MANAGEMENT STUDY GUIDE.docx

MANAGEMENT STUDY GUIDE Chapter 1 Review What is Management and where did the term come from? A process of assembling and using sets of resources, in a goal directed manner, to accomplish tasks in an organizational setting. Modern management theory emerged in the 20th century in the US Henry Ford –...

MANAGEMENT STUDY GUIDE Chapter 1 Review What is Management and where did the term come from? A process of assembling and using sets of resources, in a goal directed manner, to accomplish tasks in an organizational setting. Modern management theory emerged in the 20th century in the US Henry Ford – Industrialist, develop a car for the masses (Tin Lizzie, Model T). Importance of understanding organizations and customers (Home Depot, JC Penney) Home Depot – Bob Nardelli Tried to impose an autocratic style on a company known for its laid-back culture and decentralized operations. Fired off nasty emails to store managers after inspections and replaced full-time workers with less knowledgeable part-timers. Strategy of focusing on professional contractors at the expense of retail customers was widely seen as a mistake. Share price cratered in relation to rival Lowe’s. Nardelli was fired in 2007 & received a severance package worth $210 M. JC Penney – Ron Johnson (protégé of Steve Jobs) Hired because B.O.D wanted to give the 110 year old retailer a fresh new image and boost sales. Johnson’s bold strategy included doing away with sales, promotions, and coupons and adopting a “Fair & Square” every day low price structure. Investors liked it, Customers hated it. Sales fell by over 25%. The company’s stock price declined by over 50% during Johnson’s time as CEO. Key Managerial Challenges of 21st Century (e.g., managing change, resources, strategically, entrepreneurially) Managing Change Most persistent, pervasive, and powerful challenge for managers. Two causes of change: Technology & Globalization The introduction of new technology leads to the development of new products and/or processes, which employees must learn. Globalization promotes greater involvement in international markets and requires a greater set of skills which employees may need to develop. Managing Resources Including financial capital, human capital, physical resources, and technology. Managers must both assemble and put it into use these resources to achieve the firm’s goals. Managing Strategically In doing so, they will face many challenges, including the changing external and internal environments. Managing Entrepreneurially Managers search for new opportunities and identify new ideas for new markets. They must develop an entrepreneurial mindset, or a way of thinking about businesses that emphasizes actions to take advantage of uncertainty. What is Moore’s Law? The power of microprocessor technology doubles and its cost of production falls in half every 18 months. What is an entrepreneur? Someone who creates new businesses for the purpose of gain or growth under conditions of risk and uncertainty. Who was Joseph Schumpeter and what is meant by the term “creative destruction”? Joseph Schumpeter – Austrian economist that viewed the entrepreneur as the key agent of change in the modern world. Believed such individuals were motivated by the “will to conquer, the impulse to fight, to prove oneself superior to others and the joy of creating.” Creative Destruction: Creation by one firm leads to new products, services, and even entire industries. But unless the market leader is constantly innovating, it may be destroyed by hungrier competitors. What is an entrepreneurial mindset? Requires a commitment to constantly learning new skills and acquiring and deploying new knowledge. Historical approaches to Management, esp. F.W. Taylor & Scientific Management “The art of knowing what is to be done and seeing that it is done in the best possible manner” – F.W Taylor (Father of Scientific Management One of Ford’s advisors, focused on replacing rule-of-thumb work methods with those based on scientific study. Work processes were carefully analyzed with an eye to reducing time and boosting productivity. “To forecast, to plan, to organize, to command, to coordinate and control activities of others.” - Henri Fayol “The art of getting things done through people.” – Mary Parker Follett What do Managers do according to textbook (e.g. planning, organizing, directing, controlling) and according to Peter Drucker? Peter Drucker divided the job of the manager into 5 basic tasks Setting objectives Organizing Activities Motivating & Communicating Measuring Developing People (people are the company’s most important asset) Managers also: Plan – estimate future conditions and circumstances and making decisions about appropriate courses of action. Strategic: addresses actions designed to achieve long range goals. Tactical: translates strategic plans into actions designed to achieve shorter-term goals Operational: identifies actions needed to accomplish goals of particular organizational units. Organize – involves integrating resources to accomplish tasks. Paying attention to: Structure of relationships among positions People occupying those positions. Linking structure to firm’s strategic direction. Direct – process of influencing other people to attain organizational objectives Motivating Interacting Communicating Leading Coaching Team Building Controlling – regulating the work of those for whom a manager is responsible Set performance standards. Monitor performance! Assessing performance Results of the control process are fed back into the planning process. What are the various roles that managers play according to Mintzberg (e.g. Informational, Interpersonal, etc.) Interpersonal Roles: Figurehead: attending ceremonial activities Leader: influencing or directing others Liaison: contacting others outside the formal chain of command Informational Roles: Monitor: seek information to be aware of crucial developments. Disseminator: receiving and sending information Spokesperson: representing the views of the unit for which he/she is responsible. Decisional Roles: Entrepreneur: explore new opportunities Disturbance handler: acting as a judge or problem solver in conflicts among employees Resource allocator: deciding how resources will be distributed. Negotiator: making accommodation with other units. Chapter 2 Review: What is ethics? Branch of philosophy that focuses on moral issues (what is good and bad, right and wrong) What is managerial ethics? The study of morality and standards of business conduct. Ethical dilemmas vs. ethical lapses Ethical Dilemma: the choice between two competing but arguably valid options. Ethical Lapse: decisions that are contrary to an individual’s stated beliefs and policies of the firm. Nike’s sweatshop labor controversy Child labor Workers being exploited for low salaries. Nike acted by offering microloans to workers & increased the minimum age at factories. Nike formed Fair Labor Association