Global Management

Chapter 1 study questions

Q1. What are the challenges if working in the new economy?

Q2. What are organizations like in the new workplace?

Q3. What is the makeup of the external environment of organization and how is an organization

linked to its environment?

Q4. Who are managers and what do they do?

Q5. What is the management process and how do you learn the essential managerial skills

competencies?

Overview of the new workplace

Companies with a future offer inspirational leadership; reward and respect people, and provide

supportive work environments.

Good technology + great people+ sound strategy + execution speed= Market dominance

Solutions Q1-Q6

Q1: What are the challenges if working in the new economy? -Talent

people and their talents are the ultimate foundations of organizational performance

intellectual capital-(is the collective brainpower or shared knowledge or a workforce)

[Intellectual capital= competency x Commitment]

knowledge worker-(-is someone whose mind is a critical asset to employers)

-Diversity

gender, age, race ethnicity, religion, sexual orientation , and able-bodieness

Prejudice, discrimination, glass ceiling effect

-Globalization

The worldwide interdependence of resource flows, product markets, and business competition.

-Technology

Increasing Demand for knowledge workers with the skills to fully use technology.

Wal-Mart Scheduling system

-Ethics

Ethical expectation for modern businesses

-Careers

Core workers, contract workers, and part-time workers.

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Working at Google

Q2: What are organizations like in the new workplace? Critical skills for success in the new workplace

Mastery

Networking

Entrepreneurship

Love of technology

Marketing

Passion for renewal

Organization

A collection of people working together to achieve a common purpose

Figure 1.1 Organization as open systems

Organization Performance

Business earn a profit

Nonprofits organizations add wealth to society.

Organizational performance

Performance Effectiveness

-output

Performance efficiency

-Input

Productivity

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Figure 1.2

Workplace changes that provide a context for studying management

Google: amazing work place

Apple: organized system

Zappos: The happiness culture

Figure1.3 starbucks genral environment.

Global Management

Q3. What is the makeup of the external environment of organization and

how is an organization Linked to its environment? The specific(task) environment

Customers

Suppliers

Competitors

Regulators

Investors/owners

Value Creation

Figure 1.4 multiple stakeholders in the environment of an organization

Competitive Advantage

A core competency

Cost Efficiency

Higher Quality

Better Delivery

Greater Flexibility

Environmental Uncertainty

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Figure 1.5 Dimensions of uncertainty

Organizational Effectiveness

Sustainable high performance in using resources to accomplish mission and objectives

Q4. Who are managers and what do they do? Importance of Human Resources and managers

High performing organizations treat people as valuable strategic assets

Manager

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Figure 1.6 management levels in a typical business and non profit organization

Types of Managers

Line managers

Staff managers

Functional Managers

General Managers

Administrators

Managerial performance and accountability

Quality of Work Life (QWL)

An indicator of the overall quality of human experiences in the workplace

o Fair pay

o Safe working conditions

o Room to grow and progress in a career

o Pride in work itself and the organization

High Performing Managers

Are Well informed of their teams needs

Help their people to the best of their abilities

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The organizational as an upside-down pyramid

Figure 1.8 four functions of management

Figure 1.9 Mintzberg’s 10 Mangerial Roles.

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Q5. What is the management process and how do you learn the essential

managerial skills competencies?

Managerial agendas and networks

Learning

Lifelong learning

Figure 1.10 Kat’z essential managerial Skills

Competencies for managerial success:

Communication

Teamwork

Self management

Leadership

Critical thinking

Professionalism

Global Management

GMS 200 3hr Lecture Class 2

Chapter 13

Information and decision making

How does Facebook make money?

Is social networking service launched in Feb. 2004

Facebook was founded by Mark Zuckerberg with his college roommates

As of June 2012 Facebook as over 955 million active users

In 2011, its revenue is $3.71 billion and its profit is $1billion

The majority of Facebook’s business is advertising

In 2011 Facebook sold 3.15 billion worth of advertising or more than $3.3/user

The rest of Facebook’s business comes from selling Facebook credits, which people use in games

Facebook sells as space on its site and it helps its advertisers aim their ads at specific groups of

Facebook users, based on elements of its members profile data

Facebook also have revenue sharing agreements with developers who offer apps on Facebook

hands over a certain amount of public profile data to the app makers, enabling the experience

of applications

The personal and social detail of Facebook data could give marketers unprecedented power to

find new customers

Facebook also collects and makes “public” the list of people who are your Facebook friends

“Social marketing” is a much more fine grained and effective way of targeting potential

customers than relying on the traditional demographics approach

Facebook collects detailed and personal data from its users, transform these data into valuable

info to marketers, to help them make better decisions in identifying potential customers

Information management a generation ago

Info was stored in filing cabinets not drives

Sales and inventory levels were mailed hardcopy summaries at the end of each month instead of

upload daily by satellite to head quarters

No desktop or pc, no word processing, no email, no mail....

Ex. 1

Metlife Canada 1907 state of the art information technology system: card files

20K file drawers that held 20mil insurance applications, 700,000 accounting books, 500,000

death corticated. Employed 61 workers to sort, file and climb ladders to pull files as needed

Ex.2

Global Management

Moore’s Law-2005

In 1965 Gordon Moore, Intel’s co founder, predicts that computer processing power would

double and its cost would drop by 50% about every 2years

Today’s computer and software are an integral part of managing business information

Strategic importance of information

Wal-Mart was one of the first retailers to use computers and bar codes to track sales and

inventory data and then share data with suppliers.

The Keg uses squirrel systems software to track the information on the sale of each dish in each

location, and costs of all its food products

Study question1: What is the role of information in the management process?

Information and knowledge

o Knowledge worker

o Intellectual worker

o The productivity of knowledge and knowledge workers depends on computer and

information competency

What is useful information?

o Data

o Information

o Characteristics of useful information

Timely

High quality

Complete

Relevant

Understandable

Figure 13.1 internal and external information needs of an organization

Figure 13.2 information technology is breaking barriers and changing organizations

Study Question2: How do managers use information to make decision?

