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EXPLORING MANAGEMENT EXPLORE | INSPIRE THIRD EDITION SCHERMERHORN

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EXPLORINGMANAGEMENT

EXPLORE | INSPIRET H I R D E D I T I O N

S C H E R M E R H O R N

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{ Managers and Management

1 Managers and the Management Process: Everyone becomes a manager someday. 2

2 Management Learning: Great things grow from strong foundations. 30

3 Ethics and Social Responsibility: Character doesn’t stay home when we go to work. 54

{ Planning and Controlling

4 Managers as Decision Makers: Th ere is no substitute for a good decision. 84

5 Plans and Planning Techniques: Get there faster with objectives. 110

6 Controls and Control Systems: What gets measured happens. 132

7 Strategy and Strategic Management: Insight and hard work deliver results. 156

{ Organizing

8 Organization Structure and Design: It’s all about working together. 178

9 Organizational Cultures, Innovation, and Change: Adaptability and values set the tone. 204

10 Human Resource Management: Nurturing turns potential into performance. 230

{ Leading

11 Leadership: A leader lives in each of us. 256

12 Individual Behavior: Th ere’s beauty in individual diff erences. 282

13 Motivation: Respect unlocks human potential. 306

14 Teams and Teamwork: Two heads really can be better than one. 330

15 Communication: Listening is the key to understanding. 358

{ Environment

16 Diversity and Global Cultures: Th ere are new faces in the neighborhood. 382

17 Globalization and International Business: Going global isn’t just for travelers. 402

18 Entrepreneurship and Small Business: Taking risks can make dreams come true. 422

Skill-Building Portfolio SB-1

Cases for Critical Th inking C-1

■ Brief Contents

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{1 Managers and the Management Process 2

1.1 What Does It Mean to Be a Manager? 4

• Organizations have diff erent types and levels of managers. 4

• Accountability is a cornerstone of managerial performance. 6

• Eff ective managers help others achieve high performance and satisfaction. 6

• Managers must meet multiple changing expectations. 7

1.2 What Do Managers Do and What Skills Do Th ey Use? 10

• Managerial work is often intense and demanding. 10

• Managers plan, organize, lead, and control. 11

• Managers enact informational, interpersonal, and decisional roles. 13

• Managers pursue action agendas and engage in networking. 14

• Managers use a variety of technical, human, and conceptual skills. 15

• Managers can and should learn from experience. 16

1.3 What Are Some Important Career Issues in the New Workplace? 19

• Globalization and job migration are changing the world of work. 19

• Failures of ethics and corporate governance are troublesome. 20

• Diversity and discrimination are continuing social priorities. 22

• Intellectual capital and self-management skills are essential for career success. 23

{2 Management Learning 30

2.1 What Are the Lessons of the Classical Management Approaches? 32

• Taylor’s scientifi c management sought effi ciency in job performance. 32

• Weber’s bureaucratic organization is supposed to be effi cient and fair. 34

• Fayol’s administrative principles describe managerial duties and practices. 36

2.2 What Are the Contributions of the Behavioral Management Approaches? 38

• Follett viewed organizations as communities of cooperative action. 38

• Th e Hawthorne studies focused attention on the human side of organizations. 40

• Maslow described a hierarchy of human needs with self-actualization at the top. 41

• McGregor believed managerial assumptions create self-fulfi lling prophecies. 42

• Argyris suggests that workers treated as adults will be more productive. 43

2.3 What Are the Foundations of Modern Management Th inking? 45

• Managers use quantitative analysis and tools to solve complex problems. 45

• Organizations are open systems that interact with their environments. 46

• Contingency thinking holds that there is no one best way to manage. 48

• Quality management focuses attention on continuous improvement. 49

• Evidence-based management seeks hard facts about what really works. 50

■ Detailed Contents

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{3 Ethics and Social Responsibility 54