to monitor overseas working conditions. Basic approaches to ethical decision-making Utilitarian – what actions will result in the greatest good? Focuses on consequences of an action. Moral rights – some things are simply right or wrong. Universal - “do unto others as you would have them do unto you.” Rights stem from freedom. Justice – equity of process and outcomes, rules should be impartially applied. What are the 6 components of Moral Intensity (i.e., magnitude of consequences, social consensus, etc.) Magnitude of consequences: the anticipated impact resulting from an action (ex: having to lay off 100 vs 1000 employees). Social consensus: the extent to which people agree that an act is either good or bad (ex: speeding vs drunk driving) Probability of effect: the likelihood that an action will result in a specific adverse consequence (ex: cigarette ads & smoking). Temporal immediacy: a function of the interval between the time the action occurs and the onset of its consequences. (pollution & global warming). Proximity: the physical, psychological, and emotional closeness the decision maker feels to those affected by the decision. (ex: closing a local factory vs one in foreign country). Concentration of effect: the extent to which consequences are focused on a few individuals or dispersed across many (ex: laying off workers in a small town vs. a large city) Efficiency vs. Social Responsibility perspectives Efficiency Perspective: looks to maximize profits for the owners of the business. Social Responsibility: companies are expected to “give back” to communities, protect the environment, and promote social justice. Shareholders vs. stakeholders Stakeholder: any individual or group that is impacted by or has an interest in each business decision or project Shareholder: a person or entity that owns at least one share of a company’s stock. Essentially own the company. How firms respond to pressures for social responsibility (i.e., Defenders, Accommodators, Reactors, Anticipators) Defenders: fight against efforts to restrict or regulate activities and profit-making potential. Accommodators: Change when legally compelled to do so but does not make changes that might restrict profits if they are not required to. Reactors: respond to significant pressure even if not legally required to. No responsiveness could have a negative impact on the firm. Anticipators: believe that they are obligated to a variety of stakeholders-customers, employees, general citizens. Avoid actions with harmful consequences even if not pressured or legally required. Ways in which companies promote ethical conduct (e.g., codes of ethical conduct, whistleblower statutes) Code of ethical conduct: formal statement that outlines types of behavior that are acceptable and unacceptable. Communication, training, reward, and recognition Whistleblower: discloses illegal or unethical conduct on the part of others in the firm What is corruption? The use of public office for private gain. How does corruption affect countries and companies? Financial and Social Damage No trust What is the FCPA? Foreign Corrupt Practices Act of 1977 – law prohibits firms from paying money to any person they suspect might be using it to bribe public officials. Penalties include hefty fines for the firm and jail time for executives. Bribes vs. facilitating payments Bribery: a form of corruption involving collusion and breach of trust. Typically involves giving a government official an item of value to influence his or her actions. Results in a personal benefit to the recipient and an unfair advantage to the giver (or third party. Facilitating payments: funds paid to foreign officials to expedite the performance of routine governmental actions. Permissible under the FCPA. Chapter 3 Review Globalization – what it is; different definitions. Globalization: integration of markets, nation states and technologies to a degree interweaving of national economies through the growing flows of trade, investment, and capital across borders. Those transnational flows include technology, skills and culture, ideas, news, information, entertainment, and people. Globophobes vs. Globophiles Globophobes: fear or dislike globalization Globophiles: like globalization Friedman’s ‘flat world’ thesis The forces of globalization have transformed the global economy. Economic activity used to be primarily national in scope. Today, workers in China and India collaborate and compete with people in the West in real time. What constitutes a country’s institutional environment? Countries rules, policies, and enforcement processes. 3 dimensions Economic development: economies are classified as Developed (U.S & Japan have large effective capital markets ), Emerging (China & India are rapidly growing with underdeveloped capital markets) or Developing (weak economies with little capital available for growth). Political – legal: includes the quality of laws, regulations, their enforcement, and political risk. Physical Infrastructure: includes quantity and quality of roads and highways, telephone lines, and airports. Poor infrastructure = difficult business Who are the BRICs? Brazil – 200 M consumers Russia – 140 M consumers India – 1.2 B consumers China – 1.3 B consumers What is culture? Learned set of assumptions, values, beliefs, and behavioral norms that have been accepted by members of a group that affect human behavior. Values & norms Values: abstract ideas about what a group believes to be good, right, and desirable. USA: Freedom, Independence, Self- Reliance, Individualism, Competition Japan: Belonging, Harmony, Consensus, Collectiveness, Cooperation Norms: Social rules and guidelines that dictate behavior. 2 types of norms Folkways: Routine conventions of everyday life- no big deal if broken Dress code, social manners, etiquette Mores: more serious standards of behavior – big deal if broken Incest, murder, cannibalism Hofstede’s cultural dimensions Power Distance: the degree to which people accept power and authority differences as legitimate. Individualism-Collectivism: Deals with individual’s identity and sense of social obligation. Individualistic Societies: look out after themselves and immediate families. Collectivist Societies: look after extended families and communities. Masculinity-Femininity (Gender Focus): Masculine cultures value competition, assertiveness, ambition, and accumulation of material wealth. Feminine cultures place more value on relationships and quality of life. Uncertainty Avoidance: To what extent do members of a society tolerate ambiguity and uncertainty. High UA cultures prefer rules and structured circumstances to fluid and dynamic situations. Low UA cultures tend to embrace change more readily. Distinction between high & low context cultures High Context: emphasize interpersonal relationships and prefer harmony and consensus. Low context: value facts, logic, and directedness. Communicators are expected to be straightforward and efficient.