Management Process Today PDF

Final PDF to printer 1 LEARNING OBJECTIVES The Management Process Today After studying this chapter, you should be able to: 1 Describe what management is, why responsibilities of managers at different levels management is import...

Final PDF to printer 1 LEARNING OBJECTIVES The Management Process Today After studying this chapter, you should be able to: 1 Describe what management is, why responsibilities of managers at different levels management is important, what managers in the organizational hierarchy. [LO 1-3] do, and how managers use organizational 4 Distinguish among three kinds of managerial resources efficiently and effectively to skill, and explain why managers are divided achieve organizational goals. [LO 1-1] into different departments to perform their 2 Distinguish among planning, organizing, tasks more efficiently and effectively. [LO 1-4] leading, and controlling (the four principal 5 Discuss some major changes in management managerial tasks), and explain how practices today that have occurred as a result managers’ ability to handle each one affects of globalization and the use of advanced organizational performance. [LO 1-2] information technology (IT). [LO 1-5] 3 Differentiate among g three levels of 6 Discuss the principal challenges managers management, and understand the tasks and face in today’s increasingly competitive global environment. environm. [LO 1-6]  Final PDF to printer MANAGEMENT SNAPSHOT Tim Cook Succeeds Steve Jobs as CEO of Apple Jobs’s abrasive management style also brought What is High-Performance Management? him into conflict with John Sculley, Apple’s CEO. Employees became unsure whether Jobs (the chair- man) or Sculley was leading the company. Both I n 2011 Tim Cook took full management control of Apple as its CEO six weeks after Steve Jobs stepped down as its CEO before his untimely death. Cook had managers were so busy competing for control of Apple that the task of ensuring its resources were been Apple’s longtime chief operating officer and had being used efficiently was neglected. Apple’s costs been responsible for organizing and controlling its soared, and its performance and profits fell. Apple’s global supply chain to bring its innovative products directors became convinced Jobs’s management to market as quickly and efficiently as possible.1 style was the heart of the problem and asked him One of Apple’s major strengths is to continuously to resign. introduce new and improved products such as its After he left Apple, Jobs started new ventures iPhones and iPads, often at six-month and yearly such as PC maker NEXT to develop powerful new intervals, to offer customers more options and to stay PCs and Pixar, the computer animation company, ahead of the competition. Cook was acknowledged which become a huge success after it made block- as the leader who controlled Apple’s purchasing and buster movies such as Toy Story and Finding Nemo, manufacturing operations, and of course he had both distributed by Walt Disney. In both these com- intimate knowledge of Apple’s new product design panies Jobs developed a clear vision for managers and engineering. However, Steve Jobs had been the to follow, and he built strong management teams manager who ultimately decided what kinds of new to lead the project teams developing the new PCs products Apple would develop and the design of and movies. Jobs saw his main task as planning the their hardware and software. companies’ future product development strategies. Starting with Apple’s founding in 1977, Jobs saw However, he left the actual tasks of leading and his main task as leading the planning process to organizing to managers below him. He gave them develop new and improved PCs. Although this was a the autonomy to put his vision into practice. In 1996 good strategy, his management style was often arbi- Jobs convinced Apple to buy NEXT and use its trary and overbearing. For example, Jobs often played powerful operating system in new Apple PCs. Jobs favorites among the many project teams he created. began working inside Apple to lead its turnaround His approach caused many conflicts and led to fierce and was so successful that in 1997 he was asked to competition, many misunderstandings, and growing become its CEO. Jobs agreed and continued to put distrust among members of the different teams. 3  Final PDF to printer the new management skills he had developed over Once again he assembled different teams of engi- time to good use. neers not only to develop the new phone’s hardware The first thing he did was create a clear vision and and software but also to create an online iPhone goals to energize and motivate Apple employees. applications platform where users could download Jobs decided that, to survive, Apple had to intro- applications to make their iPhones more valuable. In duce state-of-the-art, stylish PCs and related digital 2010 Jobs announced that Apple planned to intro- equipment. He delegated considerable authority to duce a new iPad tablet computer. teams of employees to develop all the many differ- Since Cook assumed leadership of Apple, it has ent hardware and software components necessary become apparent to its employees and sharehold- to build the new products, but he also established ers that he brings a new, more open, and partici- strict timetables and challenging “stretch” goals, pative approach to managing the company. While such as