C17EB Management in a Global Context Week 2 - Business Environment PDF

C17EB Management in a global context Week 2. The business environment  Session content Understand how organisations conduct business internationally Understand the business environment Perform a PESTEL analysis Understand the driving forces of com...

C17EB Management in a global context Week 2. The business environment  Session content Understand how organisations conduct business internationally Understand the business environment Perform a PESTEL analysis Understand the driving forces of competition in an industry ©copyright, Heriot-Watt University, 2024  Competing values framework Quinn et al. (2015) ©copyright, Heriot-Watt University, 2024  1. Managing internationally ©copyright, Heriot-Watt University, 2024 Themes in international management ©copyright, Heriot-Watt University, 2024 Boddy, D. (2020), Management: Using Practice and Theory to Develop Skill, 8th ed, Harlow: Pearson, p. 89  Conducting business internationally 1/2 Offshoring – contracting out activities to other countries Exporting & Importing – physically moving products/materials Foreign Direct Investments – Build or acquire facilities in another country and manage them directly ©copyright, Heriot-Watt University, 2024  Conducting business internationally 2/2 Licensing – production of goods or services to a company in another country to deliver under licence Joint Ventures - Where two organisations share the risks and resources Wholly Owned subsidiary – A standalone company but directly owned/operated by a holding company ©copyright, Heriot-Watt University, 2024  Conducting business internationally 3/3 Multinational companies Based in one country, operate in many Transnational companies Operate in many, but decentralise (while maintaining consistent image) Global companies Closely integrated operations across many countries ©copyright, Heriot-Watt University, 2024  2. International PESTEL analysis ©copyright, Heriot-Watt University, 2024  International PESTEL analysis 6 external factors when considering to invest overseas / a company is operating in different countries They affect company policies and practices how companies can run their business They may represent an opportunity or a challenge A simplified framework Managers working internationally need to be aware of the global context and adapt ©copyright, Heriot-Watt University, 2024  International PESTEL analysis POLITICAL Political rules on foreign ownership Level of state intervention in the economy Government attitudes to foreign investment Policy on employment practices, working conditions, job protection Patent and intellectual property policy Political stability Corruption >> shape the political risk ©copyright, Heriot-Watt University, 2024  International PESTEL analysis ECONOMIC Why do nations trade with each other, rather than be self-sufficient? The theory of absolute advantage – this theory states that there is an economic advantage for countries to specialize in the production of good and services that they can produce more cheaply than other countries. ©copyright, Heriot-Watt University, 2024  International PESTEL analysis SOCIO-CULTURAL Socio-cultural factors recognize that different societies have different social practices and understandings. Managers working internationally must be aware of cultural difference. Cultural intelligence – when a person is skilled and flexible about understanding a culture and learns when they interact with it. ©copyright, Heriot-Watt University, 2024  International PESTEL analysis SOCIO-CULTURAL – Geertz Hofstede’s 5 dimensions of national culture High Low Power distance Accept inequality of power Less acceptance of power inequality Uncertainty avoidance Not comfortable with ambiguity Happy with ambiguity Individualism /collectivism Focus on individualism Focus on collectivity Masculinity / femininity Gender roles are clearly defined Gender roles overlap Long-term and short- term Concern about future More short-term oriented orientation ©copyright, Heriot-Watt University, 2024  International PESTEL analysis TECHNOLOGICAL Technological factors include all aspects of infrastructure – ports, airports, surface transport, electricity, telecommunications, and internet. NEOM in Progress ©copyright, Heriot-Watt University, 2024  International PESTEL analysis ENVIRONMENTAL Environmental factors generally refer to natural resources – oil, coal, minerals, land, climate, and water. Aluminum in Canada video ©copyright, Heriot-Watt University, 2024  International PESTEL analysis LEGAL Trade agreements and trade groupings GATT and WTO, European Union ©copyright, Heriot-Watt University, 2024  The external environment ©copyright, Heriot-Watt University, 2024  General environment – PESTEL analysis POLITICAL ECONOMIC SOCIO-CULTURAL Taxation policy Interest and inflation rates Demographics (population and household Privatisation/regulation policies Consumer confidence numbers) Environmental legislation The business cycle Values in society Health & safety regulation Economic growth prospects Lifestyle (e.g., attitudes to work and leisure) Public expenditure controls Unemployment rates Consumer preferences (e.g., attitudes to European Union directives Disposable incomes green issues) Government stability Labour cost Levels of education TECHNOLOGICAL ENVIRONMENTAL LEGAL Housing stock Climate change Employment law Scientific discoveries Water resources Company law Communications technology Energy supplies Business regulation Production technology Infrastructure (e.g., power, transport) ©copyright, Heriot-Watt University, 2024  General environment – PESTEL analysis STEPS IN THE ANALYSIS Identify the external forces Which ones are the most important / most likely to affect the industry? How the organisation considers these forces? (changes in practices) ©copyright, Heriot-Watt University, 2024  General environment – PESTEL analysis WHAT ARE THE LIMITS OF A PESTEL ANALYSIS? Oversimplification of complex environments Static analysis while the environment may rapidly change Takes time to collect the information > need to prioritise which factors are most important Mostly descriptive and not prescriptive (set of strategic actions to take?) Broad analysis which doesn’t consider internal factors > other analysis are needed (SWOT, 5 forces, scenario planning, company's resources and capabilities) Depend on the quality of data, not always available (e.g., unstable regions) May be hard to assess the impact of the factors (financial cost) ©copyright, Heriot-Watt University, 2024  3. Porter’s 5 forces of competition ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) Threat of new entrants Bargaining power Rivalery among Bargaining power of suppliers competing sellers of buyers Availability of substitute products ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) INTENSITY OF RIVALRY Greater rivalry = less profit Rivalry increases when: many firms, but none dominant market growing slowly, so firms fight for share high fixed costs encourage overproduction loyalties (family businesses or political support) prolong overcapacity ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) THREAT OF NEW ENTRANTS Affected by entry barriers such as: high costs of equipment and facilities lack of distribution facilities customers loyal to established brands small companies lack economies of scale subsidies/regulations favour existing firms ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) BARGAINING POWER OF BUYERS Greater power of buyers = less profit to seller Power of buyer increases if: Buyer takes high percentage of supplier’s sales Many alternative products or suppliers available Product is a high percentage of buyer’s costs, creating incentive to seek alternatives Cost of switching to other suppliers is low ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) BARGAINING POWER OF SUPPLIERS High power of supplier = less profit to buyer Power of supplier is high if: Buyer takes small percentage of sales Few alternative products or suppliers (distinctive product keeps buyers loyal) available Product a low percentage of buyer’s costs, little incentive to seek alternatives Cost of switching suppliers high ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) SUBSTITUTES Easy to substitute = less profit for the competing firms [internal rivalry] Substitution becomes easier if: Buyers willing to change buying habits Technological developments enable new products and services Transport costs fall New suppliers enter the market ©copyright, Heriot-Watt University, 2024  Let’s apply the 5 forces to the luggage industry ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) MANAGING THE 5 forces of competition A model to assess the attractiveness of the industry A model to understand the most important forces driving the ability to make profits Managers can try to reduce the power of competition ©copyright, Heriot-Watt University, 2024 ©copyright, Heriot-Watt University, 2024 C17EB – Management in a Global Context Week 5 – Decision-Making Key learning from the