders and Ethics
Stakeholders the people and groups that supply a company with its productive resources and so
have a claim on and stake in the company.
*The stakeholders can directly benefit or be harmed; therefore, the ethics of the company ands its
managers are important to them.
Stockholders have a claim in the company because when they buy stock or shares they become
its owners. They are interested in the way a company operates because they want to maximize
the return on their investment. They also want to watch managers to ensure they are behaving
ethically and not risking the investors capital.
Managers managers are a vital stakeholder group because they are responsible for using a
companys financial capital and human resources to increase its performance and thus its sock
price.
The problem has been that in many companies corrupt managers focus not on building
the companys capital and stockholders wealth bus on maximizing their own personal
capital and wealth.
Employees a companys employees are the hundreds of thousands of people who work in its
various departments and functions, such as research, sales, and manufacturing. Employees
expect that they will receive rewards consistent with their performance.
Suppliers and distributors no company operates alone. Every company is a network of
relationships with other companies that supply it with the inputs (raw materials, labor, etc.) that it
needs to operate.
Important issues arise in the way companys contract and interact with their suppliers and
distributors. There are concerns how and when payments are made or product quality
specifications are governed by the terms of legal contracts.
Customers often regarded as the most critical stakeholder group since if a company cannot
attract them to buy its products, it cannot stay in business.
Community, society, and nation the effects of the decisions made by companies and their
managers permeate all aspects of the communities, societies, and nations in which people
operate.
* Community refers to the physical locations like towns or cities or to social milieus like ethnic
neighborhoods
* Company affects the prosperity of a society and a nation and, to a degree that a company is
involved in global trade, all the countries it operates in and thus prosperity of the global
economy.
Rules for ethical decision making
To help themselves and employees make ethical decisions and behave in ways that benefit
stakeholders, managers can use four ethical rules or principles to analyze the effects of their
business decisions on stakeholder.
The four rules for ethical decision making
(1) Utilitarian rule an ethical decision is a decision that produces the greatest good for the
greatest number of people.
(2) 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.
- Example ethical decisions that protect peoples rights to freedom, life, and safety.
(3) Justice rule an ethical decision is a decision that distributes benefits and harms among
people and groups in a fair, equitable, or impartial way.
- Example employees with same skill level should receive same pay.
(4) Practical rule an ethical decision is one that a manager has no reluctance about
communicating to people outside the company because the typical person in a society would
think it is acceptable.
Why should managers behave ethically?
The relentless pursuit of self-interest can lead to a collective disaster when one or more people
start to profit from being unethical because it encourages other people to behave the same way.
Trust a persons confidence and faith in another persons goodwill.
Reputation the esteem or high repute that individuals or organizations gain when they behave
ethically.
Codes of Ethics
formal standards and rules, based on beliefs about right and wrong, that managers use to
help themselves make appropriate decisions with regard to the interest of stakeholders.
An organizations code of ethics derives from three principal sources in the organizational
environment:
(1) Societal ethics standards that govern how member of a society are to deal with each other
on issues such as fairness, justice, poverty, and the rights of the individual.
(2) Professional ethics standards that govern how members of a profession are to make
decisions when the way they should behave is not clear-cut.
(3) Individual ethics personal values and attitudes that govern how individuals interact with
other people.
Ethical organizational culture
Managers role in developing ethical values and standards in other employees is very important.
Employees naturally look to those in authority to provide leadership
Ethics ombudsman an ethics officer who monitors an organizations practices and procedures to
be sure they are ethical.
The increasing diversity of the workforce and the environment
Diversity differences among people in age, gender, race, ethnicity, religion, sexual orientation,
socioeconomic background, and capabilities/disabilities.
There are several reasons why diversity is such a pressing concern and issue both in the popular
press and for managers and organizations
Ethically imperative that diverse people receive equal opportunities and be treated fairly.
Effectively managing diversity can improve organizational effectiveness.
Research shows that diverse individuals continue to be discriminated against in the
workforce.
Age, gender, race/ethnicity, religion, capabilities/disabilities, socioeconomic background, sexual
orientation.these are all main reasons for discrimination.
Sexual Harassment
Quid pro quo sexual harassment asking for or forcing an employee to perform sexual favors in
exchange for some reward or to avoid negative consequences.
Hostile work environment sexual harassment telling lewd jokes, displaying pornography,
making sexually oriented remarks about someones personal appearance, and other sex-related
actions that make the work environment unpleasant.
Steps managers can take to eradicate sexual harassment
If distributors become so large and powerful that they can control customers access to a
particular organizations goods and services, they can threaten the organization by
demanding that it reduce the price of its goods and services.
In contrast, the power of the distributor may be weakened if there are may options.
Customers
Individuals and groups that buy the goods and services that an organization produces.
An organizations success depends on customers
The most obvious opportunity associated with expanding into the global environment is
the prospect of selling goods and services to new customers; however, it is important not
to place too much emphasis on this development.
National cultures differ in many ways, significant differences often require managers to
customize goods and services to suit the preference of local customers.
Example.Mattel making an Asian Barbie doll to distribute in Japan.
Competitors
Organizations that produce goods and services that are similar to a particular organizations
goods and services.
Rivalry between competitors is potentially the most threatening force that managers must
deal with.
The potential to new competitors is also a huge threat. When new competitors enter an
industry, competition increases and price decreases.
Potential competitors organizations that presently are not in a task environment but could enter
if they so choose.