bringing new products to market as quickly Jobs was respected as a guru, magician, and ruler— as possible, for these teams. Moreover, he was someone to be revered as well as feared—Cook careful to keep the different teams’ activities sep- makes himself available to employees in Apple’s arate; only he and his chief designers knew what cafeteria and talks directly to shareholders and ana- the new products would actually look like and their lysts, something that Jobs had no time for. Cook capabilities—and his demand for secrecy increased has also worked to integrate Apple’s global supply over time.2 chain and project management functions with its In 2003 Jobs announced that Apple was start- engineering functions to break down the barriers ing a new service called iTunes, an online music between teams in the company and increase the store from which people could download songs for flow of information between product units as the 99 cents. At the same time Apple introduced its iPod company grows and becomes more complex. Fol- music player, which can store thousands of down- lowing Jobs, Cook’s goal is for Apple to focus on loaded songs, and it quickly became a runaway introducing innovative new products and not to lose success. By 2006 Apple had gained control of 70% its commitment to being the leader in every mar- of the digital music player market and 80% of the ket in which it competes. However, while Cook is online music download business, and its stock price a demanding boss, he is down to earth, approach- soared to a new record level. The next milestone able, and well respected, as opposed to Jobs in Jobs’s product strategy came in 2007 when he who became increasingly isolated, forbidding, and announced that Apple would introduce the iPhone. secretive as time went on. Overview The story of Steve Jobs’s and Tim Cook’s rise to the top of Apple illustrates many challenges facing people who become managers: Managing a company is a complex activity, and effective managers must possess many kinds of skills, knowledge, and abilities. Management is an unpredictable process. Making the right decision is difficult; even effective managers often make mistakes, but the most effective managers, like Jobs and Cook, learn from their mistakes and continually strive to find ways to increase their companies’ performance. In 2013 Cook was facing a host of new competitive challenges. In this chapter we look at what managers do and what skills and abilities they must develop to manage their organizations successfully. We also identify the dif- ferent kinds of managers that organizations need and the skills and abilities they must develop to succeed. Finally, we identify some challenges managers must address if their organizations are to grow and prosper. 4  Final PDF to printer The Management Process Today 5 What Is When you think of a manager, what kind of person comes to mind? Do you see someone who, like Tim Cook, can determine the future prosperity of a large for-profit com- Management? pany? Or do you see the administrator of a not-for-profit organization, such as a community college, library, or organizations charity, or the person in charge of your local Walmart store or McDonald’s restau- Collections of people rant, or the person you answer to if you have a part-time job? What do all these who work together and people have in common? First, they all work in organizations. Organizations are coordinate their actions collections of people who work together and coordinate their actions to achieve a to achieve a wide variety wide variety of goals or desired future outcomes.3 Second, as managers, they are of goals or desired the people responsible for supervising and making the most of an organization’s future outcomes. human and other resources to achieve its goals. management Management, then, is the planning, organizing, leading, and controlling of The planning, human and other resources to achieve organizational goals efficiently and effec- organizing, leading, and tively. An organization’s resources include assets such as people and their skills, controlling of human know-how, and experience; machinery; raw materials; computers and information and other resources to technology; and patents, financial capital, and loyal customers and employees. achieve organizational goals efficiently and effectively. Achieving High Performance: A Manager’s Goal One of the most important goals that organizations and their members try to achieve is to provide some kind of good or service that customers value or desire. LO 1-1 Describe The principal goal of CEO Tim Cook is to manage Apple so it creates a continuous what management stream of new and improved goods and services—such as more powerful phones is, why management and tablets and to provide excellent quality customer service and support versatility is important, what that customers are willing to buy. In 2013 Apple still led the field in many of these managers do, and areas but competitors like Samsung and Google were quickly catching up. Apple how managers managers are currently working to make its hardware, software, and support service utilize organizational the most competitive in its industry. Similarly, the principal goal of doctors, nurses, resources efficiently and effectively to achieve and hospital administrators is to increase their hospital’s ability to make sick people organizational goals. well—and to do so