Introduction to Management by shas production

2014
Shas Production
11/3/2014
Introduction To Management

Shas Production
Team Shas Production

INTRODUCTION
TO MANAGEMENT
AND
ORGANIZATIONS
© 2003 Pearson Education Canada Inc. 1.1

 You should be able to:
 Explain what a manager is and how the role of a
manager has changed
 Define management
 Distinguish between efficiency and effectiveness
 Describe the basic management functions and
the management process
 Identify the roles performed by managers
1.2

 You should be able to:
 Describe the skills managers need
 Explain what managers do using the systems
perspective
 Identify what managers do using the contingency
perspective
 Describe what an organization is and how the
concept of an organization has changed
 Explain the value of studying management
1.3

 Manager
 Someone who works with and through other people
by coordinating their work activities in order to
accomplish organizational goals
 Changing nature of organizations and work has
blurred the clear lines of distinction between
managers and non-managerial employees
1.4

 Managerial Titles
 First-line managers - manage the work of non-
managerial individuals who are directly involved with
the production or creation of the organization’s
products
 Middle managers - all managers between the first-
line level and the top level of the organization who
manage first line managers
 Top managers - responsible for making organization-
wide decisions and establishing the plans and goals
that affect the entire organization
1.5

ORGANIZATIONAL LEVELS (Exhibit 1.1)
Non-managerial Employees
Top
Managers
Middle
Managers
First-line
Managers
1.6© 2003 Pearson Education Canada Inc.

 Management
 The process of coordinating work activities so that
they are completed efficiently and effectively with
and through other people
 Elements of definition
 Process - represents ongoing functions or
primary activities engaged in by managers
 Coordinating - distinguishes a managerial
position from a non-managerial one
1.7

 Management (continued)
 Elements of definition (continued)
 Efficiency - getting the most output from the least
amount of inputs
 “doing things right”
 concerned with means
 Effectiveness - completing activities so that
organizational goals are attained
 “doing the right things”
 concerned with ends
1.8

EFFICIENCY AND EFFECTIVENESS IN
MANAGEMENT (Exhibit 1.2)
Management Strives For:
Low resource waste (high efficiency)
High goal attainment (high effectiveness)
Resource
Usage
Efficiency (Means)
Goal
Attainment
Effectiveness (Ends)
Low Waste High Attainment

Management Functions
 Planning - defining goals, establishing
strategies for achieving those goals, and
developing plans to integrate and coordinate
activities
 Organizing - determining what tasks are to be
done, who is to do them, how the tasks are to
be grouped, who reports to whom, and where
decisions are to be made
 Leading - motivating subordinates and
influencing individuals or teams
 Controlling - monitoring actual performance
against goals
1.10

 Management Process
 Management process
 Set of ongoing decisions and work activities
in which managers engage as they plan,
organize, lead, and control
 Managerial activities are usually done in a
continuous manner
1.11

 Management Roles
 Specific categories of managerial behaviour
 Interpersonal - involve people and duties
that are ceremonial and symbolic in nature
 Informational - involve receiving, collecting,
and disseminating information
 Decisional - revolve around making choices
 Emphasis that managers give to the various roles seems
to change with their organizational level
1.12

MINTZBERG’S MANAGERIAL ROLES
(Exhibit 1.4)

 Management Skills
 Technical - knowledge of and proficiency in a certain
specialized field
 Human - ability to work well with other people both
individually and in a group
 Conceptual - ability to think and to conceptualize
about abstract and complex situations
 see the organization as a whole
 understand the relationships among subunits
 visualize how the organization fits into its broader
environment
1.14

SKILLS NEEDED AT DIFFERENT MANAGEMENT
LEVELS (Exhibit 1.5)

 Managing Systems
 System - a set of interrelated and
interdependent parts arranged in a manner that
produces a unified whole
 Closed system - a system that is not influenced
by and does not interact with its environment
 Open system - dramatically interact with their
environment
1.16

System
THE ORGANIZATION AS AN OPEN SYSTEM (Exhibit 1.7)
Transformation
Employee’s work
activities
Management
activities
Technology and
operations methods
OutputsInputs
Raw materials
Human resources
Capital
Technology
Information
Products and services
Financial results
Information
Human results
Environment
Environment
Feedback

 Managing Systems (continued)
 Managers must
 coordinate various work activities
 ensure that interdependent parts work
together
 recognize and understand the impact of
various external factors
 Decisions and actions taken in one
organizational area will affect other areas
and vice versa
1.18

 Managing in Different and Changing Situations
 Contingency perspective - different
ways of managing are required in
different organizations and different
circumstances
 No simple or universal rule for
managers to follow
 Requires that managers’ actions be
appropriate for the situation
1.19

POPULAR CONTINGENCY VARIABLES
(Exhibit 1.8)

 Organization
 Deliberate arrangement of people to accomplish
some specific purpose
 Characteristics of an organization
 distinct purpose
 deliberate structure
 people
 Today’s organizations have adopted:
 flexible work arrangements
 open communications
 greater responsiveness to changes
1.21

Distinct Purpose
People
Deliberate
Structure
1.22

THE CHANGING ORGANIZATION
(Exhibit 1.10)

 Universality of Management
 Management is needed
 in all types and sizes of organizations
 at all organizational levels
 in all work areas
 Management functions must be
performed in all organizations
 consequently, have vested interest in
improving management
1.24

UNIVERSAL NEED FOR MANAGEMENT
(Exhibit 1.11)

 The Reality of Work
 Most people have some managerial responsibilities
 Most people work for a manager
 Rewards of being a manager
 Create an environment that allows others to do their best
work
 Provide opportunities to think creatively
 Help others find meaning and fulfillment
 Meet and work with a variety of people
1.26

Challenges of being a manager
- Being a manager is hard work
- Must deal with a variety of
personalities
- Must motivate workers in the
face of uncertainty
1.27

MANAGEMENT
YESTERDAY
AND TODAY
Chapter 2

LEARNING OBJECTIVES
You should be able to:
– Discuss management’s relationship to other
academic fields of study
– Explain the value of studying management history
– Identify some major pre-twentieth-century
contributions to management
– Summarize the contributions of the scientific
management advocates
– Describe the contributions of the general
administrative theorists
2.2

LEARNING OBJECTIVES (continued)
• You should be able to:
– Summarize the quantitative approach to
management
– Describe the contributions of the early
organizational behaviour advocates
– Explain the importance of the Hawthorne
Studies to management
– Describe the effects of: globalization,
workforce diversity, entrepreneurship, e-
business, need for innovation and flexibility,
quality management, learning organizations,
and knowledge management
2.3

MANAGEMENT’S CONNECTION TO
OTHER FIELDS OF STUDY
Academic Disciplines that Affected Management
– Anthropology - work on cultures and social
environments
– Economics - concern about the allocation and
distribution of scarce resources
– Philosophy - examines the nature of things
– Political science - effect of political environment on
individuals and groups
– Psychology - seeks to measure, explain, and change
human behavior
– Sociology - studies people in relation to their fellow
human beings
2.4

DEVELOPMENT OF MAJOR
MANAGEMENT THEORIES
Historical
Background Scientific
Management
General
Administrative
Theorists
Quantitative
Approach
Management Theories
Industrial
Revolution
Adam Smith
Early Advocates
Hawthorne Studies
Organizational
Behaviour
Early Examples
of Management

HISTORICAL BACKGROUND OF
MANAGEMENT
• Organizations Have Existed for Thousands of Years
• Significant Pre-Twentieth-Century Events
– Adam Smith
• division of labour - breakdown of jobs into narrow and repetitive
tasks increased productivity
– Industrial Revolution
• substitution of machine power for human power
• large organizations required formal management
2.6

SCIENTIFIC MANAGEMENT
• F.W. Taylor - Principles of Scientific Management
– Use of scientific methods to define the “one best way” for
a job to be done
– Perspective of improving the productivity and efficiency of
manual workers
– Applied the scientific method to shop floor jobs
• Frank and Lillian Gilbreth
– Use of motion pictures to study hand-and-body
movements
2.7

TAYLOR’S FOUR PRINCIPLES OF
MANAGEMENT (Exhibit 2.2)
2.8
1. Develop a science for each element of an individual’s work,
which will replace the old rule-of-thumb method.
2. Scientifically select and train, teach, and develop the worker.
(Previously, workers chose their own work and trained
themselves as best they could.)
3. Heartily cooperate with the worker so as to ensure that all work
is done in accordance with the principles of the science that has
been developed.
4. Divide all work and responsibility equally between management
and workers. Management takes over all work for which it is
better fitted than the workers. (Previously almost all the work and
the greater part of the responsibility were thrown on the
workers.)