Managerial advantages of IT utilization:

o Planning advantages

Better and more timely access to useful information

E.g state farm insurance uses data mining software

o Organizing advantages

More ongoing and informed communication among all parts of the organization

E.g con-way, a freight transportation, use computerized truck rout optimization

system (2100 trucks, available drivers, 200 locations, 50000 shipments per day)

o Leading advantages

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Improved communication with staff and stake holders.

Keeping objectives clear

o Controlling advantages

More immediate measures of performance results

E.g, Wal-Mart “open the box”

Figure 13.3 the manager as an information processing nerve center

A performance Deficiency

A performance opportunity

Problem Solving

o The process of identifying a discrepancy between actual and desired performance and

taking action to resolve it

A decision

o A choice among possible alternative course of action

Problem-solving approaches or styles:

o Problem avoiders

o Problem solvers

o Problem seekers

Systematic versus intuitive thinking

o Multidimensional thinking applies both intuitive and systematic thinking

o Effective multidimensional thinking requires skill at strategic opportunism

Programmed decisions

Non programmed decisions

Crisis decision making

Decision environments

o Certain environments

o Risk environments

o Uncertain environments

Figure 13.4 three environments for the managerial decision making and problem solving

Figure 13.5 steps in managerial decision making and problem solving

Figure 13.6 differences in the classical and behavioural models of managerial decision making

Case: Ajax

Ajax had decided to close its plant because of poor market conditions. A buyer could noe be

found

Step1: identify and define the problem

o Closing the plant would put all 172 employees out of work, and negatively impact their

families and the local community. The loss of the ajax tax base would further hurt the

community

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Step 2: generate and evaluate possible solutions

1. Simply closing the plant on schedule

2. Delaying the plant closing until all efforts have been made to sell it to another firm

3. Offering to sell the plant to the employees and or local interests

4. Closing the plant and offering some transfers to other ajax plants

5. Closing the plant, offering some transfers and helping employees find new jobs in the local

area

Step 3: Choose a preferred course of action and conduct the ethics double check

o Ajax’s management selected the fifth option because they thought it was most

consistent with company values and most likely to solve the problem

Step4: implement the decision

o Ajax ran an ad in the local newspaper for 15days at a cost of $2600 informing local

employers of the skills and availability of the firm’s employees

Study question 4: What are the current issues in managerial decision making?

Heuristics for simplifying decision making:

o Availability heuristic

o Representativeness heuristic

o Anchoring and adjustment heuristic

Framing error

Confirmation error

Escalating commitment

Creative decision making:

o The generation of a novel idea or unique approach that solves a problem or crafts an

opportunity

o E.g nine kids helped credit Suisse group, one of Switzerland’s top banks, to brainstorm

idea to get rid of its passbook savings account

Ethical decision making

o Any decision should meet “ethics double check”

How would I feel if this decision were published in the local newspaper?

GMS lecture Class 3 (chapter 5)

Global dimensions of management

What are the management challenges of globalization?

What are global businesses and what do they do?

What is culture and how does it impact global management?

How can we benefit from global management learning?

Global companies face a critical question when they enter emerging markets

Global Management

How far should they go to localize their offerings?

Should they adapt existing products just enough to appeal to consumers in those markets?

The typical western approach to foreign expansion is to try to sell core products or services pretty

much as they’ve always been sold in Europe or the United States.

Dominos pizza nearly failed in Australia because it underestimated the need to adapt its

offerings to local tastes: only after it turned the country over to a local master franchise did

dominos become the largest pizza chain there.

Case study: McDonalds and KFC in china

In 2011, McDonalds and kfc are the 2 world’s largest chain of fast food restaurants, having

over 33,000 and 17,000 outlets, $27 billion and 9.2 billion revenue, respectively

In china with kfc as its flagship chain, yum! Has 40% of the market share for fast-food chains.

McDonalds has 1/3 as many outlets and 16% market share

One of the most impressive stories of a U.S multinational in an emerging market is in china:

KFC is opening one new restaurant a day, on average (on a base of 3,300) with the intention

of reaching 15,000 outlets

KFC’s international expansion: First oversea outlet in England in 1964. The Japanese outlets

started to make profit in 1976, 6 years after entered. Opened in Hong Kong in 1973 but all

closed in 2 years

The dominant logic behind KFC’s growth in the United States: a limited menu, low prices

and an emphasis on take out.

KFC’s management impressively adapted its business model to better suit china recently and

it’s in no danger of losing momentum

KFC in china

o In 1987 the first Chinese kfc was opened in Tiananmen square, with 15,070 square

feet and 500 seats

o This restaurant has become the highest selling single kfc store in the world 4 month

after opening

o From day 1, KFC stated to use local food ingredients and local talents

o Self developed logistics and distribution system

o Implemented a supplier rating system to find suppliers that perform the best.

o Local food R&D team and a test kitchen

o Focusing on ownership rather than franchising

KFC accumulated and competencies that now pose formidable barriers to competitors

Mcdonaldization

Big Mac index

Golden arches east

McDonalds was founded in 1940, by brothers Richard and Maurice McDonald in san

Bernardino, California

Global Management

McDonalds in China

In 1990, the first Chinese McDonald was opened in Shenzhen

Consistent global supply chain partners

Did not successfully penetrate many 3rd and 4th tire cities

The menu in china was essentially the same as in the US

In china, McDonald’s sale is far behind KFC because it underestimated the need to adapt to

local tastes

KFC China offers important lessons for global executives who seek to determine how much

of an existing business model I worth keeping in emerging markets and how much should be

thrown away

STUDY QUESTION 1: what are the management challenges of globalization?

Key concepts in the challenges of globalization:

o Global economy

Global value chain (video)

o Globalization

o International management

o Global manager

STUDY QUESTION 2: What are the forms and opportunities of internal business?

Market entry strategies

o Do not require expensive investments

Types of market entry strategies:

o Global sourcing

o Exporting

o Importing

o Licensing agreement

o Franchising

Direct investment strategies

o Major capital commitments

o Rights of ownership and control over foreign operations

Types of direct investments strategies:

o Joint ventures

o Global strategic alliances

o Foreign subsidiaries

Figure 3.2 common forms of internal business—form market to direct investment strategies

Global Management

What are the complications in the global business environment?

o Complex, dynamic, and highly competitive

o Political risk

o Local legal systems

o World trade organization

o Protectionism

Regional Economic Alliances

NAFTA-north American free trade agreement

EU- European union

SADC- South Africa development community

STUDY QUESTION 3: What are multinational corporations and what do they do?

