Saturday, February 16, 2013

Chapter 2 – The Management Environment



Chapter 2 – The Management Environment
Learning Objectives
          Explain what the external environment is and why it’s important.
          Discuss how the external environment affects managers.
          Define what organizational culture is and explain why it’s important.
          Describe how organizational culture affects managers.
Environment
          Managers make today is failing to adapt to the changing world. No successful organization, or its managers, can operate without understanding and dealing with the dynamic environment—external and internal—that surrounds it.
What Is External Environment?
External environment is the factors, forces, situations, and events outside the organization that affect its performance.
One of the biggest mistakes managers make today is failing to adapt to the changing world. No successful organization, or its managers, can operate without understanding and dealing with the dynamic environment—external and internal—that surrounds it.
The term “external environment” refers to factors, forces, situations, and events outside the organization that affect its performance.
Because of today’s global society, a volcanic eruption in Iceland in 2010 prevented delivery of auto parts that led to a shutdown at a BMW plant in South Carolina and a Nissan Motor facility in Japan.
Components of External Environment












As shown here in Exhibit 2-1, the external environment includes six components:
          The economic component encompasses factors such as interest rates, inflation, changes in disposable income, stock market fluctuations, and business cycle stages.
          The demographic component includes trends in population characteristics such as age, race, gender, education level, geographic location, income, and family composition.
          The technological component focuses on scientific and industrial innovations.
          The sociocultural component is concerned with societal and cultural factors such as values, attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of behavior.
          The political/legal component looks at federal, state, and local laws, as well as other countries’ laws and global laws. It also includes a country’s political conditions and stability.
          The global component encompasses issues associated with globalization and a world economy.
How Has the Economy Changed?
          Began with turmoil in mortgage markets
          Spread to businesses when broader credit markets collapsed
          Called the “Great Recession”
          Characterized by foreclosures, high rates of unemployment, huge public debt, and widespread social problems
          The current U.S. economic crisis, which began with turmoil in mortgage markets and spread to businesses when broader credit markets collapsed, has been called the “Great Recession” by some analysts. Due to our global society, economic troubles in the United States spread to other countries.
          With rising numbers of foreclosures and bankruptcies, a huge public debt, a U.S. unemployment rate over nine percent, 25 million unemployed globally, and widespread social problems from job losses, it’s clear that the U.S. and global economic environments are changing.
          What led to the massive problems? Experts cite a long list of factors including excessively low interest rates for an extended time, flaws in the U.S. housing market, and massive global liquidity. These factors led businesses and consumers to become highly leveraged until credit dried up and the worldwide economic system nearly collapsed.
How Will Business Change?
          Role of government in financial markets and in consumer protection
          Government spending comparable to World War II levels
          Additional regulations and increased enforcement and oversight of current regulations
What Role Do Demographics Play?
Demographics refers to the characteristics of a population used for purposes of social studies.
It has a significant impact on how managers manage and include such factors as age, income, sex, race, education level, ethnic makeup, employment status, geographic location, and more.
How Does External Environment Affect Managers?
There are three ways that the external environment affects managers:
    1.  Its impact on jobs and employment
    2.  The amount of environmental uncertainty, and