last lecture: Session aims Understand the iterative elements in making decisions Explore programmed and non-programmed decisions Examine decision contexts – certainty, risk, uncertainty, and ambiguity Understand theories of decision-making processes – rational, judgmental, negotiated, and adaptive Explore the common sources of bias in decision-making Examine decision-making in groups Definitions A decision is a specific commitment to action (and usually a commitment of resources). Decision-making is the process of identifying and defining problems and opportunities and making plans to resolve them. Boddy, D. (2020), Management: Using Practice and Theory to Develop Skill, 8th ed, Harlow: Pearson, p. 170 Key points from the video Decision-making is important – how we respond in a situation We make thousands of decisions a day We often use intuition to make decisions, but psychological research has argued that sometimes this isn’t good enough Most of the time people aren’t trained in how to make good decisions Managers need to build decision-making skills, for: Problem-solving Setting goals Prioritising Dealing with change Types of decisions What kinds of decisions might managers make? What sorts of decisions do you think managers typically make each day, week, year? Types of Decision Programmed (Structured) Non-Programmed Decisions (Unstructured) Decisions A routine decision that can be A unique decision that requires a handled by a routine approach. custom-made solution when Decisions are guided by a information is lacking or unclear. procedure or policy. There is no clear precedent and/or information gaps exist. (Simon, 1960) Relationship between problem type, decision type and level in organisation Poorly structured Top Non-programmed Decisions Type of Level in problem organisation Programmed Decisions Well structured Lower (Robbins & Coulter, 2005)  Bright, David S., Anastasia H. Cortes, David S. Bright, and Anastasia H. Cortes. Examples 2019. ‘2.3 Programmed and Nonprogrammed Decisions - Principles of Management | OpenStax’. OpenStax. 20 March 2019. Programmed decisions Non-programmed decisions Deciding how many raw materials to order based A manager trying to decide whether or not to on anticipated production, existing stock, and adopt a new technology. anticipated length of time for the delivery of the final product. A retail store manager developing the weekly A product development team planning a new work schedule for part-time employees, based product type. on how busy the store is expected to be and employee availabilities. For programmed decisions, managers often develop heuristics, or mental shortcuts, to help reach a decision. E.g. the retail store manager may not know how busy the store will be the week of a big sale but might routinely increase staff by 30% every time there is a big sale (because this has been fairly effective in the past). Decision Making Conditions Certainty describes the situation when all the information the decision maker needs is available. Risk refers to situations in which the decision maker is able to estimate the likelihood of the alternative outcomes. Uncertainty is when people are clear about their goals, but have little information about which course of action is most likely to succeed. Ambiguity is when people are uncertain about their goals and how best to achieve them. Dependency is when a decision is dependent upon other decisions or outcomes. Boddy, 2019. p.50 Dependency of decisions Decisions may be dependent upon other decisions or outcomes. (Cooke & Slack, 1991) Decision-making models Decision-making models Rational model Judgemental model Negotiated model Adaptive approach (remember these from last week?) Note the link between decision-making and strategy.  Rational Model Assumes that people make consistent choices to maximise economic value within specified constraints. E.g. deciding on which job offer to accept: Define criteria that meet your end goal Specify goal Gather Evaluate and identify information options Minimum salary options and set against Take action Location within 10 miles criteria criteria Opportunities for career progression Etc. Add weights to prioritise some criteria over others Assign scores for each option against your criteria and determine the optimum decision. Judgemental Model When people make decisions in uncertain, ambiguous situations. Used when problems are unstructured. Bounded rationality – choices made are limited by an individual’s ability to process information Satisficing – is the acceptance by decision makers of the first solution that is ‘good enough’ (rather than optimum among all solutions) Intuition and tacit knowledge may be used. Example: when choosing an app to store and organise your university notes, you might identify a few but not explore all options, and ‘satisfice’ to accept one that is good enough, based on a gut feeling that it covers your needs. Negotiated Model Organisations contain groups with diverse interests, goals and values. Different managers may disagree about priorities and solutions. Information may be ambiguous and incomplete. Managers debate and argue their priorities and solutions. Decisions arise from bargaining and discussion. Example: when organising a conference, negotiations may take place between senior managers who hold the overall budget, communications managers, and sustainability managers – regarding the extent to spend money on physical marketing tools such as posters, brochures, and branded pens and t-shirts. Adaptive Approach Remember the case of the IKEA emergent strategy (last lecture)? The intended strategy did not play out, instead the strategy was adapted to circumstances. Decision-makers adapt their perspectives based on chance meetings and new situations – solutions are found when participants and problems come together. Example: https://www.bbc.com/worklife/article/202004 13-how-factories-change-production-to- quickly-fight-coronavirus Summary Features Rational Judgemental Negotiated Adaptive Clarity of problem Clear problem and Vague problems & Conflict over goals Goals and solutions and goal goals goals independent Degree of Certainty High degree of High degree of Uncertainty or Ambiguity certainty uncertainty conflict Available Much information Little information Conflicting views Costs and benefits information on about options unconnected at cost/benefits start Method of Choice Rational choice to Satisficing choice – Bargaining amongst Choice by accidental maximise benefit good enough players merging of streams Are we good at making decisions? Bias in decision-making Prior hypothesis bias results from a tendency to base decisions on strong prior beliefs, even if the evidence shows that they are wrong. Representativeness bias results from a tendency to generate inappropriately from a small sample or a single vivid event. Illusion of control is a bias that leads from a tendency to overestimate one’s ability to control activities and events. Escalating commitment is a bias that leads to increased commitment to a previous decision despite evidence that it may have been wrong. Emotional attachment is when a decision is based upon emotional factors rather than rational factors. See Boddy, 2019, p. 167-168) Example: bias in jury decisions Previous juror decision-making research has shown that factors such as race, gender and the socioeconomic status of the defendant can all have a biasing effect on decision-making. Over a series of experiments, we showed that sometimes jurors do not use all the information available to make a decision. We showed that verdicts favoured before all the information has been shown can lead to confirmation bias and pre-decisional distortion. Confirmation bias is when decision makers see evidence that chimes with their beliefs in a positive manner, and ignore evidence that does not; pre-decisional distortion is when the decision maker twists how they view a piece of evidence so that it aligns with their preconceived beliefs and expectations. Some jurors seem to reach a point (or a threshold) that allows them to have a pre-decisional preference in relation to the verdicts (that is, a leading verdict). Curley, 2018. https://theconversation.com/how-juror-bias-can-be-tackled-to- ensure-fairer-trials-100476 Collective and collaborative decision-making  Involve diverse perspectives Identify blindspots Increase employee engagement Increase collaboration Landry, 2020. Harvard Business Review https://online.hbs.edu/blog/post/team-decision-making Vroom & Yetton’s Decision Tree Vroom & Yetton’s (1973) model refers to options a team manager can choose regarding the extent to which to involve team members in different decisions. Vroom and Yetton’s options for involving others AI (Autocratic) – The manager doesn’t involve the team. All (Information-seeking) – The manager gathers the information from the team but makes the decision themselves. CI (Consulting) – You speak to each individual in turn without bringing them together and make the decision CII (Negotiating) – You share the problem as a group, obtain ideas