A multinational corporation (MNC) is a business with extensive international operations in more

than one foreign country

Transnational corporation: MNC opertates world wide on a borderless basis

Figure 3.3 what should go right and what can go wrong in MNC-host country relationships

Ethical issues for

MNCs:

o Corruption

o Sweatshops

o Child labor

o Sustainable development

Case study: the global value of iphone

90% of iphone components were manufactured overseas: Germany, Taiwan, Korea,

Japan, Africa and Asia, all of its assembled in china

Global Management

Apple CEO Tim Cook: “Asia’s supply chains have surpassed what’s in the US. We

cannot compete at this point

Apple employs 43000 people in the united states and 20000 over seas

More than 700000 people work for apples contractors in Asia, Europe and

elsewhere nut the US

IF apple produces iphones in us its profit will from from 452$ to 239$ on each

iphone

Why does apple outsource its production?

o It isn’t just that workers are cheaper

o The vast scale of overseas factories as well as the flexibility, diligence and

industrial skills of foreign workers have so outpaced their American

counterparts

o “Made in the USA” is no longer viable

One of apples biggest manufacturers, foxcon, is a Taiwan based company

A production line in foxconn city in Shenzhen china

The iphone is assembled in this vast facility, which has 230,000 employeeys many at

the plant

THE FOXCONN EMPIRE (picture)

Controversies:

Allegations of employee mistreatment

Suicides

Protests

Study Question 3: what is culture and how does it impact global management

Culture:

The shared set of beliefs, values and patterns of behaviour common to a group of

people

Global Management

Cross culture mistakes will cause conflicts and financial losses

Culture Shock:

Confusion and discomfort a person experiences in an unfamiliar culture

Stages in adjusting to a new culture

Confusion

Small victories

The honeymoon

Irritation and anger

Reality

Ethnocentrism

Tendency to consider one’s own culture as superior to others

Cultural intelligence

The ability to adapt and adjust to new cultures

HONDA IN EUROPE

Honda has been the world’s largest motorcycle manufacturer since 1959

Honda was the 7th largest automobile manufacturer in the world behind Toyota,

GM, Volkswagen, Hyundai, ford and Nissan in 2010

Mission statement: Maintaining a global viewpoint, we are dedicated to supplying

products of the highest quality, yet at a reasonable price for worldwide customer

satisfaction.

Honda entered the European market in the early 1960s

Despite its huge success in NA, Hondas motot vehicle sales in Europe have been

relatively poor

Honda exec wonder why their technology is sputtering

Currently has 5 global operations, NA, SA, Japan, Aisa ocean and EU

The European operation covers Europe, middle easet and Africa

The Honda brand image in Europe is relatively weak and the product line is narrow

Hondas European marking strategy in 4 largest markets: Germany, UK, Italy and France

Product: Hondas European manufacturing plant is located in the UK

Price: the price of Hondas vehicles in Europe are comparable to similar cars

produced by local manufacturers

Global Management

Distribution: vehicles produces in the UK and turkey are distributed throughout

Europe middle east and Africa

Promotion:

o The promotion of Hondas motor vehicles is essentially the same

throughout Europe

o The company spends very little time and money in promotion

o It relies on the word of mouth by its customers to potential customers

and to a lesser extent on the internet and the company’s various

websites

In the launch of the JAZZ, the company relied heavily on word of mouth on a

website created especially for the occasion

The website, the same design for all European countries promoted the car as

suitable for young working women

The main problem was that the Honda failed to truly understand the culture of

Europe and more importantly it treated Europe as one giant single market

Through France Germany the UK and Italy are all European, cultural differences

abound between them

One theory that explains the differences between the four nations is that of

HIGH CONTECT vs LOW CONTEXT CULTURES

Silent Languages of culture:

Context

o Low context cultures-emphasize communication via spoken or written words

o High context cultures- rely on nonverbal and situational cues as well as on

spoken or written words in communication

Successful advertising in low context cultures differs from that in high context cultures

An advertisement for a high context culture is based on a implicit style where the

emphaisis is on the overall feel and outlook rather than the feeding of pure information

The advertisement for a low context culture...................DNF

Honda in Europe

Since Europe consists of both high context and low context culture countries, companies, such

as Honda, intending to expand its business should take into consideration two separate market

segments when planning its marketing strategy

STUDY QUESTION 3: What is culture and how does it impact global management?..CONT

Silent languages of culture

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o time

monochromic cultures-people tend to do one thing at a time

polychromic cultures- times is used to accomplish may different things at once

o Space

Proxemics-is how people use space to communicate

International companies are increasingly adopting cross cultural business practices

For example, Google gives employees tremendous freedom in allocating their time, but at the

same time demands punctuality to meetings

The golden rule in international business is that the visitor is expected to observe local customs

But you should not mimic local behaviour, instead you should be aware and generally honor

local customs and traditions

Geert hofstede- an influential Dutch researcher in the field of organizational studies

He analyzed a large data base of employee values scores covering more than 70 countries

His studies demonstrated that there are national and regional cultural groups that influence

behaviour of societies and organizations

STUDY QUESTION4: What is culture and how does it relate to global diversity?

Values and national cultures (hofstede):

o Power distance

o Uncertainty avoidance

o Individualism collectivism

o Masculinity femininity

o Time orientation

How do management practices and learning transfer across cultures?

Comparative management

o How to management systematically differs among countries or cultures

Global managers

o Apply management functions across international boundaries

CODE SWITCHING BETWEEN CULTURES

Marco an Italian COO of a technology company in Mumbai, cant motivate Indian employees

Global Management

Anat, an Israeli management consultant working in the US, struggle to give “American style’

feedback.

Marco found a middle ground between his participative European management style and the

more authoritarian kind expected in India

Anat gives feedbacks between tailored to an American audience while retain some of her direct

demanding Israeli style

STUDY QUESTION 5: How do management practices and learning transfer across cultures?