    3.  The nature of stakeholder relationships.
As external environmental conditions change, managers face the impact of these changes on jobs and employment. Economists predict that about one quarter of the 8.4 million U.S. jobs eliminated during the most recent economic downturn won’t be reinstated.
Such readjustments create challenges for managers who must balance work demands with having enough people with the right skills to do the organization’s work.
Changes in external conditions not only affect the types of jobs available but they also affect how the jobs are created and managed. For example, many employers use flexible work arrangements and contract freelancers or temporary workers.
Assessing Environmental Uncertainty
Environmental uncertainty refers to the degree of change and complexity in an organization’s environment
Managing Stakeholder Relationships
The nature of stakeholder relationships is another way in which the environment influences managers. The more obvious and secure these relationships, the more influence managers will have over organizational outcomes.
Stakeholders are any constituencies in an organization’s environment that are affected by that organization’s decisions and actions. These groups have a stake in, or are significantly influenced by, what the organization does. In turn, these groups can influence the organization.
Why Manage Stakeholder Relationships?
          Good stakeholder relationships can:
          Positively affect organizational performance
          Be recognized as “doing the right thing” and show corporate  social responsibility
          Create and reinforce a positive image of the organization among its stakeholders and community
There are a number of benefits to managing external stakeholder relationships.
          According to management researchers, good stakeholder management improves organizational performance.
          The organization is perceived as “doing the right thing,” which demonstrates corporate social responsibility and creates a positive image of the organization.
Because an organization depends on external groups for resources (such as vendors) and as outlets for goods and services (such as customers), decisions that consider stakeholders’ interests can pay off.
In the years ahead, it’s not going to be “business as usual” for either organizations or managers. Managers will make difficult decisions about how they do business and about their people. It’s important to understand how changes in the external environment will affect your future organizational and management experiences.
Organizational Stakeholders
          Managers benefit from good management of stakeholder relationships because stronger relationships can improve the predictability of environmental changes, lead to more successful innovations, foster a greater degree of trust among stakeholders, and increase organizational flexibility to reduce the impact of change.
What Is Organizational Culture?
Organizational culture is the shared values, principles, traditions, and ways of doing things that influence the way organizational members act.
Now that we’ve looked at the external environment of an organization, let’s focus on the internal aspects of the organization, specifically its culture.
Organizational culture has been described as the shared values, principles, traditions, and ways of doing things that influence the way organizational members act.
In most organizations, these shared values and practices have evolved over time and largely determine how things are done in a given organization.
Defining Culture and Its Impact
          Culture is a perception.
          Organizational  culture isn’t concerned with whether members like it.
Employees describe the culture in similar terms despite their diversity
Note that our definition of “culture” implies three things:
  1.  Culture is a perception that cannot be physically touched or seen, but is perceived based on what employees experience within the organization.
  2.  Organizational culture is concerned with how members perceive or describe the culture, not with whether they like it.
  3.  Employees tend to describe the organization’s culture in similar terms, regardless of their backgrounds or their work at different organizational levels.
Organizational culture is important because of the impact it has on decisions, behaviors, and actions of organizational employees.
How Can Culture Be Assessed?


