CHAPTER 1 - MANAGERS AND MANAGEMENT
1. Managers work in an organization.
2. An organization is a systematic arrangement of people brought together to accomplish some specific purpose.
a) Your college or university is an organization.
1. Every organization has a purpose and is made up of people who are grouped in some fashion.
a) See Exhibit 1-1.
b) This distinct purpose is typically expressed in terms of a goal or set of goals.
2. Second, purposes or goals can only be achieved through people.
3. Third, all organizations develop a systematic structure that defines and limits the behavior of its members.
a) Developing structure may include creating rules and regulations, giving some members supervisory control, forming teams, etc.
4. The term organizationrefers to an entity that has a distinct purpose, has people or members, and has a systematic structure.
1. Organizational members fit into two categories: operatives and managers.
a) Operatives work directly on a job and have no oversight responsibility of others.
b) Managers direct the activities of other people in the organization.
1) Customarily classified as top, middle, or first line, they supervise both operative employees and lower-level managers.
2) See Exhibit 1-2. (PPT 1-4)
3) Some managers also have operative responsibilities themselves.
2. The distinction between operatives and managers is that managers have employees who report directly to them.
1. First-line managers are usually called supervisors.
a) They are responsible for directing the day-to-day activities of operative employees.
b) In your college, the department chair would be a first-line supervisor.
2. Middle managers represent levels of management between the first-line supervisor and top management.
a) They manage other managers and possibly some operative employees.
b) They are responsible for translating the goals set by top management into specific details.
3. Top managers are responsible for making decisions about the direction of the organization and establishing policies that affect all organizational members.
a) Examples: Google’s Larry Page, Kenneth Chenault of American Express.
b) Top managers have titles including vice president, managing director, chief operating officer, etc.
1. Managers, regardless of title, share several common elements.
2. Management—the process of getting things done effectively and efficiently, through and with other people.
a) The term "process" in the definition represents the primary activities managers perform.
3. Effectiveness and efficiency deal with what we are doing and how we are doing it.
a) Efficiency means doing the task right and refers to the relationship between inputs and outputs. Management is concerned about minimizing resource costs.
b) Effectiveness means doing the right task, and in an organization that translates into goal attainment.
c) See Exhibit 1-3.
4. Efficiency and effectiveness are interrelated.
a) It’s easier to be effective if one ignores efficiency.
b) Good management is concerned with both attaining goals (effectiveness) and doing so as efficiently as possible.
c) Organizations can be efficient and yet not be effective.
d) High efficiency is associated more typically with high effectiveness.
5. Poor management is most often due to both inefficiency and ineffectiveness or to effectiveness achieved through inefficiency.
1. Henri Fayol defined the management process in terms of five management functions.
a) They plan, organize, command, coordinate, and control.
b) In the mid-1950s, two professors used the terms "planning," "organizing," "staffing," "directing," and "controlling" as the framework for the most widely sold management textbook.
2. The most popular textbooks now condense these processes to the basic four: planning, organizing, leading, and controlling.
a) See Exhibit 1-4. (PPT 1-6)
b) These processes are interrelated and interdependent.
3. Planning encompasses defining an organization’s goals, establishing an overall strategy for achieving those goals, and developing a comprehensive hierarchy of plans to integrate and coordinate activities. (PPT 1-6)
a) Setting goals creates a proper focus.
4. Organizing—determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made. (PPT 1-6)
5. Directing and coordinating people is the leading component of management.
a) Leading involves motivating employees, directing the activities of others, selecting the most effective communication channel, or resolving conflicts among members. (PPT 1-7)
6. Controlling. (PPT 1-7)
a) To ensure that things are going as they should, a manager must monitor the organization’s performance.
b) Actual performance must be compared with the previously set goals.
c) Any significant deviations must be addressed.
d) The monitoring, comparing, and correcting is the controlling process.
7. The process approach is clear and simple but may not accurately describe what managers do.
a) Fayol’s original applications represented mere observations from his experiences in the French mining industry.
8. In the late 1960s, Henry Mintzberg provided empirical insights into the manager’s job.
1. Henry Mintzberg undertook a careful study of five chief executives at work.
a) Mintzberg found that the managers he studied engaged in a large number of varied, unpatterned, and short-duration activities.
b) There was little time for reflective thinking (due to interruptions).
c) Half of these managers’ activities lasted less than nine minutes.
2. Mintzberg provided a categorization scheme for defining what managers do on the basis of actual managers on the job—Mintzberg’s managerial roles.
3. Mintzberg concluded that managers perform ten different but highly interrelated roles.
a) These ten roles are shown in Exhibit 1-5.
b) They are grouped under three primary headings:
(1) Interpersonal relationships.
(2) The transfer of information
(3) Decision making
1. The importance of the managerial roles varies depending on the manager’s level in the organization.
a) The differences are of degree and emphasis but not of activity.
b) As managers move up, they do more planning and less direct overseeing of others.
1) See Exhibit 1-6.
c) The amount of time managers give to each activity is not necessarily constant.
d) The content of the managerial activities changes with the manager’s level.
1) Top managers are concerned with designing the overall organization’s structure.
2) Lower-level managers focus on designing the jobs of individuals and work groups.
2. Profit versus Not-for-Profit.
a) The manager’s job is mostly the same in both profit and not-for-profit organizations.
b) All managers make decisions, set objectives, create workable organization structures, hire and motivate employees, secure legitimacy for their organization’s existence, and develop internal political support in order to implement programs.
c) The most important difference is measuring performance, profit, or the "bottom line."
d) There is no such universal measure in not-for-profit organizations.
e) Making a profit for the "owners" of not-for-profit organizations is not the primary focus.
f) There are distinctions, but the two are far more alike than they are different.
3. Size of Organization.
a) Definition of small business and the part it plays in our society.
1) There is no commonly agreed-upon definition.
b) Small business—any independently owned and operated profit-seeking enterprise that has fewer than 500 employees.
c) Statistics on small business.
1) 98 percent of all nonfarm businesses in the United States.
2) Employ over 60 percent of the private work force.
3) Dominate such industries as retailing and construction.
4) Will generate nearly three-fourths of all new jobs in the economy.
5) Where the job growth has been in recent years.
(a) Companies with fewer than 500 employees have created more than 2 million jobs
(b) Small business start-ups witnessed in countries such as China, Japan, Korea, Taiwan, and Great Britain.
d) Managing a small business is different from that of managing a large one.
1) See Exhibit 1-7.
2) The small business manager’s most important role is that of spokesperson (outwardly focused).
3) In a large organization, the manager’s most important job is deciding which organizational units get what available resources and how much of them (inwardly focused).
4) The entrepreneurial role is least important to managers in large firms.
5) A small business manager is more likely to be a generalist.
6) The large firm’s manager’s job is more structured and formal than the manager in a small firm.
7) Planning is less carefully orchestrated in the small business.
8) The small business organizational design will be less complex and structured.
9) Control in the small business will rely more on direct observation.
e) We see differences in degree and emphasis, but not in activities.
4. Management concepts and national borders.
a) Studies that have compared managerial practices between countries have not generally supported the universality of management concepts.
1) In Chapter 2, we will examine some specific differences between countries.
b) Most of the concepts we will be discussing primarily apply to the United States, Canada, Great Britain, Australia, and other English-speaking democracies.
c) Concepts may need to be modified when working with India, China, Chile, or other countries whose economic, political, social, or cultural environments differ greatly from that of the so-called free-market democracies.
5. Making decisions and dealing with change.
a) Managers make decisions and are agents of change.
1) Almost everything managers do requires them to make decisions.
2) The best managers are the ones who can identify critical problems, assimilate the appropriate data, make sense of the information, and decide the best course of action to take for resolving the problem.
3) Chapter 4 addresses the proper way to make decisions.
b) Successful managers acknowledge the rapid changes around them and are flexible.