cost-effectively. Likewise, the principal goal of each McDonald’s restaurant manager is to produce burgers, salads, fries, coffees, and drinks that people want to pay for and enjoy so they become loyal return customers. organizational Organizational performance is a measure of how efficiently and effectively performance managers use available resources to satisfy customers and achieve organizational A measure of how goals. Organizational performance increases in direct proportion to increases in efficiently and effectively efficiency and effectiveness (see Figure 1.1). What are efficiency and effectiveness? a manager uses Efficiency is a measure of how productively resources are used to achieve a resources to satisfy goal.4 Organizations are efficient when managers minimize the amount of input customers and achieve organizational goals. resources (such as labor, raw materials, and component parts) or the amount of time needed to produce a given output of goods or services. For example, McDon- efficiency A measure ald’s develops ever more efficient fat fryers that not only reduce the amount of of how well or how oil used in cooking, but also speed up the cooking of french fries. UPS develops productively resources new work routines to reduce delivery time, such as instructing drivers to leave are used to achieve their truck doors open when going short distances. Tim Cook instructed Apple’s a goal. engineers not only to develop ever more compact, powerful, and multipurpose mobile devices but also to find cost-effective ways to do so. A manager’s responsi- bility is to ensure that an organization and its members perform as efficiently as possible all the work activities needed to provide goods and services to customers.  Final PDF to printer 6 Chapter One Figure 1.1 EFFICIENCY Efficiency, Effectiveness, and LOW HIGH Performance in an Organization Low efficiency/ High efficiency/ High effectiveness High effectiveness Manager chooses the right Manager chooses the right goals to pursue, but does a goals to pursue and makes EFFECTIVENESS HIGH poor job of using resources to good use of resources to achieve these goals. achieve these goals. Result: A product that Result: A product that customers want, but that is too customers want at a quality expensive for them to buy. and price that they can afford. Low efficiency/ High efficiency/ Low effectiveness Low effectiveness Manager chooses the wrong Manager chooses LOW goals to pursue and makes inappropriate goals, but makes poor use of resources. good use of resources to Result: A low-quality product pursue these goals. that customers do not want. Result: A high-quality product that customers do not want. High-performing organizations are efficient and effective. effectiveness Effectiveness is a measure of the appropriateness of the goals that managers A measure of the have selected for the organization to pursue and the degree to which the orga- appropriateness of the nization achieves those goals. Organizations are effective when managers choose goals an organization is appropriate goals and then achieve them. Some years ago, for example, manag- pursuing and the degree ers at McDonald’s decided on the goal of providing breakfast service to attract to which the organization more customers. The choice of this goal has proved smart: Sales of breakfast food achieves those goals. now account for more than 30% of McDonald’s revenues and are still increasing because sales of its new lines of coffees and fruit drinks have risen sharply. Cook’s goal is to create a continuous flow of innovative PC and digital entertainment products. High-performing organizations, such as Apple, McDonald’s, Walmart, Intel, Home Depot, Accenture, and Habitat for Humanity are simultaneously effi- cient and effective. Effective managers are those who choose the right organiza- tional goals to pursue and have the skills to utilize resources efficiently. Why Study Management? Today more students are competing for places in business courses than ever before; the number of people wishing to pursue Master of Business Administra- tion (MBA) degrees—today’s passport to an advanced management position— either on campus or from online universities and colleges is at an all-time high. Why is the study of management currently so popular?5 First, in any society or culture resources are valuable and scarce; so the more efficient and effective use that organizations can make of those resources, the greater the relative well-being and prosperity of people in that society. Because managers decide how to use many of a society’s most valuable resources—its skilled employees, raw materials like oil and land, computers and information systems,  Final PDF to printer The Management Process Today 7 and financial assets—they directly impact the well-being of a society and the peo- ple in it. Understanding what managers do and how they do it is of central impor- tance to understanding how a society creates wealth and affluence for its citizens. Second, although most people are not managers, and many may never intend to become managers, almost all of us encounter managers because most people have jobs and bosses. Moreover, many people today work in groups and teams and have to deal with coworkers. Studying management helps people deal with their bosses and their coworkers. It reveals how to understand other people at work and make deci- sions and take actions that win the attention