Principles of Management Notes PDF

Principles of management Chapter 1 Managers and managing No chat gbt on test’s (hand writin) Before reading week 1)​ Magers and managing 2)​ Managing the organizational environment 3)​ Managing decision making...

Principles of management Chapter 1 Managers and managing No chat gbt on test’s (hand writin) Before reading week 1)​ Magers and managing 2)​ Managing the organizational environment 3)​ Managing decision making 4)​ Managing planning and strategy 5)​ Managing organizational structure 6)​ Managing information and communication Types of organizations Organizations -​ People working together and coordinating their actions to achieve specific goals and outcomes -​ Categorized based on core purpose Social impact ​ Non profit (grant/donation fund) ​ Social enterprise (NFP revenue generation) ​ Social venture (Blended value proposition) ​ Social purpose business (multiple bottom lines) ​ Traditional business (FP revenue generations) Commercial impact What is management? Management - the planning, organizing, leading and controlling of resources to achieve goals effectively and efficiently Manager - is a person responsible for supervising the use of a groups or organizations resources to achieve its goals Resources - Assets, such as people and their skills, know how, and experience, machinery: raw materials: computers and informations technology: and parts, Financial capital, and loyal customers and employees. How effectiveness and efficiency work together (in power point) Why study management? ​ Managerial skills are in demand. Organizations need individuals who understand complexity, respond to environmental contingencies, and make decisions that are ethical and effective ​ Learning from other. The advantage is that you are not bound to repeat the mistake others have made ​ Economic benefits of being a good manager ​ Managers get satisfaction from solving social problems and making a lasting contribution to the well being of society Four functions of management (realy important) Planning - choose appropriate organizational goals and courses of action to best achieve those goals Organization - Establish the task that need doing and the tas and authority relationships that allow people to work together to achieve organizational goals. Controlling - Establish accurate measuring and monitoring systems to evaluate how well the organization has achieved its goals Leading - Motiviate, coordinate and energize groups to work together to achieve organizational goals … in PP Planning -​ The process used to identify and select appropriate goals and courses of action Five steps -​ Decide which goals the organization will pursue -​ Analysis the organizational environment for threats and opportunities -​ Deciding what course of action or strategy to adopt -​ Deciding how to allocate organizational resources to implement the plan -​ Evaluating weather the strategy achieved the goals The outcome of planning is strategy Organization Structure working relations so organization members interact and cooperate to achieve organizational goals Learning -​ Articulate a clear org Controlling evaluate how well organizations is achieving goal and taking action to maintain or improve performance ​ Managers will -​ Monitor individuals Management skills and roles Conceptual skills: ability to analysis and diagnose a situation and to distinguish between cause and effect Interpersonal skills: ability to understand, alter, lead and controlling the behaviour of others individuals and groups Technical skills : job specific knowledge and techniques thats are retired to perform that job duty Managerial roles 1)​ Figurehead 2)​ Leader 3)​ Liaison 4)​ Entrepreneur 5)​ Disturbance handler 6)​ Resource handler 7)​ Negotiator (On a high to low scale) 1)​ Extraversion 2)​ Negative affectivity 3)​ Agreeableness 4)​ Conscientiousness 5)​ Openness to experience Self esteem -​ The degree to which individuals feel good about themselves and their capability Need for achievement, affiliations and power ​ Need for achievement: extent to which an individual is concerned about establishing and maintaining good interpersonal relations, being liked and having people get along  ​ Need for affiliations: extent to which an individual is concerned about establishing and maintaining good interpersonal relationships, being liked and having people get along ​ Need for power: extent to which an individual desires to control or influence others. Week 2 Managing the organizational environment Managers First Line – Middle – Top (each have a different portion of the 4 tasks) Exercise the Three Principal Skills Conceptual: analyze and diagnose a situation/ distinguish between cause and effect Interpersonal: understand, alter, lead and control behaviour Technical: job-specific knowledge and techniques required to perform an organizational role Extroversion  Experience positive emotions and moods primarily from interacting with the outer world rather than from within oneself Extrovert tend to be sociable, affectionate, outgoing, and friendly Introverts tend to be less inclined toward social interactions and experience