Global organizational learning:

o Readiness for global organizational learning varies based on managerial attitudes

Ethnocentric attitudes

Polycentric attitudes

Geocentric attitudes

Project GLOBE (global leadership and organizational behavior effectiveness)

An international group of social scientist and management schlars who study cross sultural

leadership, organizational practices, and diversity among world cultures

In each of 62 cultures the project is working with 2-5 social scientests who are responsible

for the local research

Figure 3.4 nine cultural dimension by project GLOBE researchers

IKEA: Culture as competitive advantages

Founded in 1943 by 17 year old Ingvar Kamprad, who was raised on a farm called Elmtaryd

near the small village of Agunnaryd in Sweden

Global Management

As of October 2011, IKEA has 332 stores in 38 countries in fiscal year 2010, it sold $23.1

billion worth of goods

The “IKEA way” Unique design capabilities, unique sourcing and tightly controlled logistics

Mission statement is “to create a better everyday life for the many”

Low priced quality furniture with no delays in delivery

Innovations: knock down furniture in flat boxes involve customers in the transportation and

assembling process; family even shopping

International expansion: Switzerland, Germany, Belgium, France, Canada, USA, china

Adopting to national markets: merchandising to the American customers by speaking

English with a Swedish accent. Capitalizing our strength as an outsider

GMS Lecture 5

History of management past and present

What can be learned from classical management thinking?

What insights come from the behavioral management approaches?

What are the foundations of modern thinking?

Management idea and practice throughout history

Egyptian pyramid construction (5000 bc)

o Construction management

Sumerian (300bc)

o Records of management practices

o Charismatic leadership

Chinese dynasties (2250 bc)

o Managerial ring: organization, functions, cooperation, procedures to bring efficiency,

and various control techniques

The industrial revelation (1750- 1850)

Machine power replaces man and animal power

Industrial organization become large scale

Productive work becomes highly specialized

Innovations textiles, steam power, and iron making

Birth of classical management

Figure 2.1 major branches in the classical approach to management

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Frederick W Taylor (1856-1915)

An American mechanical engineer

The ‘father of scientific management’

Taylorism

One the first management consultants

The “one best way” to do everything

Scientific management (Frederick Taylor)

Develop rules of motion standardized work implements and proper working conditions for every

job

Carefully select workers with the right abilities for the job

Carefully train workers and provide proper incentives

Support workers by carefully planning their work and removing obstacles

Taylors influence in Canada

In the early 1920’s the Canadian textile industry was re organized according to scientific

management principles

In 1928 workers at Canada cotton ltd in Hamilton Ontario went on strike against introduced

Taylorist work methods

Henry gantt, who was close associate of Taylor reorganized the Canadian pacific railway

Scientific Management

Frank (1868-1924) and Lillian (1867-1972) gillbreth

Motion study

o Study of reducing a job to its basic physical motions

Global Management

Eliminating wasted motions improvise performance formulate a constructive critique of

Taylorism

Practical Lessons from scientific management

make results based compensation a performance incentive

carefully design jobs with efficient work methods

carefully select workers with the abilities to do these jobs

train workers to perform jobs to the best of their abilities

train supervisors to support workers so they can perform jobs to the best of their abilities

Problems with scientific Management

Workers are necessarily human: they have personal needs and interpersonal friction, and they

face very real difficulties introduced when jobs become efficient they have no time to relax, and

so rigid that they have no permission to innovate

Henri Fayol (1841-1925)

Is a French mining engineer and a director of mines who developed a general theory of business

administration

14 administrative principles

Rules of management

o Foresight

o Organization

o Command

o Coordination

o Control

Key principles of management

o Scalar chain

o Unity of command

o Unity of direction

Bureaucratic organization (max Weber)

Max Weber (1864-1920)- was a German sociologist philosopher and political economist

Bureaucracy

o An ideal intentionally rational and very efficient form of organization

o Based on principles of logic order and legitimate authority

Characteristics of bureaucratic organization:

Clear division of labour

Clear hierarchy of authority

Global Management

Formal rules and procedures

Impersonality

careers based on merit

Possible disadvantages of bureaucracy:

Excessive paperwork or red tape

Slowness in handling problems

Rigidity in the face of shifting needs

Resistance to change

Employee apathy

Figure 2.2 foundations in the behavioural or human resource to management

Administrative principle: Mary Parker Follet-

(1868-1933) an American social worker, management consultant

Opposed Weber’s bureaucracy

Argues for flatter organizations

Groups and human cooperation

Forward looking management insights

o Making every employee an owner creates a sense of collective responsibility

o Private profits relative to public good

Hawthorne Studies

Were carries out by the western electric company at their Hawthorne plant in the 1920’s

One of the forerunners in applying scientific management to its production units

Illumination studies: no significant correlation between productivity and light levels

Relay assembly test room: no stable affect of rest periods and shorter working hours on

productivity

Bank wiring room experiments: no change in productivity when wage increases

Elton Mayo-a professor at Harvard business school. Were invited to help design the study

Through the years productivity relay assembly test rooms rose significantly

Global Management

Mayo reasoned that ‘the six individuals became a team and the team gave itself wholeheartedly

and spontaneously to co operation in an experiment’

Psychological ‘factors’ influenced results

Factors that accounted for increased productivity:

Group atmosphere

Participative supervision

Lessons from the Hawthorne studies

Social and human concerns are keys to productivity

Hawthorne affect—people who are singled out for special attention perform as expected

Maslow’s Theory of human needs

A need is a physiological deficiency a person feels compelled to satisfy

Abraham Maslow (1908-1970) is an American psychologist

Figure 2.3 Maslow’s

hierarchy of human needs

Maslow’s theory of human needs

Deficit Principle progression principle

Both principles

Both principles cease to operate at self-actualization level

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Douglas McGregor (1906-1964)-was a professor at MIT Sloan school of management and president of

Antioch college

McGregor’s theory X assumes that workers:

o Dislike work

o Lack ambition

o Are irresponsible

o Resist change

o Prefer to be led

McGregor’s theory Y assumes that workers are:

o Willing to work

o Capable of self control

o Willing to accept responsibility

o Imaginative.....(DNF)

Implications of theory X and Theory Y:

o Theory Xworkers become dependent and reluctant

o Theory Yworkers respond with initiative and high performance

Chris Argyris-is an American business theorist professor emeritus at Harvard business school and a

thought leader at monitor group.