and support of the boss and coworkers. Management teaches people not yet in positions of authority how to lead coworkers, solve conflicts between them, achieve team goals, and thus increase performance. Third, in any society, people are in competition for a very important resource— a job that pays well and provides an interesting and satisfying career; and under- standing management is one important path toward obtaining this objective. In general, jobs become more interesting the more complex or responsible they are. Any person who desires a motivating job that changes over time might therefore do well to develop management skills and become promotable. A person who has been working for several years and then returns to school for an MBA can usually, after earning the degree, find a more interesting, satisfying job that pays signifi- cantly more than the previous job. Moreover, salaries increase rapidly as people move up the organizational hierarchy, whether it is a school system, a large for- profit business organization, or a not-for-profit charitable or medical institution. Indeed, the salaries paid to top managers are enormous. For example, the CEOs and other top executives or managers of companies such as Apple, Walt Disney, GE, and McDonald’s receive millions in actual salary each year. However, even more staggering is the fact that many top executives also receive bonuses in the form of valuable stock or shares in the company they manage, as well as stock options that give them the right to sell these shares at a certain time in the future.6 If the value of the stock goes up, the managers keep the difference between the option price at which they obtained the stock (say, $10) and what it is worth later (say, $33). For example, when Steve Jobs became CEO of Apple again in 1997, he accepted a salary of only $1 a year. However, he was also awarded stock options that, with the fast rise in Apple’s stock price throughout the 2000s, are worth billions of dollars today (he was also given the free use of a $90 million jet).7 In 2010 Gold- man Sachs paid its top managers stock bonuses worth $16.2 billion, and its CEO Lloyd Blankfein received Goldman Sachs stock worth over $8 billion—but this was only half the value of the stock that JPMorgan Chase CEO Jamie Dimon received from his company!8 These incredible amounts of money provide some indication of both the responsibilities and the rewards that accompany the achievement of high management positions in major companies—and go to any entrepreneur who successfully creates and manages a small business that dominates its market. What is it that managers actually do to receive such rewards?9 Essential The job of management is to help an organization make the best use of its resources to achieve its goals. How do managers accomplish this objective? They do so by per- Managerial forming four essential managerial tasks: planning, organiz- ing, leading, and controlling. The arrows linking these tasks Tasks in Figure 1.2 suggest the sequence in which managers typically perform them. French manager Henri Fayol first outlined the nature of these managerial activities around the turn of the 20th  Final PDF to printer 8 Chapter One century in General and Industrial Management, a book that remains the classic state- LO 1-2 Distinguish ment of what managers must do to create a high-performing organization.10 among planning, Managers at all levels and in all departments—whether in small or large com- organizing, leading, panies, for-profit or not-for-profit organizations, or organizations that operate in and controlling one country or throughout the world—are responsible for performing these four (the four principal tasks, which we look at next. How well managers perform these tasks determines managerial tasks), and explain how how efficient and effective their organizations are. managers’ ability to handle each one Planning affects organizational performance. To perform the planning task, managers identify and select appropriate organiza- tional goals and courses of action; they develop strategies for how to achieve high performance. The three steps involved in planning are (1) deciding which goals planning Identifying the organization will pursue, (2) deciding what strategies to adopt to attain those and selecting goals, and (3) deciding how to allocate organizational resources to pursue the appropriate goals; one strategies that attain those goals. How well managers plan and develop strategies of the four principal determines how effective and efficient the organization is—its performance level.11 tasks of management. As an example of planning in action, consider the situation confronting Michael Dell, founder and CEO of Dell Computer, who in 2013 was struggling to increase the PC sales of his company given competition from HP, Apple, and Acer. In 1984 the 19-year-old Dell saw an opportunity to enter the PC market by assembling PCs and selling them directly to customers. Dell began to plan how to put his idea into practice. First, he decided that his goal was to sell an inexpensive PC, to undercut the prices charged by companies like Apple, Compaq, and HP. Second, he had to choose a course of action to achieve this goal. He decided to sell PCs directly to customers by telephone and so bypass expensive computer stores that sold Com- paq and Apple PCs. He also had to decide how to obtain low-cost components and how to tell