Intro To Management (Hamilton) Exam 1

What is the "purpose" of Management?

"Right Work, Done Well!"

To learn what Management is REALLY about:

What" do Managers do and "How" do they do it?----- They do the "Right Work"and they "Do it Well!"

"Right Work"

•Vision, Mission, Goals,Strategy, & Plans

• Doing What's Right:

- Legal Compliance

- Ethical Decision Making

- Core Values

- CSR (Corporate Social Resp)

•Managing Growth, Innovation& Entrepreneurship

•Managing a Global Business"Right Work"

"Done Well"

• Organization Design

• Human ResourcesManagement

• Employee Engagement

• Performance Management

Management is a "Practice"

To learn Management you mustapply the concepts, processes,and tools included in this book

Disclaimer

• Most management theory and purported "best practices" are not based in sound scientific research

• Difficult to conduct scientific studies

- Impossible to create controls

- Difficult to recruit participants

• Major consulting firms (McKinsey,BCG) interact frequently with orgs.

• Academic and consulting firm research still provides valuable perspectives even if not based on scientifically controlled studies

Are Management Practices situational?

YES, Management Practices are situational

4 Facets that Influence Management Practices

- Economic

- Social

- Political

- Technological

Are Facets constantly changing?

YES, Facets constantly changing

Historian Bias

- The People who write about it

- Original documents that recorded it

Data Limitations

- May not represent general practices

- May not represent best practices

What is Value of Management History Study?

• Observe the drivers/pace of change

• Are practices universal or variable?

• Are Facets/Practices dependent or interdependent?

• What is the "focus" of management practices and is that "focus" changing?

How best to Study Management History?

1. Study "stages" or "time periods"

2. Study "schools of thought"

3. Study "organizations"

4. Study "biographies"

Categories of Management Practices:

1. Specialization of Labor

2. Systematic Management

3. Scientific Management

4. Administrative Management

5. Human Relations Management

Specialization of Labor

• Adam Smith - 1700s

• Laborer focus on single component of production

• Increase experience and productivity

Systematic Management

• Early Industrial Revolution

• Engineers and Economists had major roles in managing factories

• Most of those roles migrated to other specialists over time

Scientific Management

• Focus on Productivity

• Frederick Taylor late 1800s

- Recording steps in task

- Analyze worker interaction with machines

• Frank & Lillian Gilbreth early 1900s

- Time and motion studies

• Henry Gantt early 1900s

- Sequential illustrations of workflows

• Statistical Process Control & JIT mid to late 1900s(Deming, Juran, Ishikawa, Ohno)

• Foundations for Lean & "Big Data"

Administrative Management

• Henri Fayol early 1900s

- 14 Principles

- Management Process

• Max Weber late 1800s - 1900s

- Bureaucratic Management

- Six doctrines

Human Relations Management

• Increasing power of "Unions"

• Advent of "Employee Welfare"departments that evolved into"Personnel" departments

• Hawthorne Studies (Mayo)

• Mary P. Follett early 1900s

• 1930s:

- National Labor Relations Act

- Coalition of labor unions(CIO)

• Maslow Hierarchy - 1940s

• H. Simon - "bounded rationality"

- Roots of Org. Theory & Org.Behavior studies

Five Elements for Identifying "Right Work"

1. Vision

2. Mission

3. Goals

4. Strategy

5. Plans

The "Four" Strategy Options

1. Differentiation

2. Low-Cost

3. Combo

4. Focus

Differentiation

Provide Product/Service features/benefits that are superior and more attractive to customers than competitive offerings

Low-Cost

Have the lowest total cost methods for producing products/services vs.competitors.