more positive energy from within Negative Affectivity: (The tendency to experience negative emotions and moods, feel distressed, and be critical of oneself and others) High - often feel angry and dissatisfied and complain about their own and others’ lack of progress Low - do not tend to experience many negative emotions and moods and are less pessimistic and critical of themselves and others. Agreeableness: (the tendency to get along well with others) High - likable, tend to be affectionate, and care about other people Low- may be somewhat distrustful of others, unsympathetic, uncooperative, and even at times antagonistic. Conscientiousness: the tendency to be careful, scrupulous, and persevering High - organized and self-disciplined Low - sometimes appear to lack direction and self-discipline. Conscientiousness has been found to be a good predictor of performance in many kinds of jobs, including managerial jobs Openness to experience: the tendency to be original, have broad interests, be open to a wide range of stimuli, be daring, and take risks High - may be especially likely to take risks and be innovative in their planning and decision making Low - may be less prone to take risks and more conservative in their planning and decision making Locus of Control: Beliefs about how much control they have over what happens to and around them ​ Internal locus of contro l- believe they are responsible for their own fate; see their own actions and behaviours as being major determinants of important outcomes ​ External locus of control - believe that outside forces are responsible for what happens to and around them; they do not think their own actions make much of a difference Managers need an internal locus of control because they are responsible for what happens in organizations; they need to believe they can and do make a difference. Self-Esteem: The degree to which individuals feel good about themselves and their capabilities. ​ High self-esteem - believe they are competent, deserving, and capable of handling most situations ​ Low self-esteem - poor opinions of themselves, are unsure about their capabilities, and question their ability to succeed High self-esteem facilitates managers setting and keeping high standards for themselves, pushes them ahead on difficult projects, and gives them confidence to make and carry out important decisions. Need for Achievement, Affiliation, and Power  ​ Need for achievement - extent to which an individual has a strong desire to perform well and to meet standards ​ Need for affiliation - extent to which an individual is concerned about establishing and maintaining good interpersonal relations, being liked, and having people get along ​ Need for power - extent to which an individual desires to control or influence others Impact of Values and Attitudes Value system: shapes what a person wants to achieve in life and how they want to behave (guiding principles) How do managers experience their jobs as individuals? ​ Values: what managers are trying to achieve through work and how they think they should behave ​ Attitudes: thoughts and feelings about their specific jobs and organizations ​ Moods and emotions: how managers actually feel when they are managing Two kinds of personal values: 1.​ Terminal value: personal conviction about lifelong goals or objectives ​ Often lead to the formation of norms unwritten, informal codes of conduct that prescribe how people should act in particular situations 2.​ Instrumental value: personal conviction about desired modes of conduct or ways of behaving Attitudes Collection of feelings and beliefs ​ Two most important in this context are: 1.​ Job Satisfaction: feelings and beliefs managers have about their current job, Why is it important for managers to be satisfied? More likely to go the extra mile, Less likely to quit 2.​ Organizational Commitment: feelings and beliefs that managers have about their organization as a whole Moods and Emotions ​ Mood: feeling or state of mind ​ Emotions: more intense, often directly linked to whatever caused the emotion and more short-lived ​ Emotional intelligence: ability to understand and manage one’s own moods and emotions and the moods and emotions of other people ★​ High level: more likely to understand how they are feeling and why, and they are more able to effectively manage their feelings ★​ Emotional intelligence lets mangers understand and manage feelings so they do not get in the way of effective decision making Organizational Culture ​ Shared set of beliefs, expectations, values, norms and work routines that influence how employees interact with one another and cooperate to achieve goals - “Personality” of an organization The Organizational Environment A set of forces and conditions that can affect the way the organization operates and the way managers engage in planning and organizing ​ Internal environment - forces operating within an organization and stemming from structure and climate ​ External environment - forces operating beyond boundaries of organization ​ Forces change over time and are made up of opportunities and threats ​ Opportunities openings for managers