GENERAL ADMINISTRATIVE THEORISTS
• Henri Fayol
– Concerned with making the overall organization
more effective
– Developed theories of what constituted good
management practice
• proposed a universal set of management functions
• published principles of management
– fundamental, teachable rules of management
2.9

PRINCIPLES OF MANAGEMENT
(Exhibit 2.3)
2.10

GENERAL ADMINISTRATIVE THEORISTS
(continued)
• Max Weber
– Developed a theory of authority structures and
relations
– Bureaucracy - ideal type of organization
• division of labour
• clearly defined hierarchy
• detailed rules and regulations
• impersonal relationships
2.11

IDEAL BUREAUCRACY (Exhibit 2.4)
2.12

QUANTITATIVE APPROACH TO
MANAGEMENT
• Operations Research (Management Science)
– Use of quantitative techniques to improve
decision making
• applications of statistics
• optimization models
• computer simulations of management activities
– Linear programming - improves resource
allocation decisions
– Critical-path scheduling analysis - improves
work scheduling
2.13

TOWARD UNDERSTANDING
ORGANIZATIONAL BEHAVIOUR
• Organizational Behavior
– Study of the actions of people at work
• Hawthorne Studies
– Started in 1924 at Western Electric Company
– Elton Mayo - studies of job design
– Changed the dominant view that employees were
no different from any other machines
2.14

EARLY ADVOCATES OF OB (Exhibit
2.5)
2.15

CURRENT TRENDS AND ISSUES
• Globalization
– All organizations are faced with the opportunities and
challenges of operating in a global market
• Workforce Diversity
– Heterogeneous workforce in terms of gender, race,
ethnicity, age, and other characteristics that reflect
differences
• workforce is getting older
• high degree of immigration in Canada
2.16

(continued)
• Entrepreneurship
– Three important themes
• pursuit of opportunities - capitalizing on environmental
change to create value
• Innovation and uniqueness - introducing new
approaches to satisfy unfulfilled market needs
• growth - not content to remain small
– Will continue to be important in all societies
– Will influence profit and not-for-profit
organizations
2.17

(continued)
• Managing in an E-Business World
– E-business - comprehensive term describing the way an
organization does its work by using electronic (Internet-
based) linkages with key constituencies
– E-business - any form of business exchange or transaction
in which parties interact electronically
– Intranet - an internal organizational communication
system that uses Internet technology and is accessible only
by organizational employees
2.18

TYPES OF E-COMMERCE TRANSACTIONS
E-Commerce
Business-to-Consumer
(B2C)
Electronic retailing
Government-to-Business
(G2B)
All transactions between
companies and
government agencies
Business-to-Business
(B2B)
All transactions between a
company and its suppliers
Consumer-to-Consumer
(G2C)
Electronic markets formed
by Web-based auctions
2.19
© 2003 Pearson Education Canada Inc.

CATEGORIES OF
E-BUSINESS INVOLVEMENT
E-business units
within
traditional
organization
E-Business-Enhanced
Organization
E-business tools
and applications
used within tradi-
tional organization
E-Business-Enabled
Organization
Organization’s entire work
processes revolve around
e-business model
2.20
Total E-Business
Organization

(continued)
 Need for Innovation and Flexibility
– Without a constant flow of new ideas, an organization is
doomed to obsolescence or even worse
– Must be flexible to accommodate changing customers’
needs, appearance of new competitors, and shifting
employees from project to project
– Quality Management
– Total Quality Management (TQM) - philosophy of
management based on continual improvement and
responding to customer needs and expectations
– Customer - refers to internal and external entities that
interact with the organization’s product or service
2.21

WHAT IS TQM? (Exhibit 2.8)
2.22

(continued)
 Learning Organizations and Knowledge Management
– Learning organization - one that has developed the
capacity to continuously learn, adapt, and change
– Create learning capabilities throughout the organization
– Knowledge management - involves cultivating a
learning culture where organizational members
systematically gather knowledge and share it with
others in the organization so as to achieve better
performance
– managers must transform themselves from bosses to
team leaders--listening, coaching, motivating and
nurturing
2.23

LEARNING ORGNAIZATION VERSUS TRADITIONAL
ORGANIZATION
2.24

Chapter 3
ORGANIZATIONAL
CULTURE AND
ENVIRONMENT:
THE CONSTRAINTS

LEARNING OBJECTIVES
– Differentiate the symbolic from the omnipotent
view of management
– Define organizational culture
– Identify the seven dimensions that make up an
organization’s culture
– Explain how cultures can be strong or weak
– Describe the various ways that employees learn
culture
3.2

LEARNING OBJECTIVES
(continued)
– Explain how culture constrains managers
– Describe the various components in an
organization’s specific and general environments
– Contrast certain and uncertain environments
– Identify the various stakeholders with whom
managers have to deal
– Clarify how managers manage relationships with
external stakeholders
3.3

THE MANAGER: OMNIPOTENT
OR SYMBOLIC?
• Omnipotent View of Management
– Managers are directly responsible for an organization’s
success
• Symbolic View of Management
– The actual part that managers play in organizational
success or failure is minimal
– Managers must create meaning out of randomness,
confusion, and ambiguity
• Reality Suggests a Synthesis
– Managers are neither helpless nor all powerful
3.4

PARAMETERS OF MANAGERIAL
DISCRETION (Exhibit 3.1)
Managerial
Discretion
Organization’s EnvironmentOrganizational Culture

WHAT IS ORGANIZATIONAL
CULTURE?
• A system of shared meaning and beliefs held
by organizational members that determines, in
large degree, how they act
• Composite picture of organizational culture
may be derived from seven dimensions
• Organization’s personality often shaped by one
of these dimensions
3.6

DIMENSIONS OF ORGANIZATIONAL
CULTURE (Exhibit 3.2)

THE CULTURE OF AN
ORGANIZATION
• Strong Versus Weak Cultures
– In strong cultures, key values are deeply held and widely
shared
– Strong cultures have greater influence on employees than do
weak cultures
– Employees more committed to organizations with strong
cultures
– Strong cultures are associated with high organizational
performance
– Most organizations have moderate to strong cultures
3.8

THE CULTURE OF AN
ORGANIZATION (continued)
• The Source of Culture
– Usually reflects the vision or mission of the founder
• How Employees Learn Culture
– Stories - a narrative of significant events or people
– Rituals - repetitive sequences of activities
– Material symbols – essential in creating an
organization’s personality.
– Language - organizations develop unique jargon
3.9

THE CULTURE OF AN
ORGANIZATION (continued)
• How Culture Affects Managers
– Establishes appropriate managerial behavior
– Constrains decision making in all management
functions
• Planning - degree of risk that plans should contain
• Organizing - degree of autonomy given to
employees
• Leading - degree of concern for job satisfaction
• Controlling - reliance on external or internal
controls
3.10

THE EXTERNAL ENVIRONMENT
Customers
Competitors
Suppliers
Public
Pressure
Groups
The
Organization
General
Environment
Specific
Environment

(continued)
• Forces and institutions outside the organization that
may affect organizational performance
– Specific environment - includes those
constituencies that have a direct and immediate
impact on managers’ decisions and actions
• customers - absorb organization’s outputs
• suppliers - provide material and equipment
• competitors - provide similar services/products
• pressure groups - special-interest groups
3.12

(continued)
• General environment - includes the broad
conditions that may affect organizations
– Economic conditions - interest rates,
changes in disposable income, and stage of
the business cycle
– Political/legal conditions - federal,
provincial, and local governments and
general stability of Canada
3.13

(continued)
• General environment (continued)
– Socio-cultural conditions - expectations of society
(values, customs and tastes)
– Demographic conditions - trends in the physical
characteristics of a population
– Technological conditions - most rapidly changing aspect
of the general environment
– Global conditions - increasing number of global
competitors and consumer markets
3.14

HOW THE ENVIRONMENT
AFFECTS MANAGERS
• Assessing environmental uncertainty
– Degree of unpredictable change
• dynamic - frequent change
• stable - minimal change
– Environmental complexity
• the number of components in the environment
• amount of information available or required about
those components
– Managers attempt to minimize uncertainty
3.15

ENVIRONMENTAL UNCERTAINTY
(Exhibit 3.6)
3.16

STAKEHOLDER RELATIONSHIP
MANAGEMENT
• Who are stakeholders?
– Any constituencies that are affected by
the organization’s decisions and actions
• include internal and external groups
• can influence the organization
3.17

ORGANIZATIONAL
STAKEHOLDERS (Exhibit 3.7)
3.18

MANAGEMENT (continued)
• Why is stakeholder relationship
management important?
– The more secure the relationship, the
more influence managers will have over
organizational outcomes
– It’s the “right” thing to do
3.19

• How can these relationships be managed?
– Four steps
• identify the stakeholders
• determine real and potential concerns of each
stakeholder group
• determine whether stakeholder is critical
• determine specific approach to manage the
relationship
– Approach to a stakeholder group based on the
importance of the group and the degree of
environmental uncertainty
3.20

MANAGING STAKEHOLDER
RELATIONSHIPS (Exhibit 3.8)
3.21

• Boundary spanning
– Important stakeholder and environmental
uncertainty
– Interacting to gather and disseminate
information
• Stakeholder partnerships
– Stakeholder is critical and environmental
uncertainty is high
– Pursue common goal
3.22

Chapter 4
MANAGING IN
A GLOBAL
ENVIRONMENT

LEARNING OBJECTIVES
– Explain the importance of viewing management
from a global perspective
– Identify the three different attitudes towards global
business
– Describe the different regional trading alliances
– Explain why so many countries have become part
of regional trading alliances
– Contrast multinational, transnational, and
borderless organizations
4.2

LEARNING OBJECTIVES
(continued)
– Describe the typical stages by which
organizations go global
– Explain the four dimensions of country culture
– Describe Canadian culture according to the four
dimensions of country culture
– Identify the adjustment challenges faced by a
manager on global assignment
4.3

WHO OWNS WHAT?
• Global Environment
– National borders have become
increasingly irrelevant
– Has potential for dramatic expansion of
organizations
– Presents numerous challenges for
managers
4.4

COMPANIES THAT EXPORT MORE THAN
50% OF TOTAL SALES
% of Sales
100
89
85
85
83
81
79
79
76
76
Company
McDonnell Douglas
Canadian Wheat Board
Chrysler Canada
XCAN Grain Pool
Pratt & Whitney Canada
Avenor Inc.
Donahue Inc.
Domtar Inc.
Weldwood of Canada
Canfor Corp.