3.1 How Do Ethics and Ethical Behavior Play Out in the Workplace? 56

• Ethical behavior is values driven. 57

• What is considered ethical varies among moral reasoning approaches. 58

• What is considered ethical can vary across cultures. 60

• Ethical dilemmas arise as tests of personal ethics and values. 61

• People have tendencies to rationalize unethical behaviors. 63

3.2 How Can We Maintain High Standards of Ethical Conduct? 65

• Personal character and moral development infl uence ethical decision making. 65

• Training in ethical decision making can improve ethical conduct. 67

• Protection of whistleblowers can encourage ethical conduct. 68

• Managers as positive role models can inspire ethical conduct. 68

• Formal codes of ethics set standards for ethical conduct. 69

3.3 What Should We Know About the Social Responsibilities of Organizations? 72

• Social responsibility is an organization’s obligation to best serve society. 73

• Scholars argue cases for and against corporate social responsibility. 74

• Social responsibility audits measure the social performance of organizations. 75

• Sustainability is an important social responsibility goal. 76

• Social business and social entrepreneurship point the way in social responsibility. 79

{4 Managers as Decision Makers 84

4.1 How Do Managers Use Information to Solve Problems? 86

• Managers deal with problems posing threats and off ering opportunities. 86

• Managers can be problem avoiders, problem solvers, or problem seekers. 88

• Managers make programmed and nonprogrammed decisions when solving problems. 88

• Managers can use systematic and intuitive thinking. 89

• Managers use diff erent cognitive styles to process information for decision making. 89

• Managers make decisions under conditions of certainty, risk, and uncertainty. 90

4.2 What Are Five Steps in the Decision-Making Process? 93

• Step 1 is to identify and defi ne the problem. 94

• Step 2 is to generate and evaluate alternative courses of action. 94

• Step 3 is to decide on a preferred course of action. 95

• Step 4 is to implement the decision. 96

• Step 5 is to evaluate results. 97

• Ethical reasoning is important at all steps in decision making. 98

4.3 What Are Some Current Issues in Managerial Decision Making? 100

• Personal factors help drive creativity in decision making. 100

• Group decision making has both advantages and disadvantages. 102

• Judgmental heuristics and other biases and traps may cause decision-making errors. 103

• Managers must be prepared for crisis decision making. 104

{5 Plans and Planning Techniques 110

5.1 How and Why Do Managers Use the Planning Process? 112

• Planning is one of the four functions of management. 112

• Planning is the process of setting objectives and identifying how to achieve them. 113

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• Planning improves focus and action orientation. 114

