Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. Benchmark Quiz Results ………………. …………….....………... 30(1) 40(2) 45(2) 50(4) 55(8)

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved.

Benchmark Quiz Results

………………. ……………. ....………... 30(1) 40(2) 45(2) 50(4) 55(8) 60(6) 65(2) 70(3) 75(2) 80(2)

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Want to Start My Own Business

More than half of you said “yes” to this question.

This entrepreneurial ambition is one of the reasons the U.S. economy has always been so innovative.

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Rich Don’t Pay Fair Share of Taxes

In 2006*, the top two percent of U.S. earnerspaid $522 billion in federal taxes – about 62% of individual tax receipts. The top one percent (earning $388,000 a year or higher) paid $408 billion – about 40%The bottom 50% paid NO taxes.*Latest year for which data is available

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U. S. GovernmentDesigned to be Inefficient

Fearing concentration of power, the founders sought to maximize liberty and opportunity for the individual, not the collective

• Not a democracy, but a republic with God at the center (“Man is endowed by his Creator with certain unalienable rights.”)

• Maximized checks and balances by dividing specific powers among three branches of government (legislative, executive and judicial); this “Separation of Powers” frequently yields stalemate

• Created an endless battle between states’ rights and federal overreach (“United STATES of America”)

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Power to the people

“Government is a dangerous servant and a fearful master.” George Washington“That government is best which governs least.” Thomas Jefferson

“Government should fear the people, not people their government.” Ronald Reagan“Government should be small, close, accountable and cheap.” “The combination of capitalism and the constitution has created the most open and rich economy in history.”Jim Olson

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Government and Job Creation?

“Government programs can directly create additional American jobs.”

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Government-created Jobs• Government can only create POLICIES that encourage

economic growth. • It is a money-taker, not a money-maker. To create jobs,

government has to confiscate money from you and me in the form of taxes or print new money (deflating the value of all dollars already in circulation) or borrow money, creating debt that must be paid off by taxing our grandkids, their grandkids, and their grandkid’s grandkids for many generations to come.

• The accurate description of this monetary transfer from taxpayers to the government is redistribution.

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The National Debt

• The current national debt is more than $15 trillion

• The U.S. GDP is only $14.5 trillion• Government cannot forever confiscate and

redistribute more wealth than taxpayers create or America will go bankrupt


Government Job Creation

• Building a bridge to meet a public need may be more valuable to the taxpayers collectively than things for which they would individually spend their money.

• But building the bridge does not create additional (the trick in the question) jobs. It simply displaces private-sector jobs that would have been created with the dollars government confiscated to build the bridge.

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Example

• Let’s say it takes 300 workers two years to build the bridge.

• They are paid with tax money, which taxpayers now cannot spend at Bi-Lo, Target, the local auto dealer, etc.

• In effect, these other sectors shed or forego one or more jobs for each bridge-building job government creates. Government is simply a big transfer machine. Robbing Peter to pay Paul cannot create additional jobs.

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Salamanca Scholastics

Everyone talks about Adam Smith and his Wealth of Nations….

The Salamanca Scholastics came up with his ideas nearly 300 years before he thought of them.


Key Dates in American History

1604: Jamestown, VA, is established; what were these European immigrants seeking?

1776: Declaration of Independence and the revolutionary war

1787: U.S. Constitution1791: Ratification of the Bill of Rights (the initial

10 amendments to the constitution)


Capitalism and the Constitution

The fusion of Capitalism and the Constitution formed the most powerful economic partnership and created the richest nation in history. It is still successful 230 years later because man’s nature – upon which the Constitution is based -- has not changed.


Creation of the Constitution

• During the summer of 1787, fifty-five founders gathered in Philadelphia for 18 weeks to write the Constitution

• They nailed the meeting hall shutters closed to foil eavesdroppers. As Benjamin Franklin said, “Three men can share a secret if two of them are dead.”

• As he exited from the final day of meetings, a bystander asked Franklin “Have you given us a democracy?” Franklin answered, “No. We have given you a republic… if you can keep it.”


What is the difference between a Democracy and a Republic?

• Democracy is a direct expression of your reaction to a proposed government policy (example: California’s referendum process); the founders knew most voters would lack the time, expertise and incentive to directly protect their personal interests from government interference or subversion by special interests.

• In the republic they created, you hire (elect) a professional (politician) to act on your behalf and indirectly affect national policy creation by electing or ejecting this person.


The Right to Rebel

You get the government you deserve• Your right to rebel against government is enshrined in

the constitution: “Government derives its just powers from the consent of the governed.”

• Your congressman and your senators work for you. You have a duty to monitor their performance and fire them at the next election if they don’t deliver what you sent them to Columbia or Washington to protect or create.


Roots

• The founders considered the rights cited in the Declaration of Independence, the Constitution and the Bill of Rights to be “natural law” coming from God, not man.

• Thomas Jefferson put it this way: “The God who gave us life also gave us liberty.” Then he wrote it into the Declaration of Independence: “All men are endowed by their Creator with certain unalienable rights…”


Duty to Defend Constitution

• Whenever a public official (congressman, senator, judge, etc.) is sworn into office, he or she swears “to support and defend the Constitution from all enemies foreign and domestic.” Unfortunately, many then do things that clearly demonstrate they lied.


What is the proper role of government?

Example: waging war– This lesson was learned at Valley Forge where

8000 American militia men and soldiers gathered at the beginning of one of the coldest winters on record.

– By the time spring arrived, 3000 had deserted and 2000 had died (mostly of starvation) because Congress had no way to clothe, equip and feed them.


Proper Government Activities

How about creating policies that encourage greater capital formation, production investment, efficiency and other business actions that fuel the wealth creation that generates jobs and improves living standards?