WHAT’S YOUR GLOBAL
PERSPECTIVE?
• Parochialism
– Nation views the world solely through its own
eyes and perspectives
– People do not recognize that other people have
different ways of living and working
– Significant obstacle for global managers
• Ethnocentric Attitude
– Parochial belief that the best work approaches
and practices are those of the home country
– Lack trust in foreign employees with key
decisions or technology
4.6

WHAT’S YOUR GLOBAL
PERSPECTIVE? (continued)
• Polycentric Attitude
– Belief that host-country managers know the best work
approaches and practices
– Let foreign employees determine work practices
• Geocentric Attitude
– Focuses on using the best approaches and people from
around the globe
– Look for the best approaches and people regardless of
the country of origin
4.7

KEY INFORMATION ABOUT THREE
GLOBAL ATTITUDES (Exhibit 4.2)

UNDERSTANDING THE
GLOBAL ENVIRONMENT
• Regional Trading Alliances
– Global competition is influenced by regional trading
and cooperation agreements
– The European Union
• a unified economic and trade entity
• a single market without barriers to travel,
employment, investment, and trade
• common currency (Euro)
• assertion of economic power against U.S. and Japan
• created one of the world’s richest markets
4.9

EUROPEAN UNION COUNTRIES (Exhibit 4.4)

UNDERSTANDING THE GLOBAL
ENVIRONMENT (continued)
• Regional Trading Alliances (continued)
– North American Free Trade Agreement (NAFTA)
• links economies of Canada, Mexico and U.S.
• since 1994, eliminated barriers to free trade such as
tariffs, import licensing requirements, customs user
fees
– Other Latin American free-trade blocs
• Free Trade Area of the Americas (FTAA)
• Southern Cone Common Market (Mercosur)
4.11

MERCOUSUR MEMBERS (Exhibit 4.5)

• Regional Trading Alliances (continued)
– Association of Southeast Asian Nations
(ASEAN)
• alliance of 10 Southeast Asian nations
• created in one of the fastest growing
economic regions in the world
• could rival NAFTA and EU
4.13

ASEAN MEMBERS (Exhibit 4.6)

• Different Types of Global Organizations
– Multinational corporation (MNC)
• maintain significant operations in multiple countries
but are managed from a base in the home country
– Transnational corporation (TNC)
• maintains significant operations in more than one
country but decentralizes management to the local
country
• nationals hired to run operations in each country
• marketing strategies tailored for each country
4.15

• Different Types of Global Organizations (continued)
– Borderless organization
• eliminates structural divisions that impose
artificial geographical barriers
• an attempt to increase efficiency and
effectiveness in a competitive global
marketplace
• exemplifies the geocentric attitude
4.16

HOW ORGANIZATIONS GO GLOBAL (Exhibit 4.7)
Stage I
Passive Response
Stage II
Initial Overt Entry
Stage III
Established International
Operations
Exporting
to foreign
countries
Importing
from foreign
countries
Hiring foreign
representation or
contracting with
foreign manufacturers
Licensing/
Franchising
Foreign
Subsidiary
Joint
Ventures
Strategic
Alliances

MANAGING IN A GLOBAL
ENVIRONMENT
• The Legal-Political Environment
– Canada has stable legal and political systems
– Managers in foreign countries face greater uncertainty
• The Economic Environment
– Global manager must be attentive to:
• strength of home currency versus foreign currency
• differences in inflation rates around the world
• tax rules differ from country to country
4.18

• The Cultural Environment
– National culture
• the values and attitudes shared by
individuals from a specific country
• shapes behaviour and beliefs
• has greater effect on employees than
organizational culture
• getting information about a country’s
cultural differences is difficult
4.19

• The Cultural Environment (continued)
– Four dimensions of national culture
• individualism versus collectivism
– individualism - loosely knit social framework
– collectivism - tightly knit social framework
• power distance - degree of acceptance of unequal
distributions of power in institutions and
organizations
4.20

• The Cultural Environment (continued)
• uncertainty avoidance - degree to which
people tolerate risk and unconventional
behaviour
• quantity versus quality
– quantity of life - culture values
assertiveness and the acquisition of
money and material goods
– quality of life - value relationships
4.21

EXAMPLES OF CULTURAL DIMENSIONS (Exhibit 4.9)

IS A GLOBAL ASSIGNMENT
FOR YOU?
• Criteria Used When Making Global Assignment
– Technical and human factors are considered
– Criteria used influenced by the company’s
experience and commitment to global
operations
– Include technical skills, language fluency,
flexibility, and family adaptability
4.23

IS A GLOBAL ASSIGNMENT
FOR YOU? (continued)
• Factors That Determine Adjustment to Global Assignment
– Preassignment adjustment--what are your expectations of
this assignment and what is your experience with similar
cultures?
– In-country adjustment
• individual factors--positive attitude and interaction
with co-workers
• organization factors--social support systems
4.24

FACTORS THAT AFFECT GLOBAL ADJUSTMENT
(Exhibit 4.11)

Chapter 5
SOCIAL
RESPONSIBILITY
AND MANAGERIAL
ETHICS 5.1© 2003 Pearson Education Canada Inc.

LEARNING OBJECTIVES
– Explain the classical and socioeconomic views of social
responsibility
– List the arguments for and against business’s being
socially responsible
– Differentiate among social obligation, social
responsiveness, and social responsibility
– Explain the relationship between corporate social
responsibility and economic performance
– Describe values-based management and how it is
related to organizational culture
5.2

LEARNING OBJECTIVES
(continued)
– Explain what the “greening” of management is
and how organizations are “going green”
– Differentiate among the four views of ethics
– Identify the factors that affect ethical behaviour
– Discuss various ways organizations can
improve the ethical behaviour of their
employees
5.3

WHAT IS SOCIAL
RESPONSIBILITY?
• Two Opposing Views of Social
Responsibility
– Classical view - management’s only social
responsibility is to maximize profits
• doing “social good” adds to the cost of doing
business
• costs have to be passed on to consumers
5.4

WHAT IS SOCIAL
RESPONSIBILITY? (continued)
• Two Opposing Views of Social Responsibility (continued)
– Socioeconomic view - businesses are not just economic
institutions
• management’s social responsibility goes beyond
making profits to include protecting and improving
society’s welfare
• businesses have responsibility to a society
• more organizations around the world have increased
their social responsibility
5.5

WHAT IS SOCIAL
RESPONSIBILITY? (continued)
• From Obligations to Responsiveness
– Social responsibility - a business’s obligation to
pursue long-term goals that help society
– Social obligation - obligation of a business to
meet its economic and legal responsibilities
– Social responsiveness - capacity of a firm to
adapt to changing societal conditions
5.6

LEVELS OF SOCIAL
INVOLVEMENT (Exhibit 5.2)
Social Obligation
Social
Responsibility
Social
Responsiveness
5.7

SOCIAL RESPONSIBILITY vs.
SOCIAL RESPONSIVENESS
(Exhibit 5.3)
Major consideration
Focus
Emphasis
Decision framework
Social
Responsibility
Ethical
Ends
Obligation
Long term
Social
Responsiveness
Pragmatic
Means
Responses
Medium and
short term
5.8

SOCIAL RESPONSIBILITY AND
ECONOMIC PERFORMANCE
• Most Research Shows a Positive Relationship
• Evaluation of Socially Conscious Mutual Stock
Funds
– social screening - applying social criteria to
investment
• Conclusion
– a company’s socially responsible actions do not
hurt its long-term economic performance
5.9

VALUES-BASED
MANAGEMENT
• Definition
– An approach to managing in which managers
establish, promote, and practice an
organization’s shared values
• Purposes of Shared Values
– Act as guideposts for managerial decisions and
actions
– Influence marketing efforts
– Build team spirit
5.10

PURPOSES OF SHARED VALUES
(Exhibit 5.4)
Shared
Organizational
Values
Guide Managers’
Decisions and
Actions
Influence
Marketing
Efforts
Build
Team
Spirit
Shape
Employee
Behaviour

