midterm multiple choice

13 true or false questions

12 multiple choices

its a business organization class

ill post the 11 chapters though powerpoint

and everything should be in there

this is the instructions and the link of the midterm

Hello Class,

There are 12 M/C and 13 T/F Questions in this midterm. You have 35 minutes to take the exam. Please remember that once you begin, you must finish the exam. Also, you cannot go backwards. Please use your books and notes, but not each other.

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This exam is 24/7… and may be taken now through Monday evening 11:50 PM

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PowerPoint Presentation by Charlie Cook
The University of West Alabama

Justify the importance of history and theory to management, and discuss precursors to modern management theory.
Summarize and evaluate the classical perspective on management, including scientific and administrative management, and note its relevance to contemporary managers.
Summarize and evaluate the behavioral perspective on management, including the Hawthorne studies, the human relations movement, and organizational behavior, and note its relevance to contemporary managers.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–2

Learning Objectives

Summarize and evaluate the quantitative perspective on management, including management science and operations management, and note its relevance to contemporary managers.
Discuss the systems and contingency approaches to management, and explain their potential for integrating the other areas of management.
Identify and describe contemporary management issues and challenges.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–3

Learning Objectives (cont’d)

The Importance of Theory and History
Why Use Theories?
Theories provide conceptual frameworks for organizing knowledge and blueprints for actions.
Management theories are grounded in reality.
Managers develop their own theories about how they should run their organizations.
Why Study History?
Understanding history aids managers in the development of management practices and in avoiding the past mistakes of others.
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2–4

Early Management Pioneers
Robert Owen (1771–1858)
British industrialist who recognized the importance of human resources and implemented better working conditions through reduced child labor, meals, and shorter hours.
Charles Babbage (1792–1871)
English mathematician who focused on creating efficiencies of production through the division of labor, management and labor cooperation, and application of mathematics to management problems.
Wrote “On the Economy of Machinery and Manufactures.”
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–6

Classical Management Perspective
Consists of Two Different Viewpoints:
Scientific Management
Concerned with improving the performance
of individual workers (i.e., efficiency).
Grew out of the industrial revolution’s labor shortage at the beginning of the twentieth century.
Administrative Management
A theory that focuses on managing
the total organization.

Scientific Management
Frederick Taylor (1856–1915)
Replaced rule-of-thumb methods with scientifically-based work methods to eliminate “soldiering.”
Believed in selecting, training, teaching, and developing workers.
Used time studies, standards planning, exception rule, slide-rules, instruction cards, and incentive piece-work pay systems to control and motivate employees.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–8

Other Scientific Management Pioneers
Frank and Lillian Gilbreth
Reduced the number of movements in bricklaying, resulting in increased output of 200%.
Henry Gantt
Was an early associate of Fredrick Taylor.
Developed the Gantt chart to improve working efficiency through planning and scheduling.
Harrington Emerson
Advocated job specialization in both managerial and operating jobs.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–10

Classical Management Perspective (cont’d)
Administrative Management Theory
Focuses on managing the total organization rather than individuals.
Henri Fayol
Wrote “General and Industrial Management.”
Helped to systematize the practice of management.
Was first to identify the specific management functions of planning, organizing, leading, and controlling.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–11

Classical Management Proponents
Lyndall Urwick
Focused on synthesizing and integrating the work of other classical management theorists.
Max Weber
His theory of bureaucracy posits a rational set of guidelines for structuring organizations.
Chester Barnard
Wrote “The Functions of the Executive.”
Proposed a theory of the acceptance of authority (by subordinates) as the source of power and influence for managers.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–12

Classical Management Today
Contributions
Laid foundation for later theoretical developments.
Identified management processes, functions, and skills.
Focused attention on management as a valid subject of scientific inquiry.
Limitations
More appropriate approach for use in traditional, stable, simple organizations.
Prescribed universal procedures that are not appropriate in some settings.
Employees viewed as tools rather than as resources.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–13

General
Summary The classical management perspective had two primary thrusts. Scientific management focused on employees within organizations and on ways to improve their productivity. Noted pioneers of scientific management were Frederick Taylor, Frank and Lillian Gilbreth, Henry Gantt, and Harrington Emerson. Administrative management focused on the total organization and on ways to make it more efficient and effective. Prominent administrative management theorists were Henri Fayol, Lyndall Urwick, Max Weber, and Chester Barnard.
Contributions Laid the foundation for later developments in management theory.
Identified important management processes, functions, and skills that are still recognized today.
Focused attention on management as a valid subject of scientific inquiry.
Limitations More appropriate for stable and simple organizations than for today’s dynamic and complex organizations.
Often prescribed universal procedures that are not appropriate in some settings. Even though some writers (such as Lillian Gilbreth and Chester Barnard) were concerned with the human element, many viewed employees as tools rather than resources.

Behavioral Management Perspective
Behavioral Management
Emphasized individual attitudes and behaviors, and group processes.
Recognized the importance of behavioral processes in the workplace.
Hugo Münsterberg (1863–1916)
Is considered the father of industrial psychology.
Wrote “ Psychology and Industrial Efficiency.”
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2–15

Management Challenge Question
How are Münsterberg’s decisional roles for managers—
entrepreneur
disturbance handler
negotiator
—interrelated?
Working with opposing parties to develop new approaches that allow them to reach an agreement.
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2–16

The Hawthorne Studies
Conducted by Elton Mayo and associates at Western Electric (1927–1935)
Intended as a group study of the effects of a piecework incentive plan on production workers.
Workplace lighting changes unexpectedly affected both control and experimental groups.
Workers established informal levels of acceptable individual output; over-producing workers (“rate busters”) and under-producing workers (“chiselers”).
Interview program
Confirmed importance of human behavior in the workplace.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–17

Behavioral Management Evolves
The Human Relations Movement
Grew out of the Hawthorne studies.
Proposed that workers respond primarily to the social context of work, including social conditioning, group norms, and interpersonal dynamics.
Assumed that the manager’s concern for workers would lead to increased worker satisfaction and improved worker performance.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–18

Human Relations Proponents
Abraham Maslow
Advanced a theory that employees are motivated by a hierarchy of needs that they seek to satisfy.
Douglas McGregor
Proposed Theory X and Theory Y concepts of managerial beliefs about people and work.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–19

Theory X
Assumptions People do not like work and try to avoid it.
People do not like work, so managers have to control, direct, coerce, and threaten employees to get them to work toward organizational goals.
People prefer to be directed, to avoid responsibility, and to want security; they have little ambition.
Theory Y
Assumptions People do not naturally dislike work; work is a natural part of their lives.
People are internally motivated to reach objectives to which they are committed.
People are committed to goals to the degree that they receive personal rewards when they reach their objectives.
People will both seek and accept responsibility under favorable conditions.
People have the capacity to be innovative in solving organizational problems.
People are bright, but under most organizational conditions their potential is underutilized.

Emergence of Organizational Behavior
Focuses on behavioral perspectives of management.
Draws on psychology, sociology, anthropology, economics, and medicine.
Important organizational behavior topics:
Job satisfaction and job stress
Motivation and leadership
Group dynamics and organizational politics
Interpersonal conflict
The design of organizations
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–21

Behavioral Management Today
Contributions
Provided insights into motivation, group dynamics, and other interpersonal processes.
Focused managerial attention on these critical processes.
Challenged the view that employees are tools and furthered belief that employees are valuable resources.
Limitations
Complexity of individuals makes behavior difficult to predict.
Concepts are not used because managers are reluctant to adopt them.
Research findings are not often communicated to practicing managers in an understandable form.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–22

General
Summary Focuses on employee behavior in an organizational context. Stimulated by the birth of industrial psychology, the human relations movement supplanted scientific management as the dominant approach to management in the 1930s and 1940s. Prominent contributors to this movement were Elton Mayo, Abraham Maslow, and Douglas McGregor. Organizational behavior, the contemporary outgrowth of the behavioral management perspective, draws from an interdisciplinary base and recognizes the complexities of human behavior in organizational settings.
Contributions Provided important insights into motivation, group dynamics, and other interpersonal processes in organizations.
Focused managerial attention on these same processes.
Challenged the view that employees are tools and furthered the belief that employees are valuable resources.
Limitations The complexity of individual behavior makes prediction of that behavior difficult. Many behavioral concepts have not yet been put to use because some managers are reluctant to adopt them.
Contemporary research findings by behavioral scientists are often not communicated to practicing managers in an understandable form.

The Quantitative Management Perspective
Quantitative Management Uses
Helped World War II Allied forces manage logistical problems.
Focuses on decision making, economic effectiveness, mathematical models, and the use of computers to solve quantitative problems.
Management Science
Focuses on the development of representative mathematical models to assist with decisions.
Operations Management
The practical application of management science to efficiently manage the production and distribution of products and services.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–24

Quantitative Management Today
Contributions
Sophisticated quantitative techniques can assist managers in decision making.
Application of its models has increased awareness and understanding of complex processes and situations.
It is useful in planning and controlling processes.
Limitations
It cannot fully explain or predict behavior of people in organizations.
Mathematical sophistication may come at the expense of other managerial skills.
Its models may require unrealistic or unfounded assumptions, limiting their general applicability.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–25

General
Summary Focuses on applying mathematical models and processes to management situations. Management science deals specifically with the development of mathematical models to aid in decision making and problem solving. Operations management focuses more directly on the application of management science to organizations. Management information systems are developed to provide information to managers.
Contributions Developed sophisticated quantitative techniques to assist in decision making.
Application of models has increased our awareness and understanding of complex organizational processes and situations.
Has been very useful in the planning and controlling processes.
Limitations Cannot fully explain or predict the behavior of people in organizations.
Mathematical sophistication may come at the expense of other important skills.
Models may require unrealistic or unfounded assumptions.