1) Successful managers recognize the potential effect of technological improvements on a work unit’s performance.
2) They also realize that people often resist change.
c) Managers need to be in a position to "sell" the benefits of the change while simultaneously helping their employees deal with the uncertainty and anxiety that changes may bring.
d) We'll look at how managers act as agents of change in greater detail in Chapter 7.
1. In the 1970s, management researcher Robert L. Katz found that managers must possess four critical management skills. (Conceptual, interpersonal, technical, & political skills)
2. Management skills—those abilities or behaviors that are crucial to success in a managerial position.
a) Two levels—general skills and specific skills.
3. General Skills (PPT 1-10)
a) Conceptual skills refer to the mental ability to analyze and diagnose complex situations.
1) They help managers see how things fit together and facilitate making good decisions.
2) Interpersonal skills encompass the ability to work with, understand, mentor, and motivate other people, both individually and in groups.
b) Technical skills are abilities to apply specialized knowledge or expertise.
1) Top-level managers—these abilities are related to knowledge of the industry and a general understanding of the organization’s processes and products.
2) Middle and lower-level managers—these abilities are related to the specialized knowledge required in the areas with which they work.
c) Political skills are related to the ability to enhance one’s position, build a power base, and establish the right connections.
1) Managers with good political skills tend to be better at getting resources, receive higher evaluations, and get more promotions.
4. Specific Skills. (PPT 1-10)
a) Research has also identified six sets of behaviors that explain a little bit more than 50 percent of a manager’s effectiveness.
1) Controlling the organization’s environment and its resources.
2) Organizing and coordinating.
3) Handling information.
4) Providing for growth and development.
5) Motivating employees and handling conflicts.
6) Strategic problem solving.
5. Management Competencies.
a) The most recent approach to defining the manager’s job.
b) These are defined as a cluster of related knowledge, skills, and attitudes related to effective managerial performance.
c) One of the most comprehensive competency studies has come out of the United Kingdom.
1) The Management Standards Center (MSC).
2) Based on an analysis of what effective managers should be able to do, the MCI sets generic standards of management competence.
3) Exhibit 1-8 lists standards for managers.
(a) For each area of competence, there is a related set of specific elements that define effectiveness in that area.
1. Good managers can turn straw to gold.
2. Managers tend to be more highly paid than operatives.
a) As a manager’s authority and responsibility expand, so typically does his or her pay.
b) Large retail firms such as Best Buy or Costco pay their managers considerably more than their non-managers as a measure of the importance placed on effective management skills.
3. However, not all managers make six-figure incomes.
4. What could you expect to earn as a manager?
a) It depends on level in the organization, education and experience, the type of business, comparable pay standards in the community, and managerial effectiveness.
b) Most first-line supervisors earn between $30,000 and $55,000 a year.
c) Middle managers often start near $45,000 and top out at around $120,000.
d) Senior managers in large corporations can earn $1 million a year or more.
e) In 2005 the average cash compensation (salary plus annual bonus) for executives at the largest U.S. corporations was well over $10 million.
f) In many cases, this compensation was also enhanced by other means, such as stock options.
g) The top 12 of these individuals (CEOs from Capital One, Lehman Brothers, Autodesk, and Abercrombie & Fitch) averaged between $83 and $295 million in total compensation (including their stock options).
h) Management compensation reflects the market forces of supply and demand.
i) Some controversy surrounds the large dollar amounts paid to these executives (see Ethical Dilemma in Management).
Are U.S. Executives Overpaid?
Are we paying U.S. executives too much? There are two sides to the issue. Support for paying this amount is the fact that these executives have tremendous organizational responsibilities. They have to manage today’s environment, keep moving into the future, and their jobs are six to seven days a week, often ten to fourteen hours a day.
On the other hand, most of the research done on executive salaries questions the linkage to performance. American company executives are some of the highest paid people in the world. Even when performance problems lead to dismissal, some executives are paid phenomenal severance packages—sometimes as much as $210 million. U.S. executives make two to five times the salaries of their foreign counterparts. That is interesting when you consider that a number of executives in Japanese and European organizations perform better. U.S. CEOs make more than 350 times as much as the average employee.
Do you believe that U.S. executives are overpaid? What's your opinion?
1. We all have a vested interest in improving the way organizations are managed.
a) We interact with them every day of our lives.
1) Examples of problems that can largely be attributed to poor management.
b) Those that are poorly managed often find themselves with a declining customer base and reduced revenues.
2. The reality that once you graduate from college and begin your career, you will either manage or be managed.
a) An understanding of the management process is foundational for building management skills.
b) You will almost certainly work in an organization, be a manager, or work for a manager.
c) You needn’t aspire to be a manager in order to gain something valuable from a course in management.
3. Management embodies the work and practices from individuals from a wide variety of disciplines.
1. College courses frequently appear to be independent bodies of knowledge.
2. There is typically a lack of connectedness between core business courses and between courses in business and the liberal arts.
3. A number of management educators have begun to recognize the need to build bridges by integrating courses across the college curriculum.
4. We’ve integrated topics around the humanities and social science courses you may have taken to help you see how courses in disciplines such as economics, psychology, sociology, political science, philosophy, and speech communications relate to topics in management.
5. The big picture is often lost when management concepts are studied in isolation.
1. Anthropology.
a) The study of societies, which helps us learn about human beings and their activities.
b) Anthropologists’ work on cultures and environments has helped managers better understand differences in fundamental values, attitudes, and behavior between people.
2. Economics.
a) Concerned with the allocation and distribution of scarce resources.
b) Provides an understanding of the changing economy and the role of competition and free markets in a global context.
3. Philosophy.
a) Philosophy courses inquire into the nature of things, particularly values and ethics.
b) Ethical concerns go directly to the existence of organizations and what constitutes proper behavior within them.
4. Political Science.
a) It studies the behavior of individuals and groups within a political environment.
b) Specific topics of concern include structuring of conflict, allocating power, and manipulating power for individual self-interest.
c) Capitalism is just one form of an economic system.
d) The economies based on socialistic concepts are not free markets but government owned. Organizational decision makers essentially carry out dictates of government policies.
1) Efficiency had little meaning in such economies.
e) Management is affected by a nation’s form of government, whether it allows its citizens to hold property, by the ability to engage in and enforce contracts, and by the appeal mechanisms available to redress grievances.
5. Psychology.
a) The science that seeks to measure, explain, and sometimes change the behavior of humans.
b) Psychologists study and attempt to understand individual behavior, and is leading the way in providing managers with insights into human diversity.
c) Psychology courses are also relevant to managers in terms of gaining a better understanding of motivation, leadership, trust, employee selection, performance appraisals, and training techniques.
6. Sociology.
a) Sociology studies people in relation to their fellow human beings.
b) Sociologists investigate how societal changes such as globalization, cultural diversity, gender roles, and varying forms of family life affect organizational practices.
1. Managers direct the activities of others in an organization. They have such titles as supervisor, department head, dean, division manager, vice president, president, and chief executive officer. Operatives are nonmanagerial personnel. They work directly on a job or task and have no responsibility for overseeing the work of others.
2. Management refers to the process of getting activities completed efficiently with and through other people. The process represents the primary activities of planning, organizing, leading, and controlling.
3. Efficiency is concerned with minimizing resource costs in the completion of activities. Effectiveness is concerned with getting activities successfully completed—that is, goal attainment.
4. The four primary processes of management are planning (setting goals), organizing (determining how to achieve the goals), leading (motivating employees), and controlling (monitoring activities).
1.