VALUES-BASED
• Developing Shared Values
– It is difficult to establish shared values
– Managers are responsible for shaping the
organization so that its values, norms, and
ideals appeal strongly to employees
– Companies that practice values-based
management have broad commitment to being
socially responsible and socially responsive
5.12

SUGGESTIONS FOR CREATING A
GOOD CORPORATE VALUES
STATEMENT (Exhibit 5.5)
5.13

THE “GREENING” OF
MANAGEMENT
• Definition
– Recognition of the close link between an organization’s
decisions and activities and its impact on the natural
environment
• Global Environmental Problems
– There are many global environmental problems
– Economically developed nations are blamed for the
problems
– Problems expected to increase as emerging countries
become more developed
5.14

• How Organizations Go Green
– Products and production processes have become cleaner
– Shades of green - describe different approaches that
organizations may take
• legal approach - follow legal obligations
• market approach - organizations respond to the environmental
preferences of customers
• stakeholder approach - organization chooses to respond to
multiple demands made by stakeholders
• activist approach - looks for ways to respect and preserve the
earth and its natural resources
5.15

APPROACHES TO BEING
GREEN (Exhibit 5.6)
Legal
Approach
(Light Green)
Market
Approach
Stakeholder
Approach
Activism
Approach
(Dark Green)
Low High
Environmental Sensitivity

• Summing Up Social Responsibility
– Four-stage progression of an organization’s
social responsibility
• each stage implies an increasing level of managerial
discretion
• Stage 1 - promote stockholders’ interests by seeking
to minimize costs and maximize profits
• Stage 2 - managers accept their responsibility to
employees and focus on human resource concerns
5.17

• Summing Up Social Responsibility
(continued)
– Four-stage progression (continued)
• Stage 3 - expand responsibilities to other
stakeholders
• Stage 4 - managers feel responsibility to society as a
whole
5.18

TO WHOM IS MANAGEMENT
RESPONSIBLE? (Exhibit 5.7)
Stage 1
Owners and
Management
Stage 2
Employees
Stage 3
Constituents in the
Specific Environment
Stage 4
Broader
Society
Social ResponsibilityLesser Greater

MANAGERIAL ETHICS
• Ethics
– Rules and principles that define right and
wrong conduct
• Four Views of Ethics
– Utilitarian view - ethical decisions are
made on the basis of their outcomes or
consequences
5.20

MANAGERIAL ETHICS
(continued)
• Four Views of Ethics (continued)
– Rights view - respects and protects individual
liberties and privileges
– Theory of justice view - managers impose and
enforce rules fairly and impartially
– Integrative social contracts theory - decisions
should be based on empirical and normative
factors
5.21

FACTORS THAT AFFECT ETHICAL
AND UNETHICAL BEHAVIOUR
(Exhibit 5.8)
Ethical
Dilemma
Moderators
Stage of Moral
Development
Ethical/Unethical
Behaviour
Organizational
Culture
Structural
Variables
Individual
Characteristics
Issue
Intensity

STAGES OF MORAL
DEVELOPMENT (Exhibit 5.9)

MANAGERIAL ETHICS
(continued)
• Factors That Affect Managerial Ethics
(continued)
– Individual characteristics
• values - basic convictions about right and
wrong
• ego strength - strength of a person’s
convictions
• locus of control - degree to which people
believe that they control their own fate
5.24

MANAGERIAL ETHICS
(continued)
• Factors That Affect Managerial Ethics (continued)
– Structural variables
• design of organization affects ethical behaviour
• rules and regulations
• behaviour of superiors
• performance appraisal systems that focus on means as
well as ends
• reward systems that punish failure to achieve ends is
likely to compromise ethics
5.25

MANAGERIAL ETHICS
(continued)
• Factors That Affect Managerial Ethics (continued)
– Organizational culture
• strong culture more influential than a weak culture
• high ethical standards result from a culture that is high
in risk tolerance, control, and conflict tolerance
– Issue intensity
• importance of an ethical issue
• more intense issues prompt greater ethical behaviour
5.26

DETERMINANTS OF ISSUE
INTENSITY (Exhibit 5.10)

MANAGERIAL ETHICS
(continued)
• Ethics in an International Context
– social and cultural differences determine
ethical and unethical behaviour
– Global Compact - United Nations
document containing principles for doing
business globally in the areas of human
rights, labour, and environment
5.28

THE GLOBAL COMPACTHuman Rights
Principle 1:support and respect the protection of international human rights within their
sphere of influence; and
Principle 2: make sure their own corporations are not complicit in human rights abuses.
Labour
Principle 3: freedom of association and the effective recognition of the right to collective
bargaining;
Principle 4: the elimination of all forms of forced and compulsory labour;
Principle 5: the effective abolition of child labour; and
Principle 6: the elimination of discrimination in respect of employment and occupation.
Environment
Principle 7: support a precautionary approach to environmental challenges;
Principle 8: undertake initiatives to promote greater environmental responsibility; and
Principle 9: encourage the development and diffusion of environmentally friendly
technologies.
5.29

MANAGERIAL ETHICS
(continued)
• Toward Improving Ethical Behaviour
– Comprehensive ethics programs have the
potential to improve an organization’s ethical
climate
– Employee selection - eliminate ethically
questionable applicants
– Codes of ethics - formal statement of an
organization’s primary values and ethical rules
5.30

MANAGERIAL ETHICS (continued)
• Toward Improving Ethical Behaviour (continued)
– Top management’s leadership - what they do is far
more important than what they say
– Job goals and performance appraisal - goals should be
clear and realistic and must focus on ethical standards
– Ethics training - an increasing number of organizations
use training to encourage ethical behaviour
– Independent social audits - evaluation of decisions in
relation to code of ethics
– Formal protective mechanisms - protect employees
who face ethical dilemmas
5.31

Chapter 6
DECISION MAKING:
THE ESSENCE OF
THE MANAGER’S
JOB 6.1© 2003 Pearson Education Canada Inc.

LEARNING OBJECTIVES
l You should be able to:
– Outline the steps in the decision-making process
– Explain why decision-making ability is so important for
a manager
– Describe the rational decision maker
– Contrast the perfectly rational and bounded rationality
approaches to decision making
– Explain the role that intuition plays in the decision-
making process
6.2

LEARNING OBJECTIVES
(continued)
l You should be able to: (continued)
– Identify the two types of decision problems and
the two types of decisions that are used to solve
them
– Differentiate the decision conditions of
certainty, risk, and uncertainty
– Describe the different decision-making styles
6.3

DECISION MAKING
• Decisions
– Choices from two or more alternatives
– All organizational members make decisions
• Decision-Making Process
– Step 1 - Identifying a Problem
• problem - discrepancy between an existing
and a desired state of affairs
6.4

DECISION MAKING (continued)
• Decision-Making Process (continued)
– Step 2 - Identifying Decision Criteria
• decision criteria - what’s relevant in making a
decision
– Step 3 - Allocating Weights to the Criteria
• must weight the criteria to give them appropriate
priority in the decision
– Step 4 - Developing Alternatives
• list the viable alternatives that could resolve the
problem without evaluating them
6.5

DECISION MAKING (continued)
• Decision-Making Process (continued)
– Step 5 - Analyzing Alternatives
• each alternative is evaluated against the criteria
– Step 6 - Selecting an Alternative
• choosing the best alternative from among those
considered
– Step 7 - Implementing the Decision
• implementation - conveying the decision to those
affected by it and getting their commitment to it
– Step 8 - Evaluating Decision Effectiveness
• determine whether the problem is resolved
6.6

THE DECISION-MAKING PROCESS
Identifying a
Problem
Identifying
the Decision
Criteria
Allocating
Weights
To Criteria
•Price
•Manufacturer and model
•Warranties
•Support
•Reliability
•Repair Record
•Reliability
•Service
•Warranty Period
•On-site Service
•Price
•Case Style
10
8
5
5
4
3
My sales
representatives
need new
computers.
6.3
6.7
Exhibit 6.1

Developing
Alternatives Fujitsu AST
Sharp IBM HP TI
NEC
Analyzing
Alternatives NEC
AST
HP
Fujitsu
IBM
Sharp
TI
Selecting an
Alternative
Implementing
Decision
Evaluation of
Decision Effectiveness
•Reliability
•Service
•Warranty Period
•On-site Service
•Price
•Case Style
The Fujitsu
is the best.
Compaq
Compaq
6.8
Exhibit 6.1
(continued)

ASSESSED VALUES OF NOTEBOOK COMPUTER
ALTERNATIVES AGAINST DECISION CRITERIA
(Exhibit 6.3)

EVALUATION OF LAPTOP COMPUTER
ALTERNATIVES AGAINST CRITERIAAND
WEIGHTS (Exhibit 6.4)

DECISIONS IN THE MANAGEMENT
FUNCTIONS (Exhibit 6.5)

THE MANAGER AS DECISION
MAKER
• Rational (Balance) Decision Making
– Decisions are consistent, value-maximizing choices
within specified constraints
– Managers assumed to make rational decisions
– Assumptions of Rationality - decision maker would:
– be objective and logical
– carefully define a problem
– have a clear and specific goal
– select the alternative that maximizes the likelihood of
achieving the goal
– make decision in the firm’s best economic interests
• Managerial decision making seldom meets all the tests