Agryris’s theory of adult personality

Management practices should accommodate the mature personality by:

o Increasing task responsibility

o Increasing task variety

o Using participative decision making

STUDY QUESTION 3: What are the foundations of modern management thinking?

Foundations for continuing developments in management

o Quantitative analysis and tools

o Systems view of organizations

o Contingency thinking

o Commitment to quality

o Learning organizations

o Evidence based management

Management Science (operations research) foundations

o Scientific application of mathematical problems

Mathematical forecasting

Inventory modeling

Linear programming

Global Management

Queuing theory

Network models

o Operations management

Companies like fair Isaac pioneered scoring on prediction to default

Credit scores used in credit decision as opposed to just using lenders judgment

Score cards and decision trees more likely to be used due to a need to be able to explain to

regulators

Organizations as systems

o System

Collection of interrelated parts that function together to achieve a common

purpose

o Subsystem

o Open systems

Organizations that interact with their environments in the continual process of

transforming resource inputs into outputs

Figure 2.4 organizations as complex networks of interacting subsystems

What is contingency thinking?

o Tries to match managerial responses with problems and oppurtunities specific to

different situations, particularly those posed by individual and environmental

differences

o No “one best way” to manage

o Appropriate way to manage depends on the situation

Quality Management

o Managers and workers in progressive organizations are quality conscious

Global Management

o Total quality management (TQM)

Comprehensive approach to continuous quality improvement for total

organization

o ISO certification by the international organization for standardization

Knowledge management and organizational learning

o The process of using information technology to achieve performance success

Learning organization

o Organizations that are able to continually learn and adapt to new circumstances

o EG a company uses lessons of experience to promote continuous change and

improvement

High performance organizations

o Organizations that consistently achieve excellence while creating a high quality work

environment

Evidence-based management

o Involves making the decision on hard facts about what really works

Figure 6.2 a sample hierarchy

Management by objectives (MBO)

o A structured process of regular communication

o Supervisor/ team leader and workers jointly set performance objectives

o Supervisor/team leader and workers jointly review results

Figure 6.4 management...

Participation and involvement

o Benefits of participation and involvement:

Promotes creativity in planning

Increases available information

Fosters understanding, acceptance and commitment to the final plan

Chapter 6: Planning Processes and Techniques

Jack Welch, GE and succession Planning

In 1994, years before he retired from general electric

company(GE) jack Welch had started the succession planning

process

He developed a list of qualities, skills and characteristics a CEO

Global Management

should essentially have: integrity, value, version, leadership...

So, GE was ready for its next CEO, years before it finally ad to make the decision in 1999

General Electric

General Electric Company, or GE, is an American multinational corporation

It was formed in 1892 by the merger if Edison electric light company and Thomson Houston

electric company

In 2011 GE ranked among the fortune 500 as the 6th largest firm in the U.S by gross revenue, as

well as the 14th most profitable

As Dec 2011 GE hires 301,000

Jack Welch –an American chemical engineer, business executive and author

He was chairman and CEO of general electric between 1981 and 2001

During his tenure at GE, the company’s value rose 4000%

By 1999 he was named “manager of the century” by fortune magazine

Succession Planning at GE

GE had 23 potential candidates in 1994

The final three candidates in 1999-jeff Immelt, James McNerney and Robert Nardelli

In November 2000, GE announced that Jeff Immelt would succeed jack Welch as the chairman

and CEO of the company

James McNerney and Robert Nardelli, Moved on as the CEOs of 3M and home Depot,

respectively

CHAPTER 6 STUDY QUESTIONS

Why and how do managers plan?

What types of plans do manager use?

What are the useful planning tools and techniques?

How can plans be well implemented?

STUDY QUESTION 1: How do managers Plan?

Planning

o The process of setting objective and determining how to best accomplish them

Objectives

o Identify the specific results or desired outcomes that one intends to achieve

Plan

o A statement of action steps to be taken in order to accomplish the objectives

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In the face of tougher regulations and an industry wide reputation purveying junk food, for General

Mills sought to have 40% of its products meet nutrition standards by 2013 and this with $12.4 b in sales.

Steps in the planning process

o Define your objectives

o Determine where you stand vis-a-vis objectives

o Develop premises regarding future conditions

o analyze and choose among action alternatives

o implement the plan and evaluate results

Benefits of Planning:

o Improves focus and flexibility

o Improves action orientation

o Improves coordination and control

o Improves time management

o

STUDY QUESTION 2: What types of plans do managers use?

Short- range and long range plans

o Short range plans: 1 year or less

o Intermediate range plans: 1 to 2 years

o Long range plans: 3 or more years

People vary in their capability to deal effectively with different time horizons

Strategic and tactical plans

o Strategic plans—set broad, comprehensive and longer term action directions for the

entire organizations

o Tactical plans—defines what needs to be done in specific functions to implement

strategic plans.

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Example:

Eric Schmidt, CEO of Google said “as I think about Google strategic initiative in 2011, I realize they’re all

about mobile”

Company LMN a toy manufacturer, has a discovered that one of the suppliers has used lead based on

one of its products. It is thanksgiving week. The executive committee has assembled a team to devise a

plan to mitigate the issue. LMN is using tactical planning.

Policies and procedures

o Policy

Broad guidelines

Internet surfing policy

Cancellation policy

o Rules or procedures

Actions to be taken in specific situations

Procedure for handling defective products

Rules for job reference letter

Application procedures

Operational plans

o Budjets

Ingle use plans that commit resources to activities, projects, or programs

E.g GE will spend $2.2b on its management and leadership development

program in 2013

STUDY QUESTION 3:what are the useful planning tools and techniques?

Forecasting

o Making assumptions

o Qualitative forecasting

o Quantitative forecasting

o Rely on human judgement

Planning—how to deal with the implications of a forecast

Contingency planning

o Identifying alternative courses of action that can be implemented to meet the needs of

changing circumstances

o Anticipate changing conditions

o Contain trigger points

BlackBerry Service down

On October 10 2011, RIM experienced one of the worst service outages in the company’s history

Tens of millions of blackberry users in Europe the middle east and Africa were unable to receive

or send emails and messages through their phones for 3 days

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RIM offered its users more than 100$ worth of free premium apps by way of apologizing

Scenario Planning

A Long term version of contingency planning

Identifying alternative future scenarios

Eg. Royal dutch/shell uses scenario planning to explore what the company would do if and when

its oil supplies run out

Increases organizations flexibility and preparation for future stocks

Benchmarking

Use of external comparisons to better evaluate current performance and identify possible

actions for the future

Adopting best practices of other organizations that achieve superior performance.