The three levels of management are first-line supervisors, middle managers, and top managers. First-line supervisors are the lowest level of management and are typically responsible for directing the day-to-day activities of operative employees. Middle managers represent the levels of management between the first-line supervisor and top management. These individuals, who manage other managers and possibly some operative employees, are primarily responsible for translating the goals set by top management into specific details that lower-level managers can perform. Top managers, at or near the pinnacle of the organization, are responsible for making decisions about the direction of the organization and establishing policies that affect all organizational members.2. Henry Mintzberg concluded that managers perform 10 different roles or behaviors. He classified them into three sets. One set is concerned with interpersonal relationships (figurehead, leader, liaison). The second set is related to the transfer of information (monitor, disseminator, spokesperson). The third set deals with decision-making (entrepreneur, disturbance handler, resource allocator, negotiator).
3. Management has several generic properties. Regardless of level in an organization, all managers perform the same four activities; however, the emphasis given to each function varies with the manager’s position in the hierarchy. Similarly, for the most part, the manager’s job is the same regardless of the type of organization he or she is in. The generic properties of management are found mainly in the world’s democracies. One should be careful in assuming that management practices are universally transferable outside so-called free-market democracies.
4. The four critical types of skills necessary for becoming a successful manager are: conceptual (the ability to analyze and diagnose complex situations); interpersonal (the ability to work with and understand others); technical (applying specialized knowledge); and political (enhancing one’s position and building a power base).
5. People in all walks of life have come to recognize the important role that good management plays in our society. For those who aspire to managerial positions, the study of management provides the body of knowledge that will help them to be effective managers. For those who do not plan on careers as managers, the study of management can give them considerable insight into the way their bosses behave and into the internal activities of organizations.
6. Management does not exist in isolation. Rather, management practices are directly influenced by research and practices in such fields as anthropology (learning about individuals and their activities); economics (understanding allocation and distribution of resources); philosophy (developing values and ethics); political science (understanding behavior of individuals and groups in a political setting); psychology (learning about individual behavior); and sociology (understanding relationships among people).
Happiness (and how to measure it)
Dec 19th 2006
From The Economist print edition
Capitalism can make a society rich and keep it free. Don't ask it to make you
happy as well
HAVING
grown at an annual rate of 3.2% per head since 2000, the world economy is over
half way towards notching up its best decade ever. If it keeps going at this
clip, it will beat both the supposedly idyllic 1950s and the 1960s. Market
capitalism, the engine that runs most of the world economy, seems to be doing
its job well.
But is it? Once upon a time, that job was generally agreed to be to make people
better off. Nowadays that's not so clear. A number of economists, in search of
big problems to solve, and politicians, looking for bold promises to make, think
that it ought to be doing something else: making people happy.
The view that economics should be about more than money is widely held in
continental Europe. In debates with Anglo-American capitalists, wily bons
vivants have tended to cite the idea of “quality of life” to excuse slower
economic growth. But now David Cameron, the latest leader of Britain's once
rather materialistic Conservative Party, has espoused the notion of “general
well-being” (GWB) as an alternative to the more traditional GDP. In America,
meanwhile, inequality, over-work and other hidden costs of prosperity were much
discussed in the mid-term elections; and “wellness” (as opposed to health) has
become a huge industry, catering especially to the prosperous discontent of the
baby-boomers.
The things you never knew you wanted
Much of this draws on the upstart science of happiness, which mixes psychology with economics (see article). Its adherents start with copious survey data, such as those derived from the simple, folksy question put to thousands of Americans every year or two since 1972: “Taken all together, how would you say things are these days—would you say that you are very happy, pretty happy or not too happy?” Some of the results are unsurprising: the rich report being happier than do the poor. But a paradox emerges that requires explanation: affluent countries have not got much happier as they have grown richer. From America to Japan, figures for well-being have barely budged.
The science of happiness offers two explanations for the paradox. Capitalism, it notes, is adept at turning luxuries into necessities—bringing to the masses what the elites have always enjoyed. But the flip side of this genius is that people come to take for granted things they once coveted from afar. Frills they never thought they could have become essentials that they cannot do without. People are stuck on a treadmill: as they achieve a better standard of living, they become inured to its pleasures.
Capitalism's ability to take things downmarket also has its limits. Many of the things people most prize—such as the top jobs, the best education, or an exclusive home address—are luxuries by necessity. An elite schooling, for example, ceases to be so if it is provided to everyone. These “positional goods”, as they are called, are in fixed supply: you can enjoy them only if others do not. The amount of money and effort required to grab them depends on how much your rivals are putting in.
Some economists think the results cast doubt on the long-held verities of their
discipline. The dismal science traditionally assumes that people know their own
interests, and are best left to mind their own business. How much they work, and
what they buy, is their own affair. A properly brought-up economist seeks to
explain their decisions, not to quarrel with them. But the new happiness gurus
are much less willing to defer to people's choices.
Take work, for instance. In 1930 John Maynard Keynes imagined that richer
societies would become more leisured ones, liberated from toil to enjoy the
finer things in life. Yet most people still put in a decent shift. They work
hard to afford things they think will make them happy, only to discover the
fruits of their labor sour quickly. They also aspire to a higher place in
society's pecking order, but in so doing force others in the rat race to run
faster to keep up. So everyone loses.
Yet it is not self-evident that less work would mean more happiness. In America, when the working week has shortened, the gap has been filled by assiduous TV-watching. As for well-being, other studies show that elderly people who stop working tend to die sooner than their peers who labor on. Indeed, another side of happiness economics busies itself studying the non-monetary rewards from work: most people enjoy parts of their work, and some people love it.
As for capitalism's wasteful materialism, even Adam Smith had a problem with it. “How many people ruin themselves by laying out money on trinkets of frivolous utility?” he complained. It is hard to claim that pyramid-shaped tea-bags (developed at great expense over four years) have added much to the sum of human happiness. Yet if capitalism sometimes persuades people to buy stuff they only imagine they want, it also appeals to tastes and aptitudes they never knew they had. In the arts, this is called “originality” and is venerated. In commerce it is called “novelty” and too often dismissed. But without the urge for material improvement, people would still be wearing woolen underwear and holidaying in Bognor rather than Bhutan. Would that be so great?
The joys of niche capitalism
If growth of this kind does not make people happy, stagnation will hardly do the trick. Ossified societies guard positional goods more, not less, jealously. A flourishing economy, on the other hand, creates what biologists call “a tangled bank” of niches, with no clear hierarchy between them. Tyler Cowen, of George Mason University, points out that America has more than 3,000 halls of fame, honoring everyone from rock stars and sportsmen to dog mushers, pickle-packers and accountants. In such a society, everyone can hope to come top of his particular monkey troop, even as the people he looks down on count themselves top of a subtly different troop.
To find the market system wanting because it does not bring joy as well as growth is to place too heavy a burden on it. Capitalism can make you well off. And it also leaves you free to be as unhappy as you choose. To ask any more of it would be asking too much.
I. THE CHANGING ECONOMY
A. Introduction
1. Organizations that are stagnant and bound by tradition are increasingly fading from the limelight.
2. One of the biggest problems in managing an organization is failing to adapt to change.
a) Just 30 years ago, no one had a fax machine, a cellular phone, or a notebook computer.
b) E-mail and modems were known to maybe, at best, a few hundred people.
c) Computers often took up considerable space, quite unlike the 4-pound laptop today.
d) The silicon chip and other advances in technology have permanently altered the economies of the world and the way people work.
3. Alvin Toffler studied these changes, and predicted some of their implications.
4. He argued that modern civilization has evolved over three "waves." (PPT 2-2)
a) The first wave was driven by agriculture.
1) Until the late nineteenth century, all economies were agrarian.
2) Individuals were typically their own boss and performed a variety of tasks.
3) Their success—or failure—was contingent on how well they produced.
4) Now less than five percent of the global workforce is needed to provide our food.
b) The second wave was industrialization.
1) From the late 1800s until the 1960s, most developed countries moved to industrial societies.
2) Work left the fields and moved into formal organizations.
3) The industrial wave forever changed the lives of skilled craftsmen.
4) Workers were hired into tightly structured and formal workplaces.
5) Mass production, specialized jobs, and authority relationships became common.