potential customers about his products. Third, he had to decide how to allocate his limited funds (he had only $5,000) to buy labor and other resources. He hired three people and worked with them around a table to assemble his PCs. Figure 1.2 Four Tasks of Planning Management Choose appropriate organizational goals and courses of action to best achieve those goals. Organizing Controlling Establish task Establish accurate and authority measuring and relationships that monitoring systems allow people to work to evaluate how well together to achieve the organization has organizational achieved its goals. Leading goals. Motivate, coordinate, and energize individuals and groups to work together to achieve organizational goals. on62538_ch01_002-043.indd 8  Final PDF to printer The Management Process Today 9 Thus to achieve his goal of making and selling low-price PCs, Dell had to plan, and as his organization grew, his plans changed and became progressively more complex. After setbacks during the 2000s that saw HP, Apple, and a new Taiwanese company, Acer, achieve competitive advantage over Dell in performance, styling, or pricing, Dell and his managers actively searched for new strategies to better compete against agile rivals and help the company regain its position as the highest- performing PC maker. In 2013 Dell was still locked in a major battle with its competitors, Michael Dell sits in the dorm room at the University of Texas–Austin, and its performance had not recovered despite where he launched his personal computer company as a college attempts to introduce innovative new models freshman. When he visited, the room was occupied by freshmen Russell Smith (left) and Jacob Frith, both from Plano, Texas. of laptops and digital devices. Dell needed a new approach to planning to compete more effectively; and new strategies Dell has followed in the 2010s include more pow- erful customized lines of new laptops, and a major focus on providing computer hardware, software, and consulting geared to the need of corporate customers. As the battle between Dell, HP, Acer, and Apple suggests, the outcome of plan- strategy A cluster ning is a strategy, a cluster of decisions concerning what organizational goals to of decisions about what pursue, what actions to take, and how to use resources to achieve these goals. The goals to pursue, what decisions that were the outcome of Michael Dell’s original planning formed a actions to take, and low-cost strategy. A low-cost strategy is a way of obtaining customers by making deci- how to use resources to sions that allow an organization to produce goods or services more cheaply than achieve goals. its competitors so it can charge lower prices than they do. Throughout its history, Dell has continuously refined this strategy and explored new ways to reduce costs. Dell became the most profitable PC maker as a result of its low-cost strategy, but when HP and Acer also lowered their costs, it lost its competitive advantage and its profits fell. By contrast, since its founding Apple’s strategy has been to deliver to customers new, exciting, and unique computer and digital products, such as its iPods, iPhones, and its new iPads—a strategy known as differentiation.12 Although this strategy almost ruined Apple in the 1990s when customers bought inexpen- sive Dell PCs rather its premium-priced PCs, today Apple’s sales have boomed as customers turn to its unique PCs and digital products. To fight back, Dell has been forced to offer more exciting, stylish products—hence its decision to intro- duce powerful customized PCs. Planning strategy is complex and difficult, especially because planning is done under uncertainty when the result is unknown so that either success or failure is a possible outcome of the planning process. Managers take major risks when they commit organizational resources to pursue a particular strategy. Dell enjoyed great success in the past with its low-cost strategy; but presently Apple is perform- ing spectacularly with its differentiation strategy and hurting competitors such as HP, Sony, Nokia, and Blackberry. In Chapter 6 we focus on the planning pro- cess and on the strategies organizations can select to respond to opportunities or threats in an industry. The story of the way Joe Coulombe, the founder of Trader Joe’s, used his abilities to plan and make the right decisions to create the strate- gies necessary for his and his new organization’s success is discussed in the follow- ing “Manager as a Person” box.  Final PDF to printer 10 Chapter One MANAGER AS A PERSON Joe Coulombe Knows How to Make an Organization Work Trader Joe’s, an upscale specialty supermarket chain, was started in 1967 by Joe Coulombe, who owned a few convenience stores that were fighting an uphill bat- tle against the growing 7-11 chain. 