and suggestions then make the decision G (Group) – Your share the problem, discuss alternatives and reach a decision as a consensus Groupthink (Janis, 1972) A pattern of biased thinking when a group becomes too cohesive – leads to a lack of challenge and critical appraisal Illusion of invulnerability – we can do no wrong! Belief in the inherent morality of the group – justifying decisions Rationalisation – Playing down the risks or consequences Stereotyping out groups – Characterising opponents or doubters negatively Self-Censorship – Suppressing doubts for the good of the group Direct pressure – Members of the group making it clear dissent will not be welcome Mindguards – Keeping negative information out of the group Illusion of unanimity – Playing down doubts even as they grow Groupthink example ‘Groupthink’ blamed for poor UK government decision-making during Covid pandemic (e.g. delays in closing borders, delays to testing system…) Janis coined ‘groupthink’ in his analysis of decision-making during the US invasion of Cuba in April 1961 – the so-called Bay of Pigs fiasco. The failure of the US invasion was was rooted in a series of stereotypic assumptions about Fidel Castro and the Cubans as inept and weak. When critics pointed out the problems with these assumptions, their criticisms were simply ignored. But not all groups suffer from groupthink – sometimes disagreement and debate are encouraged. Reicher and Drury (2021) suggest that ‘the notion that some 30 psychologists, anthropologists, sociologists and other social scientists could quietly agree on anything is quite frankly laughable’. https://www.theguardian.com/commentisfree/2021/jun/02/covid-mistakes- groupthink-government-dominic-cummings Exercise In small groups – identify and discuss a decision one of you has made recently. Was it a programmed or a non- programmed decision? What approach did you use to make the decision? (rational, judgemental, negotiated, adaptive) Was there any sort of bias at play? Summary – key points Decision-making is a skill (or a set of different skills) Decisions can be programmed or non-programmed Various decision-making methods/models exist You may need to use different methods for different problems or contexts Beware of bias in decision-making! Groups can make decisions in several ways…but watch out for groupthink! C17EB –Management in a Global Context Communicating and teams Recap from last lecture key learning: programmed and non-programmed decisions Poorly structured Top Non-programmed Decisions Type of Level in problem organisation Programmed Decisions Well structured Lower (Robbins & Coulter, 2005) Lecture overview Aims: Key learning: 1. To describe and illustrate the The central role of communication processes of communicating in in organisations. organisations. Communication process theory 2. To outline the significance of Selecting communication channels teams at work, and some Interpersonal skills for theories about how they develop communicating and perform. Types of teams and team composition Reading: Textbook chapters 16 Team roles theory (communicating) and 17 (Teams) Stages of team development Communicating Why is (good) communication important? Communication – the exchange of information through written or spoken words, symbols and actions to reach a common understanding (Boddy 2020, p. 403). Managers spend most of their time communicating through one or several means (Stewart 1967, Mintzberg 1973). Managers may perceive themselves to be good communicators, but staff may have different views. What communication channels do contemporary managers use? Discuss in groups of 2 or 3. Good communication is essential for: Innovation Quality Delivery A workplace communication challenge https://www.bbc.com/worklife/article/20240307- gen-z-casual-workplace-language A 2018 study published in Harvard Business Review showed that weak executive presence and poor communication style are the two most critical factors that can stall career progress. And although it's true an informal approach in the workplace can help build connections, if employees are perceived as too casual, it can have the opposite effect. In the aftermath of the pandemic, dress codes are looser, hours are more flexible and people work from home more often. All of this means communication too, is evolving in offices around the world. In the UK, an August 2023 survey by Barclays showed nearly three-quarters of respondents say that Gen Z are changing the formality of language in the workplace. https://www.youtube.com/watch?v=gCfzeONu3Mo  Communication process theory 1. Message (what you think) 2. Encoding (what you write/say) 3. Decoding (what you think it means) 4. Noise (anything that interferes with the message) 5. Feedback (the reaction to the message) Boddy, D. (2020), p. 406 Quality of Information Information is only as useful if it is accurate, timely and relevant: Accuracy – is the information a true account of the facts Timeliness – Is the information given as a time before it is either outdated or irrelevant Relevance – Is the information critical and useful or is it marginal or even a distraction. Boddy, D. (2020), pp.407-408  Selecting communication channels Lengel and Daft (1988) theorised information richness of different channels of communication. They argue that information richness depends on whether the medium can: Demonstrate multiple cues at one time (voice tone, body language, words, etc) Allow for quick two-way feedback Establish a personal focus for the communication Lengel-Daft media richness hierarchy. Match the Heriot-Watt communications channels to levels of information richness. Do the following have high, medium or low information richness? Canvas announcement Personalised email Individual student-tutor meeting Interpersonal skills for communicating Boddy, D. (2020), p. 413 Senders Receivers 1.Be clear and complete 1.Pay attention 2.Encode messages in symbols the 2.Be a good listener receiver understands 3.Be empathetic 3.Select medium appropriate for the message 4.Select a medium the receiver monitors 5.Avoid noise  Whetten and Cameron (2011) – supportive communication 1) Problem-oriented, not person-oriented 4) Specific, not global A focus on problems and issues that can be A focus on specific events or behaviours, avoiding changed rather than people and their general, extreme or vague statements. characteristics. 6) Conjunctive, not disjunctive 2) Congruent, not incongruent A focus on statements that flow from what has A focus on honest messages in which verbal been said and facilitating interaction. messages match thoughts and feelings. 7) Owned, not disowned 3) Descriptive, not evaluative A focus on taking responsibility for your statements by using personal (‘I’) words. A focus on describing an objective occurrence, your reaction to it, and offering an alternative. 8) Supportive listening, not one-way listening A focus on using a variety of responses, with a bias 4) Validating, not invalidating towards reflective responses. A focus on statements that communicate respect, flexibility and areas of agreement. Influencing tactics – Yukl and Falbe 1990 Teams Definition of a team Team = ‘a small number of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable’ (Katzenbach and Smith, 1993) Some characteristics A small number – usually 2-10, more than 12 can be hard to manage Common purpose – need clear performance goals Common approach – there needs to be agreement on how things will get done, and how conflict will be managed Mutual accountability – all members must be accountable to each other Boddy, D. (2020), p. 408 Types of teams (Hackman, 1990) Types of teams Formal team – deliberately created teams to perform specific tasks to meet organizational goals Vertical team – manager and subordinates Horizontal team – staff at same level doing different functions Informal groups – a group that emerges from regular interaction Self-managing teams – teams that are responsible for an entire area without supervision Virtual teams – teams over virtual networks  Matrix team structure Source: https://asana.com/resources/matrix-organization  Team roles - Meredith Belbin https://www.belbin.com/resources/session-ideas-handouts Talk to your neighbours: Which of Belbin’s team roles do you think you can play in a team, based on your individual strengths? Which of the team roles would you need to fill gaps and complement your own strengths? Stages of team development Even if you put together a balanced team in terms of strengths and roles, achieving a high-performing team can take time… Tuckman’s (1965) model of 5 stages of team development. https://www.youtube.com/watch?v=-RwkZxGPQb8 Effective Meetings Successful Meetings Failure Meetings Scheduled well in advance Fixed at short notice Have an agenda with No agenda or papers documents available in advance Have a start and finish time Lack of structure, drift and times for each item Decisions for action are Decisions lack clarity, no circulated within 24hrs shared understanding Related groups or teams are Team is not aware of what kept