6) By the 1950s, industrial workers were the largest group in every developed country.
7) Today, blue-collar industrial workers account for less than 30 percent of the U.S. workforce (and will be less than half of that in a few years)
8) The shift since World War II has been away from manufacturing and toward service jobs.
5. By the start of the 1970s, the information age was gaining momentum.
a) Technological advancements were eliminating many low-skilled, blue-collar jobs.
b) The information wave was transforming society from manufacturing to service.
c) Job growth in the past 20 years has been in low-skilled service work and knowledge work.
(1) Knowledge workers (those whose jobs are designed around the acquisition and application of information) as a group make up about a third of the U.S. work force.
d) The dot.com business has been the most powerful technological innovation to influence business in the past decade.
(1) Using the Internet is completely changing the rules of business.
6. These waves also affect how we do business.
a) See Exhibit 2-1, The Changing Economy.
1. Management is no longer constrained by national borders.
a) BMW, a German-owned firm, builds cars in South Carolina.
b) McDonald’s sells hamburgers in China.
c) Exxon, a so-called American company, receives more than three fourths of its revenues from sales outside the U.S.
d) Toyota makes cars in Kentucky.
e) General Motors makes cars in Brazil.
f) Mercedes makes SUVs in Alabama.
g) Parts for Ford Motor Company’s Crown Victoria come from Mexico, Japan, Spain, Germany, and England.
h) The world has become a global village. (PPT 2-3)
2. To be effective in this boundaryless world, managers need to adapt.
3. In the 1960s, Canada’s prime minister described his country’s proximity to the United States as analogous to sleeping with an elephant.
a) In the 2000s, we can generalize this analogy to the entire world.
4. International businesses have been with us for a long time.
b) Siemens, Remington, and Singer, were selling their products in many countries in the nineteenth century.
c) By the 1920s, some companies, including Fiat, Ford, Unilever, and Royal Dutch/Shell, had gone multinational.
d) Not until the mid-1960s were multinational corporations (MNCs) commonplace.
5. The generic global organization, the transnational corporation (TNC).
a) Decisions in TNCs are made at the local level.
b) Nationals are typically hired to run operations in each country.
c) The products and marketing strategies for each country are tailored to that country’s culture.
d)
Nestle and Frito Lay, for example, are transnationals.6. The borderless organization operates effectively by breaking down artificial geographic barriers. (PPT 2-3)
a) IBM reorganized into 14 industry groups.
b) Ford merged its culturally distinct European and North American auto operations.
c) Borderless management is an attempt to increase efficiency and effectiveness in a competitive global marketplace.
1. An organization going global typically proceeds through three stages as shown in Exhibit 2-3.
2. Stage I, the first step toward going international, exporting the organization’s products.
a) This is a passive step involving minimal risk.
b) The organization fills foreign orders only when it gets them.
c) Mail order businesses may have this kind of international involvement.
3. In Stage II, managers make an overt commitment to sell products or make products abroad.
a) Still no physical presence of company employees outside the company’s home country.
b) Sales through sending domestic employees on regular business trips to meet foreign customers or by hiring foreign agents or brokers.
c) To manufacture, managers contract with a foreign firm to produce their products.
4. Stage III, a strong commitment to pursue international markets aggressively.
a) As shown in Exhibit 2-3, managers can do this in different ways.
b) License or franchise the right to use the brand name, technology, or product specifications.
1) This approach is used widely by pharmaceutical companies and fast-food chains.
c) Joint ventures involve larger commitments; a domestic and a foreign firm share the cost of developing new products or building production facilities in a foreign country.
1) These are called strategic alliances.
2) These partnerships provide a fast and less expensive way for companies to compete globally than would doing it on their own.
d) The greatest commitment (and risk), occurs when the organization sets up a foreign subsidiary.
1) Such subsidiaries can be managed as an MNC (with domestic control), a TNC (with foreign control), or a borderless organization (with global control).
1. Whirlpool is the top manufacturer and distributor of appliances in the U.S., Latin America, Europe, and Asia.
2. In the changing global environment, the spread of capitalism makes the world smaller.
a) Business has new markets to conquer.
b) The implementation of free markets in Eastern Europe further underscores the growing interdependence between countries of the world.
3. A boundaryless world introduces new challenges for managers.
4. One specific challenge, one of the first issues to deal with, is the perception of "foreigners." (PPT 2-4)
5. U.S. managers in the past held a rather parochial view of the world of business.
a) Parochialism is a narrow focus.
b) Seeing things solely through their own eyes and perspectives is an ethnocentric view.
c) They believed that their business practices were the best in the world.
d) They did not recognize different ways of doing things or living.
6. Countries have different values, morals, customs, political and economic systems, and laws.
7. Traditional approaches to international business sought to advance general principles.
a) Organizational success can come from a variety of managerial practices.
b) Example, status is perceived differently in different countries.
1) In France, status is the result of factors important to the organization, ascribed status.
c) Countries also have differences in their laws.
1) In the United States, laws guard against employers’ taking action against employees solely on the basis of an employee’s age.
2) Similar laws do not exist in all other countries.
8. Viewing the global environment from any single perspective may be potentially problematic.
9. An appropriate approach is recognizing the cultural dimensions of a country’s environment.
10. A study of the differences of cultural environments was conducted by Geert Hofstede. (PPT 2-4)
a) Surveyed over 116,000 employees in forty countries—all of whom worked for IBM.
b) Found that managers and employees vary on five value dimensions of national culture.
1) Power distance.
2) Individualism versus collectivism.
3) Quantity of life versus quality of life.
4) Uncertainty avoidance.
5) Long-term versus short-term orientation.
11. Highlights of conclusions from Hofstede’s research.
a) China and West Africa scored high on power distance; the United States and the Netherlands scored low.
b) Most Asian countries were more collectivist than individualistic.
c) The United States ranked highest among all countries on individualism.
d) Germany and Hong Kong rated high on quantity of life.
e) Russia and the Netherlands rated low on quantity of life.
f) On uncertainty avoidance, France and Russia were high; Hong Kong and the United States were low.
g) China and Hong Kong rated high on Long-Term Orientation while France and the U.S. rated low.
12. The Global Leadership and Organizational Behavior Effectiveness (GLOBE) research program has updated Hofstede’s research. (PPT 2-5)
a) Using data from 825 organizations in 62 countries, GLOBE identified 9 dimensions on which national culture differ:
1) Assertiveness
2) Future orientation
3) Gender differentiation
4) Uncertainty avoidance
5) Power distance
6) Individualism/collectivism
7) In-group collectivism
8) Performance orientation
9) Human orientation
b) See Exhibit 2-4 (PPT 2-5)
c) The GLOBE study confirms that Hofstede’s original dimensions are still valid, and has added some additional dimensions.
d) It also provides us with an update measure of where countries rate on each dimension.
1) For example, the United States led the world in individualism in the 1970s but today scores in the mid-ranks of countries.
e) We can expect future cross-cultural studies of human behavior to increasingly use the GLOBE dimensions to assess differences between countries.
1. Suppose you need information on how well your unit is meeting its production standards.
a) Thirty years ago you would have submitted a requisition to the operations-control department.
b) Today, a few keystrokes on your computer will get that information almost instantaneously.
2. Since the 1970s, U.S. companies such as General Electric, CitiGroup Technologies, Wal-Mart, and 3M have been using automated offices, robotics, computer-assisted design software, integrated circuits, microprocessors, electronic meetings, etc.
a) These technologies make organizations more productive and help them create and maintain a competitive advantage.
3. Technology includes any equipment, tools, or operating methods that are designed to make work more efficient.
a) Technological advances reflect integrating technology into a process for changing inputs into outputs.
b) Technology made it possible to enhance production processes by replacing human labor with electronic and computer equipment.
c) Technology is making it possible to better serve customers (e.g., ATMs at banks)
4. Technological advancements are also used to provide better, more useful information.
a) Most cars built today have an on-board computer circuit that a technician can use to determine problems with the automobile, saving countless diagnostic hours.
b) And at Wal-Mart, technology has meant getting better and more timely information.