Use of staff planners

Coordinating the planning function for the total organization or one of its major components

Possible communication gaps between staff planners and line management

STUDY QUESTION: How can plans be well implemented?

Goal setting

Great goals are SMARTL

o Set goals

o Make sure goals are measurable

o Ensure goals are attainable

o Goals must be referred to regularly

o Goals must be timely

Goal alignment

The heating, ventilation, and air-conditioning (HVAC) company use SMART goals in its business

Increase sales by 50% during the fall and spring when business is slow

Track the number of annual maintenance contracts to customers

More work during the slow fall and spring seasons

Chapter 7 Strategy and strategic management

Study questions:

What is strategic Management?

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What are the essentials of strategic analysis?

What are corporate strategies and how are they formulated?

What are business strategies and how are they formulated?

What are current issues in strategy implementation?

Study question 1: what is strategic management?

o Basic concepts of strategy

Competitive advantage- attributes that allows an organization to outperform its

rivals

Sustainable competitive advantage- difficult for competitors to imitate

Strategy

a comprehensive action plan

accomplish organizational goals with SCA

Strategic intent- focusing all organizational energies on a unifying and compelling

goal.

o Goal of strategic management is to create above-average returns for investors

Returns exceeding those for alternative opportunities at equivalent risk

Earning above average returns depends in part on the organizations competitive

environment

o Strategic management process:

Strategic management- process of formulating and implanting strategies

Strategic analysis- process of analysing the organization, the environment, its

competitive position and current strategies

Strategy formulation- crafting strategies to guide allocation of resources

Strategy implementation- putting strategies into action

Figure 7.2 strategy formulation and implementation and implementation

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Peter Drucker(1909-2005) was an Austrian born American management consultant educator

and author

Drucker’s strategic questions for strategy formulation:

o Who is our business mission?

o Who are our customers?

o What do our customers consider value?

o What have been our results?

o What is our plan?

Study Question 2: What are the essentials of strategic analysis?

o Analysis of mission:

The reason of an organization’s existence

An important test of the mission is how well it serves the organization’s

stakeholders

Figure 7.3 how external

stakeholder can be valued

as strategic

Mission statements

Apple is committed to

bringing the best personal

computing experience to

students, educators,

creative professionals and

consumers around the

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world through its innovative hardware, software and internet offerings

Google’s mission is to organize the world’s information and make it universally accessible and useful

The mission of the ted Rogers’s school of management is to develop global leaders with an

entrepreneurial orientation and the knowledge and critical thinking skills needed to solve real world

problems

Study question 2 cont...

o Analysis of core values:

o Values are broad beliefs about what is or is not appropriate

o Google”10things”.

o Analysis of objectives:

o Operating objectives direct activities toward key and specific performance results

o Profitability, market share product quality and social responsibility

o Analysis of organizational resources and capabilities

o Core competency is a special strength that gives an organization competitive advantage

o Important goal of assessing core competencies

Google “10 things”

o Docus on the user and all else will follow

o Its best to do one thing really really well

o You don’t need to be at your desk to need an answer

o You can make money without doing evil

o The need for information crosses all borders

o You can be serious without a suit

Google’s expansion strategy in china

o In order to organize the worlds information and make it universally accessible and useful

(mission statement), Google needs to expand internationally.

o In china, Google has not provided a reliable and efficient service and therefore, decided to

expand its own presence in China.

Google’s perspective

o Google wants to enhance its legitimacy with Chinese users to lead to greater revenue streams

from advertising to Chinese users

o Google opposes any interference that might slow down or restrict a user’s ability to retrieve

information.

o Censor ship could harm Google’s credibility among Chinese and non Chinese users

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Googles expansion strategy...

o Googles major competitors in china: Baidu

o Baidu, inc. Is a Chinese web services company headquared in Beijing

o Accuire baidu? Chinese law prohibits google from holding more than a minority position

o Google hired dr.kai-fu lee as the founding president of google china in 2005

o Lee was a world renowned computer scientist widely praised and highly regarded in china and

among th Chinese high tech community.

o Objective

o Launch a Chinese domain server google.cn in china within the 12 monnths

o Alternative strategies

Maintain offshore server

Establish server presence in china

Lobby china for access to larger stake in baidu

Googles censorship free offshore sites

Internet censor ship in the people republic of china is conducted under a wide variety of laws and

administrative regulations.

The government authorities not only block websites content but also monitor the internet access of

individuals

Google Firewall of china

o The great fire wall of china is a system that includes a black list of foreign sites blocked in china

and filters that can still email and make web pages in accessible if they contain certain key

words

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Googles expansion strategy in china

o To protect its financial interest, google could acquire a stake in the Chinese ...DNF

o How ever access to google.com would remain painfull slow and the reult would likely be user

frustration and lost market share

o DNF...

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Figure 7.4 SWOT analysis of strengths

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Study question2: what are the essential of strategic analysis?

o Porters model of 5 strategic forces affecting competition

o Industry competition

o New entrants

o Subsititute products or services

o Bargaining power of suppliers

o Bargaining power of customers

o Michael porter is a professor at Harvard business school. He is a leading authority on

company strategy and the competitiveness of the nations and regions

Figure

Level of strategies

o Corporate strategy

o Sets long term direction for the total enterprise

o In what industries and markets should we compete?

o Business strategy

o Identifies how a division or strategic business unit will compete in products or services

o How are we going to compete for customers in this industry and market?

o Functional strategy

o Guides activities within one specific are of operations

o How can we best utilize resources to implement our business strategy?

Figure 7.1 three levels of strategy in organizations

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Study question 3: what are corporate strategies and how are they formulated?