Integrating Perspectives for Managers
Systems Perspective
A system is an interrelated set of elements functioning as a whole.
Open system
An organization that interacts with its external environment.
Closed system
An organization that does not interact with its environment.
Subsystems
The importance of subsystems is due to their interdependence on each other within the organization.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–27

Systems Perspective Concepts
Concept of Synergy
Subsystems are more successful working together in a cooperative and coordinated fashion than working alone.
The whole system (subsystems working together as one system) is more productive and efficient than the sum of its parts.
Concept of Entropy
A normal process in which an organizational system declines due to its failing to adjust to change in its environment
Entropy can be avoided and the organization re-energized through organizational change and renewal.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–29

Management Perspectives Compared
Universal Perspective
Includes the classical, behavioral, and quantitative approaches.
Attempted to identify the “one best way” to manage organizations.
Contingency Perspective
Suggests that each organization is unique.
Appropriate managerial behavior for managing an organization depends (is contingent) on the current situation in the organization.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–30

Modern Management Today
An Integrating Framework
Is a complementary way of thinking about theories of management.
Involves recognition of current system and subsystem interdependencies, environmental influences, and the situational nature of management.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–31

Contemporary Applied Perspectives Authors
William Ouchi’s “Theory Z”
Peters and Waterman’s “In Search of Excellence”
Biographies—Warren Buffet, Jack Welch
Authors: Senge, Covey, Peters, Collins, Porter, Kotter, and Hamel
Malcolm Gladwell’s series: The Tipping Point, Blink, Outliers
Scott Adams’ Dilbert
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2–34

Contemporary Issues and Challenges
A sluggish and worrisome economy that limits growth
Management of an increasingly diverse workforce
Employee privacy
Technology that promotes telecommuting
The role of the Internet in business strategy
Operating and competing in diverse global markets
Ethics in corporate governance and social responsibility
Quality as the basis for competition, increased productivity, and lower costs
The shift toward a service economy
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
2–35

KEY TERMS
theory
classical management perspective
scientific management
soldiering
administrative management
behavioral management perspective
Theory X and Theory Y
human relations movement
organizational behavior

quantitative management perspective
management science
operations management
system
closed system
subsystem
synergy
entropy
contingency perspective
2–36
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PowerPoint Presentation by Charlie Cook
The University of West Alabama

Describe the nature of management, define management and managers, and characterize their importance to contemporary organizations.
Identify and briefly explain the four basic management functions in organizations.
Describe the kinds of managers found at different levels and in different areas of the organization.
Identify the basic managerial roles that managers play and the skills they need to be successful.
Discuss the science and the art of management, describe how people become managers, and summarize the scope of management in organizations.
Characterize the new workplace that is emerging in organizations today.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–2

Learning Objectives

What Is an Organization?
A group of people working together in a structured and coordinated fashion to achieve a set of goals.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–3

Types of Organizational Resources
Physical Resources
Human Resources
Information Resources
Financial Resources
Organizational
Resources
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1–4

Managers are responsible for combining and coordinating human, financial, physical, and information resources to achieve the organization’s goals.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–4
Management 11e
Griffin

Organizational Resources
Human resources
Managerial talent and labor
Financial resources
Capital investments to support ongoing and long-term operations
Physical resources
Raw materials; office and production facilities, and equipment
Information resources
Usable data, information linkages
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–5

Organization resources include human, financial., physical, and information resources.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–5
Management 11e
Griffin

Organization Human
Resources Financial
Resources Physical Resources Information Resources
Royal Dutch/ Shell Group Drilling platform workers
Corporate executives Profits
Stockholder investments Refineries
Office buildings Sales forecasts
OPEC proclamations
Michigan State University Faculty
Administrative staff Alumni contributions
Government grants Computers
Campus facilities Research reports
Government publications
New York City Police officers
Municipal employees Tax revenue
Government grants Sanitation equipment
Municipal buildings Economic forecasts
Crime statistics
Susan’s Corner Grocery Store Grocery clerks
Bookkeeper Profits
Owner investment Building
Display shelving Price lists from suppliers
Newspaper ads
for competitors

Examples of resources used by managers in four very different kinds of organizations are shown in Table 1.1.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–6
Management 11e
Griffin

What is Management?
A set of activities
planning and decision making, organizing, leading, and controlling
directed at an organization’s resources
human, financial, physical, and information
with the aim of achieving organizational goals in an efficient and effective manner.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–7

1–8
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1.1 Management in Organizations

The Basic Purpose of Management
EFFICIENTLY
Using resources wisely and in a cost-effective way
EFFECTIVELY
Making the right decisions and
successfully implementing them
And
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1–9

What is a Manager?
Someone whose primary responsibility is to carry out the management process.
Plans and makes decisions, organizes, leads, and controls human, financial, physical, and information resources.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–10

The Manager’s Job
Plan:
A manager cannot operate effectively unless he or she has long range plans.
Organize
When there is more than one employee needed to carry out a plan, then organization is needed.
Control
Develop a method to know how well employees are performing to determine what has been and what still must be done.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–11

1–12
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1.2 The Management Process

The Management Process
Planning and Decision Making:
Determining goals and courses of action
Organizing:
Coordinating activities and resources
Leading:
Motivating and managing people
Controlling:
Monitoring and evaluating activities
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–13

1–14
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1.3 Kinds of Managers by Level and Area

Kinds of Managers by Level
Top Managers
are the small group of executives who manage the overall organization. They create the organization’s goals, overall strategy, and operating policies.
Middle Managers
are primarily responsible for implementing the policies and plans of top managers. They also supervise and coordinate the activities of lower level managers.
First-Line Managers
supervise and coordinate the activities of operating employees.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–15

Kinds of Managers by Area
Human Resources
Managers
Administrative
Managers
Specialist
Managers
Kinds of
Managers
by Area
Marketing
Managers
Financial
Managers
Operations
Managers
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1–16

Kinds of Managers by Area
Marketing Managers
work in areas related to getting consumers and clients to buy the organization’s products or services—new product development, promotion, and distribution.
Financial Managers
deal primarily with an organization’s financial resources—accounting, cash management, and investments.
Operations Managers
are involved with systems that create products and services—production control, inventory, quality control, plant layout, site selection.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–17

Kinds of Managers by Area (cont’d)
Human Resources Managers
are involved in human resource activities.
Administrative Managers
are generalists familiar with all functional areas of management and are not associated with any particular management specialty.
Other Kinds of Managers
hold specialized managerial positions (e.g., public relations managers) directly related to the needs of the organization.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–18

Basic Managerial Roles and Skills
Regardless of level or area, all managers must play certain roles and exhibit specific skills in order to be successful.
Managers:
Do certain things.
Meet certain needs.
Have certain responsibilities.
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1–19

Lights, Roll Camera, Manage !!!
Interpersonal
Roles
Informational
Roles
Managerial
Roles
Decisional
Roles
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1–20

Managerial Roles (Mintzberg)
Interpersonal Roles
Figurehead, leader, and liaison roles involve dealing with other people.
Informational Roles
Monitor, disseminator, and spokesperson roles involve the processing of information.
Decisional Roles
Entrepreneur, disturbance handler, resource allocator, and negotiator are managerial roles primarily related to making decisions.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–21

Category Role Sample Activities
Interpersonal Figurehead Attending ribbon-cutting ceremony for new plant
Leader Encouraging employees to improve productivity
Liaison Coordinating activities of two project groups
Informational Monitor Scanning industry reports to stay abreast of developments
Disseminator Sending memos outlining new organizational initiatives
Spokesperson Making a speech to discuss growth plans
Decisional Entrepreneur Developing new ideas for innovation
Disturbance handler Resolving conflict between two subordinates
Resource allocator Reviewing and revising budget requests
Negotiator Reaching agreement with a key supplier or labor union

What Skills Do Managers Need?
Technical
Conceptual
Communication
Time Management
Decision
Making
Diagnostic
Interpersonal
Fundamental
Management Skills
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1–23

Managerial Skills
Technical
To accomplish or understand the specific kind of work being done in an organization.
Interpersonal
To communicate with, understand, and motivate both individuals and groups.
Conceptual
To think in the abstract.
Diagnostic
To visualize the appropriate response to a situation.
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1–24

Managerial Skills (cont’d)
Communication
To convey ideas and information effectively to others and to receive the same effectively from others.
Decision-Making
To recognize and define problems and opportunities and then to select an appropriate course of action to solve problems and capitalize on opportunities.
Time-Management
To prioritize work, to work efficiently, and to delegate appropriately.
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1–25

Management: Science or Art?
The Science of Management
Assumes that problems can be approached using rational, logical, objective, and systematic ways.
Requires the use of technical, diagnostic, and decision-making skills and techniques to solve problems.
The Art of Management
Making decisions and solving problems using a blend of intuition, experience, instinct, and personal insights.
Using conceptual, communication, interpersonal, and time-management skills to accomplish the tasks associated with managerial activities.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–26

Management Challenge Question
What do you say to your boss when your boss wants you to make the numbers fit the forecast?
What do you want the numbers to be?
Which numbers are right? which are wrong?
No problem. If anyone asks, I’ll say that I deferred to your judgment and am using your numbers.
What are the consequences if I refuse to do that?
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–27

1–28
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1.4 Sources of Management Skills

The Scope of Management
For-Profit Organizations
Large businesses
Industrial firms, commercial banks, insurance firms, retailers, transportation firms, utilities, communication firms, service organizations
Small businesses and start-up businesses
International management
Not-for-Profit Organizations
Governmental organizations—local, state, and federal
Educational organizations—public and private schools, colleges, and universities
Healthcare facilities—public hospitals and HMOs
Nontraditional settings—community, social, spiritual groups
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–29

You’re the Manager
The Situation:
The group manager that you replacing has remained on job for a short time to train you, however he did not actively involve you in daily operations. He departs permanently after today’s meeting.
Morale is low because the group manager has been running a one-person show with no significant delegation or participation by other employees.
The overall performance of the group appears to be far below its current capabilities.
What will you do first?
After that, what will you do next?
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
1–30

organization
management
effective
efficient
manager
decision making
organizing
leading
controlling
levels of management
areas of management
interpersonal roles
informational roles
decisional roles
technical skills
interpersonal skills
conceptual skills
diagnostic skills
communication skills
decision-making skills
time-management skills
1–31
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PowerPoint Presentation by Charlie Cook
The University of West Alabama

Discuss the nature of the organizational environment and identify the environments of interest to most organizations.
Describe the components of the general and task environments and discuss their impact on organizations.
Identify the components of the internal environment and discuss their impact on organizations.
Discuss the importance and determinants of an organization’s culture and how the culture can be managed.
Identify and describe how the environment affects organizations and how organizations adapt to their environment.
Describe the basic models of organizational effectiveness and identify contemporary examples of highly effective firms.
3–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives

