3 the management_environment-chapther2


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Management in a diversified environment

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  • 1 – One of the biggest problems in managing an organization today is trying to hold on to the past. To better understand the turbulent business world, let’s look back on the road that we have traveled. Futurist Alvin Toffler divides history into three revolutionary waves: The first wave was agriculture . Until the 19th century, all economies were agrarian-based. The second wave was industrialization . The first two-thirds of this century saw most developed countries move from agrarian-based to machine-based economies. Starting in the 1970s, the third wave, information , is replacing low-skilled, blue-collar jobs with opportunities for educated and skilled technical specialists, professionals, and knowledge workers.
  • 1 – The world has become a global village , a world without boundaries in which managers must adapt to a variety of cultures, systems, and techniques. By the mid-1960s, multinational corporations (MNCs) were common. Even though this type of corporation maintained significant operations in two or more countries simultaneously, decision making was controlled by the home office. Now, transnational corporations (TNCs) also maintain significant operations in more two or more countries, but decision making is decentralized. Many large companies are breaking down internal arrangements that impose artificial geographic barriers, thereby forming a new type of organization—the borderless organization . They are moving to borderless management in order to increase efficiency and effectiveness in a competitive global marketplace.
  • 1 – The spread of capitalism underscores the growing global interdependence and the potential for goods, capital, and labor to move across national borders. The global marketplace, however, can present challenges for managers; for instance, managing in a different national culture. Parochialism refers to a narrow focus, in which one sees things solely according to his own perspective. An extension of this narrow focus is a person with an ethnocentric view who sees his or her own culture as better than any other. Organizational forms and goals can only be understood within their social context. In the global marketplace, success is promoted by a variety of managerial and organizational structures—each derived according to the given business environment. Managers must acknowledge that societal issues may affect operations in another country. Understanding cultural environments, therefore, is critical to managing in the global village
  • 1 – Technology includes any equipment, tools, or operating methods that are designed to make work more efficient. The integration of technology into the production process has made it possible to enhance the process of changing inputs into outputs by replacing human labor with computers and electronic equipment. Technology can improve customer service. For example, state-of-the-art equipment can allow a business to customize the orders, so that making a “one-of-a-kind” product can be done as efficiently as producing a whole shipload of standardized products. Technology also can be used to provide better, more useful information; so, company officials can have complete information on their products lines in several thousand stores within 24 hours. New technologies are changing the knowledge, skills, and abilities that employees need to succeed. Not only will repetitive tasks continue to be computerized but many jobs will be upgraded. Furthermore, reengineered jobs will require self-motivated, computer literate employees with excellent communication skills. Technology can level the competitive playing field by providing companies (no matter what size or market power) with the ability to innovate, to bring products to market fast, and to respond to customer requests.
  • 1 – Technology can also change the relationship between business and customers. Consider the proliferation of ecommerce . Because it empowers customers, their expectations about convenience, comparability, speed, price, and service are changing. Businesses will have to meet the needs of empowered customers, if they want to succeed.
  • 1 – Organizations have become integrative communication centers in which managers have quicker access to information. With that information, they can better formulate plans, make faster decisions, more clearly define jobs, and monitor work activities. Therefore, technology allows managers to perform the four functions of management more quickly and efficiently. In addition, technology has changed how their work is performed. For instance, telecommuting is the linking of a worker’s computer and modem with those of coworkers and managers at an office. Rather than simply observing the behavior of on-site employees, managers must now communicate with off-site workers and monitor their performance. Addressing such challenges will require managers to establish performance standards which will ensure that high-quality work is completed on time. In addition, since traditional “face-time” is removed in decentralized work sites, a manager’s need to “control” the work will have to change. Instead, there will have to be more employee involvement, allowing workers to make those decisions which affect them. The emphasis, then, will be on the final output, not the means by which it is accomplished.
  • 1 – In the past, a simple rule held true: hire employees during good times and fire employees in bad times. Modern organizations, however, are responding to the global business environment in other ways, such as redesigning jobs or downsizing —extensive layoffs intended to cut costs and boost efficiency. At issue for these corporations is staffing their ranks properly, or rightsizing , according to their strategic goals. As a result, many firms are now outsourcing —using outside firms to provide necessary products and services. Rather than disappearing, big companies are changing how they operate, for instance, blending large size with agility by dividing into smaller, more flexible units.
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  • 3 the management_environment-chapther2