THE MANAGER AS
DECISION MAKER (continued)
• Bounded Rationality
– Behave rationally within the parameters of a
simplified decision-making process that is limited
by an individual’s ability to process information
– Accept solutions that are “good enough”
– Escalation of commitment - increased commitment
to a previous decision despite evidence that it may
have been wrong

THE MANAGER AS A
• Types of Problems and Decisions
– Well-Structured Problems - straightforward, familiar,
and easily defined
– Programmed Decisions - used to address structured
problems
• procedure - series of interrelated sequential steps used to
respond to a structured problem
• rule - explicit statement of what to do or not to do
• policy - guidelines or parameters for decision making

THE MANAGER AS A
• Decision-Making Styles
– Two dimensions define the approach to decision making
• way of thinking - differs from rational to intuitive (sensitive)
• tolerance for ambiguity - differs from a need for consistency
and order to the ability to process many thoughts
simultaneously
– Define four decision-making styles
• Directive - fast, efficient, and logical
• Analytic - careful and able to adapt or cope with new situations
• Conceptual - able to find creative solutions
• Behavioural - seek acceptance of decisions

DECISION-MAKING STYLES
(Exhibit 6.12)
Analytic
Directive Behavioural
Rational Intuitive
Way of Thinking
Conceptual
High
Low
ToleranceforAmbiguity

MANAGING WORKFORCE
DIVERSITY
• Diversity in Decision Making
– Advantages - diverse employees:
• provide fresh perspectives
• offer differing interpretations of problem definition
• increase the likelihood of creative and unique solutions
– Disadvantages - diverse employees:
• require more time to reach a decision
• may have problems of communication
• may create a more complex, confusing, and ambiguous
decision-making process
• may have difficulty in reaching agreement

Chapter 7
FOUNDATIONS
OF PLANNING

LEARNING OBJECTIVES
– Define planning
– Explain why managers plan
– Describe what role goals play in planning
– Distinguish among the different types of plans
– Tell how goals are established
– Describe the characteristics of well-designed goals
7.2

LEARNING OBJECTIVES
(continued)
• You should learn to:
– Identify three contingency factors in planning
– Explain the approaches to developing plans
– Discuss the criticisms of planning
– Describe what it takes to effectively plan in a
dynamic environment
7.3

WHAT IS PLANNING?
• Planning
– Involves defining the organization’s goals,
establishing an overall strategy for achieving
those goals, and developing a comprehensive
set of plans to integrate and coordinate
organizational work
– Informal planning - nothing is written down
– Formal planning - written
7.4

WHY DO MANAGERS PLAN?
• Purposes of Planning
– Planning is the primary management function that
establishes the basis for all other management functions
as it gives direction
– Planning establishes coordinated effort
– Planning reduces uncertainty
– Planning reduces overlapping and wasteful activities
– Planning establishes goals and standards used in
controlling
7.5

WHY DO MANAGERS PLAN?
(continued)
• Planning and Performance
– Generally speaking, formal planning is associated with
higher profits
– Quality of the planning process and the appropriate
implementation of the plans probably contribute more to
high performance than does the extent of planning
– External environment may undermine the effects of
formal planning
– Planning/performance relationship is influenced by the
planning time frame
7.6

HOW DO MANAGERS PLAN?
• The Role of Goals and Plans in Planning
– Goals - desired outcomes
• provide direction for all management
decisions
• represent the criteria against which actual
work accomplishments can be measured
– Plans - outline how goals are going to be met
7.7

STATED OBJECTIVES FROM
LARGE COMPANIES (Exhibit 7.1)
7.8

(continued)
• The Role of Goals and Plans in Planning (continued)
– Types of Goals
• all organizations have multiple objectives
• no single measure can evaluate whether an
organization is successful
• stated goals - official statements of the organization’s
goals
• real goals - those goals that an organization actually
pursues
7.9

(continued)
(continued)
– Types of Plans
• strategic plans - apply to the entire
organization
– establish organization’s overall goals
– seek to position the organization in terms of
its environment
• operational plans - specify the details of
how the overall goals are to be achieved
– tend to cover short time periods
7.10

TYPES OF PLANS
Breadth
Strategic
Operational
Time Frame
Long term
Short term
Specificity
Directional
Specific
Frequency
of Use
Single use
Standing
7.11

(continued)
• The Role of Goals and Plans in Planning (continued)
– Types of Plans (continued)
• long-term plans - time frame beyond three
years
• short-term plans - cover one year or less
• specific plans - clearly defined with little room
for interpretation
• directional plans - flexible plans that set out
general guidelines
7.12

SPECIFIC VERSUS DIRECTIONAL
PLANS (Exhibit 7.3)

HOW DO MANAGERS PLAN
(continued)
(continued)
– Types of Plans (continued)
• single-use plans - one-time plans
specifically designed to meet the needs of a
unique situation
• standing plans - ongoing plans that provide
guidance for activities performed repeatedly
7.14

(continued)
• Establishing Goals
– Approaches to Establishing Goals
• traditional goal setting - overall goals established at
the top of the organization
– overall goals broken down into sub-goals for
each level of the organization
• network of goals creates a means-ends chain
– sub-goals constrain subordinates’ behaviour
• assumes that top managers know what is
best for the organization
7.15

TRADITIONAL OBJECTIVE SETTING
(Exhibit 7.4)
Individual
Employee’s
Objective
Top
Management’s
Objective
Department
Manager’s
Objective
Division
Manager’s
Objective
“Increase profits, regardless
of the means”
“I want to see a
significant improvement
in this division’s profits”
“We need to improve
the company’s performance”
“Don’t worry about
quality: just work fast”

(continued)
• Establishing Goals (continued)
– Approaches to Establishing Goals (continued)
• management by objectives (MBO) - specific performance goals are
jointly determined by employees and their managers
– progress toward accomplishing these goals is periodically
reviewed
– rewards are allocated on the basis of this progress
– MBO consists of four elements
• goal specificity
• participative decision making
• explicit time period
• performance feedback
7.17

STEPS IN A TYPICAL MBO
PROGRAM (Exhibit 7.5)

(continued)
– Approaches to Establishing Goals (continued)
• management by objectives (continued)
– increases employee performance and
organizational productivity
– problems with MBO
• can be useless in times of dynamic change
• overemphasis on personal rather than
organizational goals
• may be viewed simply as an annual exercise in
paperwork
7.19

(continued)
– Characteristics of Well-Designed Goals
• written in terms of outcomes
• measurable and quantifiable
• clear as to a time frame
• challenging but attainable
• written down
• communicated to all organization members who need to
know the goals
7.20

(continued)
– Steps in Goal Setting
• 1 - Review the organization’s mission
• 2 - Evaluate available resources
• 3 - Determine the goals individually or with input
from others
• 4 - Write down the goals and communicate them
to all who need to know them
• 5 - Review results and whether goals are being
met
7.21

(continued)
• Developing Plans
– Contingency Factors in Planning
• level in the organization
– operational planning dominates
managers’ planning efforts at lower levels
– strategic planning more characteristic of
planning at higher levels
7.22

PLANNING IN THE HIERARCHY
OF ORGANIZATIONS (Exhibit 7.7)
Strategic
Planning
Operational
Planning
Top
Executives
Middle-Level
Managers
First-Level
Managers

(continued)
• Developing Plans (continued)
– Contingency Factors in Planning (continued)
• degree of environmental uncertainty
• length of future commitments
– commitment concept - plans should
extend far enough to meet those
commitments made when the plans were
developed
7.24

(continued)
– Approaches to Planning
• traditional, top-down approach
– planning done by top managers
– formal planning department - specialists whose
sole responsibility is to help to write
organizational plans
– plans flowed down to lower levels
– most effective if plan is a workable document
used by organizational members for direction
and guidance
7.25

(continued)
– Approaches to Planning (continued)
• inclusive approach
– employees at each level develop plans suited
to their needs
– employees acquire greater sense of the
importance of planning when they participate
in the process
– plans more likely to be used in directing and
coordinating work
7.26

CONTEMPORARY ISSUES IN
PLANNING
• Criticisms of Planning
1. Planning may create rigidity
• unwise to force a course of action when the environment
is fluid
2. Plans can’t be developed for a dynamic environment
• flexibility required in a dynamic environment
• can’t be tied to a formal plan
3. Formal plans can’t replace intuition and creativity
• mechanical analysis reduces the vision to some type of
programmed routine
7.27

PLANNING (continued)
• Criticisms of Planning (continued)
4. Planning focuses managers’ attention on today’s competition,
not on tomorrow’s survival
• plans concentrate on capitalizing on existing
business opportunities
• hinders managers who consider creating or
reinventing an industry
5. Formal planning reinforces success, which may lead
to failure
• success may breed failure in an uncertain
environment
7.28

PLANNING (continued)
• Effective Planning in Dynamic Environments
– develop plans that are specific, but flexible
– recognize that planning is an ongoing
process
– change directions if environmental
conditions warrant
– stay alert to environmental changes
7.29