to strengthen their organization by making and selling more products, obtaining more resources and capital or opening markets ​ Threats issues that can devastate an organization if managers are unable to sell products and revenues/profits plunge Stakeholders: the persons, groups and institutions that are affected by internal and external environments External Environment 1) Industry-specific or task environment: ​ Affect the organization’s ability to obtain inputs and dispose of outputs ​ Immediate and direct impact on manager Suppliers: ​ Provide input resources (raw materials, labour, financing) ​ Managers must ensure reliable suppliers in a global economy ​ Tasked with finding reliable overseas suppliers offering lowest-prices and highest-quality products ​ Supply chain management is complicated due to shortages, unions, lack of substitutes and need to coordinate suppliers ​ Managers often prefer to have many, similar suppliers of each item Distributors: · Organizations that help others to sell goods or services to customers ​ Changing nature of distributors and distribution methods brings threats and opportunities for managers Large distributors are so powerful they can control customer’s access to an organization’s goods and services. Power of distributors can be weakened if there are too many options for manufacturers and wholesalers and if goods are sold directly online. Customers: ​ Individuals and groups that buy the goods and services an organization produces ​ Changing customer types, tastes and needs result in opportunities and threats Competitors: ​ produce goods or services that are similar ​ Rivalry between competitors (or from potential competitors) can be most threatening force facing managers ​ High levels of rivalry often results in price competition (Reduces access to resources and causes profits to decrease) Barriers to Entry Some factors that make it difficult and costly for a company to enter a particular task environment. Three main barriers: ​ Economies of scale cost advantages associated with large operations such as buying raw material in bulk ​ Brand loyalty customers’ preference for the products or organizations currently in the task environment ​ Government regulations national and global policies can prevent entry at both industry and country levels The General Environment -​ Political, economic, socio-cultural, technological and international (global) forces -​ Must be monitored and analyzed Political forces : Outcomes of changes in laws and regulations, resulting from political and legal developments within a nation/region/world Trends: 1.​ Deregulation - 2.​ Privatization 3.​ Globalization Economic forces: Include interest rates, inflation, unemployment, economic growth Strong economic conditions - people have more money to spend (opportunity to sell more goods and services) and resources become easier to acquire Poor economic conditions ​ Limit managers’ ability to gain necessary resources ​ Fewer customers for goods and services ​ Creates uncertainty, complexity and risk for managers The General Environment Socio-cultural forces -Pressures coming from the social structure of a country or society or from the national culture Social structure - the arrangement of individuals or groups in a society Demographic forces - outcomes of changes in the characteristics of a population ​ Such as age, gender, ethnic origin, race, sexual orientation, and social class National culture - the set of values that a society considers important and the norms of behaviour that are acceptable in society Effective managers: ​ Are sensitive to differences in the social structures and national cultures of all countries in which they operate (and adjust their behaviours accordingly) ​ Respond to changing behavior and consumer trends within a society Global Forces: The most impactful change for organizations (and their managers), is the integration of world economies The Global Environment 1)​ Human capital – immigration, migration, emigration 2)​ Financial capital – overseas investment, credit, lending, and aid 3)​ Resource capital – natural resources, semi-finished products (metals, minerals, Lumber, energy, food products, microprocessors, and auto parts) 4)​ Political capital – power and influence (diplomacy, persuasion, aggression) Barriers to Trade and Investment Distance and Culture - transportation and technological innovation has overcome many of these challenges Trade Wars -​ economic -​ conflicts arising from extreme protectionism Tariffs tax that government imposes on goods imported into one country from another ​ Results in series of retaliatory moves ​ Free trade and international treaties combat these (GATT). Managing the External Environment Managers must analyze threats and opportunities by measuring: 1.​ Level of complexity in the environment 2.