Management 11e
Griffin
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3–2

The Organization’s Environments
External Environment
General environment
Everything outside an organization’s boundaries—economic, legal, political, socio-cultural, international, and technical forces.
Task environment
Specific groups and organizations that affect the firm.
Internal Environment
Conditions and forces present and at work within an organization.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3–3

3–4
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3.1 The Organization and Its Environments

The External Environment
The General Environment
The set of broad dimensions and forces in an organization’s surroundings that create its overall context.
Economic dimension
Technological dimension
Sociocultural dimension
Political-legal dimension
International dimension
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3–5

3–6
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3.2 McDonald’s General Environment

The External Environment (cont’d)
Dimensions of the Task Environment
Specific groups affecting the organization
Competitors
Customers
Suppliers
Regulators (agencies and interest groups)
Strategic partners (allies)
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3–7

3–8
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3.3 McDonald’s Task Environment

McDonald’s
Competitors
•
Burger King
•
Wendy’s
•
Subway
•
Dairy Queen
Customers
•
Individual
consumers
•
Institutional
customers
Suppliers
•
Coca-Cola
•
Wholesale food
processors
•
Packaging
manufacturers
Strategic Partners
•
Wal-Mart
•
Disney
•
Foreign partners
Regulators
•
Food and Drug
Administration
•
Securities and
Exchange
Commission
•
Environmental
Protection
Agency
Internal environment

Task environment

The Internal Environment
Conditions and stakeholder forces within an organization
Owners.
Board of directors
Employees
Physical work environment
Culture
3–9
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Organization’s Culture
Organization Culture
Is the set of internal values, beliefs, behaviors, customs, and attitudes that determines the “feel” of the organization.
Is not necessarily the same throughout the entire organization.
Must be managed so that its strength benefits the firm’s overall effectiveness and long-term success.
Can be dysfunctional if it becomes strongly resistant to change.
3–10
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
3–11
Determinants of Organization Culture
Shared experiences
Organization successes
Organization’s founder
Organization
Culture
Symbols, stories, heroes, slogans, ceremonies

11
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Management 11e
Griffin

How Environments Affect Organizations
Environmental Change and Complexity
Change occurs in two ways:
Degree to which change in environment is occurring
Degree of homogeneity or complexity of the environment
Uncertainty
A driving force that influences organizational
decisions.
Environmental Turbulence
Unexpected changes and upheavals in the environment of an organization.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3–12

3–13
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3.4 Environmental Change, Complexity, and Uncertainty

Porter’s Five Competitive Forces
Power of customers
Power of
suppliers
Threat of
substitute products
Competitive
rivalry
Threat of
new entrants
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3–14

Porter’s Five Competitive Forces
Threat of new entrants
Extent to and ease with which competitors can enter market.
Competitive rivalry
Competitive rivalry between firms in an industry.
Threat of substitute products
Extent to which alternative products/services may replace the need for existing products/services.
Power of buyers
Extent to which buyers influence market rivals.
Power of suppliers
Extent to which suppliers influence market rivals.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3–15

3–16
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3.5 How Organizations Adapt to Their Environments

How Organizations Respond
to Their Environments
Information Management in Organizations
Boundary spanners
Environmental scanning
Information systems
Strategic Response
Maintaining the status quo, altering the current strategy, or adopting a new strategy.
Mergers, Acquisitions, Alliances
Firms combine (merge), purchase (acquisition), or form new venture partnerships or alliances.
3–17
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

How Organizations Respond to
Their Environments (cont’d)
Organizational Design and Flexibility
Adapting by building flexibility into structural design.
Mechanistic firms operate best in stable environments.
Organic firms are best suited for dynamic environments.
Direct Influence of the Environment
Attempting to change the nature of the competitive conditions in its environment to suit its needs.
Pursuing new or changed relationships with suppliers, customers, and regulators.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3–18

The Environment and
Organizational Effectiveness
3–19
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Systems resource approach
Internal processes approach
Goal approach
Strategic constituencies approach
Models of Organizational
Effectiveness
Combined approach

3–20
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3.6 A Model of Organizational Effectiveness

3–21
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
3.1 Examples of Admired and High-Performing Firms

Fortune’s
Most Admired Companies (2011) Business Week’s
Best-Performing Companies (2011)
Apple
Google
Berkshire Hathaway
Southwest Airlines
Procter & Gamble
Coca-Cola
Amazon
FedEx
Microsoft
McDonald’s Priceline.com
Intuitive Surgical
Southwestern Energy
Apple
salesforce.com
Express Scripts
Flowserve
FMC Technologies
Cliff’s Natural Resources
Amazon.com

KEY TERMS
internal environment
external environment
task environment
economic dimension
technological dimension
sociocultural dimension
political-legal dimension
international dimension
competitor
customer
supplier
interest group
strategic partners (strategic allies)
owner
board of directors
organization culture
uncertainty
five competitive forces
3–22
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PowerPoint Presentation by Charlie Cook
The University of West Alabama

Discuss managerial ethics, three areas of special ethical concern for managers, and how organizations manage ethical behavior.
Identify and summarize key emerging ethical issues in organizations today.
Discuss the concept of social responsibility, specify to whom or what an organization might be considered responsible, and describe four types of organizational approaches to social responsibility.
Explain the relationship between the government and organizations regarding social responsibility.
Describe some of the activities that organizations may engage in to manage social responsibility.
4–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives

4–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Management 11e
Griffin

Individual Ethics In Organizations
Ethics
An individual’s personal beliefs regarding what is right and wrong or good and bad.
Ethical Behavior
“Eye of the beholder” or behavior that conforms to generally accepted social norms.
Examples of Unethical Behavior
“Borrowing” office supplies for personal use.
Surfing the Internet on company time.
Filing falsified or inflated business expense reports.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4–3

Determinants of Individual Ethics
4–4
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Family
Peers
Individual
Experiences
Values and
Morals
Individual
Ethics
An individual’s ethics are determined by a combination of factors.

4–5
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4.1 Managerial Ethics
Three basic areas of concern for managerial ethics are the relationships of the firm to the employee, the employee to the firm, and the firm to other economic agents.

Ethics in an Organizational Context
Organizational Values
Individual Values
Managerial
Values
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4–6

Ethics in Organizations
Train
Employees
Written Code
of Ethics
Individual Issues:
Behavior, Conscience, Privacy
Top Management Involvement
Managing Ethical Behavior
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4–7

Applying Ethical Judgments
Model for deciding whether or not a particular action or decision is ethical
Gather relevant factual information.
Determine the most appropriate moral values.
Make a judgment.
Ethical Norms Affecting Actions
Utility
Rights
Justice
Caring
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4–8

4–9
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4.2
A Guide for Ethical Decision Making

Maintaining Organizational Justice
Distributive justice
Procedural justice
Interpersonal justice
Informational justice
Forms of Organizational Justice
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4–10

Emerging Ethical Issues in Organizations
Ethical
leadership
Information technology
Emerging Ethical Issues
Corporate governance
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4–11

Social Responsibility and Organizations
Organizational Stakeholders
People and organizations directly affected by the behaviors of an organization and that have a stake in its performance.
Social Responsibility
The set of obligations an organization has to protect and enhance the societal context in which it functions.
Areas of Social Responsibility
Stakeholders
The natural environment
The general social welfare
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4–12

4–13
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4.3 Organizational Stakeholders

4–14
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4.4 Arguments for and Against Social Responsibility

4–15
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4.5 Approaches to Social Responsibility

Social Responsibility Approaches
Obstructionist Stance
Do as little as possible.
Defensive Stance
Do only what is legally required and nothing more.
Accommodative Stance
Meet legal and ethical obligations and go beyond that in selected cases.
Proactive Stance
Organization views itself as a citizen and proactively seeks opportunities to contribute to society.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4–16

4–17
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4.6 How Business and the Government Influence Each Other

Managing Social Responsibility
Legal compliance
Ethical compliance
Philanthropic giving
Formal Organizational
Dimensions
Organization leadership and culture
Whistle Blowing
Informal Organizational
Dimensions
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4–18

Managing Social Responsibility:
Formal Organizational Dimensions
Legal Compliance
Extent to which the organization conforms to local, state, federal, and international laws.
Ethical Compliance
Extent to which members of the organization follow basic ethical/legal standards of behavior.
Philanthropic Giving
Awarding of funds or gifts to charities and other social programs.
4–19
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Managing Social Responsibility:
Informal Organizational Dimensions
Organization Leadership and Culture
Leadership practices and the culture of the organization can help define the social responsibility stance an organization and its members will adopt.
Whistle Blowing
The organizational response to the disclosure by an employee of illegal or unethical conduct on the part of others within the organization is indicative of the organization’s stance on social responsibility.
4–20
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Evaluating Social Responsibility
Concept of Ethical Controls
Evaluating organizational responses to questionable legal or ethical conduct:
Initiate an immediate follow-up response to events?
Seek punishment for those involved?
Engage in delay or cover-up tactics?
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
4–21

Evaluating Social Responsibility (cont’d)
4–22
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Clearly define social goals
Analyze resources applied
Determine if goals are being met
Corporate Social Audit
Recommend changes for improvement

KEY TERMS
unethical behavior
managerial ethics
code of ethics
Sarbanes-Oxley Act of 2002
social responsibility
organizational stakeholder
obstructionist stance
defensive stance
accommodative stance
proactive stance
regulation
lobbying
legal compliance
ethical compliance
philanthropic giving
whistle blowing
corporate social audit
4–23
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

4–23
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Management 11e
Griffin

PowerPoint Presentation by Charlie Cook
The University of West Alabama

Describe the nature of international business, including its meaning, recent trends, management of globalization, and competition in a global market.
Discuss the structure of the global economy and describe the GATT and the WTO.
Identify and discuss the environmental challenges inherent in international management.
Describe the basic issues involved in competing in a global economy, including organization size and the management challenges in a global economy.
5–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives

5–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Management 11e
Griffin

The Nature of International Business
Globalization means:
Everyone is part of the global village.
All organizations are affected by competition in the global economy.
Firms are reshaping themselves for international competition and discovering new ways to exploit markets.
Failure to take a global perspective is one of the biggest mistakes managers can make.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–3