5. Technological changes, especially IT changes, have a significant effect on organizational management.
6. IT has created the ability to circumvent the physical confines of doing work only in a specified organizational location.
7. One important implication is that employees’ job skill requirements will increase.
8. Another implication is that IT tends to level the competitive playing field.
9. E-commerce is becoming the standard label to describe the sales side of electronic business.
a) Encompasses presenting products on Web sites and filling orders.
b) Global e-commerce spending trillions of dollars. .
10.
E-business refers to the full breadth of activities included in a successful Internet-based enterprise.a) Developing strategies for running Internet-based companies.
b) Improving communication between employees, customers, and suppliers.
c) Collaborating with partners to electronically coordinate design and production.
11. E-organization (e-orgs) refers to applications of e-business concepts to all organizations.
a) The Internal Revenue Service is an e-organization because it now provides access to taxpayers over the Internet.
b) There are three underlying concepts of the e-organization.
1) The Internet—a worldwide network of interconnected computers.
2) Intranets—an organization’s private Internet.
3) Extranets—extended intranets, accessible only to selected employees and authorized outsiders.
c) E-organizations are defined by the degree to which they use global (Internet) and private (intranet and extranet) network linkages (See Exhibit 2-5)
1) Type A—traditional organizations.
2) Type B—Contemporary organizations with heavy reliance on intranets and extranets.
3) Type C—small e-commerce firms.
4) Type D—full e-organizations with completely integrated global and private networks.
5) See Exhibit 2-5.
12. The Internet and E-organizations.
a) The Internet created thousands of new businesses,
b) Changed the way organizations operated, and
c) Left a lot of road kill.
d) Growth of e-organizations is expected.
13. Technology changed the manager’s job.
14. Organizations today have become integrative communication centers.
15. Managers can get complete information quickly, better formulate plans, make faster decisions, more clearly define the jobs that workers need to perform, and monitor work.
a) Information technology enhanced a manager’s ability to more effectively and efficiently perform the four primary activities of management.
16. Technology is also changing how a manager’s work is performed.
a) Historically, the work site was located close to a source of skilled labor.
b) Management could observe what work was being done and communicate face to face.
c) Managers are able to supervise employees in remote locations, and the need for face-to-face interaction has decreased dramatically.
d) Telecommuting capabilities make it possible for employees to be located anywhere on the globe.
e) Many employers no longer have to consider locating a business near their work force.
(1) Example, Progressive Auto Insurance in Omaha, Nebraska could hire qualified workers in Dillon, South Carolina ---provide them with computer equipment and appropriate ancillaries, and the work could be done hundreds of miles away and transmitted to the home office.
17. Management’s two biggest challenges—effectively communicating with individuals in remote locations, as well as ensuring that performance objectives are being met.
a) Addressing these challenges will focus on training managers in establishing performance standards and ensuring appropriate work quality and on-time completion.
b) Need for more employee involvement with emphasis on output, not means.
1. The importance of corporate social responsibility surfaced in the 1960s when the activist movement began questioning the singular economic objective of business.
2. Before the 1960s, few people asked such questions. Good arguments can be made for both sides of the social responsibility issue.
a) See Exhibit 2-6.
3. Managers are now regularly confronted with decisions that have a dimension of social responsibility.
4. In a globally competitive world, few organizations can afford the bad press or potential economic ramifications associated with being seen as socially irresponsible.
5. Few terms have been defined in as many different ways as social responsibility.
6. Some of the more popular meanings.
a) Profit making only.
b) Going beyond profit making.
c) Voluntary activities.
d) Concern for the broader social system.
e) Social responsiveness.
7. The debate has focused at the extremes.
a) The classical—or purely economic—view that management’s only social responsibility is to maximize profits.
b) The socioeconomic position, which holds that management’s responsibility goes well beyond making profits to include protecting and improving society’s welfare.
1. According to the text, social responsibility is a business firm’s obligation, beyond that required by the law and economics, to pursue long-term goals that are good for society.
a) This definition assumes that business obeys the law and pursues economic interests.
b) This definition views business as a moral agent.
2. Comparison with two similar concepts: social obligation and social responsiveness.
a) Social obligation is the foundation of a business’s social involvement. A business has fulfilled its social obligation when it meets its economic and legal responsibilities. A firm pursues social goals only to the extent that they contribute to its economic goals.
b) Social responsibility and social responsiveness go beyond meeting basic economic and legal standards. This might mean respecting the community in which the company operates, treating all employees fairly, respecting the environment, supporting women and minorities, not doing business in countries where there are human rights violations, etc.
3. Social responsibility also adds an ethical imperative.
4. Social responsiveness refers to the capacity of a firm to adapt to changing societal conditions.
5. Social responsibility requires businesses to determine what is right or wrong and thus seek fundamental ethical troths.
6. Social responsiveness is guided by social norms.
1. Ethics commonly refers to the rules or principles that define right and wrong conduct.
a) Corporate scandals at companies such as Adelphia, Enron, and ImClone have resulted in a lack of trust for management.
b) Exhibit 2-7 presents three views of ethical standards.
2. Whether a manager acts ethically or unethically will depend on several factors, including:
a) the individual’s morality.
b) values.
c) personality and experiences.
d) the organization’s culture.
e) the issue in question.
3. 82 percent of corporate executives surveys admitted they cheat at golf –and 72 percent of them believe that golf and business behaviors are parallel.
4. People who lack a strong moral sense are much less likely to do the wrong things if they are constrained by rules, policies, job descriptions, or strong cultural norms.
5. Codes of ethics are an increasingly popular tool for reducing that ambiguity.
a) A formal document that states an organization’s primary values and the ethical rules it expects managers and operative employees to follow.
b) Nearly 90 percent of Fortune 1000 companies have a stated code of ethics.
6. The effectiveness of ethical codes depends heavily on whether management supports them, ingrains them into the corporate culture, and how employees who break the codes are treated.
1. Entrepreneurship—a process where an individual or a group of individuals risk time and money in pursuit of opportunities to create value and grow through innovation regardless of the resources they control.
2. Three important themes in this definition.
a) The pursuit of opportunities—to grow a business by changing, revolutionizing, transforming, or introducing new products or services.
b)
Innovation.c) Growth.
3. Entrepreneurs create entrepreneurial ventures—characterized by innovative practices with growth and profitability as their primary goals.
4. Small businesses—independently owned, operated, and financed with fewer than 500 employees, relatively little impact on its industry—may or may not engage in any new or innovative practices.
1. Four key steps that entrepreneurs must address as they start and manage their entrepreneurial ventures. (PPT 2-11)
a) Exploring the entrepreneurial context.
1) Includes the realities of the new economy, society’s laws and regulations that compose the legal environment, and the realities of the changing world of work.
b) Identifying opportunities and possible competitive advantages.
c) Starting the venture.
d) Managing the venture.
1. Entrepreneurs are creating something new—searching for change, responding to it, and exploiting it.
2. Assessing the potential for the entrepreneurial venture and then dealing with start-up issues.
3. Researching the venture’s feasibility—uncovering business ideas, looking at competitors, and exploring financing options.
4. Developing a viable organizational mission, exploring organizational culture issues, and creating a well-thought-out business plan (See Ch. 3)
5. Organizing the venture—choosing a legal form of business organization, addressing other legal issues such as patent or copyright searches, and coming up with an appropriate organizational design for structuring how work is going to be done.
6. Launching the venture—setting goals and strategies, and establishing the technology-operations methods, marketing plans, information systems, financial-accounting systems, and cash flow management systems.
7. Managing the entrepreneurial venture—making decisions, establishing action plans, analyzing external and internal environments, measuring and evaluating performance, and making needed changes.