updated other teams are doing Tips for team management Agree on tasks and output Agree on how to achieve the goals of the team Setting and following timetables Recording action points that have been agreed Giving tasks to members Setting and keeping meeting dates Agree on consequences/strategies for when members don’t meet deadlines Ensure that members have the skills to complete tasks assigned References Belbin, R.M. (2010) Team Roles at Work. (2nd ed.) Butterworth/Heinemann, Oxford. Boddy, D. (2020) Management: Using Practice and Theory to Develop Skill, 8th ed, Pearson, Harlow. Hackman, J.R. (1990) Groups that work (and those that don’t) Jossley-Bass, San Francisco, CA. Katzenback, J.R. and Smith, D.K. (1993) The Wisdom of Teams, Harvard Business School Press, Boston, MA. Knight, R. M. (2024) Not all employers are tolerating Gen Z's laid-back language. BBC Worklife, 11th March 2024. Available from: https://www.bbc.com/worklife/article/20240307-gen-z-casual-workplace-language Lengel, R.H. and Daft R.L. (1988) The selection of communication media as an executive skill, Academy of Management Executive, vol. 11, no. 3, pp.225-32. Mintzberg, H. (1973) The Nature of Managerial Work, Harper & Row, New York. Stewart, R. (1967) Managers and their Jobs, Macmillan, London. Tuckman, B and Jensen, N. (1977) Stages of small group development revisited, Group and Organizational Studies, vol. 2, pp. 419-27 Yukl, G. and Falbe, C.M. (1990) Influence tactics in upward, downward and lateral influence attempts, Journal of Applied Psychology, vol. 75, no. 2, pp.132-40. Management in a Global Context C17EB Week 11 – course review and exam prep Learning Objectives Review key theories and concepts (*Exam topics could be from theories outside of these slides) Understand some strategies for exam prep Identify qualities of good exam answers Exam The exam will be an in-person closed book exam, during the December Exam and Assessment Diet (4th December 2024). You will have 2 hours to answer 2 out of 5 essay questions. Management models The 4 management models Remember to revise the details of the 4 models: - Rational Goal - Internal Process - Human Relations - Open Systems  Comparison of the four models Theory Rational goal Internal process Human relations Open systems Criteria of Productivity, profit Stability, continuity Commitment, Adaptability, external effectiveness cohesion, morale support Means-end theory Clear direction adds Rules, routines, lead Involvement brings Continuous most value to stability commitment innovation secures resources Practices Clarifying goals, Clear roles, Participation, team Creating, solving emphasised rational analysis documentation working, problems, innovating measurement development Focus of action Compete Control Collaborate Create Competing values framework Managing internationally  Offshoring – contracting out activities to other countries Exporting & Importing – physically moving products/materials Foreign Direct Investments – Build or acquire facilities in another country and manage them directly Licensing – production of goods or services to a company in another country to deliver under licence Joint Ventures - Where two organisations share the risks and resources Wholly Owned subsidiary – A standalone company but directly owned/operated by a holding company Multinational companies Based in one country, operate in many Transnational companies Operate in many, but decentralise (while maintaining consistent image) Global companies Closely integrated operations across many countries  General environment – PESTEL analysis POLITICAL ECONOMIC SOCIO-CULTURAL Taxation policy Interest and inflation rates Demographics (population and household Privatisation/regulation policies Consumer confidence numbers) Environmental legislation The business cycle Values in society Health & safety regulation Economic growth prospects Lifestyle (e.g., attitudes to work and leisure) Public expenditure controls Unemployment rates Consumer preferences (e.g., attitudes to European Union directives Disposable incomes green issues) Government stability Labour cost Levels of education TECHNOLOGICAL ENVIRONMENTAL LEGAL Housing stock Climate change Employment law Scientific discoveries Water resources Company law Communications technology Energy supplies Business regulation Production technology Infrastructure (e.g., power, transport) Porter’s 5 forces analysis (1980) Threat of new entrants Bargaining power Rivalry among Bargaining power of suppliers competing sellers of buyers Availability of substitute products Organisational culture Types of culture – competing values framework Corporate responsibility Planning and managing strategy Planning = the iterative task of setting goals, specifying how to achieve them, acting on the plan and monitoring the results (Boddy, p.170). Strategy = a plan of action designed to achieve a long-term or overall aim (Oxford English Dictionary). Types of plans Strategic plans (or strategies) – sets out the overall direction for the business. They are broad in scope and cover all major activities. (Boddy, p. 171). Business plan – a plan setting out a proposal for a business, including markets, financing, and other key areas of operation. (Boddy, p. 171). Operational plans – plans that specify how overall objectives are going to be achieved by senior leaders, identifying what tasks each department will undertake. (Boddy, p. 171). Activity plans – set out what a unit, work group or individual is expected to do to help achieve the larger plan (Boddy, p. 173). Other – other varieties of plans exist within larger organisations such as an annual plan or a standing plan (to deal with recurring issues or complaints), or a recovery plan. (Boddy, p. 173). The process of planning Analyse Strengths, Weaknesses, Opportunities and Threats – perhaps taking into account a PESTEL analysis and Porter’s (1980) 5 forces. Forecasting – trend analysis, horizon scanning, modelling and simulating the future Set goals (e.g. financial, employee satisfaction, environmental performance…) Organising – identifying resources needed Communicating the plan Implementing and monitoring the plan https://www.flickr.com/photos/agirregabiria/51807624244 Theories of strategy (Boddy, p.195-199) Rational Judgemental Negotiated Adaptive Business level strategic options (Porter, 1985) Cost leadership Differentiation Focus Minimising operation costs. Distinct, unique. Niche market segment. Economies of scale. Able to charge a higher price or maintain customer loyalty. e.g. Saga travel and insurance for e.g. Ryanair, Amazon, Lidl, Aldi e.g. Apple, Coca Cola. over 50s, NFU mutual insurance for farmers. Decision-making Relationship between problem type, decision type and level in organisation Poorly structured Top Non-programmed Decisions Type of Level in problem organisation Programmed Decisions Well structured Lower (Robbins & Coulter, 2005) Dependency of decisions Decisions may be dependent upon other decisions or outcomes. (Cooke & Slack, 1991) Summary – decision-making approaches Features Rational Judgemental Negotiated Adaptive Clarity of problem Clear problem and Vague problems & Conflict over goals Goals and solutions and goal goals goals independent Degree of Certainty High degree of High degree of Uncertainty or Ambiguity certainty uncertainty conflict Available Much information Little information Conflicting views Costs and benefits information on about options unconnected at cost/benefits start Method of Choice Rational choice to Satisficing choice – Bargaining amongst Choice by accidental maximise benefit good enough players merging of streams Bias in decision-making Prior hypothesis bias results from a tendency to base decisions on strong prior beliefs, even if the evidence shows that they are wrong. Representativeness bias results from a tendency to generate inappropriately from a small sample or a single vivid event. Illusion of control is a bias that leads from a tendency to overestimate one’s ability to control activities and events. Escalating commitment is a bias that leads to increased commitment to a previous decision despite evidence that it may have been wrong. Emotional attachment is when a decision is based upon emotional factors rather than rational factors. See Boddy, 2019, p. 167-168 Vroom and Yetton’s options for involving others AI (Autocratic) – The manager doesn’t involve the team. All (Information-seeking) – The manager gathers the information from the team but makes the decision themselves. CI (Consulting) – You speak to each individual in turn without bringing them together and make the decision CII (Negotiating) – You share the problem as a group, obtain ideas and suggestions then make the decision G (Group) – Your share the problem, discuss alternatives and reach a decision as a consensus Groupthink (Janis, 1972) A pattern of biased thinking when a group becomes too cohesive – leads to a lack of challenge and critical appraisal Illusion of invulnerability – we can do no wrong! Belief in the inherent morality of the group – justifying decisions Rationalisation – Playing down the risks or consequences Stereotyping out groups – Characterising opponents or doubters negatively Self-Censorship – Suppressing doubts for the good of the group Direct pressure – Members of the group making it clear dissent will not be welcome Mindguards – Keeping negative information out of the group Illusion of unanimity – Playing down doubts even as they grow Communicating and teams  Communication process theory 1. Message (what you think) 2. Encoding (what you write/say) 3. Decoding (what you think it means) 4. Noise (anything that interferes with the message) 5. Feedback (the reaction to the message) Boddy, D. (2020), p. 406  Selecting communication channels Lengel and Daft (1988) theorised information richness of different channels of communication. They argue that information richness depends on whether the medium can: Demonstrate multiple cues at one time (voice tone, body language, words, etc) Allow for quick two-way feedback Establish a personal focus for the communication Lengel-Daft media richness hierarchy.  