Adam SmithThe invisible hand of the marketplaceThe founders used Adam Smith’s thoughts (among others) to create a document that would harness man’s biggest flaw (self interest) to promote the public good while also creating personal wealth. What basic conditions are necessary for capitalism to flourish?> Rule of Law> Property rights> Liberty to pursue personal wealth> Government guarantees equal opportunity to succeed not equal outcomes; inherent in this is personal responsibility.


Salamanca Scholastics

Salamanca, Spain, 1526: the Salamanca Scholastics – 250 years before Adam Smith’s Wealth of Nations in 1776. How did these guys help establish capitalism?Natural Law: right to life, liberty, property ownership, personal wealth, freedom of religion, etc. Does this sound familiar?


What About Today?

• For decades, many politicians in Washington have tried to undercut the Constitution in the name of “fairness” and “social justice.”

• These ongoing attempts have seriously skewed the balance of powers among the three branches of government (executive, legislative and judicial). Particularly guilty are activist judges who consider the U.S. Constitution a “living” document they can override with “case law” or their personal feelings about a particular issue.


You Must Pay Attention to Government Activities

“The price of liberty is eternal vigilance.”Ben Franklin, Thomas Jefferson, and others

Hold them accountable! Don’t let them encroach!


Chapter

11

Managers and Managing


Overview

• How managers use resources efficiently and effectively to achieve organizational goals

• How you can use the four managerial functions (planning, organizing, leading and controlling) to generate goal-achieving performance

• How upper, middle and front-line managers differ

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Overview

• The roles managers perform, the skills required to execute those roles effectively and the way Information Technology (IT) is affecting them

• The principal challenges managers face in today’s increasingly competitive global environment

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What is Management?

Managers plan, organize, lead, and control:1. manpower2. money3. material4. morality5. informationinside an organization where people coordinate their actions with each other in order to achieve shared goals efficiently and effectively.

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Organizational Performance

EfficientAre we using resources productively to achieve the goal?EffectiveIs the goal appropriate and how much of it are we achieving?

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Your Motivation

Why are you here?

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Why study management?

To learn to create value for yourself and those you care for by getting a job, enjoying a satisfying career, and working with your boss and coworkers to get things done!

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Planning

The process of identifying and selecting appropriate goals and courses of action -- Vision,Values, Mission,Strategy, Tactics (VVMST)

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Planning…

• Complex and difficult• Done in uncertainty• Optimum strategy not always clear• No perfect knowledge before a decision is

required

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VVMST

• Who are we and where are we going? (vision)• What do we hold most dear? (Values)• What do we want to achieve? (Mission)• How will we accomplish it? (Strategy)• What are the road map and the detailed

person- by-person responsibilities? (Tactics)

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Organizing

• Building an organization based on clear lines of authority, individual and team accountability and working relationships that enhance efficiency and effectiveness

• Allocating necessary resources• Establishing timetables and setting the

milestones to accomplish the missionWHO DOES WHAT WITH WHOM WHEN

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Leading

• Using position, personality and persuasion to empower and energize commitment and goal-achieving performance

“Getting the other fellow to do what you want him to do when you want him to do it.”

Dwight Eisenhower

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Controlling

• Evaluating how well an organization is achieving its goals and taking action to maintain or improve performance

• Requires the ability to measure performance accurately and regulate efficiency and effectiveness (the “C” in PDCA)

– Peter Drucker: “What gets measured gets done.”

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Types of Managers

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First-line Managers – Hands-on day-to-day supervision of people performing activities required to make the good or service. Responsible for effectiveness.

Middle Managers - Supervise first-line managers to find the best way to use departmental resources to achieve goals. Hands-on responsibility for efficiency.

Top Managers – Responsible for defining VVMS and monitoring/maintaining/improving organizational performance.


Restructuring

Downsizing an organization by eliminating the jobs of large numbers of top, middle, or first-line managers and non-managerial employees. Flattens structure, broadens spans of control, enhances productivity, speeds communication and usually erodes morale and commitment (Ford, GM & Chrysler right now).

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Outsourcing

• Contracting with another company in a low-cost country abroad, to perform an activity previously performed inside the company

• Can promote efficiency by reducing costs and allowing an organization to make better use of its remaining resources

• Reduces control

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Question

• Should a corporation out-source certain functions? Is out-sourcing ethical? What if it is the only way to survive?

• Stakeholder versus shareholder culture.

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Empowerment

Expanding employees’ knowledge, tasks, and responsibilities by using powerful Information Technology (scientia est potestas)

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Self-managed teams• Groups of employees responsible for supervising

their own actions to assure the quality of their work.

• Yields a flatter and faster organization by removing first-line managers.

• Can increase creativity and innovation if implemented and controlled properly.

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Managerial Skills

• Conceptual skills (thinking)– The ability to analyze and diagnose a situation

and distinguish between cause and effect.

• Human skills (relating)– The ability to understand and influence the

behavior of other individuals and groups.

• Technical/Professional skills (knowing)– The specific knowledge and techniques

required to perform an organizational role.

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Challenges for Management ina Global Environment

• Rise of Global Organizations.• Building a Competitive Advantage• Maintaining Standards at a distance (example:

injecting “The Toyota Way” into overseas managers in order to avoid Big Company Disease)

• Managing a diverse workforce to better understand a diverse marketplace

• Policing your supply chain by using Information Technology wisely

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Building Competitive Advantage

• Increase efficiency and effectiveness• Increase quality and value• Increase speed, flexibility, innovation and

responsiveness to customers• Decrease cost• Constantly monitor conditions and re-examine base

assumptions• Prepare crisis plans• Improve continuously: PDCA Kaizen • Be urgent, never rest, run scared

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Documents

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. Benchmark Quiz Results ………………. …………….....………... 30(1) 40(2) 45(2) 50(4) 55(8)