8. Managing the people-related activities—selecting and hiring, appraising and training, motivating, managing conflict, delegating tasks, and being an effective leader.
9. Managing the venture’s growth—developing and designing growth strategies, dealing with crises, exploring various avenues for financing growth, placing a value on the venture, and perhaps eventually exiting the business.
1. The entrepreneurial spirit is not limited solely to the small business.
2. Some companies are attempting to model the activities of the entrepreneur.
a) Entrepreneurs are better able to respond to a changing environment.
b) The owner-manager is usually close to the customer.
c) The owner-manager is the main decision maker; the result is a flatter organization.
3. Intrapreneurs—people who demonstrate entrepreneurial characteristics in large organizations.
a) Can entrepreneurs exist in every large, established organization?
b) The answer depends on one’s definition of entrepreneur.
4. Peter Drucker argues that they can.
a) An entrepreneurial manager is someone confident in his/her abilities, who seizes opportunities for change, and who not only expects surprises but capitalizes on them.
b) Contrasted with the traditional manager, who feels threatened by change, is bothered by uncertainty, prefers predictability, and is inclined to maintain the status quo.
c) Drucker’s use of the term "entrepreneurial" is misleading.
1) By any definition of good management, his entrepreneurial type would be preferred to the traditional type.
2) Intrapreneurship can never capture the autonomy and riskiness inherent in true entrepreneurship.
1. Until very recently, managers took a "melting-pot" approach to differences in organizations.
2. They assumed that people who were different would somehow automatically want to assimilate.
3. Managers found that employees do not set aside their cultural values and lifestyle preferences when they come to work.
4. The melting-pot assumption is being replaced by the recognition and celebration of differences.
1. Much of the change that has occurred in the work force is attributed to the passage of U.S. federal legislation in the 1960s prohibiting employment discrimination.
2. Avenues began to open up for minority and female applicants and they have become the fastest growing segment in the work force.
3. Birthrates in the United States began to decline.
4. As globalization became more pronounced, Hispanic, Asian, and other immigrants came to the United States and sought employment.
5. Work-force diversity will be heterogeneous: males and females; whites and people of color; gays and straights; Hispanics, Asians, and Native Americans; the disabled, and the elderly.
6. The aging Baby Boom population is also having a significant impact on the work force.
7. Referred to as the "graying of the work force," our work force is increasingly witnessing those individuals who desire to work past "retirement" age.
a) Need to have a greater income to sustain current living standards, and
b) Desire to remain active.
8. More than 80 percent of the Baby Boom generation indicate they expect to work past 65.
9. The U.S. Congress passed the Senior Citizen’s Freedom to Work Act which eliminated the benefits penalty for those individuals on Social Security who earn more than $17,000 per year.
10. We can expect our work force to continue to get older, with 70- and 80-year-old workers no longer uncommon.
11. Multi-culturalism is also reshaping the labor pool as the proportion of people of Hispanic, Asian, Pacific Island, and African origins has increased significantly over the past two decades.
1. More diversity leads to adapting human resource practices to reflect those changes.
2. Many organizations today, like Bank of America, have work force diversity programs.
a) Hire, promote and retain minorities.
b) Encourage vendor diversity.
c) Provide diversity training for employees.
3. Some, like Coca-Cola, Motorola, and Mars actually conduct cultural audits to ensure that diversity is pervasive. (See Exhibit 2-8)
a) The diversity that exists in the work force requires managers to be more sensitive to the differences that each group brings to the work setting.
b) Managers may have to shift their philosophy to recognizing individual differences and responding to those differences in ways that will ensure employee retention and greater productivity.
1) Recognize and deal with the different values, needs, interests, and expectations of employees;
2) Avoid any practice or action that can be interpreted as being sexist, racist, or offensive to any particular group;
3) Not illegally discriminate against any employee; and
4) Find ways to assist employees in managing work/life issues.
1. Employees in the 1960s and 1970s showed up at the workplace Monday through Friday and did their job in eight- or nine-hour chunks of time.
2. Today’s employees are increasingly complaining that the line between work and non-work time has become blurred, creating personal conflicts and stress.
a) The creation of global organizations means their world never sleeps.
b) Communication technology allows employees to do their work at home, in their car, or on the beach in Tahiti.
c) Organizations are asking employees to put in longer hours.
d) Fewer families have only a single breadwinner.
3. Employees are increasingly recognizing that work is squeezing out their personal lives and they want jobs that give them flexibility in their work schedules so they can better manage work/life conflicts.
4. Organizations that don’t help their people achieve work/life balance will find it increasingly hard to attract and retain the most capable and motivated employees.
1. There is both an abundance and a shortage of skilled labor in the United States.
1. Corporate America used to follow a simple rule—in good times you hire employees; in bad times, you fire them.
2. Since the late 1980s that "rule" no longer holds true; most Fortune 500 companies made
significant cuts in their overall staff.
a) In the fourth quarter of 2006 alone, more than 255,000 jobs were cuts in US companies; nearly one-million lost jobs in 2006.
b) Jobs are being eliminated (downsizing) in almost all industrialized nations.
3. Organizations are attempting to increase their flexibility to better respond to change.
4. Quality emphasis programs are creating flatter structures and redesigning work to increase efficiency.
a) The result is a need for fewer employees.
5. Downsizing as a strategy is here to stay.
a) It’s part of a larger goal of balancing staff to meet changing needs.
6. A better term might be rightsizing. Rightsizing involves linking staffing levels to organizational goals.
a) Rightsizing promotes greater use of outside firms for providing necessary products and services—outsourcing—in an effort to remain flexible and responsive to the ever-changing work environment.
a) Thousands of organizations are converting many jobs into temporary or part-time positions—giving rise to what is commonly referred to as the contingent work force.
1) See Exhibit 2-9. (PPT 2-14)
b) Many large companies are converting some permanent jobs into temporary ones.
c) Organizations facing a rapidly changing environment must be in a position to adjust rapidly to those changes.
1) Having a large number of permanent full-time employees limits the ability to react.
2) Organizations that rely heavily on contingent workers will have greater flexibility because workers can be easily added or taken away as needed.
8. What issues do contingent workers create for managers?
a) Each contingent worker may need to be treated differently in terms of practices and policies.
b) Managers must also make sure that contingent workers do not perceive themselves as second-class workers.
c) They may not be as loyal, as committed to the organization, or as motivated on the job as permanent workers are.
d) Today’s managers need to motivate their entire work force—full-time and temporary employees—and to build their commitment to doing good work!
1. In the late 1990s, most employers found it difficult to find skilled workers to fill vacancies.
2. In 2001, layoffs were widespread and the supply of skilled workers became much more plentiful.
3. A labor shortage is expected in the United States and most of Europe for at least another 10 to 15 years.
4. The U.S. labor shortage is a function of two factors—birth rates and labor participation rates.
a) There are 76 million Baby Boomers (those born between 1946 and 1965) in the work force.
b) There are 30 million fewer Gen-Xers (those born after 1965) to replace them when they retire.
c) Around 2010, the major exodus of Boomers from the workplace will be in full force, anticipating that nearly 6 million jobs will be unfilled.
d) Repercussions from Sept. 11th2001 in the US may have the potential of reducing immigration and further reducing the supply of skilled labor.
e) The huge increase of women that entered the workforce in the latter part of the twentieth century has now been tapped.
f) There is declining interest by older workers to stay in the labor force.
1) In 1950, nearly 80 percent of all 62-year-old men were still working.
2) Today, only slightly more than half are.
5. In tight labor markets, those managers who don’t understand human behavior and fail to treat their employees properly, risk having no one to manage!
1. Henry Ford said his customers could have any color car they wanted—as long as it was black. work process engineering.
1. American Express believes in customer service.
a) A customer service representative received a call at 10:30 p.m. that a gold card customer left her card in a restaurant 30 miles away and had to catch a 7:30 a.m. flight the next morning.
b) At 11:45 p.m. the same evening, the customer received a replacement card delivered by courier to her front door!