5–4
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5.1 Levels of International Business Activity
Global Business
Multinational Business
International Business
Domestic Business
Level of International Activity
Lowest
Highest

The Meaning of International Business
Domestic Business
acquires all of its resources and sells all of its products or services within a single country.
International Business
is based in a single country yet acquires a meaningful share of its resources and/or revenues from other countries.
Multinational Business
transcends national boundaries and buys raw materials, borrows money, and manufactures and sells its products in a world-wide marketplace.
Global Business
transcends national boundaries and is not committed to a single home country.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–5

Trends in International Business
Decreasing Isolation from Competition
Increasing Globalization
of Markets
Economic Recovery and Development
Trends in
International Business
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–6

Managing the Process of Globalization
Exporting and
Importing
Licensing
Strategic Alliance
and Joint Venture
Direct
Investment
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–7

Approach to Internationalization Advantages Disadvantages
Importing or Exporting Small cash outlay
Little risk
No adaptation necessary Tariffs and taxes
High transportation costs
Government restrictions
Licensing Increased profitability
Extended profitability Inflexibility
Competition
Strategic Alliances
and Joint Ventures Quick market entry
Access to materials and technology Shared ownership
(limits control and profits)
Direct Investment Enhanced control
Existing infrastructure Complexity
Greater economic and political risk
Greater uncertainty

The Structure of the Global Economy
Mature Market Economies and Systems
Employ market factors in allocating resources.
Are based on the private ownership of business
Well-developed infrastructures and individual wealth.
Trade Agreements
North American Free Trade Agreement (NAFTA)
covering the United States, Mexico, and Canada.
European Union (EU) of western European countries.
Pacific Asia countries in Southeast Asia.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–9

The global economy is dominated by three relatively mature market systems
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–10
5.2 The Global Economy

Market Economies and Systems
High Potential or High Growth Economies
Underdeveloped and immature markets with a weak industrial base, weak currency, and poor consumers
People’s Republic of China, India, Vietnam, Brazil, Russia
Challenges to market development:
Lack of consumers with personal wealth
Underdeveloped infrastructure for support operations
Unfamiliarity with market economy mechanisms
The need for large investments in distribution systems
Unfavorable policy changes distorting value of investments
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–11

Market Economies and Systems (cont’d)
Other Economies
Defy classification due to their possession of critical and valuable resources or other social or political factors which distort their internal economies and markets.
Challenges of other economies
Political instability
Cultural differences
Ethnic violence
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–12

The Role of the GATT and the WTO
General Agreement on Tariffs and Trade (GATT)
Promoted international trade by reducing trade barriers and making it easier for all nations to compete.
Most Favored Nation (MFN) principle
The World Trade Organization (WTO)
Organization (replaced GATT) with the goals of:
Promoting trade flows by encouraging nations to adopt nondiscriminatory and predictable trade policies
Reducing trade barriers through multilateral negotiations
Establishing impartial procedures for resolving trade disputes among its members
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–13

Political and Legal Environment
Government stability
Property rights
Trade incentives, relations, and controls
Cultural Environment
Values, symbols, beliefs, language, individual behaviors
Economic Environment
Economic system
Natural resources
Infrastructure
International Management Functions

Controls on International Trade
Tariffs
Export restraint agreements
Quotas
Subsidies and “buy national”
Key Trade Control Concepts
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–15

Domestic Controls on International Trade
Key Concepts
Tariffs
Taxes on goods shipped across national boundaries.
Quotas
Limits on the number or value of goods that can be traded as exports or imports.
Export Restraint Agreements
Voluntary limits on the volume or value of goods exported to or imported from another country.
Subsidies and “Buy National” Laws
Protection for domestic businesses from foreign competition.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–16

The Cultural Environment
Individual differences across cultures:
Social orientation
A person’s beliefs about the relative importance of the individual versus groups to which that person belongs.
Power orientation
The beliefs that people in a culture hold about the appropriateness of power and authority differences in hierarchies such as business organizations.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–17

Competing in a Global Economy
Globalization and Organization Size
Multinational Corporations (MNCs)
Adopt a global perspective and compete in the global marketplace.
Medium-Size Businesses
Remain primarily domestic organizations that may buy and sell abroad through trade specialists and compete with foreign companies in local markets.
Small Businesses
Participate in global markets when they serve as local suppliers for MNCs.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–21

Management Challenges in a Global Economy
Planning
Leading
Organizing
Understanding of both environmental issues
and competitive issues.
Addressing issues of creating and managing operations on a world-wide scale.
Learning to interact with and motivate persons
of different cultural, social, and economics backgrounds.
Controlling
Integrating operations across time-zones, cultural factors, and varying communication methods.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5–22

KEY TERMS
domestic business
international business
multinational business
global business
importing
exporting
licensing
joint venture
direct investment
maquiladoras
market economy
market systems
Pacific Asia
GATT
WTO
NAFTA
infrastructure
nationalized
tariff
export restraint agreements
economic community
social orientation
power orientation
uncertainty orientation
goal orientation
time orientation
5–23
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PowerPoint Presentation by Charlie Cook
The University of West Alabama

Describe the nature of diversity and multiculturalism.
Identify and describe the major trends and dimensions of diversity and multiculturalism in organizations.
Discuss the primary effects of diversity and multiculturalism in organizations.
Describe individual strategies for and organizational approaches to managing diversity and multiculturalism in organizations.
Discuss the characteristics of the fully multicultural organization.
6–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives

The Nature of Diversity and Multiculturalism
Multiculturalism
The broad issues associated with differences in values, beliefs, behaviors, customs, and attitudes held by people in different cultures.
Diversity
When members of a group differ from one another along dimensions such as age, gender, or ethnicity.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
6–3

Increased awareness that diversity improves the quality of the workforce
Changing demographics in the labor force
Increasing diversity and multiculturalism in organization

The globalization
movement
Legislative and legal actions mandating and fostering diversity

Dimensions of Diversity and Multiculturalism
Age Distributions
Average age of the U.S. workforce is increasing and will continue to do so for the next several years.
Gender
Females were 46% of the workforce in 2009.
The “glass ceiling” has a discriminatory effect of on female managers.
Ethnicity
U.S. workforce will have an increasing number of Hispanic workers and a decline in white workers.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
6–5

6–7
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
6.3 Percentage of Population Over 65 in Various Countries by 2050
Aging populations represent new challenges for industrialized countries. As the proportion of working people drops, there are increased pressures on retirement funds, for example. An aging population also means higher healthcare costs. As this graph illustrates, the average age in Japan, Germany, China, and the United States continues to grow. Japan, with the world’s longest average life span, has especially significant challenges ahead.

By 2050, Latinos will be the largest minority group in the United States. The share of the population of each group in 2000 and projected in 2050:

Dimensions of Diversity and Multiculturalism (cont’d)
Other Dimensions of Diversity
More handicapped individuals in the workforce.
Other increases due to diversity in religious and political beliefs and viewpoints, lifestyles, and various other individual characteristics.
Multicultural Differences
The increasing globalization of business
Immigration patterns affect labor force makeup
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
6–9

Diversity, Multiculturalism, and Conflict
Sources of Conflict
Personnel actions being attributed to diversity status.
Misunderstood, misinterpreted, or inappropriate actions between people or groups.
Cultural differences in work hours, personal styles, interpersonal relations, and conflict.
Fear, distrust, or individual prejudices.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
6–11

6–12
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Managing Diversity and Multiculturalism
in Organizations
Understanding
Empathy
Tolerance
Willingness to Communicate
Individual Strategies for Managing
Diversity and Multiculturalism

Managing Diversity and Multiculturalism

Organizational Policies
Organizational Practices
Diversity and Multicultural Training
Organizational Culture
Organizational
Approaches
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
6–13

Management Challenge Question
Which human resource management planning problems are likely to increase as an organization becomes more diverse?
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
6–14

Toward The Multicultural Organization
Absence of prejudice and discrimination
No gap in organizational identification
Low levels of intergroup conflict
Basic
Characteristics of
the Multicultural
Organization
Pluralism
Full structural integration
Fully integrated informal network
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
6–15

KEY TERMS
diversity
multiculturalism
glass ceiling
ethnicity
diversity and multicultural training
multicultural organization
pluralism
6–17
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PowerPoint Presentation by Charlie Cook
The University of West Alabama

Summarize the function of decision making and the planning process.
Discuss the purpose of organizational goals, identify different kinds of goals, discuss who sets goals, and describe how to manage multiple goals.
Identify different kinds of organizational plans, note the time frames for planning, discuss who plans, and describe contingency planning.
Discuss how tactical plans are developed and executed.
Describe the basic types of operational plans used by organizations.
Identify the major barriers to goal setting and planning, how organizations overcome those barriers, and how to use goals to implement plans.
7–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives

Decision Making and the Planning Process
Decision Making
Is the cornerstone of planning.
Is the catalyst that drives the planning process.
Underlies every aspect of setting goals and formulating plans.
Planning
All organizations plan, but not in the same fashion.
All planning occurs within an environmental context.
All goals require plans to guide in their achievement.
All goals are tied higher goals and plans.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7–3

Organizational Goals
Guidance and unified direction
Promotion of good planning
Source of motivation
Evaluation
and control
Purposes of Goals
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7–5

Organizations can have several different kinds of goals that serve different purposes critical to organizational effectiveness.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7–5
Management 11e
Griffin

Kinds of Goals
By Level
Mission statement
Strategic goals
Tactical goals
Operational goals
By Area
Operations
Marketing
Finance
Production
Time Frame
Long-term goals
Intermediate goals
Short-term goals
Explicit goals
Open-ended goals
Setting Organizational Goals
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7–6

Responsibilities of Setting Goals
Who Sets Goals?
All managers
Managerial responsibility for goal setting
should correspond to the manager’s level
in the organization.
Managing Multiple Goals
Optimizing allows managers to balance and reconcile inconsistent or conflicting goals.
Managers can pursue one goal and exclude
all others or to seek a mid-range goal.
7–8
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Kinds of Organizational Plans
Strategic Plans
(upper management)
Tactical Plans
(middle management)
Operational Plans
(lower-level managers)
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7–9

Time Frames for Planning
The Time Dimension of Planning
Planning must provide sufficient time to fulfill
the managerial commitments involved.
Long-range (strategic)
plans of 5 or more years
Short-range (operational)
action and reaction plans
of 1 year or less
Intermediate-range
(tactical) plans of 1–5 years

1
5
10
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7–10

Responsibilities for Planning
Planning Staff
Gather information, coordinate planning activities,
and take a broader view than individual managers.
Planning Task Force
Created when the organization wants a special circumstance addressed.
Board of Directors
Establishes corporate mission and strategy.
May engage in strategic planning.
Chief Executive Officer
May serve as president or board chair; has a major role in planning and implementing the strategy.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7–11

Responsibilities for Planning (cont’d)
Executive Committee
Is composed of top executives.
Meets regularly with the CEO to review strategic plans.