Chapter 8
STRATEGIC
MANAGEMENT

LEARNING OBJECTIVES
– Explain the importance of strategic
management
– Describe the steps in the strategic
management process
– Explain SWOT analysis
– Differentiate corporate-, business-, and
functional-level strategies
8.2

LEARNING OBJECTIVES
(continued)
• You should be able to (continued):
– Explain what competitive advantage is
and why it’s important to organizations
– Describe the five competitive forces
– Identify the various competitive strategies
8.3

THE IMPORTANCE OF
STRATEGIC MANAGEMENT
• What Is Strategic Management?
– A set of managerial decisions and actions that determines
the long-run performance of an organization
• Purposes of Strategic Management
– Involved in many decisions that managers make
– Companies with formal strategic management systems
have higher financial returns than companies with no such
system
Important in profit and not-for-profit organizations
8.4

THE STRATEGIC
MANAGEMENT PROCESS
(Exhibit 8.1)
8.5

THE STRATEGIC
MANAGEMENT PROCESS
• Step 1: Identifying the Organization’s
Current Mission, Objectives, and Strategies
– Mission
• statement of the purpose of an organization
• important in profit and not-for-profit
organizations
• important to identify the goals currently in
place and the strategies currently being
pursued
8.6

COMPONENTS OF A MISSION
STATEMENT (Exhibit 8.2)
8.7

THE STRATEGIC
MANAGEMENT PROCESS
(continued)
• Step 2: Analyzing the Environment
– successful strategies are aligned with the environment
– examine both the specific and general environments
to determine what trends and changes are occurring
• 3. Identifying Opportunities and Threats
– opportunities - positive trends in the external
environmental
– threats - negative trends in the external environment
8.8

THE STRATEGIC
MANAGEMENT PROCESS
(continued)
• Step 4: Analyzing the Organization’s Resources
and Capabilities
– examine the inside of the organization
– available resources and capabilities always
constrain the organization in some way
– core competencies - major value-creating skills,
capabilities and resources that determine the
organization’s competitive weapons
8.9

THE STRATEGIC
MANAGEMENT PROCESS
(continued)
• Step 5: Identifying Strengths and Weaknesses
– Strengths - activities the organization does well or
any unique resource
– Weaknesses - activities the organization does not
do well or resources it needs but does not possess
– organization’s culture has its strengths and
weaknesses
– SWOT analysis - analysis of the organization’s
strengths, weaknesses, opportunities, and threats
8.10

IDENTIFYING THE
ORGANIZATION’S
OPPORTUNITIES (Exhibit 8.3)
Organization’s
Opportunities
Organization’s
Resources/Abilities
Opportunities in
the Environment

THE STRATEGIC
MANAGEMENT PROCESS
(continued)
• Step 6: Formulating Strategies
– Require strategies at the corporate, business, and
functional levels of the organization
– Strategy formulation follows the decision-making
process
• Step 7: Implementing Strategies
– A strategy is only as good as its implementation
• Step 8: Evaluating Results
– Control process to determine the effectiveness of a
strategy
8.12

TYPES OF ORGANIZATIONAL
STRATEGIES
• Corporate-Level Strategy
– Determines
• what businesses a company should be in or
wants to be in
• the direction that the organization is going
• the role that each business unit will play
8.13

LEVELS OF ORGANIZATIONAL
STRATEGY (Exhibit 8.4)

STRATEGIES (continued)
• Corporate-level Strategy (continued)
– Grand Strategy - Stability
• no significant change is proposed
• organization’s performance is satisfactory
• environment appears to be stable and
unchanging
8.15

• Corporate-level Strategy (continued)
– Grand Strategy - Growth
• seeks to increase the level of the organization’s operations
• related diversification - grow by merging with or acquiring
firms in different but related industries
• unrelated diversification - grow by merging with or
acquiring firms in different and unrelated industries
– Grand Strategy - Retrenchment - designed to address
organizational weaknesses that are leading to performance
declines
8.16

SWOT ANALYSIS AND GRAND
STRATEGIES (Exhibit 8.5)
Corporate
Growth
Strategies
Corporate
Stability
Strategies
Corporate
Retrenchment
Strategies
Abundant
Environmental
Opportunities
Critical
Environmental
Threats
Corporate
Stability
Strategies
Critical
Weaknesses
Valuable
Strengths
Environmental Status
FirmStatus

• Corporate-Level Strategy (continued)
– Corporate Portfolio Analysis - used when
corporate strategy involves a number of
business
• Boston Consulting Group (BCG) matrix--
strategy tool that guides resource allocation
decisions on basis of market share and
growth rate of SBU
8.18

THE BCG MATRIX (Exhibit 8.6)
Stars
Cash
Cows
Dogs
Question
Marks
Market Share
High Low
HighLow
Anticipated
Growth
Rate

• Corporate-Level Strategy (continued)
– BCG matrix (continued)
• strategic implications of the matrix
– cash cows - “milk”
– stars - require heavy investment
– question marks - attractive but hold a
small market share
– dogs - sold off or liquidated
8.20

• Business-Level Strategy
– Determines how an organization should compete in
each of its businesses
– Strategic business units - independent businesses that
formulate their own strategies
– Role of Competitive Advantage
• competitive advantage - sets an organization apart by
providing a distinct edge
– comes from the organization’s core competencies
– not every organization can transform core competencies into
a competitive advantage
– once created, must be able to sustain it
8.21

• Business-Level Strategy (continued)
– Competitive Strategies
• industry analysis based on five competitive forces
– Threat of new entrants - affected by barriers to
entry
– Threat of substitutes - affected by buyer loyalty
and switching costs
– Bargaining power of buyers - affected by number
of customers, availability of substitute products
8.22

– Competitive Strategies (continued)
• industry analysis based on five
competitive forces
– Bargaining power of suppliers - affected
by degree of supplier concentration
– Existing rivalry - affected by industry
growth rate, demand for firm’s product or
service, and product differences
8.23

Current Rivalry
Industry
Competitors
FORCES IN THE INDUSTRY
ANALYSIS (Exhibit 8.7)
Suppliers
New
Entrants
Buyers
Substitutes
Threat of
New Entrants
Threat of
Substitutes
Bargaining
Power or
Buyers
Bargaining
Power or
Suppliers

– Competitive strategies (continued)
• Porter’s three generic strategies
– cost leadership - goal is to become the
lowest-cost producer in the industry
– differentiation - offer unique products
that are widely valued by customers
– focus - aims at a cost advantage or
differentiation advantage in a narrow
segment
8.25

REQUIREMENTS FOR SUCCESSFULLY
PURSUING PORTER’S COMPETITIVE
STRATEGIES (Exhibit 8.8)
8.26

• Functional-Level Strategy
– used to support the business-level
strategy
– creates an appropriate supporting role for
each functional area of the organization
8.27

Chapter 9
PLANNING TOOLS
AND
TECHNIQUES

LEARNING OBJECTIVES
– Describe three techniques for assessing the
environment
– Describe four techniques for allocating
resources
– Tell why budgets are popular planning tools
– Differentiate Gantt and load charts
– Identify the steps in developing a PERT
network
9.2

LEARNING OBJECTIVES
(continued)
– State the factors that determine the breakeven
point
– Describe the requirements for using linear
programming
– Explain the concept of project management
– Tell how managers might use scenarios in
planning
9.3

TECHNIQUES FOR ASSESSING
THE ENVIRONMENT
• Environmental Scanning
– The screening of information to anticipate and
interpret changes in the environment
– Competitor intelligence - gathering information
about one’s competitors
– Global scanning - screening of information on
global forces that might affect an organization
that has global interests
9.4

THE ENVIRONMENT (continued)
• Forecasting
– Used to predict future events to facilitate
decision making
– Techniques
• quantitative - applies a set of mathematical rules to
a series of past data to predict outcomes
• qualitative - uses the judgment and opinions of
knowledgeable individuals to predict outcomes
9.5

FORECASTING TECHNIQUES
(Figure 9.1)
9.6

• Forecasting (continued)
– Effectiveness - managers have had mixed
success
• forecasts are most accurate in relatively stable
environments
• forecasts are relatively ineffective in predicting
nonseasonal events, unusual occurrences, and the
actions of competitors
• to improve forecasts - use simple forecasting
methods
9.7

• Benchmarking
– The search for the best practices in other organizations
that lead to superior performance
– Standard tool of many organizations in quest for
performance improvement
– Analyze and then copy the methods used by leaders in
various fields
– Important to identify appropriate targets for
benchmarking
– Organizations may share benchmarking information
9.8

STEPS IN BENCHMARKING
(Exhibit 9.2)
Form a benchmarking
planning team
Prepare and
implement
action plan
Gather internal and
external data
Analyze data to
identify performance
gaps
BEST
PRACTICES

TECHNIQUES FOR
ALLOCATING RESOURCES
• Resources
– The assets of the organization
– take many forms, including financial, physical,
human, intangible, and structural/cultural
• Budgeting
– Budgets - numerical plans for allocating
resources to specific activities
9.10