2. The majority of employees today in developed countries work in service jobs.
a) 75 percent of all private sector jobs in the United States and Canada are in service industries.
b) These jobs require substantial interaction with an organization’s customers.
3. In organizations in service industries, there is a clear chain of cause-and-effect running from employee attitudes and behavior to customer attitudes and behavior to an organization’s revenues and profits.
4. Sears found that a 5 percent improvement in employee attitudes leads to a 1.3 point increase in customer satisfaction, which in turn translated into a 0.5 percent improvement in revenue growth.
5. Sears also found that by training employees to improve the employee-customer interaction, it was able to improve customer satisfaction by 4 percent over a 12-month period, which generated an estimated $200 million in additional revenues.
6. Many an organization has failed because its employees failed to please the customer.
7. Management needs to create a customer-responsive culture—where employees are friendly and courteous, accessible, knowledgeable, prompt in responding to customer needs, and willing to do what’s necessary to please the customer.
8. Can you create a customer-responsive culture?
a) French retailers have a well-established reputation for indifference to customers.
b) Most organizations today are trying very hard to be un-French-like.
c) Companies that have created customer-responsive cultures include Southwest Air, FedEx, Johnson & Johnson, Nordstrom, and L. L. Bean.
1) They have built a strong and loyal customer base and have generally outperformed their competitors in revenue growth and financial performance.
9. What are the key variables shaping customer-responsive cultures?
a) Five variables are routinely evident in customer-responsive cultures. (See Exhibit 2-10)
1) The employees are outgoing and friendly.
2) Service employees need to have the freedom to meet changing customer-service requirements—rigid rules, procedures, and regulations make this difficult.
3) Employees need to be empowered—have the decision discretion to do what’s necessary to please the customer.
4) Good listening skills—the ability to listen to and understand messages sent by the customers.
5) Customer-responsive cultures have employees who exhibit organizational citizenship behavior.
(a) They are conscientious in their desire to please the customer.
(b) They’re willing to take the initiative, even when it’s outside their normal job requirements, to satisfy a customer’s needs.
10.
What managerial actions are needed?a) There are seven actions management can take to make its culture more customer responsive and to create employees with the competence, ability, and willingness to solve customer problems as they arise.
b) Selection—hiring service-contact people with the personality and attitudes consistent with a high service orientation.
1) Southwest Airlines puts its job applicants through an extensive interview process to assess whether a candidate has the outgoing and fun-loving personality that it wants in all its employees.
c) Training—making its current employees more customer-focused.
1) General Motors, Shell, and J.P. Morgan have used training focusing on such areas as improving product knowledge, active listening, showing patience, and displaying emotions to help employees move away from their product focus.
2) Even new employees who have a customer-friendly attitude may need to understand management’s expectations.
3) Even the most customer-focused employees can lose direction every once in a while and benefit from regular training updates where the organization’s customer-focused values are restated and reinforced.
d) Organizing—give employees more control.
1) Reducing rules and regulations. Allow employees to adjust their behavior to the changing needs and requests of customers.
e) Empowerment—allows service employees to make on-the-spot decisions to completely satisfy customers.
f) Leadership—conveying a customer-focused vision and demonstrating by their continual behavior that they are committed to customers.
g) Evaluation—based on such measures as how they behave or act—on criteria such as effort, commitment to teamwork, friendliness, and the ability to solve customer problems—rather than on measurable outcomes they achieve.
h) Rewards—reward good service.
1) Provide ongoing recognition to employees who have demonstrated extraordinary effort to please customers and who have been singled out by customers for "going the extra mile."
2) Make pay and promotions contingent on outstanding customer service.
1. There is a quality revolution.
a) The generic term that has evolved to describe this revolution is quality management, or continuous improvement.
b) Inspired by quality experts like Joseph Juran and the late W. Edwards Deming.
2. An American, Deming found few managers in the United States interested in his ideas.
a) In 1950, he went to Japan and began advising many top Japanese managers.
b) Central to his methods, the use of statistics to analyze variability in production processes.
c) A well-managed organization was one in which statistical control reduced variability and resulted in uniform quality and predictable quantity of output.
3. Deming developed a 14-point program for transforming organizations.
4. Today, Deming’s original program has been expanded into a philosophy of management that is driven by customer needs and expectations (See Exhibit 2-11). (PPT 2-17)
5. Quality management expands the term "customer" to include everyone involved with the organization, either internally or externally—encompassing employees and suppliers as well as the people who buy the organization’s products or services. (PPT 2-17)
a) The objective is to create an organization committed to continuous improvement, or as the Japanese call it, "kaizen."
6. Quality management is a departure from the earlier management theories that were based on the belief that low costs were the only road to increased productivity.
The Japanese demonstrated that it was possible for the highest-quality manufacturers to be among the lowest-cost producers.a)
Managers in American auto manufacturing facilities and in other industries soon recognized the importance of quality management and implemented many of its basic components.b)
c) The elements and the goals of quality management and continuous improvements are essential characteristics in achieving an effective and lean workplace.
1. Continuous improvement methods provide useful innovations; they focus on incremental change.
2. Such action—a constant and permanent search to make things better—is intuitively appealing.
3. Many organizations, however, operate in an environment of rapid and dynamic change and a continuous improvement process may keep them behind the times.
a) A focus on continuous improvements may provide a false sense of security.
b) Incremental change may avoid facing up to the possibility that what the organization may really need is radical or quantum change, referred to as work process engineering.
c) Continuous change may also make managers feel as if they are taking progressive action while avoiding quantum changes that will threaten organizational members.
4. Aren’t these contradictory statements?
a) Continuous improvement can lead to organizational improvements, but it may not be the right approach initially.
b) That's the case if you are producing a new improved version of an outdated product when a complete overhaul might be required.
c) After the overhaul, then continuous improvement can have its rightful place.
5. Electronic organizer business example, continuous improvement approach.
a) Frame of reference, an electronic search capability for names and addresses, calendar of tasks, an expanded keyboard function, and the like.
b) Your continuous improvement focus—more memory, larger storage capabilities, or longer-lasting batteries.
6. A competitor reengineers the design process.
a) Your competitor asks, "How can we design an electronic organizer that is more useful, expandable, and provides greater mobility?"
b) Starting from scratch, your competitor completes a redesign for a "wireless personal data assistant."
c) You are now competing against technology that may make your product obsolete.
7. In this theoretical example, both companies made progress.
a) But who made the most progress given the dynamic environment they face?
8. Our example demonstrates why companies such as Thermos, Ryder Trucks, and Casio Computer are opting for work process engineering rather than incremental change.
1. Both organizations and managers need to be more flexible and respond to change.
2. Frederick Taylor, the father of scientific management (See History Module), argued nearly a century ago for the division of work and responsibility between management and workers.
3. Workers today are far better educated and trained than they were in Taylor’s day.
a) Today’s workers may be considerably more knowledgeable than those who manage them about how best to do their jobs.
4. Managers are transforming themselves from bosses into team leaders.
a) Managers are finding that they become more effective when they focus on motivating, coaching, and cheerleading.
b) Managers also recognize that they can often improve quality, productivity, and employee commitment by redesigning jobs to increase the decision-making discretion of workers.
5. We call this process empowering employees.
6. The empowerment movement is being driven by two forces.
a) First is the need for quick decisions by those people who are most knowledgeable about the issues.
b) Second is the reality that the large layoffs in the middle-management ranks that began in the late 1980s have left many managers with considerably more people to supervise than they had in the past.
7. Letting go and stretching can be likened to the role of a sports team coach.
a) Consider the job of head coach of a college football team.
b) This individual establishes the game plan and readies the players for the task.
c) The players execute the game plan.
d) During the game what the coach does depends on how well the plan is working.
e) Thus, the coach deals with the exceptions.
