Management Unit 1

Chapter 1 - Intro to Management

management

the pursuit of organizational goals efficiently and effectively by integrating the work of people through planning, organizing, leading, and controlling the organization’s resources

management

the art of getting things done

managers

task-, people-, and achievement-oriented

effective

achieving results

efficient

wise, cost-conscious use of the firm’s resources (people, money, raw materials)

origins of management

psychology + leadership + strategy + ENT = MNGT

traditional management

• top managers ensure firm competitiveness, others’ job security

• lower managers, employees implement strategy with loyalty, obedience

contemporary management

• lower managers, employees are responsible for firm competitiveness, own development

• top managers support personnel, ensure employability

what managers do

planning → organizing → leading → controlling → back to planning

functional manager

responsible for one organizational activity (ex. VP of Finance)

general manager

responsible for multiple organizational activities (ex.EVP)

for-profit firm

goal is to make money

non-profit firm

goal is to offer services to some/all people in your area

mutual-benefit firm

goal is advance members’ interests (ex. labor union)

interpersonal

• figurehead, leader, liaison

• interact with insiders, outsiders

informational

• monitor, disseminator, spokesperson

• receive, share information

decisional

• entrepreneur, disturbance, handler, resource allocator, negotiator

• uses information

technical skills

• job-specific knowledge

• most important for employees, first-line managers, but still useful later

conceptual skills

• think analytically, visualize the firm as a whole

• increase in importance as you climb the hierarchy, especially important for top managers

human skills

• work with others to get things done (soft skills)

• often the hardest skill to master, important at all levels of the hierarchy

most valued traits

• ability to motivate

• ability to communicate

• international work experience

• high energy level

7 management challenges

• DEI

• technology

• competitive advantage

• happiness & meaningfulness

• globalization

• ethics

• sustainability

management theory

1. use history to understand the present

2. make predictions, develop principles to guide actions

3. gives new ideas for new situations

4. helps clarify why/what your managers do

5. help you understand how external events influence internal processes

6. understand why certain management techniques have or haven’t been successful

Taylor

• founder of scientific management

• motion studies

• emphasis on standardization, efficiency, productivity

*scientific management

*classical

Gilbreths

• build on Taylor’s work

• time and motion studies

• removed unnecessary movements to increase efficiency

*scientific management

*classical

Spaulding

• developed “necessities”

• championed ideas including needs, division of labor, budgets, teamwork, environment, etc.

*administrative management

*classical

Fayol

• founder of “administrative science”

• first to identify major management functions, many still used today

*administrative management

*classical

Weber

• developed the concept of bureaucracy

• in response to common practice in German firms to promote based on social status

*administrative management

*classical

Munsterberg

• father of Industrial Psychology

• main focus is on human behavior at work

• (industrial psychology is basically the foundation of HR)

*behavioral

Follett

• firms should be more democratic

• laid foundation for self-managed teams, worker empowerment, etc.

*behavioral

Mayo

• Hawthorne Studies (researched that certain lighting levels affected productivity - although it wasn’t actually the light, it was more interaction/supervision from managers)

• managers should pay attention to what their employees are doing

*behavioral

Maslow

• developed hierarchy of innate needs

*human relations

McGregor

• developed Theory X (view employees in a negative way (lazy, unmotivated) → managers are micromanaging and don’t trust), Theory Y (view employees in a positive way (want to come and be successful) → manager doesn’t come in until there’s issues)

• managers’ beliefs influence their actions

*human relations

human relations approach

welcome change from scientific, administrative management but came to be seen as too simplistic and was replaced by behavioral science approach

behavioral science approach

• uses scientific research to develop theories about human behavior and produce practical tools for managers

• incorporates psychology, sociology, anthropology, economics

operations management

• managing the production, delivery of products/services more effectively, efficiently

• includes all aspects of day-to-day operations and supply chain

• governs decisions about increasing productivity, efficiency, quality

evidence based management

• using data, evidence to translate principles to practice

• understand what does/doesn’t work using data (don’t assume or always follow conventional wisdom)

systems viewpoint

• views an organization as a system of interrelated parts

• understand how parts come together → diagnose problems, develop solutions

inputs → transformational processes → outputs → feedback → repeat

inputs

the people, money, information, equipment, and materials required to produce an organization’s goods or services

transformational processes

the organization’s capabilities in management and technology that are applied to converting inputs into outputs

outputs

the products, services, profits, losses, employee satisfaction or discontent, etc., produced by the organization

feedback

information about the reaction of the environment to the outputs, which affects the inputs

contingency viewpoint

early approaches looked for single best way to do something (became increasingly challenging)

“It depends” → manager’s approach should vary depending on individual, environment (uses what best works in your situation)

contemporary approaches

• learning organizations

• high-performing work practices

• shared value & sustainable development

learning organizations

• keep learning!!