TYPES OF BUDGETS (Exhibit 9.4)
Cash Budget
Forecasts cash on hand and
how much will be
needed
Revenue Budget
Projects Future Sales Expense
Budget
Lists primary
activities
and allocates
dollar amount to
each
Profit Budget
Combines revenue and expense budgets of
various units to determine each unit’s profit
Variable Budget Fixed Budget
Takes into account Assumes fixed
the costs that vary level of sales
with volume or projection
9.11

TECHNIQUES FOR ALLOCATING
RESOURCES (continued)
9.12
• Budgeting (continued)
– Ways to improve budgeting process:
• Be flexible
• Goals should drive budgets
• Coordinate budgeting throughout the
organization
• Use budgeting/planning software when
appropriate
• Remember that budgets are tools
• Remember that profits result from smart
management, not because you budgeted for
them

9.13
• Scheduling
– Detailing what activities have to be done, the
order in which they are to be completed, who is
to do each, and when they are to be completed
– Gantt Charts
• show when tasks are supposed to be done
• actual and planned output over period of time

A GANTT CHART (Exhibit 9.6)
MonthActivity
Copyedit manuscript
Design sample pages
Draw artwork
Print galley proofs
Print page proofs
Design cover
1 432
Reporting DateGoals
Actual Progress

• Scheduling (continued)
– Load Charts - modified Gantt Chart
• schedule capacity by work areas
– vertical axis lists either entire departments or
specific resources
• allow managers to plan and control capacity
utilization
9.15

5
A LOAD CHART (Exhibit 9.7)
MonthEditors
Anne
Antonio
Kim
Maurice
Dave
Penny
1
Work scheduled
2 3 4 6

– PERT (Program Evaluation and Review
Technique) Network Analysis
• used to schedule complex projects
• flowchart diagram that depicts the sequence of
activities needed to complete a project
• indicates the time or costs associated with each
activity
• can compare the effects alternative actions might
have on scheduling and costs
9.17

– PERT (continued)
• events - end points that represent the completion of
major activities
• activities - time or resources required to progress
from one event to another
• slack time - amount of time an activity can be
delayed without delaying the entire project
• critical path - the most time-consuming sequence of
events and activities in a PERT network
9.18

STEPS IN DEVELOPING A
PERT NETWORK (Exhibit 9.8)
9.19

A PERT NETWORK FOR
CONSTRUCTING AN OFFICE
BUILDING (Exhibit 9.10)
A EB
D
F
C H
I
G
J K
Start
10 6 14
6
3
3 5
5 5
3
4
3
15
9.20© 2003 Pearson Education Canada

• Breakeven Analysis - used to determine
how many units must be sold to have
neither profit nor loss
– Used to make profit projections
– Points out relationships between revenues,
costs, and profits
9.21

BREAKEVEN ANALYSIS
(Exhibit 9.11)
$90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
Revenue/Cost($)
100 200 300 400 500 600
Output (in thousands)
Breakeven Point
Total Revenue
Total Costs
Loss
Area
Profit
Area
Variable
Costs
Fixed
Costs

• Breakeven Analysis (continued)
– P - unit price of product
– VC - variable cost per unit
– TFC - total fixed costs
– Fixed costs - costs that do not change as volume
increases
– Variable costs - costs that change in proportion to
output
9.23

• Linear Programming
– Mathematical technique that solve resource allocation
problems
– Requirements
• resources are limited
• outcome optimization is the goal
• alternative methods exist for combining resources to produce a
number of output mixes
• a linear relationship exists between variables
– technique has a variety of applications
9.24

CONTEMPORARY
PLANNING TECHNIQUES
• Project Management
– The task of getting a project’s activities done on
time, within budget, and according to
specifications
• project - a one-time-only set of activities that has a
definite beginning and ending point in time
– Standardized planning procedures often are not
appropriate for projects
9.25

CONTEMPORARY PLANNING
TECHNIQUES (continued)
• Project Management (continued)
– Project Management Process
• team created from appropriate work areas
• team reports to a project manager
• project manager coordinates activities
• team disbands when project is completed
9.26

PROJECT MANAGEMENT
PROCESS (Exhibit 9.14)Define
objectives
Establish
sequences
Identify activities
and resources
Compare with
objectives
Estimate time
for activities
Determine
project
completion date
Determine
additional
resource
requirements

• Project Management (continued)
– Role of the Project Manager
• role is affected by the one-shot nature of the
project
• role is difficult because team members still
linked to their permanent work areas
• managers must rely on their communication
skills and powers of persuasion
9.28

• Scenario Planning
– Scenario - an imagined sequence of future
events
– Contingency planning - “if this happens, then
these are the actions to take”
– Intent is to reduce uncertainty by playing out
potential situations under different specified
conditions
9.28

Chapter 10
ORGANIZATIONAL
STRUCTURE
AND DESIGN

LEARNING OBJECTIVES
– Define organizational structure and organizational
design
– Explain why structure and design are important to an
organization
– Describe the six key elements of organizational
structure
– Differentiate mechanistic and organic organizational
design
– Identify the four contingency factors that influence
organizational design
10.2

LEARNING OBJECTIVES
(continued)
– Describe a simple structure, a functional structure, and
a divisional structure
– Explain team-based structures and why organizations
are using them
– Describe matrix structures, project structures,
autonomous internal units, and boundaryless
organizations
– Explain the concept of a learning organization and how
it influences organizational design
10.3

DEFINING ORGANIZATIONAL
STRUCTURE
• Organizing - the process of creating an
organization’s structure
• Organizational structure - the formal
framework by which job tasks are divided,
grouped, and coordinated
• Organizational design - process of
developing or changing an organization’s
structure
10.4

KEY ELEMENTS
OF ORGANIZATIONAL DESIGN
Centralization and
Decentralization
Formalization
Work
Specialization
Chain
of Command
Departmentalization
Span
of Control
10.5

ELEMENTS OF
ORGANIZATIONAL DESIGN
• Work Specialization
– The degree to which tasks in an organization
are divided into separate jobs
– Too much specialization has created human
diseconomies
– An important organizing mechanism, though
not a source of ever-increasing productivity
10.6

ELEMENTS OF
(continued)
• Departmentalization
– The basis by which jobs are grouped together
• functional - groups jobs by functions performed
• geographical - groups jobs on the basis of territory
or geography
• product - groups jobs by product line
• process - groups jobs on the basis of product or
customer flow
• customer - groups jobs on the basis of common
customers
10.7

ELEMENTS OF
(continued)
• Departmentalization (continued)
– Large organizations combine most or all forms
of departmentalization
– Trends
• customer departmentalization is increasingly being
used
– better able to monitor and respond to customer
needs
– cross-functional teams are becoming popular
10.8

FUNCTIONAL
DEPARTMENTALIZATION
(Exhibit 10.2)
Manager,
Engineering
Manager,
Manufacturing
Manager,
Human Resources
Manager,
Purchasing
Manager,
Accounting
Plant Manager

GEOGRAPHICAL
DEPARTMENTALIZATION
(Exhibit 10.2)
Sales Director,
Western Region
Sales Director,
Southern Region
Sales Director,
Eastern Region
Vice President
for Sales
Sales Director,
Midwestern Region

PRODUCT DEPARTMENTALIZATION
(Exhibit 10.2)
Mass Transit
Division
Bombardier-Rotax
(Vienna)
Mass Transit
Sector
Recreational Products
Division
Logistic Equipment
Division
Industrial Equipment
Division
Bombardier-Rotax
(Gunskirchen)
Recreational and Utility
Vehicles Sector
Rail Products
Sector
Bombardier, Ltd.

PROCESS DEPARTMENTALIZATION
(Exhibit 10.2)
Assembling
Department
Manager
Plant
Superintendent
10.12
Sawing
Department
Manager
Planning
and Milling
Department
Lacquering
and Sanding
Department
Manager
Finishing
Department
Manager
Inspection
and Shipping
Department
Manager

CUSTOMER
DEPARTMENTALIZATION
(Exhibit 10.2)
Manager,
Retail Accounts
Director
Of Sales
Manager,
Wholesale Accounts
Manager,
Government Accounts

ELEMENTS OF
(continued)
• Chain of Command
– Continuous line of authority that extends from upper
organizational levels to the lowest levels and clarifies who
reports to whom
– authority - the rights inherent in a managerial position to tell
people what to do and to expect them to do it
• responsibility - the obligation to perform any assigned duties
• unity of command - a person should report to only one manager
– These concepts are less relevant today due to information
technology and employee empowerment
10.14

ELEMENTS OF
(continued)
• Span of Control
– Number of employees that a manager can efficiently
and effectively manage
– Determines the number of levels and managers in an
organization
– The wider the span, the more efficient the
organization
10.15

CONTRASTING SPANS OF
CONTROL (Exhibit 10.3)
1
4
16
64
256
1024
4096
1
8
64
512
4096
Span of 4
Operatives = 4,096
Managers (levels 1-6) =
1,365
Assuming Span of 4
Assuming Span of 8
Span of 8
Operatives = 4,096
Managers (levels 1-4) = 585
1
2
3
4
5
6
7
1
2
3
4
5
10.16