• Planning improves coordination and control. 115

• Planning improves time management. 115

5.2 What Types of Plans Do Managers Use? 118

• Managers use short-range and long-range plans. 118

• Managers use strategic and operational plans. 118

• Organizational policies and procedures are plans. 119

• Budgets are plans that commit resources to activities. 121

5.3 What Are Some Useful Planning Tools and Techniques? 123

• Forecasting tries to predict the future. 123

• Contingency planning creates backup plans for when things go wrong. 124

• Scenario planning crafts plans for alternative future conditions. 124

• Benchmarking identifi es best practices used by others. 125

• Participatory planning improves implementation capacities. 126

• Goal setting helps align plans and activities throughout an organization. 127

{6 Controls and Control Systems 132

6.1 How and Why Do Managers Use the Control Process? 134

• Controlling is one of the four functions of management. 134

• Control begins with objectives and standards. 135

• Control measures actual performance. 136

• Control compares results with objectives and standards. 137

• Control takes corrective action as needed. 138

6.2 What Types of Controls Are Used by Managers? 140

• Managers use feedforward, concurrent, and feedback controls. 140

• Managers use both internal and external controls. 142

• Managing by objectives is a way to integrate planning and controlling. 143

6.3 What Are Some Useful Control Tools and Techniques? 146

• Quality control is a foundation of modern management. 146

• Gantt charts and CPM/PERT are used in project management and control. 147

• Inventory controls help save costs. 148

• Breakeven analysis shows where revenues will equal costs. 149

• Financial ratios measure key areas of fi nancial performance. 149

• Balanced scorecards help top managers exercise strategic control. 150

{7 Strategy and Strategic Management 156

7.1 What Types of Strategies Are Used by Organizations? 158

• Strategy is a comprehensive plan for achieving competitive advantage. 158

• Organizations use corporate, business, and functional strategies. 159

• Growth strategies focus on expansion. 160

• Restructuring and divestiture strategies focus on consolidation. 161

• Global strategies focus on international business initiatives. 162

• Cooperative strategies focus on alliances and partnerships. 163

• E-business strategies focus on using the Internet for business success. 163

7.2 How Do Managers Formulate and Implement Strategies? 166

• Th e strategic management process formulates and implements strategies. 166

• Strategy formulation begins with the organization’s mission and objectives. 167

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• SWOT analysis identifi es strengths, weaknesses, opportunities, and threats. 167

• Porter’s fi ve forces model examines industry attractiveness. 168

• Porter’s competitive strategies model examines business and product

strategies. 169

• Portfolio planning examines strategies across multiple businesses

or products. 171

• Strategic leadership ensures strategy implementation and control. 172

{8 Organization Structure and Design 178

8.1 What Is Organizing as a Managerial Responsibility? 180

• Organizing is one of the management functions. 180

• Organization charts describe the formal structures of organizations. 181

• Organizations also operate with informal structures. 182

• Informal structures have good points and bad points. 183

8.2 What Are the Most Common Types of Organization Structures? 185

• Functional structures group together people using similar skills. 185

• Divisional structures group together people by products, customers,

or locations. 187

• Matrix structures combine the functional and divisional structures. 188

• Team structures use many permanent and temporary teams. 189

• Network structures extensively use strategic alliances and outsourcing. 190

8.3 What Are the Trends in Organizational Design? 194

• Organizations are becoming fl atter, with fewer levels of management. 194

• Organizations are increasing decentralization. 195

• Organizations are increasing delegation and empowerment. 196

• Organizations are becoming more horizontal and adaptive. 198

• Organizations are using more alternative work schedules. 199

{9 Organizational Cultures, Innovation, and Change 204

9.1 What Is the Nature of Organizational Culture? 206

• Organizational culture is the personality of the organization. 206

• Organizational culture shapes behavior and infl uences performance. 207

• Th e observable culture is what you see and hear as an employee or customer. 208

• Th e core culture is found in the underlying values of the organization. 209

• Value-based management supports a strong organizational culture. 210

9.2 How Do Organizations Support and Achieve Innovation? 213

• Organizations pursue process, product, and business model innovations. 213

• Green innovations pursue and support the goals of sustainability. 214

• Social innovations seek solutions to important societal problems. 214

• Commercializing innovation turns new ideas into salable products. 215

• Innovative organizations share many common characteristics. 216

9.3 How Do Managers Lead the Processes of Organizational Change? 219

• Organizations pursue both transformational and incremental changes. 219

• Th ree phases of planned change are unfreezing, changing, and refreezing. 220

• Managers use force-coercion, rational persuasion, and shared power

change strategies. 222

• Change leaders identify and deal positively with resistance to change. 224

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{10 Human Resource Management 230

10.1 What Are the Purpose and Legal Context of Human Resource Management? 232

• Human resource management attracts, develops, and maintains a talented

workforce. 232

• Strategic human resource management aligns human capital with organizational

strategies. 233

• Government legislation is supposed to protect workers against employment

discrimination. 234

• Laws can’t guarantee that employment discrimination will never happen. 235

10.2 What Are the Essential Human Resource Management Practices? 238

• Recruitment attracts qualifi ed job applicants. 238

• Selection makes decisions to hire qualifi ed job applicants. 240

• Socialization and orientation integrate new employees into the organization. 241

• Training continually develops employee skills and capabilities. 241

• Performance management appraises and rewards accomplishments. 242

• Retention and career development provide career paths. 244

10.3 What Are Current Issues in Human Resource Management? 247

• Today’s lifestyles increase demands for fl exibility and work-life balance. 247

• Organizations are using more independent contractors and part-time workers. 248