​ Rate at which the environment is changing Environmental complexity ​ Depends on the number and potential impact of the forces ​ Managers must pay closer attention to forces with larger impact ​ Generally, the larger the organization, the greater the number of environmental forces managers must respond to Managers as Agents of Change Change in the environment is a two-way process: ​ Environmental change directs consequences of actions taken by managers ​ Organization is an open system ​ Ability to predict events is determined by rate of change and complexity of the environment Managers make decisions under conditions of: ​ Uncertainty state of environmental forces that is so dynamic managers cannot predict the probable outcomes of actions ​ Certainty state of environmental forces that is stable enough to predict possible outcomes of decisions Tips for managers to reduce uncertainty 1.​ Scenario planning to imagine multiple different futures. 2.​ Adaptable strategies 3.​ Identifying societal needs, benefits, and harms that are or could be embodied in the firm’s products. 4.​ Analyzing underserved markets 5.​ Exploring societal needs to discover new opportunities 6.​ Adopting technology to enhance resource utilization, process efficiency, and quality. Challenges for Management in a Global Environment 1.Building a competitive advantage while maintaining ethical standards 2. Utilizing new kinds of technologies based on artificial intelligence and machine learning 3. Embracing and overcoming differences in national cultures to curb racism and discrimination. Increasing Efficiency Reduce the quantity of resources (such as people and raw materials) used to produce goods or services ​ Training workers in new skills and techniques ​ New technological solutions to project management ​ Creating alliances and partnerships Increasing Quality Global competition has increased pressure on companies to improve the quality of goods and services delivered. ​ Techniques known as total quality management (TQM). ​ Employees supported to find new and better ways to perform their jobs ​ Reducing their environmental footprint ​ Monitoring and evaluating the quality of the goods they produce. Increasing Innovation The process of creating new goods and services that customers want or need, or developing better ways to produce or provide goods and services ​ Creating an organizational culture to support innovation ​ Rewarding risk-taking ​ Among the most difficult managerial tasks Increasing Responsiveness ​ Adapting to changing customers needs and interests ​ Re-evaluating traditional markets and Identifying underserved markets ​ Training employees  Week 3 Managing decision making What Is Decision Making? -The process of analyzing options and making determinations about specific organizational goals and courses of action in responding to: Opportunities → search for ways to improve performance to benefit all stakeholders Threats → search for ways to increase performance despite e vents inside or outside the organization that are adversely affecting organizational performance Managers as Agents of Change Change in the environment is a two way process: ​ Environmental change directs consequences of actions taken by managers ​ Organization is an open system ​ Ability to predict events is determined by rate of change and complexity of the environment Managers make decisions under conditions of: ​ Uncertainty → state of environmental forces that is so dynamic managers cannot predict the probable outcomes of actions ​ Certainty → state of environmental forces that is stable enough to predict possible outcomes of decisions Tips for Managers to Reduce Uncertainty 1.Scenario planning to imagine multiple different futures. 2.Adaptable strategies 3.Identifying societal needs, benefits, and harms that are or could be embodied in the firm’s products. 4. Analyzing underserved markets 5. Exploring societal needs to discover new opportunities 6. Adopting technology to enhance resource utilization, process efficiency, and quality. Challenges for Management in a Global Environment 1.Building a competitive advantage while maintaining ethical standards; 2. Utilizing new kinds of technologies based on artificial intelligence and machine learning; and 3. Embracing and overcoming differences in national cultures to curb racism and discrimination. Increasing Efficiency Reduce the quantity of resources (such as people and raw materials) used to produce goods or services ​ Training workers in new skills and techniques ​ New technological solutions to project management ​ Creating alliances and partnerships Increasing Quality Global competition has increased pressure on companies to improve the quality of goods and services delivered. ​ Techniques known as total quality management (TQM). ​ Employees supported to find new and better ways to perform their jobs ​ Reducing their environmental footprint ​ Monitoring and evaluating the quality of the goods they produce. Increasing Innovation The process of creating new goods and services that customers want or need, or developing better ways to produce or provide goods and services ​ Creating an organizational culture to support innovation ​ Rewarding risk - taking ​ Among the most difficult managerial tasks Increasing Responsiveness ​ Adapting to changing customers needs and interests ​ Re-evaluating traditional markets and Identifying underserved markets ​ Training employees Programmed Decision