• develop knowledge

• share knowledge

• modify behavior

• focus on experimentation, problem solving

high-performance work practices

• create HR practices that foster employee development, well-being

• enhance ability, motivation, opportunity to contribute

• turns you into an “employer of choice”

• will help you get and retain higher quality talent

• “supercharging HR process”

shared value & sustainable development

• focus on environmental, social costs of doing business

• business + sustainability

• meet current needs, preserve future ability to do the same

success

many businesses, small and large, are beginning to subscribe to a new standard of ________ — the triple bottom line

triple bottom line

people, planet, and profit

ethical behavior

a behavior accepted as right or wrong according to prevailing standards

Sarbanes-Oxley Act of 2002 (SOX)

• a response to the high-profile ethics scandals in the early 2000s

• developed 11 key requirements to reform corporate governance practices

• main focus on awareness, ethics

common types of misconduct

• conflicts of interest

• abusive behaviors

• violations of health and safety regulations

• corruption

• discrimination

• sexual harassment

approaches to ethics

• utilitarian

• individual

• moral-rights

• justice

ethical responsibility

individuals being good organizational citizens

social responsibility

managers’ responsibility to benefit the firm and society

corporate social responsibility

expectation that firms to than “just” earn money and stay within the law

transportation

communication used to rely on ______

roads → railroads

advances of communication technology

telegraph → telephone → commercial radio → television → cellular communications → internet

rise of global economy

Key events that have led to the ________

1. Berlin Wall comes down

2. Asian countries begin opening their economies to foreign investment

3. Widespread governmental deregulation for economies

pros of globalization

• faster technological improvements

• increase access to capital

• small companies start more easily, maneuver more quickly

cons of globalization

• US job losses

• information security concerns

• loss of control

• hidden costs

• potential instability

ethnocentrism

managers believe their native country, culture, language, and behavior are superior to others

polycentrism

native managers in foreign offices best understand native personnel and practices, home office should let them lead

geocentrism

accept there are differences and similarities between home, foreign personnel and practices; use whatever techniques are most effective

cross-cultural awareness

willingness to work abroad → _________ _________ → becoming increasingly valuable

current global trends

• millennials

• customization

• environment concern

• income disparity

• faster innovation

• social connectivity

• global instability

• increased mobility

• creative class

• increasing collaboration

national culture

the shared set of beliefs, values, knowledge, and patterns of behavior common to a group of people

national culture - globe dimensions

• performance orientation

• gender egalitarianism

• uncertainty avoidance

• collectivism

• assertiveness

• humane orientation

• power distance

• future orientation

other elements of culture

• language

• interpersonal space

• communication

• time orientation

• religion

• law and political stability

strategic competitive advantage

knowing the cultural tendencies of foreign business partners and competitors increase your career readiness and can give you a _______ _________ __________

why companies expand internationally

• availability of supplies

• new markets

• lower labor costs

• access to finance capital

• avoidance of tariffs and import quotas

strategic positioning

attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company

strategic management

• reflects firm’s actions to achieve its mission and vision

• examines how actions and events involving top executives, firms, and industries influence a firm’s success or failure

• pattern of resource allocation choices and organizational arrangements that result from managerial decision-making

• matching internal resources with demands of external environment

corporate-level strategy

What business or businesses should we be in?

corporation

business-level strategy

How should we compete in this industry?

electronic components unit, services unit, retail unit

functional-level strategy

How can business functions support the business-level strategies?

finance, human resources, operations, marketing and communications

strategic management process

1. establish the mission, vision, and values statements

2. assess the current reality

3. formulate corporate, business, and functional strategies

4. strategic implementation

5. maintain strategic control

6. revise actions, if necessary, based on feedback

how to assess current reality

• SWOT analysis

• VRIO analysis

• forecasting

• benchmarking

SWOT analysis

Strengths: internal environment

Weaknesses: internal environment

Opportunities: external environment

Threats: external environment

SWOT strengths or weaknesses

could be work processes, organization, culture, staff, product quality, production capacity, image, financial resources and requirements, service levels, other internal matters

SWOT opportunities or threats

could be market segment analysis, industry and competition analysis, impact of technology on organization, product analysis, governmental impacts, other external matters

VRIO assessment

assessment of a company’s resources and capabilities is essential to answering; if a company or its products possess a competitive advantage

VRIO

Valuable: does it let you exploit an opportunity, neutralize a threat?

Rare: do other firms control the resource, too?

Inimitable: is it costly for other firms to imitate?

Organized: do you have the structures to exploit it?

forecasting

after you’ve completed your SWOT analysis

trend analysis

contingency planning

benchmarking

compare your performance to other high-performing firms

understand what leads to better performance, determine best practices

implement best practices at your firm

evaluate external environment

• general or macroeconomic

  • PESTEL analysis

• industry

  • Porter’s 5 Forces analysis

evaluating internal environment

• resources, capabilities

• VRIO analysis

PESTEL (+G) analysis

Political: tax policy, trade restrictions, tariffs, government stability, etc.

Economic: interest rates, inflation, GDP, unemployment rates, disposable income, etc.

Socio(cultural): demographic trends, cultural trends (ex. obesity), etc.

Technological: new product development, automation, etc.

Environmental: natural disasters, climate change, weather patterns, etc.

Legal: laws involving healthcare, discrimination, antitrust, etc.

Global: what’s happening in other parts of the world?

Porter’s 5 Forces

1. threat of new entrants

   • barriers to entry + retaliation from current competitors

2. threat of substitutes

   • can buyers find products in other industries that meet their needs?

3. power of buyers

   • can buyers push for lower prices, increased quality?

4. power of suppliers

   • can suppliers push for higher prices, reduced quality?

5. competitive rivalry

   • how intense is the competition?

difference between competitor and substitute

depends on how narrowly we define the industry

substitute

comes from outside the industry

competitor

same/similar products being sold

source of your advantage

you’re doing something different than somebody else of you’re doing something different entirely

this will make you a COST leader

ex. walmart

scope of competition

what makes you different/special in your market to gain control of the competition

this kind of thing helps you with brand loyalty

ex. apple

Target

most famous integrated strategy company

“stuck in the middle” company

tried an integrated strategy and couldn’t pull it off

mission statement

• communicates the organization’s reason for being and how it plans to serve its key stakeholder

• who are you? what are you doing? why are you doing it?

vision statement

• a declaration of the organization’s purpose and aspirations

• future oriented