• Compensation plans infl uence employee recruitment and retention. 249

• Fringe benefi ts are an important part of employee compensation packages. 250

• Labor relations and collective bargaining are closely governed by law. 251

{11 Leadership 256

11.1 What Are the Foundations for Eff ective Leadership? 258

• Leadership is one of the four functions of management. 258

• Leaders use position power to achieve infl uence. 259

• Leaders use personal power to achieve infl uence. 260

• Leaders bring vision to leadership situations. 261

• Leaders display diff erent traits in the quest for leadership eff ectiveness. 262

• Leaders display diff erent styles in the quest for leadership eff ectiveness. 262

11.2 What Can We Learn from the Contingency Leadership Th eories? 265

• Fiedler’s contingency model matches leadership styles with situational diff erences. 265

• Th e Hersey-Blanchard situational leadership model matches leadership styles with the

maturity of followers. 267

• House’s path-goal theory matches leadership styles with task and follower characteristics. 267

• Leader-member exchange theory describes how leaders treat in-group and out-group

followers. 268

• Th e Vroom-Jago model describes a leader’s choice of alternative decision-making

methods. 269

11.3 What Are Current Issues and Directions in Leadership Development? 272

• Transformational leadership inspires enthusiasm and great performance. 272

• Emotionally intelligent leadership handles emotions and relationships well. 273

• Interactive leadership emphasizes communication, listening, and participation. 274

• Moral leadership builds trust from a foundation of personal integrity. 275

• Servant leadership is follower centered and empowering. 277

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{12 Individual Behavior 282

12.1 How Do Perceptions Infl uence Individual Behavior? 284

• Perceptual distortions can obscure individual diff erences. 285

• Perception can cause attribution errors as we explain events and problems. 287

• Impression management is a way of infl uencing how others perceive us. 287

12.2 How Do Personalities Infl uence Individual Behavior? 290

• Th e Big Five personality traits describe work-related individual diff erences. 290

• Th e Myers-Briggs Type Indicator is a popular approach to personality assessment. 291

• Self-monitoring and other personality traits infl uence work behavior. 292

• People with Type A personalities tend to stress themselves. 293

• Stress has consequences for work performance and personal health. 294

12.3 How Do Attitudes, Emotions, and Moods Infl uence Individual Behavior? 297

• Attitudes predispose people to act in certain ways. 297

• Job satisfaction is a positive attitude toward one’s job and work experiences. 298

• Job satisfaction infl uences work behaviors. 299

• Job satisfaction has a complex relationship with job performance. 300

• Emotions and moods are positive and negative states of mind that infl uence behavior. 300

{13 Motivation 306

13.1 How Do Human Needs Infl uence Motivation to Work? 308

• Maslow described a hierarchy of needs topped by self-actualization. 308

• Alderfer’s ERG theory deals with existence, relatedness, and growth needs. 309

• McClelland identifi ed acquired needs for achievement, power, and affi liation. 310

• Herzberg’s two-factor theory focuses on higher-order need satisfaction. 312

• Th e core characteristics model integrates motivation and job design. 313

13.2 How Do Th ought Processes and Decisions Aff ect Motivation to Work? 316

• Equity theory explains how social comparisons motivate individual behavior. 316

• Expectancy theory considers Motivation � Expectancy � Instrumentality � Valence. 318

• Goal-setting theory shows that well-chosen and well-set goals can be motivating. 320

13.3 How Does Reinforcement Infl uence Motivation to Work? 323

• Operant conditioning infl uences behavior by controlling its consequences. 323

• Positive reinforcement connects desirable behavior with pleasant consequences. 325

• Punishment connects undesirable behavior with unpleasant consequences. 325

{14 Teams and Teamwork 330

14.1 Why Is It Important to Understand Teams and Teamwork? 332

• Teams off er synergy and other benefi ts to organizations and their members. 332

• Teams often suff er from common performance problems. 333

• Organizations are networks of formal teams and informal groups. 334

• Organizations use committees, task forces, and cross-functional teams. 335

• Virtual teams are increasingly common in organizations. 336

• Self-managing teams are a form of job enrichment for groups. 337

14.2 What Are the Building Blocks for Successful Teamwork? 339

• Teams need the right members and other inputs to be eff ective. 340

• Teams need the right processes to be eff ective. 342

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• Teams move through diff erent stages of development. 342