Combo

Provides some of the "differentiation"features valued by customers at an overall lower price point than competitors' fully differentiated product/service offerings

Focus

•Serve the needs of a market segment better than competitors' offerings for the total market

• Market segments include:

-Geographic

-Demographic

-Product/Service specialization or customization

External Analysis Tools

• Porter's Five Forces Analysis

• Industry Life Cycle Analysis

• Macroenvironmental Analysis

Porter's Five Forces Analysis

• Threat of New Entrants

• Intensity of Rivalry

• Bargaining Power of Buyers

• Bargaining Power of Suppliers

• Threat of Substitutes

Industry Life Cycle Analysis

• Embryonic

• Growth

• Shakeout

• Mature

• Decline

Macroenvironmental Analysis

• Macroeconomic

• Global• Technology

• Demographics

• Social Values

• Political/Legal Forces

Internal Analysis - Attributes Evaluated

• Product/Service Quality

• Efficiency

• Innovation

• Customer Responsiveness

• Distinctive Competencies

Product/Service Quality

• Customer Perceived Performance relative to alternatives

• Customer Perceived value relative to world-class standards

Efficiency

• Outputs/Inputs

• Use of resources relative to competitors

• Relative comparison of overall cost structure vs competitors

Innovation

• Success rate at developing impactful new products relative to competitors

• Success rate at developing improved processes relative to competitors

Customer Responsiveness

• How well does organization understand (vs competitors understanding) its customers' requirements

• How well does the organization deliver the customers' requirements vs.competitors

Distinctive Competencies

Defined -> The ability to differentiate products/services and/or to achieve lower costs

• Do the organization'sDistinctive Competencies(DCs) provide a competitive advantage?

• Are the organization's DCs superior to competition's DCs?

• How vulnerable are the organization's DCs to imitation or obsolescence?

Strategy Implementation

• Organization Structure

• Monitoring & Control

• Culture

Organization Structure

• Identify, design, and staff the jobs required to complete the necessary tasks to execute the organization's plans, achieve its objectives, and to fulfill its mission

• Integrate and coordinate the activities of employees by grouping jobs and delegating authority to assure effective and efficient delivery of results.

Monitoring & Control

• Create measures to evaluate organizational and individual performance

• Establish feedback mechanisms to share performance results

• Establish incentives to encourage achievement of goals

• Implement motivational programs to encourage good performance

Culture

Defined -> Set of values, norms, believes, and attitudes shared by the organization's members

The culture must be aligned with the strategy of the organization in order to support effective implementation

Why Plans are Often Revised or Abandoned?

• Competitor's Actions/Reactions

• Limited Resources or Capabilities

• Lack of Support from Employees

• Ineffective

• Competing Priorities

• New Information/Unexpected Events

Some organizations are more structured and more disciplined than others in pursuing the "Right Work" (TRUE OR FALSE)

TRUE

As the business environment changes, organizations need to be flexible and adapt quickly to revise their goals to be more realistic, and to modify strategies and plans to increase the probability of successfully achieving their goals (TRUE OR FALSE)

TRUE

Four Elements for Doing What's "Right"

1. Business Law

2. Ethical Decision Making

3. Core Values

4. Corporate Social Responsibility

Business Law

• Labor Laws

• Uniform Commercial Code

• Environmental Protection

• Industry Specific Regulations

Ethical Decision Making

Many examples of unethical behavior by businesses!

- Why?

•"What does happen"

•"What should happen"

- What Does Happen:

• Internal Factors

• External Factors

- What Should Happen:

• Moral Awareness

• Moral Judgment

• Moral Intention

• Action/Implementation

- Ethical Standards:

• Utilitarian

• Individualism

• Moral Rights

• Justice

• Impartial Opinion

• Full Disclosure

Core Values

• Underlying norms of behavior and actions expected of all employees

• Must go beyond articulation

-Reinforced by example

-Reinforced by action

Corporate Social Responsibility

• The actions of an organization to recognize and proactively respond to the needs and expectations of all of its stakeholders

• Stakeholders include customers, suppliers, distributors, employees, communities, etc.