8. This coaching role is increasingly becoming an accurate description of today’s managers!
1. The first wave was agriculture and individuals were their own bosses, responsible for performing a variety of tasks. The second wave was industrialization when work left the fields and moved into formal organizations with workers hired into tightly structured and formal workplaces dominated by mass production, specialized jobs, and authority relationships. The third wave is information technology and has significantly reduced low-skilled, blue-collar jobs in manufacturing. It has also created abundant opportunities for educated and skilled technical specialists, professionals, and other knowledge workers.
2. Competitors are no longer defined within national borders. Managers must think globally, be prepared to deal with the changes globalization fosters, and be able to work with individuals from diverse cultures.
3. Technology provides managers with immediate access to information that will help them in making decisions. It also allows managers to supervise employees in remote locations with little face-to-face interaction. Effectively communicating with individuals in remote locations as well as ensuring that performance objectives are being met will become major challenges.
4. The term e-commerce encompasses presenting products on Web sites and filling orders. E-business includes developing strategies for running Internet-based companies; improving communication between employees, customers, and suppliers; and collaborating with partners to electronically coordinate design and production. The term e-organization (e-orgs) refers to applications of e-business concepts to all organizations.
5. Social responsibility refers to an obligation (beyond that required by law and economics) for a firm to pursue long-term goals that are good for society. Ethics refers to rules or principles that define right or wrong conduct.
6. Entrepreneurship is a process where an individual or a group of individuals risk time and money in pursuit of opportunities to create value and grow through innovation, regardless of the resources they control. The components of entrepreneurial ventures are organizations that are pursuing opportunities, that are characterized by innovative practices, and that have growth and profitability as their primary goals.
7. The work force of 2010 will witness heterogeneity of gender, race, and ethnicity. It will also include the physically disabled, gays and lesbians, the elderly, and those who are significantly overweight. The most important requirement for managers is sensitivity to the differences among individuals.
8. Employees are increasingly focusing on the balance between work and personal time. Global organizations, customer responsiveness, technology, and longer work hours have all contributed to this debate. Employees are recognizing that work is squeezing our their personal lives and they want "a life" as well as a job!
9. Many corporations have downsized in an attempt to increase their flexibility. Continuous improvements and work process engineering activities have created flatter structures and redesigned work to increase efficiency.
10. Variables routinely evident in customer-responsive cultures include hiring service-oriented, outgoing, and friendly employees; giving service employees the freedom to meet changing customer-service requirements; empowering employees, giving them decision discretion to do what’s necessary to please the customer; ensuring that employees have good listening skills; ensuring that employees are conscientious in their desire to please the customer, and that they’re willing to take the initiative, even when it’s outside their normal job requirements, to satisfy a customer’s needs.
11. Today’s educated consumer demands quality and continuous improvement. These are also strategic initiatives in an organization designed to make the operation more efficient and effective.
Missionary man
Aug 27th 2009 From
The Economist print editionDavid Neeleman thinks Brazil is just as good a place to do business as America
WHEN David Neeleman returned to Brazil as a 19-year old Mormon missionary, he spent two years among shoeless children and their toothless parents in the country’s poor north-east. The experience turned him into "kind of an anarchist", he says. His band of missionaries rented a house in Recife that was next to a slum and started trying to convert the people who lived there. Mr Neeleman reckons that he made about 100 converts—a number he does not consider particularly impressive.
This was a different country from the Brazil that Mr Neeleman knew from his childhood. He was born in So Paulo to parents who were also Mormon missionaries. He spent several years living the life of a well-to-do Brazilian child in the country’s south-east, which typically revolves around beaches, barbecues and private sports clubs.
Many Brazilians lament the contrast between these two worlds. But it is less marked now than it was in Mr Neeleman’s childhood thanks to a recent spell of growth that has favored the poor in particular. In that he sees an opportunity. Brazil’s middle class is swelling: at the last count there were 97m people in marketing bracket "C", which means they are rich enough to contemplate getting on an airplane. Mr Neeleman, in turn, has some experience getting people onto planes, having founded JetBlue, an American airline that aims to combine low cost with relatively lavish service.
Mr Neeleman insists that he was "pretty much done with the airline business" last year, when he resigned as chairman of JetBlue, which he had taken from an idea to an IPO and is now valued at $1.6 billion. The previous year he had ceased to be chief executive after blunders had left angry passengers stranded during a spell of bad weather. Mr Neeleman says he was "humiliated and mortified" by it all. That episode followed an earlier embarrassment, when JetBlue had handed over the names of its customers to a military contractor looking for terrorists.
When he tried to put all this behind him by returning to Brazil, he found air fares that were 70% higher than in America in a country that is considerably poorer, a market in which the two biggest carriers, TAM and Gol, had a combined share of 85% and large areas of the country that were scantily served by airlines. All this tempted him back into a business that in the words of Sir Richard Branson, British founder of the Virgin family of carriers, excels at turning billionaires into millionaires.
Making air travel more accessible in a country the size of the continental United States, where infrastructure is rickety and many families have been scattered by internal migration, is a noble aim—and potentially a lucrative one. "It sometimes feels like this country is built for 20m people," says Mr Neeleman, when in fact it has close to 190m souls. His Brazilian airline Azul (which means blue) was born in December last year. On some routes, its tickets are cheaper than a bus fare for the same journey.
In nine months the company has gone from having no employees to a staff of 1,300. It has 12 planes made by Embraer, a local firm, which pleases the Brazilian government; it will have 14 by the end of the year. Azul is already the country’s third-biggest carrier, although it is still a long way behind the big two.
The speed with which Mr Neeleman has got his new company airborne is perhaps surprising given Brazil’s reputation as a bureaucratic place where life is hard for entrepreneurs. In its "Doing Business" survey, the World Bank ranks Brazil 121 places lower than America on ease of starting a business. According to Mr Neeleman, lots of things that companies need, from capital to telephone lines and computing expertise, are indeed more expensive in Brazil than in America. Labor is not much cheaper when taxes are taken into account. The corporate tax rate is lower than in America but Azul needs an army of accountants to pay it correctly. Customers have less access to credit than American ones do, so Azul has had to perform some of the services of a bank, offering interest-free credit for ten months, and so on.
But the feebler competition and growing market compensate for this. "America has an excess of everything: cars, credit," says Mr Neeleman. "Down here people are getting their first car, first credit card, owning their first home. It feels like the beginning of the cycle."
Mr Neeleman is also lucky that Brazil’s aviation infrastructure may soon improve. The country has lots of airports, which were built enthusiastically by the military regime that ruled the country from 1964 to 1985. But many of them are in disrepair and the state company in charge of them, Infraero, has been poorly run. A low point came in 2007 when a TAM plane skidded off the end of a runway in So Paulo, killing 199 people. But the government has put new managers in place at Infraero and plans to renovate Brazil’s airports before the country hosts the World Cup in 2014.
The gospel of prosperity
Mr Neeleman and his wife recently returned to the church where he was a missionary in Recife. One generation later, he says, there was a car park full of new vehicles, and a beautiful chapel. When he gets a break from his nine children and his corporate offspring, Mr Neeleman devotes a lot of time to the Mormon church’s charity work, which aims to foster economic development as well as the spiritual sort. But it will probably be his role as an evangelist of commerce that brings the most benefit to Brazil.
On a recent Monday at So Paulo’s international airport, a group of some 30 young American Mormons in dark suits with lapel badges bearing their names were waiting to clear immigration and begin proselytising. No doubt many of them were already looking forward to returning home. But perhaps a few will form an enduring attachment to a country that resembles America in so many ways, and will use their experience of converting the natives to start a business in Brazil too.
Chapter One PowerPoint (Web Based)
Chapter One PowerPoint Handout (PDF Based)
Chapter Two PowerPoint (Web Based)
Chapter Two PowerPoint Handout (PDF Based)
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