Making Routine decision making that follows established rules or guidelines ​ All inputs and outcomes are known with certainty  ​ Managers have made the decision many times before ​ Managers can develop rules and guidelines to regulate all routine and repetitive organizational activities ​ Example: Deciding when to reorder office supplies ​ High degree of predictability allows these types of decisions to be learned by computers (machine learning) ​ Programmed decisions are increasingly being digitized which allows managers to focus on more complex decisions (Relies on vast amounts of data to make judgments and improve actions taken without human involvement) Nonprogrammed decisions Non -routine decision making that occurs in response to unusual, unpredictable opportunities and threats ​ Rules do not exist because situation is unexpected or uncertain ​ Decisions are made based on incomplete information ​ Can result in effective or ineffective decision making Example: Should the firm invest in a new technology? Two Models of Decision Making Classical (Rational) model: Specifies a process of decision making to maximize benefit to organization and shareholders Assumptions 1) Decision maker can identify and evaluate all possible alternatives and their consequences and rationally choose most suitable course of action 2) Managers have access to all information needed to reach the optimum decision (the most appropriate decision for most desirable future consequences for organization) Two Models of Decision Making Administrative Model - Explains why decision making is always an inherently uncertain and risky process based on the assumptions that: 1)​ Managers in the real world do not have access to all the information required to make a decision 2)​ Managers usually make satisfactory rather than optimum decisions 3)​ Human decision -making capabilities are constrained by one’s ability to interpret, process, and act on information ​ Too many alternatives and to much information for managers to consider it all ​ Decisions are limited by people’s cognitive abilities ​ Bounded awareness → tendency for people to overlook important information that bears on the decision - making process Administrative Model Incomplete information exists for three reasons: 1.​ Risk and uncertainty -probabilities of alternative outcomes cannot be determined, and future outcomes unknown 2.​ Ambiguous information - information that can be interpreted in multiple and often conflicting ways 3.​ Time constraints and cost of searching for alternative solutions to problems can be prohibitive Managerial decisions are often “more art than science”: ​ Intuition → person’s ability to make sound decisions based on past experience and immediate feelings about information at hand ​ Judgment → person’s ability to develop a sound option based on one’s evaluation of the importance of the information at hand Satisficing→ exploring a limited sample of possible alternatives (searching for and choosing satisfactory ways to respond to problems and opportunities, rather than trying to make the best decision) Seven Steps in the Decision Making Process Seven steps that managers should follow to make a good decision: 1.Recognize the need for a decision (cap international students) 2.Identify the decision criteria (reputation, student satisfaction) (profits, environment and social responsibility) concerned about environmental threats in genral environment and internal environment 3.Generate alternatives (fire jobs, bigger classes, cut courses) (find lithium suppliers) 4.Assess alternatives (pros and cons to each) 5.Choose an alternative (cut jobs) what the choice is 6.Implement the chosen alternative (go to hr check laws and regulation for letting professors go, look at classes and see what ca be merged) 2 tings 7.Evaluate and learn from feedback (look back at criteria and see what happened) financial results, quality Ethics, Social Responsibility and Decision Making Ethics: Beliefs about what is right or wrong that guide decision making and behaviour Ethical dilemma: A situation requiring a choice between courses of action that involves conflicting “goods” or outcomes Moral scruples: Thoughts and feelings that tell a person what is right or wrong What is a Manager’s Role in Ethics? A manager must encourage ethical behaviour by: ​ Ensuring ethical values and norms are central to organizational culture ​ Helping develop ethical values and standards in other employees ​ Implementing ethical control systems (codes of ethics, regular training programs,etc.) ​ Modeling ethical behaviour Ethics ombudsperson →ethics officer who monitors an organization’s practices to ensure they are ethical Social Responsibility and Decision Making Managers have a duty to make decisions that promote stakeholder and society well -being. Commitment Levels Obstructionist →managers choose not to behave in a socially responsible way -Willing to engage in unethical and illegal behavior Defensive → minimal commitment to ethical behavior - Milton, “There is one and only one social responsibility of business -to use its resources and engage in activities designed to increase its profits, so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud. Accommodative → acknowledgement of the need to support social responsibility -Willing to do more than the law requires, if asked Proactive → actively embrace acting socially responsible -Eagerness to do more than the law requires and to use organizational resources to do so Decision Making for Sustainability Sustainability → making decisions that meet needs of current generation without sacrificing future generations’ ability to do so Sustainability strategy contains four elements: 1.