Whetten and Cameron (2011) – supportive communication 1) Problem-oriented, not person-oriented 4) Specific, not global A focus on problems and issues that can be A focus on specific events or behaviours, avoiding changed rather than people and their general, extreme or vague statements. characteristics. 6) Conjunctive, not disjunctive 2) Congruent, not incongruent A focus on statements that flow from what has A focus on honest messages in which verbal been said and facilitating interaction. messages match thoughts and feelings. 7) Owned, not disowned 3) Descriptive, not evaluative A focus on taking responsibility for your statements by using personal (‘I’) words. A focus on describing an objective occurrence, your reaction to it, and offering an alternative. 8) Supportive listening, not one-way listening A focus on using a variety of responses, with a bias 4) Validating, not invalidating towards reflective responses. A focus on statements that communicate respect, flexibility and areas of agreement. Types of teams Formal team – deliberately created teams to perform specific tasks to meet organizational goals Vertical team – manager and subordinates Horizontal team – staff at same level doing different functions Informal groups – a group that emerges from regular interaction Self-managing teams – teams that are responsible for an entire area without supervision Virtual teams – teams over virtual networks Belbin’s team roles Stages of team development Even if you put together a balanced team in terms of strengths and roles, achieving a high-performing team can take time… Tuckman’s (1965) model of 5 stages of team development. Human resource management Types of Manager General Managers Functional Managers Line Managers Staff Managers Project Managers Entrepreneurs Mintzberg’s (1973) ten management roles Boddy, D. (2020) p. 13 Human resource planning Detailed analysis of the size and nature of the workforce to fulfil the organisation’s strategy 3 Stages of human resource planning Forecasting Job analysis Recruitment and selection Predictive accuracy of different selection methods (Beardwell and Thompson, 2014) What motivates people? (textbook chapter 15) Content theories of motivation: based on goals/needs people pursue Money Quality of supervision Safe working environment Secure employment Good working relationships Responsible, challenging work Career prospects Etc. Example: Maslow’s (1970) hierarchy of needs What motivates people? Process theories e.g. Goal Setting Theory (Locke, 1968; Locke and Latham, 2002) Challenging Goals – Lead to higher performance than easy goals Specific Goals – Lead to higher performance than vague goals Participation – in setting the goals improves commitment to achieving the goals Knowledge of results – feedback on past performance helps people attain the new goals Textbook chapter 15 introduces further content and process theories of how to motivate people at work. These theories have implications for reward strategies and management styles.  Equal opportunities and diversity Torrington et al. (2008) distinguished two broad Diversity management – improving approaches: opportunities for individuals, whatever their background, by stressing the Equal opportunities – legislation value which a more diverse workforce encourages or require employers to can add create systems and procedures to ensure fair treatment, e.g. UK Equality Act: E.g. a diverse selection panel can help reduce bias Creativity, innovation and change Definitions What is creativity? What is innovation? The ability to combine ideas to produce something new and useful Creativity results in ideas which can be applied to add value new ideas Updates or improvements Models of change in practice Operations management Exam tips Exam Prep Strategies Study theories/concepts from the text and examples or applications Write clear, descriptive, and orderly answers (essays) Answer the questions provided (not some other question) Answer BOTH questions If you can add references (in-text) then that is great (Boddy, 2020) Outline your answers (both of them) before you start writing Introduction including thesis statement (argument) – body containing analysis and examples – conclusion. Watch your time Good answers include… Description of the concepts and theories Good examples of application to a business context Good answers are… Well structured Complete Questions? Good luck! C17EB Management in a global context Managing operations and quality Week 10  Session aims Explore what is meant by operations management Explain the transformation process Detail the 4V’s which inform operations strategy Discuss manufacturing and service process types Explore what is meant by ‘quality’ Explain the considerations in quality for both manufacturing and services ©copyright, Heriot-Watt University, 2024  Section 1: managing operations ©copyright, Heriot-Watt University, 2024  What is operation management? Operations management is the activity of managing the resources Operations which are devoted to the production and delivery of products and services. Organisation/ enterprise Core functions of an organisation Product/ (Slack et al., 2013) Marketing service and sales development ©copyright, Heriot-Watt University, 2024  The operations challenge Globalisation resulting in more companies operating in each market Advances in technology constantly inventing better ways of doing things Increasing complexity due to more demanding markets and more sophisticated products and services Increased environmental regulation and legal constraint ©copyright, Heriot-Watt University, 2024  What does operations management do? Implement systems and processes that are: Repeatable (can be done recurrently) Consistent (produce the same result every time) Reliable (do not break down randomly) Processes need to be: Efficient (producing most output for least input) Competitive (at least as good as others in the same business) Compliant (with relevant legislation) ©copyright, Heriot-Watt University, 2024  The practice of operations management Craft system A system in which the craft producers do everything. With or without customer involvement, they design, source materials and manufacture, sell and perhaps service. The craft system is ‘based on workers with the embodied knowledge to carry out all necessary activity.’ (Boddy, p. 485). Factory production A process-based system that breaks down the integrated nature of the craft worker’s approach Makes it possible to increase supply by dividing tasks into simple, repetitive processes that could be done by unskilled workers and machinery on a single site ©copyright, Heriot-Watt University, 2024  Operations as transformation process Transformation process ‘refers to the operational Outputs are products system that takes all of the and services that add inputs (raw materials, value for customers information, facilities, capital and people) and converts them into an output product to be delivered to the market’ (Boddy, p. 481). Boddy, D. (2020), Management: Using Practice and Theory to Develop Skill, 8th ed, Harlow: Pearson, p. 482 ©copyright, Heriot-Watt University, 2024  Example of transformation process Inputs Transformed resources Metal/Plastic/Glass Machining Outputs Drawings/Specifications Assembly Cars, spares, Wiring diagrams Painting service manuals Transforming resources Testing Factory/Machinery/ tools Production workers Capital Feedback -Process efficiency and productivity measures -Customer views on product performance -Market data such as numbers bought ©copyright, Heriot-Watt University, 2024  What is operations strategy? Operations strategy helps to make decisions about the management of capabilities and processes, technologies, resources and key tactical activities necessary in the function or chain of functions that create and deliver product and service combinations. In other words, operations strategy ‘defines how the function will support the business strategy by ensuring the organisation has the resources and competences to meet market requirements.’ ©copyright, Heriot-Watt University, 2024  The 4 V's of operations Volume how many units they produce of each type of product Variety how many types (or versions) of a product they manufacture in the same facility Variation in demand how the volume of production varies with time Visibility the extent to which customers see manufacturing or delivery process ©copyright, Heriot-Watt University, 2024  Example – 4 V's of operations ©copyright, Heriot-Watt University, 2024  Operations processes Production systems: Project Job-shop Batch Mass/Continuous Service systems: Professional services Service shops Mass services ©copyright, Heriot-Watt University, 2024  Operations processes - Production systems Increasing flexibility High Project Jobbing Variety Batch Mass Contin- Low uous (Hayes & Wheelwright, 1979) Low Volume High ©copyright, Heriot-Watt University, 2024  Operations processes - Production systems (Hayes and Wheelwright, 1979) Product is built in one place, with resources brought to it Project Skyscraper Low-volume specialist products Job High flexibility but high unit costs Custom suit Higher variety, but repeated orders Batch Mix of pre-ordained processes with skilled workers Etsy shop Single product, high specialisation, high rates of output Mass Consumer goods ©copyright, Heriot-Watt University, 2024  Operations processes - Service systems Decreasing volume Decreasing variety Professional service Increasing interaction and Service shop customisation Mass service (Hayes & Wheelwright, 1979) ©copyright, Heriot-Watt University, 2024  Operations processes - Service systems Professional services High level of customisations Higher volume customer contact Service Service shops shops Customer gets Higher volume customer contact standard service Customer gets standard service Mass services Low skilled staff, non- Low skilled staff, non-custom productcustom product ©copyright, Heriot-Watt University, 2024  Key activities of operations Capacity The ability of an organisation to deliver to the customer Standards Quality of work or performance Materials Supply of materials needed to produce Scheduling Coordinating resources Control Checking if plans are meeting targets The four steps of control are: setting objectives, measuring, comparing, acting ©copyright, Heriot-Watt University, 2024  Section 2: Quality ©copyright, Heriot-Watt University, 2024  What is quality in a product? Functionality What the product does or can do Performance How well the product does it Reliability Consistency of performance Durability How robust is it Customisation How well the product fits the need (of the customer) Appearance How the product looks ©copyright, Heriot-Watt University, 2024  What is quality in a service? Responsiveness – willingness to help and provide prompt service Assurance – ability to inspire confidence Empathy – understanding and attentiveness shown to customers ©copyright, Heriot-Watt University, 2024  Principles of total quality management (TQM) Total quality management – ‘is a philosophy of management that is driven by customer needs and expectations and focuses on continually improving work processes’(Boddy, 2020, p. 495) TQM principals: Customer focus: the aim is to meet the needs and expectations of customers Comprehensive: covers all parts of the organisation Inclusive: includes every person in the organisation and across the supply chain Measurement: tracks all costs affecting quality, especially those of failures and of getting things right first time Methods: clear systems and procedures to support quality, implemented by teams Continuous: developing the idea of continuous, incremental improvement Source: based on Slack and Brandon-Jones (2016) pp 548-9 ©copyright, Heriot-Watt University, 2024  References Boddy, D. (2020) (Chapter 19) Hayes, R.H. and Wheelwright, S.C. (1979), ‘Link manufacturing process and product lifecycles’, Harvard Business Review, Vol 57, no. 1, pp. 133-140. Kaynak, H. (2003), ‘The relationship between total quality management practices and their effects on firm performance’, Journal of Operations Management, Vol. 21, no. 4, pp. 468-489. Kaynak, H. and Hartley, J.L. (2008), ‘A replication and extension of quality management in the supply chain’, Journal of Operations Management, Vol. 26, no. 4, pp. 468-489. Slack, N., Brandon-Jones, A. and Johnston, R.(2013), Operations Management, (7th ed.). Pearson: Harlow. ©copyright, Heriot-Watt University, 2024  Test your understanding Explain what is meant by operations management Describe using examples the transformation process Detail the 4V’s and explain how they inform operations strategy Discuss manufacturing and service process types and their use Explore what is meant by ‘quality’ Explain the considerations in quality for both manufacturing and services ©copyright, Heriot-Watt University, 2024 ©copyright, Heriot-Watt University, 2024 Creativity, innovation and change Week 9  Session aims Define & describe creativity Define & describe innovation Explore the relationship between both Link creativity & innovation to management Detail the areas and sources of innovation Explore how organisations influence innovation Discuss context and models of implementing change in organisations ©copyright, Heriot-Watt University, 2024  Section 1: Creativity ©copyright, Heriot-Watt University, 2024  What is creativity? The ability to combine ideas to produce something new and useful Creativity results in ideas which can be applied to add value New ideas Updates or improvements NOTE: Creativity is the idea – it does not add value unless acted upon! ©copyright, Heriot-Watt University, 2024  Your turn – 2 minutes Who is creative? Where do you have your best thoughts? ©copyright, Heriot-Watt University, 2024  Resources supporting creativity Escape from Knowledge of the Thinking globally conventional area, issue or and locally thinking ; See problem problems in new ways Intellectual Style of Knowledge abilities thinking Desire to overcome Commitment to Supportive context obstacles tasks Tolerant of ambiguity and risks Willing to defy conventions Personality Motivation Environment (Sternberg & Lubart, 1999) ©copyright, Heriot-Watt University, 2024  Creative thinking challenge – 5 minutes Imagine you are the manager of a coffee shop located in a busy business district. Many of your customers are international professionals and tourists, bringing diverse backgrounds and preferences. How would you leverage Sternberg and Lubart’s six resources to make your coffee shop stand out globally? Think creatively about how cultural preferences, global trends, and international customers needs could shape your approach. Brainstorm in pairs or small groups. Share your ideas with your peer, considering which factors could impact the success of the coffee shop. ©copyright, Heriot-Watt University, 2024  Section 2: Innovation ©copyright, Heriot-Watt University, 2024  What is innovation? The process of applying or implementing something new and useful Applied Creativity ©copyright, Heriot-Watt University, 2024  Innovation in action ©copyright, Heriot-Watt University, 2024 Bringing ideas to life Example : Design thinking ©copyright, Heriot-Watt University, 2024 O2 AD | October SIMO (youtube.com) ©copyright, Heriot-Watt University, 2024  4P’s of innovation Can be a change of function or feature of a Product product Process Can be a change of how to do things Position Can be a change of market for product Paradigm Can be a change of whole company presentation ©copyright, Heriot-Watt University, 2024  Sources of innovation Accidents and the unexpected Penicillin Velcro Post-it notes Market pull; external pressures Market need or gap (e.g., vegan fast-food options) Knowledge push R&D Staff Open innovation ©copyright, Heriot-Watt University, 2024  Culture of innovation R&D centre - strategically an organisation can establish and invest in R&D through a dedicated department or unit. Open innovation – encouraging staff to innovate and share ideas as well as openness to external ideas. Continuous improvement – rather than radical leaps forward in development, small incremental improvements. ©copyright, Heriot-Watt University, 2024  How do organisations influence and drive innovation? Cultural - Respect for creativity & change - Innovation seen as essential to survive - Exchange & debate is part of the job Structural - Physical arrangements (open plan, - Organic structure shared areas) - Availability of resources Innovation - System to support innovation - Roles clarifying expectations Human Resource Management - Recruitment -& Selection - Job Security - Development opportunities - Incentives & rewards ©copyright, Heriot-Watt University, 2024  Section 3: Change ©copyright, Heriot-Watt University, 2024  Models of change Life Cycle - (Lock, 2013) Change as a process, delivered in stages (project) Emergent - (Mintzberg, 1994) Recognises that the change in itself will evolve and change where circumstances are uncertain Long-term planning is less valuable Participative - (Ketokivi & Castaner, 2004) Involves everyone Makes