Research suggests that an organization’s culture can be described using the seven dimensions shown here in Exhibit 2-4: Attention to Detail, Outcome Orientation, People Orientation, Team Orientation, Aggressiveness, Stability, and Innovation and Risk Taking.
These dimensions range from low (meaning not typical of the culture) to high (meaning especially typical of the culture).
In many organizations, one cultural dimension is emphasized more than the others and essentially shapes both the organization’s personality and the way organizational members work.
          For instance, Sony Corporation focuses on product innovation, identified in this graphic as “innovation and risk taking.”
          In contrast, Southwest Airlines has made its employees a central part of its culture, illustrated in this graphic as “people orientation,” which the company shows by how it treats its employees.
How Do Employees Learn the Culture?
Employees most commonly learn an organization’s culture through its stories, rituals, material symbols, and language.
          Organizational stories recount significant events or people, such as a popular Nike story that tells how its cofounder, the late Bill Bowerman, poured rubber into his wife’s waffle iron to create a better running shoe.
          Corporate rituals are repetitive activities that express and reinforce the important values and goals of the organization. For example, “Passing of the Pillars” at Boston Scientific is a ritual that acknowledges a challenging assignment by awarding the employee who completes the assignment with a two-foot high plaster-of-Paris pillar to show that this person has the support of all his or her colleagues.
          Material symbols, such as the layout of organizations facilities, how employees dress, employee perks, and so on, give a sense of whether the work environment is formal or casual, fun or serious, and the kinds of behavior that are rewarded, such as risk taking, conservative, participative, and so on.
          Many organizations use language to identify and unite members of a culture by developing unique terms to describe equipment, key personnel, customers, processes, or products related to its business.
Where Does an Organization’s Culture Come From?
An organization’s culture generally reflects the vision or mission of its founders, who establish the early culture by projecting an image of what the organization should be and what its values are.
The small size of most new organizations helps the founders impose their vision on all organization members. An organization’s culture, then, results from the interaction between:
  1.  The founders’ biases and assumptions, and
  2.  What the first employees subsequently learn from their own experiences.
How Do Employees Learn the Culture?
          Organizational stories recount significant events or people.
          Corporate rituals are repetitive activities that express and reinforce the important values and goals of the organization.
          Material symbols, such as the layout of organizations facilities, how employees dress, employee perks, and so on, give a sense of whether the work environment is formal or casual, fun or serious, and the kinds of behavior that are rewarded, such as risk taking, conservative, participative, and so on.
          Language to identify and unite members of a culture by developing unique terms to describe equipment, key personnel, customers, processes, or products related to its business.
How Does Culture Affect What Employees Do?
An organization’s culture has an effect on what employees do, depending on how strong or weak it is.
Strong cultures—those in which the key values are deeply held and widely shared—have a greater influence on employees than weaker cultures do.
          The more employees accept and commit to the organization’s key values, the stronger the culture is, based on high agreement on what’s important, what defines good employee behavior, what it takes to get ahead, and so on.
          The stronger a culture becomes, the more it affects what employees do and the way managers plan, organize, lead, and control.
Strong cultures can create predictability, orderliness, and consistency without the need for written rules and regulations because employees internalize these behaviors when they accept the organization’s culture.
How Does Organizational Culture Affect Managers?
Organizational culture affects managers in two primary ways:
          Through its effect on what employees do and how they behave, and
          Through its effect on what managers do as they plan, organize, lead, and control.
Marjorie Kaplan, president of the Animal Planet and Science television networks, describes how the power of organizational culture affects her as a manager. She says that one of her company’s stated goals is “to make it the place where, when you come to work, you feel like you have the opportunity to bring your best self—and you’re also challenged to bring your best self.”
An organization’s culture constrains what managers can and cannot do, and how they manage. Such constraints are rarely explicit and all managers must quickly learn how to respond in their organization.
For instance, the following values are unwritten, but each comes from a real organization:
          Look busy even if you’re not.
          If you take risks and fail around here, you’ll pay dearly for it.
          Before you make a decision, run it by your boss so that he or she is never surprised.
          We make our product only as good as the competition forces us to.
          What made us successful in the past will make us successful in the future.
          If you want to get to the top here, you have to be a team player.
The link between values such as these and managerial behavior is clear.
          If an organization’s culture supports the belief that profits can be increased by cost cutting and that the company’s best interests are served by achieving slow but steady increases in quarterly earnings, managers are unlikely to pursue innovative, risky, long-term, or expansionary programs.
          In an organization whose culture conveys a basic distrust of employees, managers are more likely to use an authoritarian leadership style rather than a democratic one because the culture establishes appropriate and expected behavior for managers.
Managerial Decisions Affected by Culture