ELEMENTS OF
(continued)• Centralization
– The degree to which decision making is concentrated at
a single point in the organization
• Decentralization
– The degree to which decisions are made by lower-level
employees
– Distinct trend toward decentralized decision making
10.17

FACTORS INFLUENCING DEGREE
OF CENTRALIZATION OR
DECENTRALIZATION (Exhibit 10.4)
10.18

ELEMENTS OF
(continued)
• Formalization
– The degree to which jobs within the
organization are standardized
– Extent to which employee behaviour is guided
by rules and procedures
10.19

DECISIONS
• Mechanistic Organization
– Rigidly and tightly controlled structure
– Tries to minimize the impact of differing human traits
– Most large organizations have some mechanistic
characteristics
• Organic Organization
– Highly adaptive and flexible structure
– Permits organization to change when the need arises
– Employees are highly trained and empowered to handle
diverse job activities
– Minimal formal rules and little direct supervision
10.20

MECHANISTIC VERSUS
ORGANIC STRUCTURES
Mechanistic Organic
• High Specialization
• Rigid Departmentalization
• Clear Chain of Command
• Narrow Spans of Control
• Centralization
• High Formalization
• Cross-Hierarchical Teams
• Free Flow of Information
• Wide Spans of Control
• Decentralization
• Low Formalization
10.21

DECISIONS (continued)
• Contingency Factors
– Strategy and Structure - structure should
facilitate the achievement of goals
– Size and Structure - size affects structure at a
decreasing rate
10.22

• Contingency Factors (continued)
– Technology and Structure
• unit production - production of items in units or
small batches
• mass production - production of items in large
batches
• process production - production of items in
continuous process
– Mechanistic structure supports routine
technology
– Organic structure supports non-routine
technology
10.23

TECHNOLOGY, STRUCTURE, AND
EFFECTIVENESS (Exhibit 10.6)
Mass
Production
Moderate vertical
differentiation
High horizontal
differentiation
High formalization
Process
Production
High vertical
differentiation
Low horizontal
differentiation
Low formalization
Unit
Production
Low vertical
differentiation
Low horizontal
differentiation
Low formalization
Structural
Characteristics
Most effective
structure
Organic Mechanistic Organic

• Contingency Factors (continued)
– Environmental Uncertainty and Structure
• one way to reduce environmental uncertainty is
to adjust the organization’s structure
– with greater stability, mechanistic structures
are more effective
– the greater the uncertainty, the greater the
need for an organic structure
– organizations are being designed to be more
organic nowadays
10.25

COMMON
ORGANIZATIONAL DESIGNS
• Traditional Organizational Designs
– Simple Structure - low departmentalization,
wide spans of control, authority centralized in a
single person, and little formalization
– Functional Structure - groups similar or
related occupational specialties together
– Divisional Structure - composed of separate
divisions
10.26

COMPARISON OF COMMON
TRADITIONAL DESIGNS (Figure 10.7)
10.27

COMMON ORGANIZATIONAL
DESIGNS (continued)
• Contemporary Organizational Designs
– Team-Based Structures - entire
organization is made up of work teams
• employee empowerment is crucial
• teams responsible for all work activity and
performance
• complements functional or divisional
structures in large organizations
10.28

DESIGNS (continued)
(continued)
– Matrix Structure - assigns specialists from different
functional departments to work on projects led by
project managers
• adds vertical dimension to the traditional horizontal
functional departments
• creates a dual chain of command
10.29

A MATRIX ORGANIZATION IN AN
AEROSPACE FIRM (Exhibit 10.8)

DESIGNS (continued)
(continued)
– Project Structure - employees work
continuously on projects
• employees do not return to a functional
department at the conclusion of a project
• all work performed by teams comprised of
employees with appropriate skills and abilities
• tends to be very fluid and flexible
10.31

DESIGNS (continued)
(continued)
– Autonomous Internal Units –
independent, decentralized business units
• each has its own products, clients,
competitors, and profit goals
• business units are autonomous
10.32

DESIGNS (continued)
• Contemporary Organizational Designs (continued)
– Boundary less Organization - design is not defined by, or
limited to, the horizontal, vertical, or external boundaries
imposed by a predefined structure
• strategic alliances break down barriers between the company and its
customers and suppliers
• seeks to eliminate the chain of command, to have limitless spans of
control, and to replace departments with empowered teams
• flattens the hierarchy by removing vertical boundaries
• horizontal boundaries removed by organizing work around processes
instead of functional departments
10.33

DESIGNS (continued)
• Contemporary Organizational Designs (continued)
– Learning Organization - an organizational mind-set rather
than a specific organizational design
• has developed the capacity to continuously adapt
• all members take an active role in identifying and resolving
work-related issues
• practice knowledge management by continually acquiring
and sharing new knowledge
• environment is conducive to open communication
• empowered teams are important
• leadership creates a shared vision for the future
• organizational culture provides sense of community
10.34

CHARACTERISTICS OF A LEARNING
ORGANIZATION (Exhibit 10.9)
Organizational Design
• Boundaryless
• Teams
• Empowerment
Organizational Culture
• Strong Mutual
Relationships
• Sense of Community
• Caring
• Trust
Information Sharing
• Open
• Timely
• Accurate
Leadership
• Shared Vision
• Collaboration
The
Learning
Organization

Chapter 11
MANAGERIAL
COMMUNICATION
AND INFORMATION
TECHNOLOGY

LEARNING OBJECTIVES
– Define communication
– Explain the interpersonal communication process
– Describe the criteria on which the different
communication methods can be evaluated and on what
the choice of communication method depends
– Explain how nonverbal communication affects
managers
11.2

LEARNING OBJECTIVES
(continued)
• You should learn to:
– Explain the barriers to effective interpersonal
communication and how to overcome them
– Contrast the different organizational communication
flows and networks
– Describe two developments in information technology
that have had a significant impact on managerial
communication
– Discuss how information technology affects
organizations
11.3

UNDERSTANDING MANAGERIAL
COMMUNICATIONS
• What is Communication?
– The transfer and understanding of meaning
– Everything that a manager does involves
communicating
– Interpersonal communication - occurs
between people
– Organizational communication - all the
patterns, networks, and systems of
communication in an organization
11.4

PROCESS OF INTERPERSONAL
COMMUNICATION
• Message - a purpose to be conveyed
• Encoding - converting the message in
symbolic form
• Channel - medium a message travels along
• Decoding - retranslating a sender’s message
• Noise - disturbances that interfere with the
transmission, receipt, or feedback of a
message
11.5

THE INTERPERSONAL
COMMUNICATION PROCESS
(Exhibit 11.1)
Sender
Message Medium Receiver
Encoding Noise
Feedback
Message
Decoding

COMMUNICATION (continued)
• Methods of Communicating Interpersonally
– A wide variety of communication
methods exist
– Choice of a method should reflect:
– the needs of the sender
– the needs of the receiver
– the attributes of the message
– the attributes of the channel
11.7

EVALUATING COMMUNICATION
METHODS
1. Feedback - how quickly can the receiver respond to the message?
2. Complexity capacity - can the method effectively process complex messages?
3. Breadth potential - how many different messages can be transmitted using this
method?
4. Confidentiality - can communicators be reasonably sure their messages are received
only by those intended?
5. Encoding ease - can sender easily and quickly use this channel?
6. Decoding ease - can receiver easily and quickly decode messages?
7. Time-space constraint - do senders and receivers need to communicate at the same
time and in the same space?
8. Cost - how much does it cost to use this method?
9. Interpersonal warmth - how well does this method convey interpersonal warmth?
10. Formality - does this method have the needed amount of formality?
11. Scanability - does this method allow the message to be easily browsed or scanned
for relevant information?
12. Time of consumption - does sender or receiver exercise the most control over when
the message is dealt with?

COMPARISON OF
COMMUNICATION METHODS
(Exhibit 11.2)
11.9

• Methods of Communicating Interpersonally
(continued)
– Nonverbal communication - communication
without words
• body language - gestures, facial expressions,
and other body movements that convey
meaning
• verbal intonation - emphasis given to words
or phrases that conveys meaning
• nonverbal component usually carries the
greatest impact
11.10

• Barriers to Effective Interpersonal
Communication
– Filtering - the deliberate manipulation of
information to make it appear more favourable
to the receiver
– Selective Perception - what people see or hear
on the basis of their interests, background,
experience, and attitudes
11.11

Communication (continued)
– Emotions - interpretation of a message
affected by the way the receiver feels
– Information Overload - information
available exceeds processing capacity
11.12

Communication (continued)
– Defensiveness - behaviours that result from
feeling threatened
– Language - meaning of words differs among
people with diverse backgrounds
• jargon - specialized terminology used by a group
– National Culture - cultural values affect the
way people communicate
11.13

Introduction to Management by shas production

Introduction to Management by shas production

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (20)

Similar to Introduction to Management by shas production

Similar to Introduction to Management by shas production (20)

More from Shas Productions

More from Shas Productions (17)

Recently uploaded

Recently uploaded (20)

Introduction to Management by shas production