Grand or master strategies:

o Growth strategies

o Stability strategy

o Renewal strategy

o Combination strategy

Growth and diversification strategies:

o Growth strategies

o Seek an increase in size and the expansion of current operations

o Types of growth strategies

o Concentration strategies

o Diversification strategies

o Unrelated diversification

o Related diversification

o Vertical integration

o

-restructubg strategies: tries to correct weakness by changing the miz or reducing the scale or

operations

Turnaround

Downsizing

diversiture

o The pause that refreshes...strategy

o The coca cola company (concentrate producer)

Blend raw materials, pack the mixer and ship it to the bottler

o Coca cola enterprises (bottler)

Purchase concentrate, add carbonated water and corn syrup, bottle or can the

products and deliver to customers

o Retailer

Super market, fountain outlets, vending machines

o Strategy: determine the growth/ diversification/ restricting strategy approach

o The coca cola company purchases the coca cola enterprises

o The coca cola company produces sports drink (Gatorade)

o Pepsi purchases KFC

o The coca cola company sales it EU border

o Global strategies

o Multi domestic strategy

Customize products

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Polycentric view

o Transnational strategy

Balance efficiencies in global operations and responsiveness to local markets

Geocentric view

Study question 3: what are corporate strategies and how are they formulated?

Cooperative strategies

o Strategic alliances—two or more organizations partner to pursue an area of mutual

interest

E-business strategies

o The strategic use of the internet to gain competitive advantage

Figure 7.6 the BCG matrix approach to corporate strategy formulation

Figure 7.7 porter’s generic strategy frame work: soft drink industry example:

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Study Question 5: what are the current issues in strategy implementation?

Corporate governance:

o System of control and performance monitoring of top management

o Board of directors

Googles boards of directors

Shirley tilghman: president of Princeton university

Paul otellini: CEO and president of intel corporation

Strategic control

o Making sure strategies are well implanted and that poor strategies are scrapped or

modified

Strategic leadership

Leading and leadership Development

What is the nature of leader ship?

What are the important leadership traits and behaviours?

What are the contingency approaches to leadership?

What are the contingency approaches to leadership?

What are some current issues in leadership development?

What is the communication process?

What is the nature of leader ship?

Leadership

o The process of inspiring others to work hard to accomplish important tasks

Contemporary leadership challenges

Figure 11.1

Power

Influence vs power

Two sources of managerial power

o Position power

o Personal power

Figure 11.2

How to turn power into influence?

o Acquire all sources of pwer

o Reward/ legititmate/ coercive power: temporary compliance

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o Expert/ referent power: enduring results and generates commitment

Visionary leadership

o Vision

The version of the ted Rogers school of management is to shaping the global

leaders of tomorrow

o Visionary leadership

A clear and compelling sense of the future

Understand the action needed to be successful

Meeting the challenges of visionary leadership:

o Challenge the process

o Show enthusiasm

o Help others to act

o Set the example

o Celebrate achievements

Servant Leadership

o Commitment to serving others

o Follower more important than leader

o Other centered not self centered

o Power no a zero sum quantity

o Focuses on empowerment, not power

Kinnear: empower your employees

Over decades kinnear trained the best and pushed them up the corporate ladder, so that today

the best get promoted at chevron Texaco

Kinnear became the only non Saudi at the Saudi arbian oil company

Study question 2: What are the important leadership traits and behaviours?

Leadership behaviour

o Recurring patterns of behaviours exhibited by leaders

o Basic dimensions of leadership behaviors:

Task to be accomplished

People doing the work

Figure 11.3 mangeraul styles in blake and moutons leadership grid

What are the important leadership traits and behaviours?

Classic leadership styles:

o Autocratic style

Emphasizes tasks over people

o Laissez fair stlye

Lets the group make decisions

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o Democratic style

Committed to both task and people

Study question 3: what are the contingency approaches to leadership?

Fiedlers contingenct model

o Good leadership depends on a match between leadership and situational demands

o Leadership style must be fit to the situation

Contingency model

o The least preferred co worker scale (lpc scale)

o Loq lpc-task motivated leaders

o High lpc- relationship motivated leaders

Figure 11.4

Situational leadership model (hershy Blanchard

Leaders adjust their styles depending on the readiness of their followers to perform in a given

situation

Figure 11.5 leadership implications of the hershey Blanchard situational leadership model

Oath goal leadership theory (house)

o Effective leadership deals with the paths through which followers can achieve

Houses leadership styles

o Direct leadership: ambiguous job assignments

o Supportive leadership: low worker self confidence

o Participative leadership: low worker self confidence

o Achievement oriented leadership: insufficient task challenge

Figure 11.6 contingency relationships in the path goal leadership theory

What are the contingency approaches to leader ship?

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Leader member exchange theory (LMX)

o Not all people are treated the dame by leaders in leadership situations

In goups

High LMX

Out groups

Low LMX

NOV 14 2012

Figure 11.3 mangerial styles in blake and mouton’s leadership grid

Figure 11.8 Leadership implication of vroom jago leadership participation model

Study question 4: what are some current issues in leadership development?

Super leaders

o Persons whose vision and strength of personality have an extraordinary impact on

others

Charismatic leaders

o Develop special leader follower relationships and inspire others in extraordinary ways

Transactional leadership

o Someone who directs the efforts of others through tasks, rewards, and structures

Transformational leadership

o Someone who is truly inspirational as a leader and who arouses others to seek

extraordinary performance accomplishments

Emotional intelligence

o The ability of people to manage themselves and their relationships effectively

Self awareness

Self regulation

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Motivation

Empathy

Social skill

Study question 5: What are current issues in leadership development?

Gender and leadership

o Both women and men can be effective leaders

o Women—interactive leadership

o Men—transactional leadership

o Fit with the demands of a diverse workforce and the new workplace

Old fashioned leadership (drucker)

o Leadership is more than charisma; it is “good old fashioned” hard work

Moral leadership

o Ethical leadership

o Long term sustainable success requires ethical behaviour

Study Questions

What is entrepreneurship?

What is special about small business?

How does one start a new venture?

What resources support entrepreneurship and business development?

Study question 1: What is entrepreneurship?