    1. 1. 2– 2
    2. 2. The Changing Economy <ul><li>Agriculture </li></ul><ul><ul><li>Until the late nineteenth century, all economies were agrarian. </li></ul></ul><ul><li>Industrialization </li></ul><ul><ul><li>From the late 1800s until the 1960s, most developed countries moved from agrarian societies to industrial societies. </li></ul></ul><ul><li>Information </li></ul><ul><ul><li>Information technology is transforming society from its manufacturing focus to one of service. </li></ul></ul>2–
    3. 3. The Changing Economy 2– Exhibit 2.1 <ul><li>Old Economy </li></ul><ul><li>National borders limit competition </li></ul><ul><li>Technology reinforces rigid hierarchies and limits access to information </li></ul><ul><li>Job opportunities are for blue-collar industrial workers </li></ul><ul><li>Population is relatively homogeneous </li></ul><ul><li>Business is estranged from its environment </li></ul><ul><li>Economy is driven by large corporations </li></ul><ul><li>Customers get what business chooses to give them </li></ul><ul><li>New Economy </li></ul><ul><li>National borders no longer define an organization’s operating boundaries </li></ul><ul><li>Technological change makes information more accessible </li></ul><ul><li>Job opportunities are for knowledge workers </li></ul><ul><li>Population is characterized by cultural diversity </li></ul><ul><li>Business accepts its social responsibilities </li></ul><ul><li>Economy is driven by small entrepreneurial firms </li></ul><ul><li>Customer needs drive business </li></ul>Refer to your own note sheet which I have marked.
    4. 4. A Global Marketplace <ul><li>Global village / Globalisation </li></ul><ul><ul><li>The concept of a boundaryless world; the production and marketing of goods and services worldwide. </li></ul></ul><ul><li>Borderless organization </li></ul><ul><ul><li>A management structure in which internal arrangements that impose artificial geographic barriers are broken down </li></ul></ul>2–
    5. 5. Globalization’s Effect On Managers <ul><li>Parochialism </li></ul><ul><ul><li>A narrow focus in which one sees things solely through one’s own view and from one’s own perspective </li></ul></ul><ul><li>Hofstede’s framework for assessing cultures: </li></ul><ul><ul><li>Power distance </li></ul></ul><ul><ul><li>Individualism versus collectivism </li></ul></ul><ul><ul><li>Quantity of life versus quality of life </li></ul></ul><ul><ul><li>Uncertainty avoidance </li></ul></ul><ul><ul><li>Long-term versus short-term orientation </li></ul></ul>2–
    6. 6. Emphasis on Technology <ul><li>Technology </li></ul><ul><ul><li>Any equipment, tools, or operating methods that are designed to make work more efficient </li></ul></ul><ul><li>Information Technology (IT) </li></ul><ul><ul><li>Benefits of IT </li></ul></ul><ul><ul><ul><li>Cost savings (e.g., inventory control) </li></ul></ul></ul><ul><ul><ul><li>Freedom from fixed locations for operations </li></ul></ul></ul><ul><ul><li>Challenges </li></ul></ul><ul><ul><ul><li>Increased worker skill requirements </li></ul></ul></ul><ul><ul><ul><li>A leveling of the the competitive playing field that increases competition </li></ul></ul></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 2–
    7. 7. Internet Business Terms <ul><li>E-commerce </li></ul><ul><ul><li>Any computer transaction that occurs when data are processed and transmitted over the Internet </li></ul></ul><ul><li>E-organization </li></ul><ul><ul><li>The applications of e-business concepts offered to stakeholders. </li></ul></ul><ul><li>E-business </li></ul><ul><ul><li>The full breadth of activities included in a successful Internet-based enterprise </li></ul></ul>2–
    8. 8. In What Ways Does Technology Alter A Manager’s Job? <ul><li>Effectiveness and efficiency </li></ul><ul><ul><li>Managers have access to more complete and accurate information than before, enabling them to function as better managers. </li></ul></ul><ul><li>Place </li></ul><ul><ul><li>Telecommuting: the linking of a worker’s computer and modem with those of co-workers and management at an office. </li></ul></ul>2–
    9. 9. Labor Supply and Demand Adjustments <ul><li>Downsizing </li></ul><ul><ul><li>An activity in an organization designed to create a more efficient operation through extensive layoffs </li></ul></ul><ul><li>Rightsizing </li></ul><ul><ul><li>Linking staffing levels to organizational goals </li></ul></ul><ul><li>Outsourcing </li></ul><ul><ul><li>An organization’s use of outside firms for providing necessary products and services </li></ul></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 2–
    10. 10. Flexible Workforces <ul><li>Core employees </li></ul><ul><ul><li>The small group of full-time employees of an organization who provide some essential job tasks for the organization </li></ul></ul><ul><li>Contingent workforce </li></ul><ul><ul><li>Part-time, temporary, and contract workers who are available for hire on an as-needed basis </li></ul></ul>Copyright © 2005 Prentice Hall, Inc. All rights reserved. 2–
    11. 11. Classifying Global Village Businesses <ul><li>Global Sourcing </li></ul><ul><ul><li>The use of worldwide resources (outsourcing). </li></ul></ul><ul><li>Importing </li></ul><ul><ul><li>Domestic firm buys products from foreign firms and sells them in its home market. </li></ul></ul><ul><li>Exporting </li></ul><ul><ul><li>Domestic firm sells its locally-made products to foreign buyers in overseas markets. </li></ul></ul>Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 3–
    12. 12. Classifying Global Village Businesses <ul><li>Licensing </li></ul><ul><ul><li>One company allows another company to use its assets (intellectual property) for a fee. </li></ul></ul><ul><ul><ul><li>Brand name, trademark, technology, patent, and copyright </li></ul></ul></ul><ul><ul><li>Franchising </li></ul></ul><ul><ul><ul><li>For a fee, a franchiser provides the franchisee with the assets and support to conduct a business using the franchiser’s business model for its operations. </li></ul></ul></ul>Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 3–
    13. 13. Classifying Global Village Businesses <ul><li>Management Contracts </li></ul><ul><ul><li>A company has a foreign firm manufacture the goods while retaining the marketing process. </li></ul></ul><ul><li>Joint Venture </li></ul><ul><ul><li>A enterprise that is created when firms agree to share in its ownership. </li></ul></ul><ul><li>Direct Investment </li></ul><ul><ul><li>Investment that occurs when a company builds or purchases operating facilities (subsidiaries) in a foreign country. </li></ul></ul>Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 3–
    14. 14. Taking a Business Global Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 3– Exhibit 3 – 2