implementation more likely Political - (Pettigrew, 1985) Based on compromise and negotiation to build consensus and support ©copyright, Heriot-Watt University, 2024  Models in practice Perspective Themes Examples Life Cycle Rational, linear, single agreed aim, technical Measurable objectives, project focus management tools, such as Gannt charts etc. Emergent Objectives change as learning occurs and Open to new ideas about scope and new possibilities appear direction, willing to change resources as required Participative Ownership, commitment, shared goals, Inviting ideas, seeking consensus people focus Political Oppositional, influencing, conflicting goals, Building allies and coalitions, securing power focus support ©copyright, Heriot-Watt University, 2024  Kotter’s 8 steps model Kotter, 1996 ©copyright, Heriot-Watt University, 2024  Your turn – 5 minutes Scenario-based pair or small group exercise A small, family-owned Scottish textile company known for its high-quality, handmade wool products has decided to expand internationally. Management sees potential demand in the UAE and Malaysian markets but faces limited resources and staff unfamiliar with international business. Task You are assigned one step of Kotter’s model. Discuss how you would apply your assigned step to support the company’s international expansion. What specific actions would be necessary for the assigned step? What potential obstacle could arise, and how would you overcome them? ©copyright, Heriot-Watt University, 2024  Summary Creativity is the ability to combine ideas to produce something new and useful 6 resources supporting creativity (Sternberg and Lubart, 1999) Innovation is the implementation of new ideas 4 main forms and various sources of innovation Organisations can promote innovation Key models of change Kotter’s model of change ©copyright, Heriot-Watt University, 2024  References Boddy, D. (2020) (Chapters 13 & 18) Canato, A., Ravasi, D. and Phillips, N. (2013), ‘Coerced practice implementation in cases of low cultural fit: Cultural change and practice adaptation during the implementation of Six Sigma at 3M’, Academy of Management Journal, vol. 56, no. 6, pp. 1724-53. Ketokivi, M. and Castaner, X. (2004), ‘Strategic Planning as an integrative device’, Administrative Science Quarterly, vol. 49, no. 3, pp. 337-365. Kotter, J.P. (1996), Leading Change, Harvard Business School Press: Boston, MA. Lock, D. (2013), Project Management, 10th ed., Gower: Aldershot. Mintzberg, H. (1994), The Rise and Fall of Strategic Planning, Prentice Hall International: Hemel Hempstead. Pettigrew, A. (1985), The Awakening Giant: Continuity and change in Imperial Chemical Industries, Blackwell, Oxford. Sternberg, R.J., and Lubart, T.I. (1999) ‘The concept of creativity: Prospects and paradigms’ Handbook of Creativity, Sternberg, R.J. (ed.), Cambridge: Cambridge UP ©copyright, Heriot-Watt University, 2024 ©copyright, Heriot-Watt University, 2024 C17EB –Management in a Global Context Planning and Managing Strategy Last lecture – organisational culture One key learning – types of organisational culture (Handy, 1993) Session Contents Understand the difference between a plan and a strategy Explain the purpose of planning Consider how different plans fit together Examine the process of planning Explore SMART goal setting Discuss different theories of strategy Reading: textbook chapters 7 and 8. Strategy vs plan? Discuss in pairs or groups of three: What is a plan? What is a strategy? What is the difference? Planning = the iterative task of Strategy = a plan of action designed to setting goals, specifying how to achieve a long-term or overall aim (Oxford achieve them, acting on the plan and English Dictionary). monitoring the results (Boddy, p.170). Planning Why People Plan What type of things have you Why plan? planned? 1. Clarifies direction – everyone Holiday gives attention to the right things Education 2. Motivates lets everyone see how Night Out their contribution matters Redecorating a room 3. Uses resources efficiently Cooking a Meal 4. Increases control, measures progress Types of plans Strategic plans (or strategies) – sets out the overall direction for the business. They are broad in scope and cover all major activities. (Boddy, p. 171). Business plan – a plan setting out a proposal for a business, including markets, financing, and other key areas of operation. (Boddy, p. 171). Operational plans – plans that specify how overall objectives are going to be achieved by senior leaders, identifying what tasks each department will undertake. (Boddy, p. 171). Activity plans – set out what a unit, work group or individual is expected to do to help achieve the larger plan (Boddy, p. 173). Other – other varieties of plans exist within larger organisations such as an annual plan or a standing plan (to deal with recurring issues or complaints), or a recovery plan. (Boddy, p. 173). A hierarchy of strategies and plans at the British Broadcasting Corporation (BBC) The process of planning Analyse Strengths, Weaknesses, Opportunities and Threats – perhaps taking into account a PESTEL analysis and Porter’s (1980) 5 forces. Forecasting – trend analysis, horizon scanning, modelling and simulating the future Set goals (e.g. financial, employee satisfaction, environmental performance…) Organising – identifying resources needed Communicating the plan Implementing and monitoring the plan  A hierarchy of plans at the BBC - goals Examples of different goals from the long-term strategy; annual plan; equality, diversity and inclusion strategy; sustainability strategy. https://www.flickr.com/photos/agirregabiria/51807624244 Example of a SMART goal Expand operations into three new geographic markets within the next two years. This goal is specific (expand operations), measurable (into three new markets), achievable (through market research, planning, and execution), relevant (facilitates business growth), and time-bound (within the next two years).  SMART goals exercise In pairs or groups of three, discuss and write 3 SMART goals for how you plan to complete assignment 1 for this course. Hints for SMART goals mini exercise Things to consider: - Understanding the assignment requirements - Reviewing course materials and choosing a topic - How much time will you set aside and when? - Setting your own mini deadlines - Producing an outline - Making time to revise your draft… Strategy Theories of strategy (Boddy, p.195-199) Rational Judgemental Negotiated Adaptive Rational or planning This approach relies on formal and systematic processes which depend on the rational evaluation of information. Objectivity and rational behaviour is assumed. Judgemental This approach is based more on intuition and personal judgement as well as objective factors. Managers may need to make ‘unstructured’ decisions in situations of uncertainty. e.g. investment managers devising a fund investment strategy. Negotiated This perspective involves the use of objective information while taking into account power, conflict, and ambiguity (bargaining between players). Adaptive (Mintzberg, 1994) Mintzberg proposed that there are two types of strategies – intended and emergent. An intended strategy may not be fully realized, and a different approach may emerge. Emergent Strategy at IKEA Selling furniture was originally a small part of the business and not part of the deliberate strategy. The flat pack approach was actually a response to reducing insurance claims on damage in mail order sales. Only started to design their own furniture because competitors put pressure on suppliers not to sell to IKEA. (Barthelemy, 2006) Identifying strategic capabilities Robinson and Spears (2018) p.527. Business level strategic options (Porter, 1985) Cost leadership Differentiation Focus Minimising operation costs. Distinct, unique. Niche market segment. Economies of scale. Able to charge a higher price or maintain customer loyalty. e.g. Saga travel and insurance for e.g. Ryanair, Amazon, Lidl, Aldi e.g. Apple, Coca Cola. over 50s, NFU mutual insurance for farmers. Key learning from this session Explain using examples, the difference between a plan and a strategy. 4 benefits of planning: clarify direction; motivate people; use resources efficiently; control and monitor. Detail the meaning of SMART objectives or goals. Understand key theories of how strategies are formed strategy (rational, judgemental, negotiated, adaptive). Understand business strategic differentiation strategies.  