Line Management
Have formal authority and responsibility for management of the organization.
Help to formulate strategy by providing information.
Are responsible for executing the plans of top management.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7–12

Contingency Planning
and Crisis Management
Contingency Planning
The determination of alternative courses of action to be taken if an intended plan is unexpectedly disrupted or rendered inappropriate.
These plans help managers to cope with uncertainty and change.
Crisis Management
The set of procedures the organization uses in the event of a disaster or other unexpected calamity.
7–13
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Ongoing planning process
Action point 1
Action point 2
Action point 3
Action point 4
Develop plan,
considering
contingency events
Implement plan and
formally identify
contingency events
Specify indicators
for the contingency
events and develop
contingency plans for
each possible event
Successfully complete
plan or contingency
plan
Monitor contingency event indicators and
implement contingency plan if necessary
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7–14
7.3 Contingency Planning

Management Challenge Question
What effects does an organization’s culture have on its contingency planning?
On its management of a crisis?
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7–15

Developing tactical plans
•
Recognize and understand
overarching strategic plans
and tactical goals
•
Specify relevant resource and
time issues
•
Recognize and identify human
resource commitments

Executing tactical plans
•
Evaluate each course of action
in light of its goal
•
Obtain and distribute
information and resources
•
Monitor horizontal and vertical
communication and integration
of activities
•
Monitor ongoing activities for
goal achievement

Plan Type Description
Single-use plans Developed to carry out a course of action not likely to be repeated in the future
Program Single-use plan for a large set of activities
Project Single-use plan of less scope and complexity than a program
Standing plans Developed for activities that recur regularly over a period of time
Policy Standing plan specifying the organization’s general response to a designated problem or situation
Standard operating procedure Standing plan outlining steps to be followed in particular circumstances
Rules and regulations Standing plans describing exactly how specific activities are to be carried out

Managing Goal-Setting
and Planning Processes
Barriers to Goal Setting and Planning
As part of managing the goal-setting and planning process, managers must understand the barriers that can disrupt them.
Managers must also know how to overcome them.
7–18
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Major barriers Inappropriate goals
Improper reward system
Dynamic and complex environment
Reluctance to establish goals
Resistance to change
Constraints
Overcoming
the barriers Understanding the purposes of goals and planning
Communication and participation
Consistency, revision, and updating
Effective reward system

Using Goals to Implement Plans
Management by Objectives (MBO)
Is a technique for integrating formal goal setting and planning by giving subordinates a voice and clarifying what they are expected to accomplish.
Is frequently tailored to the special circumstances of firms which may use a special term or name for it.

7–20
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

The Effectiveness of Formal Goal Setting
Strengths (Success)
Improved employee motivation
Enhances communication
Fosters more objective performance appraisals
Focuses attention on appropriate goals and plans
Helps identify managerial talent
Provides a systematic management philosophy
Facilitates control of the organization
Weaknesses (Failure)
Poor implementation of the goal setting process
Lack of top-management support for goal setting
Delegation of the goal-setting process to lower levels
Overemphasis on quantitative goals
Too much paperwork and record keeping
Managerial resistance to goal setting
7–22
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

KEY TERMS
mission
strategic goal
tactical goal
operational goal
optimizing
strategic plan
tactical plan
operational plan
reaction plan
long-range plan
intermediate plan
short-range plan
crisis management
single-use plan
program
project
standing plan
policy
rules and regulations
management by objectives (MBO)
7–23
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PowerPoint Presentation by Charlie Cook
The University of West Alabama

Discuss the components of strategy, the types of strategic alternatives, and the distinction between strategy formulation and strategy implementation.
Describe how to use SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis in formulating strategy.
Identify and describe various alternative approaches to business-level strategy formulation.
Describe how business-level strategies are implemented.
8–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives

8–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Management 11e
Griffin

Identify and describe various alternative approaches to corporate-level strategy formulation.
Describe how corporate-level strategies are implemented.
Discuss international and global strategies.
8–3
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives (cont’d)

8–3
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Management 11e
Griffin

The Nature of Strategic Management
Strategy
Is a comprehensive plan for accomplishing an organization’s goals.
Strategic Management
Involves formulating and implementing strategies to take advantage of business opportunities and meet competitive challenges.
Effective Strategies
Promote superior alignment between an organization, its environment, and its goals.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–4

Components of Strategy
Distinctive Competence
Competitive
Scope
Resource Deployment
Components of Effective Strategies
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–5

Strategic Alternatives
Business-level strategy
Functional-level strategy
Operations-level strategy
Corporate-level strategy
Business-level strategy
Functional-level strategy
Operations-level strategy
Market A
Market B
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–6

Types of Strategic Alternatives
Business-Level Strategy
The set of strategic alternatives that an organization chooses from as it conducts business in a particular industry or a particular market.
Corporate-Level Strategy
The set of strategic alternatives that an organization chooses from as it manages its operations simultaneously across several industries and several markets.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–7

Strategy Formulation and Implementation
Strategy Formulation
The set of processes involved in creating or determining the organization’s strategies; it focuses on the content of strategies.
Strategy Implementation
The methods by which strategies are operationalized or executed within the organization; it focuses on the processes through which strategies are achieved.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–8

Management Challenge
If it is important that all employees be involved in strategy implementation, then what are the most important responsibilities for managers in helping them participate?
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–9

Types of Strategies
Deliberate Strategy
A plan, chosen and implemented to support specific goals, that is the result of a rational, systematic, and planned process of strategy formulation and implementation.
Emergent Strategy
A pattern of action that develops over time in the absence of goals or missions, or despite goals and missions.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–10

SWOT Analysis and Strategy
Evaluating Organizational Strengths
Organizational strengths
are skills and abilities enabling an organization to conceive of and implement strategies.
Common organizational strengths
are organizational capabilities possessed by numerous competing firms.
Distinctive competencies
are useful for competitive advantage and superior performance.
Imitation of distinctive competencies
removes the competitive advantage of the competency.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–12

SWOT Analysis and Strategy (cont’d)
Evaluating Organizational Strengths (cont’d)
Sustained competitive advantage
occurs when a distinctive competence cannot be easily duplicated.
is what remains after all attempts at strategic imitations cease.
Strategic imitation of a distinctive competence is difficult when:
it is based on unique historical circumstances.
it is difficult for competitors to understand its nature or character.
it is based on a complex phenomenon (e.g., organizational culture).
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–13

SWOT Analysis and Strategy (cont’d)
Evaluating Organizational Weaknesses
Organizational weaknesses
Skills and capabilities that do not enable an organization to choose and implement strategies that support its mission.
Weaknesses can be overcome by:
investments to obtain the strengths needed.
modification of the organization’s mission so it can be accomplished with the current workforce.
Competitive disadvantage
occurs when an organization fails to implement strategies being implemented by competitors.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–14

SWOT Analysis and Strategy (cont’d)
Evaluating an Organization’s Opportunities and Threats
Organizational opportunities
are areas in the organization’s environment that may generate high performance.
Organizational threats
are areas in the organization’s environment that make it difficult for the organization to achieve high performance.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–15

Formulating Business-Level Strategies
Overall cost leadership strategy
Focus
strategy
Differentiation strategy
Porter’s Generic
Strategies
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–16

Formulating Business-Level Strategies
Porter’s Generic Strategies
Differentiation strategy
An organization seeks to distinguish itself from competitors through the quality of its products or services.
Overall cost leadership strategy
An organization attempts to gain competitive advantage by reducing its costs below the costs of competing firms.
Focus strategy
An organization concentrates on a specific regional market, product line, or group of buyers.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–17

Strategy Type Definition Examples
Differentiation Distinguish products
or services Rolex (watches)
Godiva (chocolate)
Mercedes-Benz (automobiles)
Nikon (cameras)
Cross (writing instruments
Overall cost leadership Reduce manufacturing
and other costs Timex (watches)
Hershey (chocolate)
Kia (automobiles)
Kodak (cameras)
BIC (writing instruments)
Focus Concentrate on specific regional market, product market, or group of buyers Tag Heuer (watches)
Vosges (chocolate)
Fiat, Alfa Romeo (automobiles)
Hasselblad (cameras)
Waterman (writing instruments)
Fisher-Price (handheld calculators)

Implementing Porter’s Generic Strategies
Differentiation
Marketing and sales emphasize high-quality, high-value image of the organization’s products or services.
Overall Cost Leadership
Marketing and sales focus on simple product attributes and how these product attributes meet customer needs in a low-cost and effective manner.
Focus
Either differentiation or cost leadership, depending on which one is the proper basis for competing in or for a specific market segment, product category, or group buyers.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–19

Miles and Snow’s Strategy Types
Prospectors
Defenders
Analyzers
Reactors
Strategic Types of Organizations
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–20

Miles and Snow’s Strategy Types
Prospector
Encourages creativity to seek out new market opportunities and to take risks.
Develops the flexibility to meet changing market conditions by decentralizing its organizational structure.
Defender
Focuses on defending its current markets by lowering its costs and/or improving the performance of its current products.
Analyzer
Incorporates elements of both the prospector and the defender strategies to maintain business and to be somewhat innovative.
Reactor
Has no clear strategy, reacts to changes and events.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–21

Strategy Type Definition Examples
Prospector Is innovative and growth oriented, searches for new markets and new growth opportunities, encourages risk taking Amazon.com
3M
Rubbermaid
Defender Protects current markets, maintains stable growth, serves current customers BIC
eBay
Mrs. Fields
Analyzer Maintains current markets and current customer satisfaction with moderate emphasis on innovation DuPont
IBM
Yahoo!
Reactor No clear strategy, reacts to changes in the environment, drifts with events International Harvester
(now doing business as Navistar)
Joseph Schlitz Brewing Co.
Kmart
Montgomery Ward
(no longer in business)