Barriers to entry factors that make it difficult and costly for an organization to enter a particular
task environment or industry.
The more difficult and costly it is to enter the task environment, the higher the barriers to
entry.
The higher the barriers to entry, the fewer the competitors.
Barriers to entry result from three sources:
(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 that impede entry examples.air transport, telecommunications,
utilities.
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.
Social 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 of behavior
that are approved or sanctioned in that society.
Social structure and national culture not only differ across societies but also change
within societies over time.
Demographic forces
Outcomes of changes in, or changing attitudes 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.
Global forces
Outcomes of changes in international relationships, changes in nations economic, political, and
legal systems, and changes in technology, such as falling trade barriers, the growth of
representative democracies, and reliable and instantaneous communication.
Free-trade doctrine the idea that if each country specializes in the production of the goods and
services that it can produce most efficiently, this will make the best use of global resources.
Declining barriers of distance and culture
Barriers of distance and culture also closed the global environment and kept managers looking
inward.
** The shift toward a more open global economy has created not only more opportunities to sell
goods and services in markets abroad but also the opportunity to buy more from other countries.
NAFTA North American Free Trade Agreement
Effective Jan. 1, 1994, and had the aim of abolishing the tariffs on 99% of the goods traded
between Mexico, Canada, US by 2004.
The role of national culture
Although evidence shows that countries are becoming more and more similar to one another, the
cultures of different countries still vary widely because of critical differences in their values,
norms, attitudes.
Values ideas about what a society believes to be good, right, desirable, or beautiful
Norms unwritten rules and codes of conduct that prescribe how people should act in particular
situations
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.
Holfstedes model of National Culture
Developed five dimensions along which national cultures can be placed.
(1) Individualism vs. Collectivism
Individualism a worldview that values individual freedom and self expression and adherence to
the principle that people should be judged by their individual achievements rather than by their
social background. Example valued in US
Collectivism a worldview that values subordination of the individual to the goals of the group
and the adherence to the principle that people should be judged by their contribution to the
group. Example highly valued in Japan.
(2) Power distance
Power distance the degree to which societies accept the idea that inequalities in the power and
well being of their citizens are due to differences in individuals physical and intellectual
capabilities and heritage.
Programmed decision making routine, virtually automatic decision making that follows
established rules or guidelines.
Example a principal asks the school board to hire a new teacher because there are 40 student
per classroom.
They are called programmed because office managers do not need to repeatedly make
new judgments about what they should do
Non-programmed decision making non-routine decision making that occurs in response to the
unusual, unpredictable opportunities and threats.
Intuition feelings, beliefs, and hunches that come readily to mind, require little effort and
information gathering, and result in on-the-spot decisions.
Reasoned judgment a decision that takes time and effort to make and results from careful
information gathering, generation of alternatives, and evaluation of alternatives.
Classical Model
- one of the earliest models of decision making
Classical decision making model a prescriptive approach to devision 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.
Administative model
- in contract it was proposed that managers do not have access to all the info they need to
make a decision.
Administrative model an approach to decision making that explains why decision making is
inherently uncertain and risky and why managers usually make satisfactory rather than optimum
decisions.
Bounded rationality cognitive limitations that constrain ones ability to interpret, process, and
act on information
Risk the degree of probability that the possible outcomes of a particular court of action will
occur
Uncertainty unpredictability
Ambiguous information info that can be interpreted in multiple and often conflicting ways.
Satisficing searching for and choosing an acceptable, or satisfactory, response to problems and
opportunities, rather than trying to make the best decision.
Steps in the decision making process
(1) Recognizing the need for a decision
(2) Generate alternatives
(3) Evaluate alternatives
(4) Choose among alternatives
(5) Implement the chosen alternative
(6) Learn from feedback
Diversity among groups can improve decision making and are sometimes less prone to
groupthink.
*In turn, each division has its own set of functions or departments manufacturing,
marketing, human resource management, R&D. Example GE has many different branches of
its company (GE Aircraft, GE Lighting, GE motors) and each have their own functions.
Corporate-level plan top managements decisions pertaining to the organizations mission,
overall strategy, and structure.
Corporate-level strategy a plan that indiviates in which industries and national markets an
organization intends to compete.
Business-level plan divisional managers decisions pertaining to divisions long-term goals,
overall strategy and structure.
Business-level strategy a plan that indicates how a division intends to compete against its rivals
in an industry.
Function a unit or department in which people have the same skills or use the same resources
to perform their jobs.
Functional managers managers who supervise the various functions, such as manufacturing,
accounting, and sales, within a division.
Functional-level plan functional managers decisions pertaining to the goals that they propose
to pursue to help the division attain its business-level goals.
Who Plans?
In general, corporate-level planning is the primary responsibility of top managers; however,
lower level managers can and usually are given the opportunity to become involved in the
process.
Time Horizons of Plans
Time horizon the intended duration of a plan
Long term plans horizon of five years or more
Intermediate term plans horizon between one and five years
Short term plans - one year or less
**Typically on the corporate and business level rolling plans are used, which is a plan that is
updates and amended every year to take account the changing conditions in the external
environment.
Standing plans and single-use plans
Standing plans are used in situations in which programmed decision making is appropriate.
When the same situations occur repeatedly, managers develop policies, rules, and standard
operating procedures.
Single-use plans are developed to handle non-programmed division making in unusual or one- of
a kind situations.