7-11 offered customers a wider selection of lower-priced products, and Coulombe had to find a new way to manage his small business if it was going to survive. As he began planning new strategies to help his small business grow, he was struck by the fact that there might be a niche for supplying specialty products, such as wine, drinks, and gourmet foods, which were more profitable to sell; moreover, he would no longer be competing against giant 7-11. Coulombe changed the name of his stores to Trader Joe’s and stocked them with every vari- ety and brand of California wine produced at the time. He also began to offer fine foods like bread, crackers, cheese, fruits, and vegetables to complement and encourage wine sales. Pictured is Trader Joe’s first New York City store that opened From the beginning Coulombe realized in 2006. Founder Joe Coulombe’s approach to motivating and that good planning was only the first step in rewarding his employees to provide excellent customer service paid off in a city where the prices of food and drink are so high that successfully managing his small, growing com- customers were delighted to shop in stores with a great ambiance pany. He knew that to encourage customers and friendly customer service. to visit his stores and buy high-priced gourmet products, he needed to give them excellent customer service. So he had to motivate his salespeople to perform at a high level. His approach was to decentralize authority, empowering salespeople to take responsibility for meeting customer needs. Rather than forcing employees to follow strict operating rules and to obtain the consent of their superiors in the hierarchy of authority, employees were given autonomy to make decisions and provide personalized customer service. Coulombe’s approach led employees to feel they “owned” their supermarkets, and he worked to develop a store culture based on values and norms about providing excellent customer service and devel- oping personalized relationships with customers. Today many employees and cus- tomers are on first-name terms. Coulombe led by example and created a store environment in which employ- ees are treated as individuals and feel valued as people. For example, the theme behind the design of his stores was to create the feeling of a Hawaiian resort: He and his employees wear loud Hawaiian shirts, store managers are called captains, and the store decor uses lots of wood and contains tiki huts where employees give customers food and drink samples and interact with them. Once again, this helped create strong values and norms that emphasize personalized customer service. Finally, Joe Coulombe’s approach from the beginning was to create a policy of promotion from within the company so that the highest-performing salespeo- ple could rise to become store captains and beyond in the organization. He had  Final PDF to printer always recognized the need to treat employees (people) in a fair and equitable way to encourage them to develop the customer-oriented values and norms needed to provide personalized customer service. He decided that full-time employ- ees should earn at least the median household income for their communities, which averaged $7,000 a year in the 1960s and is $48,000 today—an astonishingly high amount compared to the pay of employees of regular supermarkets such as Kroger’s and Safeway. Moreover, store captains, who are vital in helping create and reinforce Trader Joe’s store culture, are rewarded with salaries and bonuses that can exceed $100,000 a year. And all salespeople know that as the store chain expands, they may also be promoted to this level. In 2014 Trader Joe’s had over 400 stores in 33 states and was still expanding because Coulombe’s approach to managing his small business created the right foundation for an upscale specialty supermarket to grow and prosper. Organizing organizing Organizing is structuring working relationships so organizational members Structuring working interact and cooperate to achieve organizational goals. Organizing people relationships in a way into departments according to the kinds of job-specific tasks they perform lays that allows organizational out the lines of authority and responsibility between different individuals and members to work groups. Managers must decide how best to organize resources, particularly together to achieve human resources. organizational goals; one of the four principal The outcome of organizing is the creation of an organizational structure, a tasks of management. formal system of task and reporting relationships that coordinates and motivates members so they work together to achieve organizational goals. Organizational organizational structure determines how an organization’s resources can be best used to create structure A formal goods and services. As his company grew, for example, Michael Dell faced the system of task and issue of how to structure his organization. Early on he was hiring 100 new employ- reporting relationships ees a week and deciding how to design his managerial hierarchy to best motivate that coordinates and and coordinate managers’ activities. As his organization grew to become one of motivates organizational the largest global PC makers, he and his managers created progressively more members so they work together to achieve complex forms of organizational structure to help it achieve its goals. We exam- organizational goals. ine the organizing process in detail in Chapter 9. Leading An organization’s vision is a short, succinct, and inspiring statement of what the organization intends to become and the goals it is seeking to achieve—its desired leading Articulating future state. In leading, managers articulate a clear organizational vision for the a clear vision and organization’s members to accomplish, and they energize and enable employ- energizing and enabling ees so everyone understands the part he or she plays in achieving organizational organizational members goals. Leadership involves managers using their power, personality, influence, so