Introduction
Maturity
Growth
Time
Decline
Sales Volume
Stages
High
Low
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8–23
8.2 The Product Life Cycle

Management Challenge Questions
Which of Porter’s generic strategies are best suited for which stages of the product life cycle?
Which of the Miles and Snow’s types of effective strategic organizations are most appropriate for which stage of the product life cycle?
Do your answers support the concept that structure must follow strategy?
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8–24

Formulating Corporate-Level Strategies
Strategic Business Units
Each business or group of businesses within an organization is engaged in serving the same markets, customers, or products.
Diversification
The number of businesses an organization is engaged in and the extent to which these businesses are related to one another
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8–25

Corporate-Level Strategies
Related diversification
(synergy)
Unrelated diversification
(risk/return)
Single-product strategy
(simplicity)
Strategic Choices
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8–26

Corporate-Level Strategies
Single-Product Strategy
An organization manufactures one product or service and sells it in a single geographic market.
Related Diversification
A strategy in which an organization operates in several different businesses, industries, or markets that are somehow linked.
Avoids the disadvantages and risks of a single-product strategy.
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8–27

Basis of Relatedness Examples
Similar technology Philips, Boeing, Westinghouse
Common distribution
and marketing skills Kraft Foods, Philip Morris, Procter & Gamble
Common brand name
and reputation Disney, Universal
Common customers Merck, IBM, AMF-Head

Advantages of Related Diversification
Reduces economic risk by avoiding dependence on a specific business or activity.
Reduces overhead costs through economies of scale and economies of scope.
Increases overall economic value through complementary strengths and capabilities synergies gained by managing the set of businesses together rather than separately.
8–29
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Unrelated Diversification
Unrelated Diversified Organization
Operates multiple businesses that are not logically associated with one another.
Advantages
Stable performance over time due to business cycle differences among the multiple businesses.
Allocation of resources to areas with the highest return potentials to maximize corporate performance.
Disadvantages
Poor performance due to the complexity of managing a diversity of businesses.
Failing to exploit key synergies puts the firm at a competitive disadvantage to firms with related diversification strategies.
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8–30

Firms that pursue an unrelated diversification strategy operate multiple businesses that are not logically associated with one another.
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8–30
Management 11e
Griffin

Becoming a Diversified Firm
Development of new products
Vertical integration
Merger with another firm
Acquisition of another firm
Diversification Alternatives
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8–31

Becoming a Diversified Firm
Replacement of Suppliers And Customers
Backward vertical integration
Beginning a business that furnishes resources previously handled by a supplier.
Forward vertical integration
Beginning a business previously handled by an intermediary and selling more directly to customers.
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8–32

Becoming a Diversified Firm (cont’d)
Purposes of Mergers and Acquisitions
To diversify through vertical integration.
To acquire complementary products or services linked by a common technology and common customers.
To create or exploit synergies that reduce the combined organizations’ costs of doing business to increase revenues.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–33

Managing Diversification
Major Tools for Managing Diversification
Organization structure
A detailed discussion of organization structure
is contained in Chapter 12.
Portfolio management techniques
Methods used by diversified firms to make decisions about what businesses to engage in and how to manage these businesses to maximize corporate performance.
Two important portfolio management techniques
The BCG Matrix
The GE Business Screen
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–34

Managing Diversification (cont’d)
BCG Matrix
Evaluates a portfolio of businesses on the growth rate of their respective markets and each business’s relative share of its market.
Classifies the types of businesses in a diversified firm’s portfolio as:
“Dogs” have small market shares and no growth prospects.
“Cash cows” have large shares of mature markets.
“Question marks” have small market shares in quickly growing markets.
“Stars” have large shares of rapidly growing markets.
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8–35

Stars
Question
marks
Cash Cows
Relative Market Share
Dogs
Market Growth Rate
High
Low
High
Low
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8–36
8.3 The BCG Matrix

Managing Diversification (cont’d)
GE Business Screen
A method of evaluating businesses in a diversified portfolio along two dimensions, each of which contains multiple factors:
Industry attractiveness.
Competitive position (strength) of each firm in the portfolio.
In general, the more attractive the industry and the more competitive a business is, the more resources an organization should invest in that business.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–37

Winner
Average
business
Loser
Profit
producer
Loser
Loser
Winner
Winner
Question
mark
Competitive Position
Industry Attractiveness
Good
Medium
Poor
Medium
High
Low
Competitive Position
Market share
Technological know-how
Product quality
Service network
Price competitiveness
Operation costs
Industry Attractiveness
Market growth
Market size
Capital requirements
Competitive intensity
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8–38
8.4 The GE Business Screen

International and Global Strategies
Multimarket flexibility
Worldwide learning
Global efficiencies
Developing International
and Global Strategies
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–39

International and Global Strategies
Developing International and Global Strategies
Global efficiencies
Location efficiencies—seeking lower input cost locations
Economies of scale—larger facilities result in lower costs
Economies of scope—broadening product lines
Multimarket flexibility
International businesses may respond to a change in one country by implementing a change in another country.
Worldwide learning
The diverse operating environments of multinational corporations (MNCs) contribute to organizational learning that can be transferred to other operating environments.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–40

8–41
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Strategic Alternatives for
International Businesses
Home replication
Multi-domestic strategy
Global strategy
Transnational strategy
Strategic
Alternatives

Strategic Alternatives for
International Businesses
Home Replication
Utilizing a core competency or a firm-specific advantage developed at home as a main competitive weapon in foreign markets.
Multi-Domestic Strategy
Managing a corporation as a collection of independent operating subsidiaries frees a firm to customize its products, its marketing campaigns, and operating techniques to meet local customer needs.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–42

Strategic Alternatives for
International Businesses (cont’d)
Global Strategy
Viewing the world as a single marketplace and having as a primary goal the creation of standardized goods
and services that will address the needs of customers worldwide.
Transnational Strategy
Attempting to combine the benefits of scale efficiencies pursued by a global corporation, with the benefits and advantages of local responsiveness of a multi-domestic corporation.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8–43

KEY TERMS
strategy
strategic management
distinctive competence
scope
resource deployment
business-level strategy
corporate-level strategy
strategy formulation
strategy implementation
deliberate strategy
emergent strategy
SWOT
organizational strength
common strength
strategic imitation
sustained competitive advantage
organizational weaknesses
competitive disadvantage
organizational threat
organizational opportunity
8–44
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KEY TERMS (cont’d)
differentiation strategy
overall cost leadership strategy
focus strategy
prospector strategy
defender strategy
analyzer strategy
reactor strategy
product life cycle
diversification
single-product strategy
related diversification
unrelated diversification
backward vertical integration
forward vertical integration
merger
acquisition
BCG matrix
GE Business Screen
home replication strategy
multidomestic strategy
global strategy
transnational strategy
8–45
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Key terms for Chapter 8, continued.
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8–45
Management 11e
Griffin

PowerPoint Presentation by Charlie Cook
The University of West Alabama

Define decision making and discuss types of decisions and decision-making conditions.
Discuss rational perspectives on decision making, including the steps in rational decision making.
Describe the behavioral aspects of decision making.
Discuss group and team decision making, including the advantages and disadvantages of group and team decision making and how it can be more effectively managed.
9–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives

9–2
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Management 11e
Griffin

The Decision Making Process
Decision Making
The act of choosing one alternative from among a set of alternatives.
Decision-Making Process:
Recognizing
and defining
the decision situation
Identifying alternatives
Choosing
the “best” alternative
Putting the alternative
into practice
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9–3

The Nature of Decision Making
Decision-Making Process (cont’d)
An effective decision optimizes some set of factors such as profits, sales, employee welfare, and market share.
Managers make decisions about both problems and opportunities.
9–4
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9–4
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Management 11e
Griffin

Types of Decisions
Programmed Decision
is a fairly structured decision or one that recurs with some frequency or both.
Example: Starting your car in the morning.
Nonprogrammed Decision
is relatively unstructured and occurs much less often a programmed decision.
Example: Choosing a vacation destination.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
9–5

Decision-Making Conditions
Decision Making Under Risk
Decision Making Under Uncertainty
Decision Making Under Certainty
Conditions Affecting
Decision Making
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9–6

Level of ambiguity and chances of making a bad decision
Uncertainty
Risk
Certainty
The decision maker faces conditions of…
Lower
Moderate
Higher
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9–7
9.1 Decision-Making Conditions

Decision-Making Conditions
Decision Making Under Certainty
The decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative.
Decision Making Under Risk
The availability of each alternative and its potential payoffs and costs are all associated with risks.
Decision Making Under Uncertainty
The decision maker does not know all the alternatives, the risks associated with each, or the consequences of each alternative.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
9–8

When faced with a decision situation, managers should…
obtain complete and perfect information
eliminate uncertainty
evaluate everything logically and rationally
…and end up with
a decision that best serves the interests of the organization
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
9–9
9.2 The Classical Model of Decision Making

Step Detail Example
1. Recognizing and defining the decision situation Some stimulus indicates that a decision must be made. The stimulus may be positive or negative. A plant manager sees that employee turnover has increased by 5 percent.
2. Identifying alternatives Both obvious and creative alternatives are desired. In general, the more important the decision, the more alternatives should be generated. The plant manager can increase wages, increase benefits, or change hiring standards.
3. Evaluating alternatives Each alternative is evaluated to determine its feasibility, its satisfactoriness, and its consequences. Increasing benefits may not be feasible. Increasing wages and changing hiring standards may satisfy all conditions.
4. Selecting the best alternative Consider all situational factors and choose the alternative that best fits the manager’s situation. Changing hiring standards will take an extended period of time to cut turnover, so increase wages.
5. Implementing the chosen alternative The chosen alternative is implemented into the organizational system. The plant manager may need permission from corporate headquarters. The human resource department establishes a new wage structure.
6. Following up and evaluating the results At some time in the future, the manager should ascertain the extent to which the alternative chosen in step 4 and implemented in step 5 has worked. The plant manager notes that, six months later, turnover dropped to its previous level

Management Challenge Question
Your are captain of a container ship caught in a typhoon. Water is leaking into the cargo hold and you are unsure of whether or not you should abandon ship.
What state of uncertainty is described in this scenario?
How does the state of uncertainty affect the likelihood that you will make the correct decision?
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9–11

Is the alternative
feasible?