As shown here in Exhibit 2-5, a manager’s decisions are influenced by the culture in which he or she operates. An organization’s culture, especially a strong one, influences and constrains the way managers plan, organize, lead, and control.
For example, the culture influences managerial planning about the degree of risk that plans should contain, whether plans should be developed by individuals or teams, or the amount of environmental scanning in which management will engage.
With organizing activities, culture influences how much autonomy should be designed into employees’ jobs, whether tasks should be done by individuals or in teams, and the degree to which department managers interact with each other
When it comes to leading, organization culture helps determine the degree to which managers try to increase employee job satisfaction, appropriate leadership styles, and whether all disagreements—even constructive ones—should be eliminated.
Finally, the culture influences managers’ controlling activities: for example, whether they impose external controls or to allow employees to control their own actions, which criteria should be emphasized in employee performance evaluations, and the repercussions for exceeding one’s budget.

Chapter 1 – Manager and Management


Chapter 1 – Manager and Management

Learning Outcomes
          Tell who managers are and where they work.
          Define management.
          Describe what managers do.
          Explain why it’s important to study management.
          Describe the factors that are reshaping and redefining management.

Who Are Managers?
Where Do They Work?
          Organization
          A deliberate arrangement of people brought together to accomplish a specific purpose
          Common Characteristics of Organizations
          Goals
          People
          Structure

    1. Goals, which express the distinct purpose of a particular organization
    2.  People, who make decisions and reach the organization’s goals, and
    3.  A deliberate structure, which systematically defines, limits, and guides
    4.  its members’ behavior.

How Are Managers Different from Nonmanagerial Employees?
          Nonmanagerial Employees
          People who work directly on a job or task and have no responsibility for overseeing the work of others
          Examples: Associates and Team Members
          Managers
          Individuals in organizations who direct the activities of others
What Titles Do Managers Have?
          Top managers often makes decisions about the direction of the organization and establishes policies and philosophies that affect all organizational members.
          Examples: President, Chief Executive Officer, Vice-President
          Middle managers are responsible for translating the goals set by top managers into specific detailed tasks that lower-level managers oversee.
          Examples: District Manager, Division Manager
          First-line managers are responsible for directing the day-to-day activities of nonmanagerial employees.
          Examples: Supervisor, Team Leader
What Is Management?
Management is the process of getting things done effectively and efficiently, with and through people.
          Effectiveness
          “Doing the right things”: the tasks that help an organization reach its goals
          Efficiency
          “Doing things right”: the efficient use of such resources as people, money, and equipment
          Efficiency and effectiveness are interrelated.
          a) It’s easier to be effective if one ignores efficiency.
          b) Good management is concerned with both
              attaining goals (effectiveness) and doing so as efficiently as
              possible.
          c) Organizations can be efficient and yet not be effective.
          d) High efficiency is associated more typically with high effectiveness
Four Management Functions
          Planning
          Defining the organizational purpose and ways to achieve it
          Organizing
          Arranging and structuring work to accomplish organizational goals
          Leading
          Directing the work activities of others
          Controlling
          Monitoring, comparing, and correcting work performance
Minzberg Manager’s Role: Update
Manager’s role is to influence action by:
    1. Managing actions directly
    2. Managing people who take action
    3. Managing information that propels people to take action
Manager’s dual roles include:
    1. Framing
    2. Scheduling
What Skills Do Managers Need?
          Conceptual Skills
          Used to analyze and diagnose complex situations
          Interpersonal Skills
          Used to work with, understand, and motivate individuals and groups
          Technical Skills
          Involve job-specific knowledge and techniques required to perform tasks
          Political Skills
          Used to build a power base and establish connections
Is The Manager’s Job Universal?
The previous discussion describe management as a generic activity.  In reality, a manager’s job varies with along several dimensions
          Level in the Organization
          Top level managers do more planning than supervisors
          Profit vs. Nonprofit
          Management performance is measured on different objectives
          Size of the organization
          Dictates the manager’s main roles and time spent in each role
          Transferability of managerial concepts
          Requires modification with countries other than free-market democracies
Why Study Management?
          We all benefit from efficiently and effectively run businesses.
          Well-managed organizations prosper even in challenging economic times.
          After graduation, most students become managers or are managed.
What Factors Are Reshaping and Redefining Management?
Today, managers must deal with:
          Changing workplaces
          Ethical and trust issues
          Global economic uncertainties
          Changing technologies
Why Are Customers Important?
          Without customers, most organizations would cease to exist.
          Employee attitudes and behaviors play a big part in customer satisfaction.
Managers must create a customer-responsive environment where employees are friendly, knowledgeable, and sensitive to customer needs
Why Is Innovation Important?
          “Nothing is more risky than not innovating.”
          Innovation isn’t only important for high technology companies; it is essential in all types of organizations.
          Innovation means doing things differently, exploring new territory, and taking risks.
          In today’s challenging environment, innovation is critical and managers need to understand what, when, where, how, and why innovation can be fostered and encouraged throughout an organization. Managers need to be personally innovative and to encourage their employees to be innovative.