• Not just the "Right" thing to do but also the "Smart" thing to do

• Three things proactive leaders do:

Act as a role model (words and action), Use empathy, Create a broader vision

Drivers of Economic Value of a Business

1. Profitability

2. Growth

Profability

Ability to generate long-term positive cash flow necessary to provide an appropriate, risk-adjusted, rate of return on capital employed

ROIC = NIAT/Equity + LT Debt

Growth

Rate of increase in net cashflows year over yea

Options for Creating Growth:

1. Existing products/services to current customers

2. Gaining new customers while retaining current customers

3. New products/services to current and new customers

4. Selling existing products/services into new markets

5. Entering completely new markets with new products/services

What is Innovation?

executing an idea which addresses a specific challenge and creates value for both the developer and the user

Mechanisms for Successful Innovation

1. Use of Artificial Intelligence

2. Use of Technology Platforms

3. Use of Collaborative Ecosystems

Use of Artificial Intelligence

Computer systems able to perform tasks that normally require human intelligence

Use of Technology Platforms

Provide a foundation for developing other business offerings

Use of Collaborative Ecosystems

Multiple organizations working collaboratively to enable rapid development of new technologies, products, and services

• Collecting and using data

• Access to IP (intellectual property)

• Merging physical and digital marketing channels

• Advancing new technologies

What is Entrepreneurship?

bringing forth novel ideas and concepts that create value. To do this entrepreneurs often act with urgency, in unorthodox ways, so as to address the immediate challenges, and generate opportunities amidst uncertainty.

How Do Large Businesses Create Successful NewVentures?

1. Top Leadership Commitment

2. Creating limited target areas aligned to core competencies of the business

3. Overcome the typical obstacles that stifle internal new ventures

4. Create separately funded business development organizations

5. Use innovation tools (tech platforms & collab. ecosystems)

6. Learn from prior ventures

7. Terminate unsuccessful ventures

Factors Driving Globalization

1. Declining Trade Barriers

2. Technology Enablement

3. Rise of MultinationalEnterprises (MNEs)

4. Formation of Global Institutions

Declining Trade Barriers

• Reduction of tariffs

• General recognition of the advantages of free-trade policies

Technology Enablement

• Air Travel

• Advanced Communications

• Internet Commerce

Rise of MultinationalEnterprises (MNEs)

• More international trade experience

• More sharing of best practices and expertise

Formation of Global Institutions

• WTO

• World Bank

Key Elements of Political Economy

1. Political Climate

2. Economic Conditions

3. Legal System

Political Climate

• Government favors free-trade?

• Civil unrest/political upheaval or instability

• Corruption/fraud

Economic Conditions

• Stable economy

• Sufficient distributed wealth to generate sufficient demand

• Inflation/exchange rates/tax policies

Legal System

• Laws and enforcement practices protect the assets, investments, and intellectual property of foreign entities

• Contracts are recognized and enforceable

• Legal regulations are not overly restrictive

Culture

"Norms, beliefs, attitudes, mores, and values that are commonly shared by a large number of residents of a country"

1. Many countries are multi-cultural

2. Some cultures are not receptive to foreign businesses

3. Cultural differences (including language)need to be understood and considered in conducting business in a country

Core Strategies for Conducting InternationalBusiness

1. Global Standard

2. Local Customization

3. Combination

Global Standard

• Common product sold in all countries with minimal variation

• Chosen to optimize production and distribution efficiencies as well as to build global brands

Local Customization

• Products/Services are customized to meet the unique needs of each country in order to optimize customer acceptance and purchase

• Customization costs can be significant

Combination

• Products are customized in some countries where the market size and unique requirements make it worth while

• All other countries are provided standard products

Strategies for Entering a Foreign Market

1. Export

2. License

3. Franchise

4. Joint Venture

5. Strategic Alliance

6. Do it Yourself (DIY)

How Do You Decide Which Strategy for Entering a Foreign Market?

1. Management preferences regarding direct control

2. Availability of suitable business partners/acquisition targets

3. Legal factors favoring/disfavoring a particular option including foreign ownership restrictions

4. Nature of the products/services

5. Time required and risks involved to get a particular option operational