Eliminate from
consideration
Is the alternative
satisfactory?
Are the alternative’s
consequences
affordable?
Retain for further
consideration

Yes

Eliminate from
consideration

No
No
No
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9–12
9.3 Evaluating Alternatives in the Decision-making Process

Behavioral Aspects of Decision Making
Satisficing
Bounded rationality
Coalitions
Escalation of commitment
Intuition
Risk propensity
Influences on
Decision Making
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9–13

When faced with a decision situation, managers actually…
use incomplete and imperfect information
are constrained by bounded rationality
tend to satisfice
…and end up with
a decision that may or may not serve the interests of the organization
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9–14
9.4 The Administrative Model of Decision Making

Behavioral Aspects of Decision Making
Bounded Rationality
Decision makers are limited by their values and unconscious reflexes, skills, and habits.
Satisficing
The tendency to search for alternatives only until one is found that meets some minimum standard of sufficiency to resolve the problem.
Coalition
A positive or negative political force in decision making which consists of an informal alliance of individuals or groups formed to achieve a goal.
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9–15

Behavioral Aspects of Decision Making (cont’d)
Intuition
An innate belief about something without conscious consideration.
Escalation of Commitment
Staying with a decision even when it appears to be wrong.
Risk Propensity
The extent to which a decision maker is willing to gamble when making a decision.
9–16
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Management Challenge Question
How could a coalition lead to escalation of commitment?
What can be done to prevent or avoid the escalation?
9–17
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Managerial Ethics and Decision Making
Individual
Ethics
Managerial
Ethics
Employees
Other economic agents
Organizational
Ethics
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9–18

Ethics and Decision Making
Managerial Ethics
Individual ethics (personal beliefs about right and wrong behavior) combine with the organization’s ethics to create managerial ethics.
Components of Managerial Ethics:
Relationship of the firm to employees
Employees to the firm
The firm to other economic agents
9–19
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Group and Team Decision Making
Interacting
group or team
Delphi
groups
Nominal
group
Forms of Group Decision Making
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9–20

Group and Team Decision Making
Forms of Group Decision Making
Interacting group or team
Consists of an existing group or newly formed team interacting and then making a decision.
Delphi groups
Developing a consensus of expert opinion from a panel of experts who individually contribute through a moderator.
Nominal groups
Generating ideas through the individual contributions of alternatives that are winnowed down to reach a decision.
9–21
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9–21
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Management 11e
Griffin

Advantages Disadvantages
More information and
knowledge are available.
More alternatives are likely
to be generated.
More acceptance of the final decision is likely.
Enhanced communication
of the decision may result.
Better decisions generally emerge. The process takes longer than individual decision making, so
it is costlier.
Compromise decisions resulting from indecisiveness may emerge.
One person may dominate
the group.
Groupthink may occur.

Making Group and Team Decisions
More Effective
Being aware of the pros and cons of having a group or team make a decision.
Setting deadlines for when decisions must be made.
Avoiding dominance problems by managing group membership.
Having each group member individually critically evaluate all alternatives.
Not making your position known too early.
Appointing a group member to be a “devil’s advocate.”
Holding a follow-up meeting to recheck the decision.
9–23
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KEY TERMS
decision-making
decision-making process
programmed decision
nonprogrammed decision
state of certainty
stage of risk
state of uncertainty
classical decision model
steps in rational decision making
administrative model
bounded rationality
satisficing
coalition
intuition
escalation of commitment
risk propensity
interacting groups
Delphi group
nominal group
groupthink
9–24
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PowerPoint Presentation by Charlie Cook
The University of West Alabama

Discuss the nature of entrepreneurship.
Describe the role of entrepreneurship in society.
Understand the major issues involved in choosing strategies for small firms and the role of international management in entrepreneurship.
Discuss the structural challenges unique to entrepreneurial firms.
Understand the determinants of the performance of small firms.
10–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives

10–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Management 11e
Griffin

The Nature of Entrepreneurship
Entrepreneurship
The process of planning, organizing, operating, and assuming the risk of a business.
Entrepreneur
Someone who engages in entrepreneurship.
Small Business
A business that is privately owned by one individual or a small group of individuals; it has sales and assets that are not large enough to influence its environment.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–3

The Role of Entrepreneurship in Society
Research Findings:
Most new businesses fail, those that survive often do so because the entrepreneur works for little income.
More than 98% of U.S. businesses have fewer than 100 employees.
Most U.S. workers work for small businesses.
The majority of small businesses are owner operated.
Small business is a strong presence in both mature and emerging economies
Small businesses have a strong effect on job creation, innovation, and are important to big businesses.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–4

© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–5
10.1 The Importance of Small Business in the United States
(a) Approximately 86 percent of all U.S. businesses employ fewer than 20 people; another 11.7 percent employ between 20 and 99 people. In contrast, only about 2.1 percent employ between 100 and 400 workers, and another .2 percent employ 500 or more. (b) 24.5 percent of all U.S. workers are employed by firms with fewer than 20 people; another 29.6 percent work in firms that employ between 20 and 99 people. 25.5 percent of U.S. workers are employed by firms with 100–499 employees, and another 20.3 percent work for businesses that employ 500 or more total employees

Entrepreneurship’s Role in Society
Small Businesses’ Role in Job Creation
Create many of the new jobs in the U.S.
Dominate sectors that have added the most jobs.
Represent 92% of all U.S. exporters.
Innovation
Major innovations are as likely to come from small
businesses as from large firms.
Much of what is created in the high-technology sectors comes from start-up companies.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–6

Aetna
Wal-Mart
Home Depot
Verizon
Communications
Sprint Nextel Corp.
Johnson & Johnson
IBM
Merck
Pfizer
Caterpillar
–1,240
–1,450
–7,000
–8,000
–8,000
–8,900
–10,000
–16,000
–19,500
–20,000
Whole Foods Market
Microsoft
T-Mobile
Google
Nordstrom
Cisco Systems
Deloitte
Accenture
Edward Jones
+8,570
+7,130
+3,586
+3,550
+2,421
+2,412
+2,311
+2,176
+2,1290
JOB LOSSES
JOB GAINS

Entrepreneurship’s Role in Society (cont’d)
Importance to Large Businesses
Most products made by large manufacturers are sold to customers by small businesses.
Small businesses as suppliers provide large firms with essential services, supplies, and raw materials.
Large businesses outsource many routine business operations such as packaging, delivery, and distribution to small businesses.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–8

Strategy for Entrepreneurial Organizations
10–9
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Emphasizing distinctive competencies
Gaining first mover advantage
Choosing an industry in which to compete
Basic Strategic
Challenges

Services are the fastest growing segment of small-business enterprise.
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10–10
10.3 Small Businesses (Businesses With Fewer Than Twenty Employees) by Industry

Emphasizing Distinctive Competencies
Identifying Niches in Established Markets
Niches represent a market segment currently unexploited in a market where several large firms compete.
Niches offer a competitive advantage to small businesses.
Identifying New Markets
Using the transfer of an existing product/service to explore a new market.
Creating new industries/products/services.
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10–12

First Mover Advantages
First-Mover Advantage
Exploiting an opportunity before any other firm does.
Why first-mover advantage is not taken by larger firms:
Decisions are slowed by organizational hierarchy.
Size of the assets at risk makes large firms overly cautious.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–13

Management Challenge Question
What would you caution an entrepreneur about the dangers of taking first-mover advantage?
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10–14

Writing a Business Plan
Business Plan
is a document that summarizes the business strategy and structure. It should include:
business goals and objectives.
strategies used to achieve these goals and objectives.
a plan of how the entrepreneur will implement these strategies.
Entrepreneurship and International Management
Expansion and growth potential in foreign markets.
Entering a foreign country’s market can be an important catalyst for success.
10–15
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10–15
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Management 11e
Griffin

Structure of Entrepreneurial Organizations
Starting the New Business
Buying an Existing Business
Business has a proven ability to draw customers and make a profit (the business is a going concern).
Networks (e.g., customers and suppliers) are established.
Negative: New owners inherit any existing problems.
Starting from Scratch
Avoids problems associated with previous owners.
Freedom to choose suppliers, equipment, location, and workers.
Negative: More business risk and uncertainty.
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10–16

Getting into the Game
Identifying a Genuine Business Opportunity
Who are my customers?
Where are they?
At what price will they buy my product?
In what quantities will they buy?
Who are my competitors?
How will my product differ from those of my competitors?
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–17

Financing the New Business
Venture Capital Companies
Small-Business Investment Companies
SBA Financial Programs
Sources of
New Business
Financing
Personal
Resources
Strategic
Alliances
Lenders
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10–18

Seeking New Business Advice
Advisory Boards
Management Consultants
Small Business Administration
Networking with Others
Sources of
Management Advice
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10–19

Franchising
The Franchising Agreement
Governs the operation of a franchise business by the entrepreneur (the franchisee) under a license by a parent company (the franchiser).
The entrepreneur pays the parent company for use of trademarks, products, formulas, and business plans.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–20

Franchising (cont’d)
Disadvantages
Start-up fees to purchase franchise.
Limitations of franchise (market area, product, customers).
Loss of independence due to imposed operational controls of franchiser.
Advantages
Reduced financial risk of new business success through experience provided by franchiser.
Training, financial, and management support by franchiser.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–21

Management Challenge Questions
What characteristics of a franchisee would an entrepreneur/franchisor likely find most attractive?
What aspects of this relationship could be detrimental to either party?
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–22

10–23
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
The Performance of Entrepreneurial Organizations
Crossovers to small business
by former large-business employees
The emergence
of E-commerce
Trends in New Business Start-Ups

Better survival rates for
small businesses
Increased entrepreneurial opportunities for minorities and women

Success in Entrepreneurial Organizations
Reasons for Failure
Managerial incompetence/ inexperience of the entrepreneur.
Neglect in not devoting sufficient time and effort to the business.
Weak control systems that do not warn of impending problems.
Insufficient capital to sustain the business until it starts to turn a profit.
Reasons for Success
Hard work, drive, and dedication by the entrepreneur.
Careful analysis of market conditions provides insights about business conditions
Managerial competence through training and experience contributes to success.
Luck sometimes plays a role.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10–24