Entrepreneurship

o Strategic thinking and risk taking behavior that results in the creation of new

opportunities for individuals and or organizations

Entrepreneur

o Risk taking individuals who take actions to pursue opportunities and situations

others may fail to recognize or may view as problems or threats

Example-

Google – began in January 1996 as a research project by Larry page and Sergey brin when they were

both PhD students at Stanford

In 1998 brin and page dropped out of there PHD and started Google in a friends garage

Starbucks- first was opened in Seattle in 1971 by three partners: English teacher jerry Baldwin, history

teacher Zev Siegl, and writer Gordon Bowker.

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In 1984 the original owner of sold the star bucks chain to entrepreneur Howard Schultz

Second cup- is Canada’s largest Canadian based specialty coffee retailer. Its headquarters are in

Mississauga, Ontario. (Frank O’dea: co founder of second cup)

Anita Roddick- Mrs.Body shop

Roddick (1942-2007) open her own shop back in the UK in 1976

the company was one of the first to prohibit the use of ingredients tested on animals and one of the first

to promote fair trade with 3rd world countries

Hailey Coleman

Ryerson Alum, Hailey Coleman, founder of damn heels: “save women from our beloved damn heels.”

Study Question 1: What is Entreprenuership?

Common myths about entrepreneurs:

o Entrepreneurs are born, not made

o Entrepreneurs are gamblers

o Money is the key to entrepreneurial success

o You have to be young to be an entrepreneur

o You must have a degree in business to be an entrepreneur

Study question 1: what is special about small businesses?

Small businesses...

o With 100 or fewer employees

o Is independently owned and operated

o Are established by:

Starting a new business

Buying an existing business

Buying and running a franchise

Entrepreneurship is a power full force driving innovation, productivity, job creation and

economic growth

International entrepreneurship

Family Businesses

o Owned and financially controlled by family members

o Largest percentage of businesses worldwide

Study question 2: what is special about small businesses?

Small businesses have a high failure rate –60 to 80% of new businesses fail in their first 5 years

of operation

Business plan: describes the direction for a new business and the financing needed to operate it.

Figure 5.2 eight reasons why many small businesses fail

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Study question 3: How does one start a new venture?

What are the important issues in new venture creation?

o Identify a market niche that is being missed by other established firms—first mover

advantage

o Identify a new market that has not yet been discovered by existing firms

Questions that keep a new venture focused on its customers

o Who is your customer?

o What determines customer choices to buy or not buy your product/ service?

Figure 5.3 stages in the life cycle of an entrepreneurial firm

Forms of legal ownership

o Sole proprietorship

o Partnership

o Corporation

o Limited liability corporation (LLC)

Financing of new venture

o Sources of outside financing

Debt financing

Equity financing

o Equity financing alternatives

Angel investors

Individual who is willing to invest a portion of his/her wealth in return

for equity in a new venture

The first funding for Google was a 1998 contribution of US$100,000

Andy Bechtolsheim

o Equity financing alternatives

Venture capitalists

Focus on relatively large investments

Usually take a management role in order to grow the business and add

value as soon as possible.

In 1999, a $25 million funding was announced by Google, with major

investors including two venture capital firms

Equity financing alternatives

Shares of stock in the business are sold to public and begin trading on a

major stock exchange

Google’s IPO took place in 2004 at a price of 85$/share today its worth

659/share

o Promoting entrepreneurship in large enterprises

Entrepreneurship

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Entrepreneurial behavior displayed by people or subunits operating

within large organizations

skunk works

o business incubators

Canadian association of business incubation

Ryerson’s digital media zone

o Small business development centers

Canadian small business finance center

Chapter 8

Organization structure and design

Study Questions

What is organizing as a management function?

What are the major types of organization structures?

What are the new developments in organization structures?

What organizing trends are changing the workplace?

Organizing: the process of arranging people and other resources to work together

Adam smith’s pin factory: labor division

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Apple

Accountability

Simplicity

The top 100

Start-up at heart

Jobs departure

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Formal Structures

The structure of the organization in its official state

Organizational chart

o Formal communication channels

o Type of work performed

o Division of work

o Levels of management

Departmentalization

The process of making decision on how to group work positions into formal teams that are

linked together so they operate in a coordinated manner within the larger organization.

Informal structures

The way work actually gets done

Relationships in the shadow organization

Unofficial working relationships and communications patterns

Functional structures

People with similar skills and performing similar tasks are grouped together into formal work

units. (FIGURE 8.2)

Divisional structures

Group together people who work on the same product or process, serve similar customers,

and/or located in the same area or geographical region.

Potential advantages of divisional structures:

More flexibility in responding to environmental changes

Improved coordination

Clear points of responsibility

Expertise focused on specific customers, products, and regions

Greater ease in restructuring

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Matrix structure

Combines functional and divisional structures to gain advantages and minimize disadvantages of

each

(Some figure)-functional personnel assigned to both projects and functional departments

Potential advantages and disadvantages of matrix structures:

Better cooperation across functions

2 boss system is system susceptible to power struggles

Team structures

Extensively use permanent and temporary teams to solve problems, complete special projects,

and accomplish day to day tasks

Cross functional teams bring together members from different area of work responsibility

Figure 8.5 how a team structure uses cross functional reams for improved lateral relations

Network structures

A central core that is linked through networks of relationships with outside contractors and

suppliers of essential services

(Random figure of information, business core, technology)

Boundaryless organizations

A combination of team and network structures, with the addition of “temporariness”

(2 figures- one is a triangle with research and development and sales and production etc., the

second had time 1, time 2, time 3 triangles with a, b, c, d in it)

Figure 8.8 a continuum of organizational design alternatives: from bureaucratic to adaptive

organizations

Figure 8.9 subsystems differentiation among research and development, malfunctioning and sales

Ideally each subsystem supports other subsystems working toward interests of entire organization.

Contemporary organizing trends include:

Shorter chains of command

Less unity of command

Wider spans of control

More delegation and empowerment

Decentralization with centralization reduced use of staff

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Google decentralized with centralization

Larry page wants google act more like a startup than an incumbent. One noticeable change is making

top executives more accessible to all employees. Page is looking to streamline projects and push

decision making down the organization

SAS ranks No. 1 in the world for best workplaces

Carry, NC (nov, 14, 2012)- SAS earned the top spot on the elite World’s best multinational workplaces

list form great place to work.

SAS, the leader in business analytics software and serves reakinked no 1 based on inspiring work