• Team performance is aff ected by norms and cohesiveness. 344

• Team performance is aff ected by task and maintenance roles. 345

• Team performance is aff ected by use of communication networks. 346

14.3 How Can Managers Create and Lead High-Performance Teams? 348

• Team building helps team members learn to better work together. 348

• Team performance is aff ected by use of decision-making methods. 349

• Team performance suff ers when groupthink leads to bad decisions. 350

• Team performance benefi ts from good confl ict management. 352

{15 Communication 358

15.1 What Is Communication and When Is It Eff ective? 360

• Communication is a process of sending and receiving messages with meanings

attached. 361

• Communication is eff ective when the receiver understands the sender’s

messages. 361

• Communication is effi cient when it is delivered at low cost to the sender. 362

• Communication is persuasive when the receiver acts as the sender intends. 363

15.2 What Are the Major Barriers to Eff ective Communication? 366

• Poor use of channels makes it hard to communicate eff ectively. 367

• Poor written or oral expression makes it hard to communicate eff ectively. 367

• Failure to spot nonverbal signals makes it hard to communicate eff ectively. 368

• Status diff erences make it hard to communicate eff ectively. 368

• Physical distractions make it hard to communicate eff ectively. 369

15.3 How Can We Improve Communication with People at Work? 371

• Active listening helps people say what they really mean. 371

• Constructive feedback is specifi c, timely, and relevant. 372

• Offi ce spaces can be designed to encourage interaction and communication. 373

• Transparency and openness ensure that accurate and timely information is shared. 373

• Appropriate use of technology can facilitate more and better communication. 375

• Sensitivity and etiquette can improve cross-cultural communication. 376

{16 Diversity and Global Cultures 382

16.1 What Should We Know About Diversity in the Workplace? 384

• Th ere is a business case for diversity. 384

• Inclusive organizational cultures value and support diversity. 385

• Organizational subcultures can create diversity challenges. 385

• Minorities and women suff er diversity bias in many situations. 387

• Managing diversity should be a top leadership priority. 388

16.2 What Should We Know About Diversity Among Global

Cultures? 391

• Culture shock comes from discomfort in cross-cultural situations. 391

• Cultural intelligence is the capacity to adapt to foreign cultures. 392

• Th e “silent” languages of cultures include context, time, and space. 393

• Hofstede identifi es fi ve value diff erences among national cultures. 394

• Country clusters show cultural diff erences. 397

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{17 Globalization and International Business 402

17.1 How Does Globalization Aff ect International Business? 404

• Globalization involves the growing interdependence of the world’s economies. 405

• Globalization creates a variety of international business opportunities. 405

• International business is done by global sourcing, import/export, licensing,

and franchising. 406

• International business is done by joint ventures and wholly owned subsidiaries. 408

• International business is complicated by diff erent legal and political systems. 409

17.2 What Are Global Corporations and How Do Th ey Work? 412

• Global corporations or MNCs do substantial business in many countries. 412

• Th e actions of global corporations can be controversial at home and abroad. 413