​ Protects the environment 2.​ Promotes social responsibility 3.​ Respects cultural differences 4.​ Provides an economic benefit Decision Making in Learning Organizations Organizational learning → process through which managers seek to improve employee’s desire and ability to understand and manage the organization and its task environment Learning organization → managers try to maximize ability of individuals and groups to think and behave creatively ​ Maximizes organizational learning ​ Creativity →ability of decision maker to discover original ideas that lead to feasible courses of action  Week 4 Planning and strategy Planning Process that managers use to identify and select suitable goals sand courses of action for an organization ​ Organizational plan: results from the planning process and details goals of the organization and specifies how managers intend to attain them ​ Strategy: cluster of decisions and actions that managers take to help an organization attain its goals The Steps 1.Determine organization’s vision, mission and major goals ​ Vision statement →broad declaration of the big picture of the organization and/or a statement of its dreams for future ​ Mission statement →broad declaration of purpose that identifies the organization's products and customers and distinguishes the organization from competitors 2.Conduct analysis of current situation 3.Formulate a strategy 4.Implement a strategy 5.Evaluate the strategy Why Is Planning Important? It provides direction and purpose (goals to achieve and strategies to attain the goals) It allows managers to participate in decision -makingabout appropriate goals and strategies It ensures that all managers within organization coordinate towards future desired state It specifies who is responsible for putting the strategies into action to achieve the goals Elements of a Good Plan ​ Unity: one central at one time, guiding plan is put into operation to achieve an organizational goal  ​ Continuity: an ongoing process in which managers build and refine previous plans ​ Accuracy: collect and use all available information in the planning process. ​ Flexibility: plans can be altered and changed if the situation changes Types of Plans Long term(5+yrs), Intermediate term(1-5yrs), Short term→(1-yrs) Rolling plan → updated and amended yearly re: changes in the external environment Standing plans →used where programmed decision making is appropriate Standard operating procedures-Written instructions describing series of actions that should be followed in specific situation and rules and policies that standardize behaviour Single-use plans →For non-programmed decision making in unusual situations Scenario / contingency planning →generation of multiple forecasts of future conditions followed by an analysis of how to respond effectively to each of those conditions Crisis management plans →formulated to deal with possible future crises Step 1: Vision, Mission and Goals Vision →reveals “big picture” of organization, its dream for future Mission →defining the business: 1.Who are our customers? 2.What customer needs are being satisfied? 3.How are we satisfying customer needs? Establishing major goals →desired future outcome within specified timeframe Strategic leadership: the ability of top management to convey a compelling vision of what they want to achieve to subordinates Qualities of Good Goal Formulation ​ Make them SMART + C S) Specific M) Measurable A)Assignable (Achievable, Attainable, Action-oriented, Acceptable, Agreed-upon, Accountable R)Realistic T)Time related C) Communicated Step 2: Analyzing the Environment Strategy formulation →analysis of an organization’s current situation the development of strategies to accomplish the mission and achieve goals Utilizes several techniques: ​ SWOT analysis →Strengths,Weaknesses,Opportunities, and Threats ​ Porter’s Five Forces model → used to analyze potential profitability of entering and competing within a particular industry BIAS ON TEST ALL 7, description of a situation and you need to identify what bias it is Step 3: Developing Strategy Corporate-level strategy: plan of action ( In which industries/ countries should an organization invest) How should growth and development be managed to create value for customers over long run? Common strategies include: ​ Concentration on a single business ​ Diversification ​ Vertical integration ​ International expansion Business -level strategy: plan to gain a competitive advantage in particular industry/market ​ Decisions relating to the organization’s mission, strategy, and structure ​ Increase the