KEY TERMS
entrepreneurship
entrepreneur
small business
established market
niche
first-mover advantage
business plan
venture capital company
franchisee
franchisor
franchising agreement
10–25
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

PowerPoint Presentation by Charlie Cook
The University of West Alabama

Identify the basic elements of organizations.
Describe the alternative approaches to designing jobs.
Discuss the rationale and the most common bases for grouping jobs into departments.
Describe the basic elements involved in establishing reporting relationships.
Discuss how authority is distributed in organizations.
Discuss the basic coordinating activities undertaken by organizations.
Describe basic ways in which positions within an organization can be differentiated
11–2
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Learning Objectives

11–2
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Management 11e
Griffin

The Elements of Organizing
Organizing
Deciding how to best group organizational activities and resources.
Organization Structure
The set of building blocks that can be used to configure an organization.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–3

Designing Jobs
Job Design
The determination of an individual’s work-related responsibilities.
Job Specialization (Division of Labor)
The degree to which the overall task of the organization is broken down and divided into smaller component parts.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–4

Designing Jobs (cont’d)
Benefits of Job Specialization
Workers can become proficient at a task.
Transfer time between tasks is decreased.
Specialized equipment can be more easily developed.
Employee replacement becomes easier.
Limitations of Job Specialization
Boredom and dissatisfaction with mundane tasks.
Anticipated benefits do not always occur.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–5

Adam Smith’s Example of Job Specialization
11–6
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Making a pin (nail) requires 18 tasks
1 worker doing all 18 tasks might make
20 pins (nails) a day.
20 workers = (20 x 20) = 400 pins
______________________________
With specialization:

20 workers make 100,000 pins a day.
1 worker = 5,000 pins
20 pins vs. 5,000 pins per worker

Alternatives to Job Specialization
Job
Enlargement
Job
Enrichment
Job
Rotation
Job Specialization
Alternatives
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–7

Alternatives to Job Specialization
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–8
Job
rotation
Job characteristics approach
Job enlargement
Job Specialization
Alternatives
Job enrichment
Work teams

Job Characteristics: Core Dimensions
Skill Variety
The number of tasks a person does in a job
Task Identity
The extent to which the worker does a complete or identifiable portion of the total job
Task Significance
The perceived importance of the task by the worker
Autonomy
The degree of control the worker has over how the work
is performed
Feedback
The extent to which the worker knows how well the job
is being performed
Growth Need Strength
The desire for people to grow, develop, and expand their capabilities that is their response to the core dimensions
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–9

11–10
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11.1 The Job Characteristics Approach

Alternatives to Specialization (cont’d)
Work Teams
An alternative to job specialization that allows the entire group to design the work system it will use to perform an interrelated set of tasks.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–11

Management Challenge Question
You will be leading your company’s transition team after the acquisition of your company by
a much larger competitor.
What organizing problems would you anticipate will arise in merging the two companies?
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–12

Grouping Jobs: Departmentalization
Departmentalization
The process of grouping jobs according to some logical arrangement.
Rationale for Departmentalization
Organizational growth exceeds the owner-manager’s capacity to personally supervise all of the organization.
Additional managers are employed and assigned
specific employees to supervise.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–13

Functional Departmentalization
Advantages
Each department can be staffed by functional-area experts.
Supervision is facilitated in that managers only need be familiar with
a narrow set of skills.
Coordination inside each department is easier.
Disadvantages
Decision making becomes slow and bureaucratic.
Employees narrow their focus to their department and lose sight of broader goals and issues.
Accountability and performance are difficult to monitor.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–15

Product Departmentalization
Advantages
All activities associated with one product are integrated and coordinated.
Speed and effectiveness
of decision making are enhanced.
Performance of individual products or product groups can be assessed.
Disadvantages
Managers may focus
on their product to the exclusion of the rest of the organization.
Administrative costs
may increase due to each department having its own functional-area experts.
Grouping activities around products or product groups.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–16

Customer Departmentalization
Grouping activities to respond to and interact with specific customers and customer groups.
Advantage
Skilled specialists can deal with unique customers or
customer groups.
Disadvantage
A large administrative staff is needed to integrate activities of various departments.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–17

Location Departmentalization
The grouping of jobs on the basis of defined geographic sites or areas.
Advantage
Enables the organization to respond easily to unique
customer and environmental characteristics.
Disadvantage
Large administrative staff may be needed to keep track of units in scattered locations.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–18

Other Forms of Departmentalization
Alternative Groupings
By specific units of time
By sequence.
By customer characteristics, products, or services
Other Considerations
Departments are often called by other names.
Divisions, units, sections, and bureaus
Organizations are likely to employ multiple bases of departmentalization, depending on level.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–19

Establishing Reporting Relationships
11–20
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Scalar
Principle
Span of
Management
Chain of Command
Reporting Relationships
Considerations

Reporting Relationships
Chain of Command
A clear and distinct line of authority among
the positions in an organization.
Unity of Command
Each person within an organization must have a clear reporting relationship to one and only one boss.
Scalar Principle
A clear and unbroken line of authority must extend from the bottom to the top of the organization.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–21

Span of Management
Span of Control
The number of people reporting to a manager.
A. V. Graicunas
Subordinate interactions
Direct—manager’s relationship with each subordinate.
Cross—among the subordinates themselves.
Group—between groups of subordinates.
Formula for the number of interactions of all types:
I = N(2N/2 + N – 1), where I is the total number of interactions and N is number of subordinates.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–22

Span of Management (cont’d)
Narrow Versus Wide Spans
Ralph C. Davis
Operative span for lower-level managers of up to 30 workers.
Executive span for middle and top managers set at 3 to 9.
Span depends on managers’ jobs, company growth rate, and similar factors.
Lyndall Urwick and General Ian Hamilton
Executive span should never exceed six persons.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–23

Establishing Reporting Relationships: Tall versus Flat Organizations
Tall Organizations
Are more expensive because of the number
of managers involved.
Foster more communication problems because of the number of people through whom information must pass.
Flat Organizations
Lead to higher levels
of employee morale
and productivity.
Create more administrative responsibility for the relatively few managers.
Create more supervisory responsibility for managers due to wider spans of control.
11–24
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Competence of supervisor and subordinates
(the greater the competence, the wider the potential span)
Physical dispersion of subordinates
(the greater the dispersion, the narrower the potential span)
Extent of nonsupervisory work in manager’s job
(the more nonsupervisory work, the narrower the potential span)
Degree of required interaction
(the less required interaction, the wider the potential span)
Extent of standardized procedures
(the more procedures, the wider the potential span)
Similarity of tasks being supervised
(the more similar the tasks, the wider the potential span)
Frequency of new problems
(the higher the frequency, the narrower the potential span)
Preferences of supervisors and subordinates
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–26
11.1 Factors Influencing the Span of Management

Distributing Authority
Authority
Power that has been legitimized by the organization.
Delegation
The process by which managers assign a portion of their total workload to others.
Reasons for Delegation
To enable the manager to get more work done by utilizing the skills and talents of subordinates.
To foster development of subordinates by having them participate in decision making and problem solving.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–27

Problems in Delegation
Manager
Reluctant to delegate.
Disorganization prevents planning work in advance.
Subordinate’s success threatens superior’s advancement.
Lack of trust in the subordinate to do well.
Subordinate
Reluctant to accept delegation for fear of failure.
Perceives no rewards for accepting additional responsibility.
Prefers to avoid any risk and responsibility.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–29

Decentralization and Centralization
Decentralization
Systematically delegating power and authority throughout the organization to middle- and lower-level managers.
Centralization
Systematically retaining power and authority
in the hands of higher-level managers.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–30

Factors in the Choice of Centralization
11–31
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Organization’s
Centralization Choice
History of the organization
Nature
(cost and risk) of decisions to be made
External environment’s complexity and uncertainty

Coordinating Activities
Coordination
The process of linking the activities of the various departments of the organization.
The Need for Coordination
Where departments and work groups are interdependent; the greater the interdependence, the greater the need for coordination.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–32

Coordinating Activities:
Forms of Interdependence
Pooled interdependence
When units operate with little interaction; their output is simply pooled at the organizational level.
Sequential interdependence
When the output of one unit becomes the input of another unit in sequential fashion.
Reciprocal interdependence
When activities flow both ways between units.
11–33
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Input
Output

Sequential
Major Forms of Interdependence
11–34
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Pooled

Input
Input
Input
Output

Output
Input

Output
Input
Output
Input
Reciprocal

Structural Coordination
Task
Forces
Integrating Departments
Electronic Coordination
Structural
Coordination
Techniques
Management Hierarchy
Rules and Procedures
Managerial Liaison Roles
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–35

Structural Coordination Techniques
The Managerial Hierarchy
Placing one manager in charge of interdependent departments or units.
Rules and Procedures
Routine coordination of activities using rules and procedures that set priorities and guidelines for actions.
Managerial Liaison Roles
A manager coordinates interdependent units by acting as a common point of contact, facilitating the flow of information.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–36

Structural Coordination… (cont’d)
Task Forces
Used with multiple units when coordination is complex, requiring more than one individual and the need for coordination is acute.
Disbanded when need for coordination has been met.
Integrating Departments
Permanent organizational units that maintain internal integration and coordination on an ongoing basis.
May have authority and budgetary controls.
Electronic Coordination
E-mail, electronic scheduling, PDAs, cell phones
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–37

Differentiating Between Positions
Line Positions
Positions in the direct chain of command responsible for the achievement of an organization’s goals.
Have formal (legitimate) authority.
Staff Positions
Positions intended to provide expertise, advice, and support to line positions.
Have advisory authority; can give compulsory advice.
Have functional authority to enforce compliance with organizational policies and procedures.
Administrative Intensity
The degree to which managerial positions are concentrated in staff positions.
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11–38

KEY TERMS
organizing
organization structure
job design
job specialization
job rotation
job enlargement
job enrichment
job characteristics approach
work teams
departmentalization
functional departmentalization
product departmentalization
customer departmentalization
location departmentalization
chain of command
span of management
authority
delegation
centralization
coordination
pooled interdependence
sequential interdependence
reciprocal interdependence
line position
staff position
administrative intensity
11–39
© 2013 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Key terms for Chapter 11.
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11–39
Management 11e
Griffin

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