• Managers of global corporations face a variety of ethical challenges. 414

• Planning and controlling are complicated in global corporations. 414

• Organizing can be diffi cult in global corporations. 416

• Leading is challenging in global corporations. 416

{18 Entrepreneurship and Small Business 422

18.1 What Is Entrepreneurship and Who Are Entrepreneurs? 424

• Entrepreneurs are risk takers who spot and pursue opportunities. 425

• Entrepreneurs often share similar backgrounds and experiences. 426

• Entrepreneurs often share similar personality traits. 428

• Women and minority entrepreneurs are growing in numbers. 428

• Social entrepreneurs seek novel solutions to pressing social problems. 430

18.2 What Should We Know About Small Business and How to Start One? 433

• Small businesses are mainstays of the economy. 433

• Small businesses must master three life-cycle stages. 434

• Family-owned businesses can face unique challenges. 435

• Most small businesses fail within fi ve years. 436

• Assistance is available to help small businesses get started. 437

• A small business should start with a sound business plan. 438

• Th ere are diff erent forms of small business ownership. 439

• Th ere are diff erent ways of fi nancing a small business. 440

Skill-Building Portfolio SB-1

Self-Assessments

1. Personal Career Readiness

2. Managerial Assumptions

3. Terminal Values Survey

4. Intuitive Ability

5. Time Management Profi le

6. Internal/External Control

7. Handling Facts and Inferences

8. Empowering Others

9. Tolerance for Ambiguity

10. Performance Appraisal Assumptions

11. Least-Preferred Co-Worker Scale

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12. Stress Test

13. Two-Factor Profi le

14. Team Leader Skills

15. Feedback and Assertiveness

16. Diversity Awareness

17. Global Intelligence

18. Entrepreneurship Orientation

Class Exercises

1. My Best Manager

2. Evidence-Based Management Quiz

3. Confronting Ethical Dilemmas

4. Lost at Sea

5. Th e Future Workplace

6. Stakeholder Maps

7. Strategic Scenarios

8. Organizational Metaphors

9. Force-Field Analysis

10. Upward Appraisal

11. Leading by Participation

12. Job Satisfaction Preferences

13. Why We Work

14. Understanding Team Dynamics

15. Communication and Teamwork Dilemmas

16. Alligator River Story

17. American Football

18. Entrepreneurs Among Us

Team Projects

1. Managing Millennials

2. Management in Popular Culture

3. Organizational Commitment to Sustainability

4. Crisis Management Realities

5. Personal Career Planning

6. After Meeting/Project Review

7. Contrasting Strategies

8. Network “U”

9. Organizational Culture Walk

10. Th e Future of Labor Unions

11. Leadership Believe-It-Or-Not

12. Diffi cult Personalities

13. CEO Pay

14. Superstars on the Team

15. How Words Count

16. Job Satisfaction Around the World

17. Globalization Pros and Cons

18. Community Entrepreneurs

Cases for Critical Th inking C-1

Case 1: Trader Joe’s: Keeping a Cool Edge

Case 2: Zara International: Fashion at the Speed of Light

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Case 3: Patagonia: Leading a Green Revolution

Case 4: Amazon: One E-Store to Rule Th em All/Sidebar: Barnes & Noble: Adapting to an Uncertain Future

Case 5: Nordstrom: Planning a Better Inventory/Sidebar: Zappos: How Zappos Did it

Case 6: Electronic Arts: Inside Fantasy Sports/Sidebar: Zynga: Building an Army of Social Games

Case 7: Dunkin’ Donuts: Betting Dollars on Donuts

Case 8: Nike: Spreading Out to Stay Together

Case 9: Apple: People and Design Create the Future

Case 10: Netfl ix: Making Movie Magic/Sidebar: Redbox: Will Customers Wait for New Releases?

Case 11: SAS: Business Decisions at the Speed of Light/Sidebar: Sungard: Risky Business

Case 12: Facebook: Social Networking Is Big Business/Sidebar: LinkedIn: Social Networking’s All Grown Up

Case 13: Panera Bread Company: Staying Ahead of Long-Term Trends/Sidebar: TOMS: Get One, Give One

Case 14: Pixar: Animated Geniuses/Sidebar: DreamWorks: DreamWorks Delights

Case 15: Twitter: Redefi ning Communications/Sidebar: Yammer: Microblogging Goes Corporate

Case 16: Toyota: Looking Far into the Future/Sidebar: Ford: Th e Assembly Line Goes Global

Case 17: Harley-Davidson: Style and Strategy Have Global Reach

Case 18: In-N-Out Burger: Building a Better Burger/Sidebar: Sprinkles: Leading a Sweet Trend

Test Prep Answers AN-1

Glossary G-1

Endnotes EN-1

Photo Credits PC-1

Name Index NI-1

Subject Index SI-1

Organization Index OI-1

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