C17EB Management in a global context Week 3. Organisational culture and corporate responsibility International PESTEL analysis Boddy, D. (2020), Management: Using Practice and Theory to Develop Skill, 8th ed, Harlow: Pearson, p. 93 ©copyright, Heriot-Watt University, 2024  Learning outcomes Understand Hofstede’s 5 dimensions of national culture Understand Schein’s theory of the components of culture Apply Quinn’s and Handy’s typologies of culture Understand key aspects of corporate responsibility Understand what sustainability means ©copyright, Heriot-Watt University, 2024  1. Hofstede’s 5 dimensions of national culture ©copyright, Heriot-Watt University, 2024 The environment ©copyright, Heriot-Watt University, 2024  Geertz Hofstede’s 5 dimensions of national culture Theory based on a research at IBM employing over 100 000 workers The research aimed at categorising cultures in nations where IBM was operating its activities Research extended which led to the identification of 5 categories of national cultures Main cultural clusters: Nordic, Germanic, Anglo, Latin European, Latin American, Far Eastern, Arab, Near Eastern ©copyright, Heriot-Watt University, 2024  Geertz Hofstede’s 5 dimensions of national culture POWER DISTANCE “the extent to which the less powerful members of … organisations within a country expect and accept that power is distributed unevenly” (Hofstede and Hofstede, 2005:46) High power distance: hierarchy [acceptance of boss/subordinate inequality], authority, control Low power distance: flat organisational structure, empowerment of people, autonomy ©copyright, Heriot-Watt University, 2024 ©copyright, Heriot-Watt University, 2024 The 6 dimensions model of national culture by Geert Hofstede  Geertz Hofstede’s 5 dimensions of national culture UNCERTAINTY AVOIDANCE Attitude toward ambiguity and uncertainty : Societies tolerating ambiguity and uncertainty such as Anglo and Nordic countries, most Asian countries e.g., keep bureaucracy to a minimum Societies avoiding uncertainties such as France, Russia, Latin and American countries, Japan, Korea ©copyright, Heriot-Watt University, 2024 ©copyright, Heriot-Watt University, 2024 The 6 dimensions model of national culture by Geert Hofstede  Geertz Hofstede’s 5 dimensions of national culture INDIVIDUALISM Vs. COLLECTIVISM Individualism: emphasise the individual, workers take the initiative and assume responsibility Managerial implication on motivational strategy: emphasise on collective action, mutual responsibility How are employees rewarded? Value individual performance such as individual bonus Reward based on team performance ©copyright, Heriot-Watt University, 2024 ©copyright, Heriot-Watt University, 2024 The 6 dimensions model of national culture by Geert Hofstede  Geertz Hofstede’s 5 dimensions of national culture MASCULINITY Vs. FEMINITY Masculine: countries where gender roles are clearly distinct Feminine: countries in which gender roles overlap ©copyright, Heriot-Watt University, 2024 ©copyright, Heriot-Watt University, 2024 The 6 dimensions model of national culture by Geert Hofstede  Geertz Hofstede’s 5 dimensions of national culture LONG TERM Vs. SHORT TERM ORIENTATION Perspective on time horizon: Countries standing for virtues such as perseverance and thrift Countries standing for virtues such as respect for tradition, preservation of face Managerial implication: investment decision, setting performance goals, planning ©copyright, Heriot-Watt University, 2024 ©copyright, Heriot-Watt University, 2024 The 6 dimensions model of national culture by Geert Hofstede  Geertz Hofstede’s 5 dimensions of national culture High Low Power distance Accept inequality of power Less acceptance of power inequality Uncertainty avoidance Not comfortable with ambiguity Happy with ambiguity Individualism /collectivism Focus on individualism Focus on collectivity Masculinity / femininity Gender roles are clearly defined Gender roles overlap Long-term and short- term Concern about future More short-term oriented orientation ©copyright, Heriot-Watt University, 2024  2. Organisational culture ©copyright, Heriot-Watt University, 2024  Defining organisational culture Defining organisational culture “the way we do things” (Deal and Kennedy, 1982) “collective programming of the mind” (Hofstede, 1992) “set of values, beliefs and assumptions shared by a group and that guide their interpretation of, and response to their environments” (Ogbonna and Harris, 2014: 668) Shared values > what is considered important Common beliefs > expected appropriate behaviors and attitudes ©copyright, Heriot-Watt University, 2024  Components of culture, Shein (2016) 1/2 ARTIFACTS : Observable aspects of culture such as language, etiquette, architecture, style, rituals Architecture Technology and equipment Style Rituals and ceremonies Courses BELIEFS AND VALUES : The ideas that members have about their work including how people make decisions, how teams work, how teams solve problems. ‘Quality pays’ ‘We should stick to our core business’ ‘Take personal responsibility’ ‘Challenge a proposal – whoever made it’ ©copyright, Heriot-Watt University, 2024  Google Bay View Campus ©copyright, Heriot-Watt University, 2024 The first campus built by Google | Bay View and Charleston East (youtube.com)  Carlsberg “Our logo Our iconic logo was introduced in 1904 designed by the Danish architect Thorvald Bindesbøll. Our Carlsberg Group logo is available in two primary colours, namely the Carlsberg green and white.” ©copyright, Heriot-Watt University, 2024  Carlsberg “Our prominent graphic element is an interpretation of our iconic hops leaf mark – inspired by the fine crafted lines of our heritage labels. The hops leaf is hand crafted with fine delicate lines that link it to our heritage bottles and give it a light texture and a human character. The crafted hops leaf comes in two sizes, which we use dynamically in different crops and colours.” Who we are » About the Carlsberg Group » Design Guide « Carlsberg Group ©copyright, Heriot-Watt University, 2024  Components of culture, Shein (2016) 2/2 BASIC UNDERLYING ASSUMPTIONS : Assumptions that are deeply held by members of the group as being the way to work together. The beliefs and values that work become basic underlying assumptions. These can cause problems when one group needs to work with another with different assumptions. ‘We need to satisfy customers to survive as a business’ ‘People can make mistakes as long as the learn from them’ ‘Financial markets worry about the short term: we are here for the long term’ ©copyright, Heriot-Watt University, 2024  Types of culture 1. Competing values framework Flexibility Human relations Open systems Internal External Rational goal Internal process Control Source: Based on Quinn et al. (2015) ©copyright, Heriot-Watt University, 2024  Types of culture 1bis Competing values framework Rational goal Internal process Human relations Open systems Value rationality and Values stability and Values informal and Values external ideas efficiency control interpersonal relations Motivation: competition Motivation: security, Motivation: cohesiveness, Motivation: creativity, and achieving goals stability, order membership variety ©copyright, Heriot-Watt University, 2024  Types of culture 2. Charles Handy (1993) POWER A culture that is primarily influenced by a dominant central figure ROLE Activities are influenced by clear and detailed job descriptions and procedures TASK The focus is on completing the task and not formal roles PERSON Activities are influences by the wishes of the individual who are at the centre of the system; the system works to support them ©copyright, Heriot-Watt University, 2024  What are the benefits of a strong organisational culture? A way to attract the best talents by building a reputation of a company who cares about employees’ well-being A mean to retain employees Contribute to job satisfaction Fosters collaboration Contributes to better productivity which has a positive impact on company performance ©copyright, Heriot-Watt University, 2024  3. Corporate responsibility ©copyright, Heriot-Watt University, 2024  Corporate Social Responsibility - Key concepts Corporate malpractice – corporate activities that are harmful, erode trust, and damage reputation. Philanthropy – supporting charitable or socially beneficial causes (private or corporate) Enlightened self-interest – acting in a costly or inconvenient way for the present to fulfill long-term goals. Corporate responsibility (CR)– management reflecting an understanding of the broader implications of corporate decisions ©copyright, Heriot-Watt University, 2024  Why Corporate Responsibility? Economic – Milton Friedman have argued that managers of a company provide social benefit by creating wealth or employment Legal – companies have the responsibility to follow the law Societal – companies have a moral responsibility within a social contract Philanthropic – recognizing societal responsibilities for enlightened self-interest ©copyright, Heriot-Watt University, 2024  Why Corporate Responsibility? Ooho (notpla.com) ©copyright, Heriot-Watt University, 2024  Sustainability – the triple bottom line Planet – the environmental account, measured by the environmental impact of the organisation Sustainability People – the social Profit – the economic account, measured by account, measured by the the impact of the profitability, return on organisation on the assets, etc. of the quality of people’s live organisation ©copyright, Heriot-Watt University, 2024  Heriot Watt and Sustainability ©copyright, Heriot-Watt University, 2024 https://www.hw.ac.uk/uk/about/sustainability.htm ©copyright, Heriot-Watt University, 2024