value by (1) lowering costs or (2) increasing product differentiation Cost-Leadership Strategy Competitive advantage by driving down organizational costs and providing lower prices to customers ​ Below the cost of rival firms ​ Managers focus on: ​ Reducing production costs ​ Manufacturing more cheaply ​ Lowering costs of attracting new customers Differentiation Competitive advantage by distinguishing an organization’s products from competitors in: ​ Product design ​ Quality ​ After-sales service and support Companies pursuing differentiation will: ​ Charge premium pricing ​ Spend enormous amounts on advertising to differentiate In the Middle According to Porter, managers cannot simultaneously pursue both cost -leadership and differentiation strategies ​ Organizations stuck in the middle have lower levels of performance ​ Exceptions to rule –in some organizations, managers drive down costs while differentiating their products ​ Southwest Airlines : dedicated “to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit.” combined with lower ticket prices Focused Low-Cost and Focused Differentiation Strategies Firms must also choose to serve the entire market or focus on a few segments: ​ Focused low - cost →serving only one segment of the market and being the lowest - cost organization in that segment ​ Focused differentiated →serving only one segment of the market and trying to be the most differentiated organization serving that segment Functional-Level Strategies Plan of action to improve ability of each department to create value consistent with corporate -and business - level strategies Value is added in two ways: 1.Lowering the costs of creating value so that organization can attract customers by keeping prices lower than competitors 2. Adding value to product by finding ways to differentiate it from other companies Focused Low - Cost and Focused Differentiation Strategies Step 4: Strategy implementation Five -step process: 1.​ Allocating responsibility for implementation 2.​ Drafting detailed action plans that specify implementation 3.​ Establishing a timetable (with goals) for implementation Gantt chart → graphic bar chart used to schedule tasks, responsibilities and timelines  4.​ Allocating appropriate resources 5.​ Holding specific individuals or groups responsible for reaching corporate, divisional, and functional goals Step 5: Evaluating strategy How do managers know when they are successful? Managers must: ​ Monitor progress ​ Evaluate performance levels ​ Make corrective adjustments as necessary Balanced Scorecard (BSC) Developed in the early 1990s as a way to provide a balanced approach to evaluation (not just the “bottom line”). The balanced scorecard (BSC): a way to track and measure progress toward goals from a number of perspectives: ​ financial metrics ​ customer perspective ​ internal operations perspectives. Week 5 Managing organizational structure What is a Business Plan? ​ Management tool used to document the organization’s objectives ​ Sets out how the objectives will be achieved within the time frame What does it contain? -​ Description of organization -​ Description of goals -​ Explanation of how resources will be organized to attain goals -​ Risks -​ Explanation of how organization will overcome risks How is it used? -​ To obtain financing -​ To obtain permits/ licensing, etc. Designing Organizational Structure Organizational structure is the formal system of task and reporting relationships that determines how employees use resources to meet goals The structure depends upon: 1) How tasks are grouped into individual jobs 2) How jobs are grouped into functional departments and divisions 3) How authority is allocated, and decisions are made 4) Whether the structure is formal or flexible Organizing Process of establishing structure of organization, including: ​ Arranging tasks to create jobs and division of labour ​ Grouping jobs into departments ​ Creating working relationships ​ Distributing authority, accountability and control ​ Coordinating efforts of each department ​ Allocating sufficient resources Organizational design → process by which managers make specific choices resulting in a given organizational structure Questions That Managers Entertain 1.​ How should I group tasks into individual jobs that are interesting and motivating? 2.​ How should I group jobs into departments and divisions as organizations grow? 3.​ How should authority be allocated among functional areas and divisions to ensure coordination and integration? 4.​ Should the structure be formal or flexible? Job Design Division of work into specific jobs ​ Results in division of labour between employees in an organization that is most effective and efficient ​ Work specialization → degree to which the job is focused on particular tasks or multiple tasks Job Simplification Reduction of the number of tasks each worker performs ​ Efficient: each employee has fewer tasks to perform (so that each job and each employee becomes more specialized ​ Too much simplification may reduce effectiveness if boredom sets in Job Enlargement Increasing the number of different tasks for a given job by changing the division of labour ​ Reduces employee boredom and fatigue, increases motivation ​ Increases quantity and quality of good and services provided Job Enrichment Increasing the degree of responsibility by: 1.​ Empowering employees 2.​ Encouraging employees to develop new skills 3.​ Allowing employees to decide how to do the work 4.​ Allowing employees to monitor/measure own performance The Job Characteristics Model Job Characteristics Model (Hackman & Oldham) → explains how managers can make jobs more interesting and motivating Five characteristics that determine how motivating job is: 1.​ Skill variety 2.​ Task identity 3.​ Task significance 4.​ Autonomy 5.​ Feedback Departmentalization How are you (as manager) going to group jobs into units to best match the needs of the organization’s environment, strategy, technology, and human resources? Structure in which employees are permanently assigned to cross-functional team and report only to the project team manager ​ Removes dual -​ reporting relationships for employees ​ Employees permanently assigned to cross-functional team →group of individuals brought together from different departments to perform organizational tasks ​ boundaries between departments disappear ​ focus shifts from departmental goals to organizational goals. Strategic alliance → formal agreement that commits two or more companies to exchange or share resources in order to produce and market a product ​ Result of increasing globalization and use of new IT ​ Network structure → series of global strategic alliances that an organization creates with suppliers, manufacturers and/or distributors to produce and market a product ​ Outsourcing → using outside suppliers and manufacturers to produce goods and services Allocating Authority ​ To ensure sufficient coordination between functions, managers design the hierarchy of authority Authority → power to hold people accountable for their actions and to allocate organizational resources Hierarchy of authority → organization’s chain of command, specifying the relative authority of each manager Span of control → number of sub- ordinates who report directly to a manager Organizational structure’s (tall and flat) Flat → fewer levels of authority relative to company’s size Tall → many levels of authority Minimum Chain of Command ​ Chain of command: linkage between top management and lowest levels ​ Minimum chain of command: a hierarchy with the fewest levels of authority necessary to efficiently and effectively use organizational resources ​ Unity of command: every employee should report to one boss with one continuous stream of authority cascading down from the top level to the lowest level. ​ Managers should consider: Do they have the right number of middle managers? Can the structure be altered to reduce levels? Centralization and Decentralization of Decision Making ​ Decentralizing → empowering lower -​ level employees to make important decisions about how to use organizational resources ​ Allows for flexibility and improved response to customer needs ​ Reduces slow and distorted communication But… · Divisions, functions, or teams may begin to pursue their own goals · Lack of communication among functions/divisions may prevent possible synergies · A stable environment does not need to decentralize (managers at the top can maintain control) · In changing environments managers must decentralize authority so that the organization can adapt Quickly Mechanistic vs. Organic Structure Mechanistic Structure ​ Authority is centralized at top of hierarchy ​ Tasks and roles are clearly specified ​ Employees are closely supervised Organic Structure ​ Authority is decentralized to middle and first-line managers ​ Tasks and roles left ambiguous ​ Employees encouraged to cooperate and respond quickly to unexpected Strategy Different strategies need different organizational structures: ​ Differentiation strategy usually succeeds best with a flexible structure ​ Low-cost strategy does best in more formal structure ​ Vertical integration or diversification requires a more flexible structure International expansion requires flexible structure on a global level. Technology The combination of skills, knowledge, tools, machines, computers, and equipment that are used to design, produce, and distribute goods and services. ​ More complicated technology requires more flexible structure ​ More routine technology requires a more formal structure  ​ Complexity of technology is determined by: ​ Task variety: number of new or unexpected problems ​ Task analyzability: degree to which programmed solutions are available to solve problems Human Resources Structure and culture are affected by the characteristics of the human resources it employs. More likely to be flexible or decentralized when: ​ People are required to work together in groups or teams ​ Employees are highly skilled Organizational Environment When the external environment is stable, and resources readily available, less coordination and communication among people and functions is needed. More formality is possible. -​ When this is not the case, flexible and quick decision Week 6 Communication