they understand persuasion, and communication skills to coordinate people and groups so their the part they play in activities and efforts are in harmony. Leadership revolves around encouraging all achieving organizational goals; one of the four employees to perform at a high level to help the organization achieve its vision principal tasks of and goals. Another outcome of leadership is a highly motivated and committed management. workforce. Employees responded well to Michael Dell’s hands-on leadership style, which has resulted in a hardworking, committed workforce. Managers at Apple appreciate the way Steve Jobs, and now Tim Cook, have adopted a leader- ship style based on a willingness to delegate authority to project teams and to help 11  Final PDF to printer 12 Chapter One controlling managers resolve differences that could easily lead to bitter disputes and power Evaluating how well an struggles. We discuss the issues involved in managing and leading individuals and organization is achieving groups in Chapters 9 through 12. its goals and taking action to maintain or improve performance; Controlling one of the four principal In controlling, the task of managers is to evaluate how well an organization tasks of management. has achieved its goals and to take any corrective actions needed to maintain or improve performance. For example, manag- ers monitor the performance of individuals, departments, and the organization as a whole to see whether they are meeting desired per- formance standards. Michael Dell learned early in his career how important this is; if standards are not being met, managers seek ways to improve performance. The outcome of the control process is the ability to measure performance accurately and regulate organizational efficiency and effective- ness. To exercise control, managers must decide which goals to measure—perhaps goals pertain- ing to productivity, quality, or responsiveness to Ken Chenault, pictured here, is the president and CEO of customers—and then they must design control American Express Company. Promoted in 1997, he climbed the systems that will provide the information neces- ranks from its Travel Related Services Company thanks to his sary to assess performance—that is, determine to even temper and unrelenting drive. Respected by colleagues for what degree the goals have been met. The con- his personality, most will say they can’t remember him losing his trolling task also helps managers evaluate how temper or raising his voice. His open-door policy for subordinates allows him to mentor AmEx managers and encourages all to enter well they themselves are performing the other and speak their minds. three tasks of management— planning, organiz- ing, and leading—and take corrective action. Michael Dell had difficulty establishing effective control systems because his company was growing so rapidly and he lacked experienced managers. In the 1990s Dell’s costs suddenly soared because no systems were in place to control inventory, and in 1994 poor quality control resulted in a defective line of new laptop computers—some of which caught fire. To solve these and other control problems, Dell hired hundreds of experienced managers from other companies to put the right control systems in place. As a result, by 2000 Dell was able to make computers for over 10% less than its competitors, which created a major source of competitive advantage. At its peak, Dell drove competitors out of the market because it had achieved a 20% cost advantage over them.13 However, we noted earlier that through the 2000s rivals such as HP and Acer also learned how to reduce their operating costs, and this shattered Dell’s competitive advan- tage. Controlling, like the other managerial tasks, is an ongoing, dynamic, always- changing process that demands constant attention and action. We cover the most important aspects of the control task in Chapters 13 and 14. The four managerial tasks—planning, organizing, leading, and controlling— are essential parts of a manager’s job. At all levels in the managerial hierarchy, and across all jobs and departments in an organization, effective management means performing these four activities successfully—in ways that increase effi- ciency and effectiveness.  Final PDF to printer The Management Process Today 13 Levels and Skills To perform the four managerial tasks efficiently and effec- tively, organizations group or differentiate their managers in two main ways—by level in hierarchy and by type of of Managers skill. First, they differentiate managers according to their level or rank in the organization’s hierarchy of authority. department A group The three levels of managers are first-line managers, middle managers, and top of people who work managers—arranged in a hierarchy. Typically first-line managers report to middle together and possess managers, and middle managers report to top managers. similar skills or use the Second, organizations group managers into different departments (or func- same knowledge, tools, tions) according to their specific job-related skills, expertise, and experiences, or techniques to perform such as a manager’s engineering skills, marketing expertise, or sales experience. their jobs. A department, such as the manufacturing, accounting, engineering, or sales department, is a group of managers and employees who work together because they possess similar skills and experience or use the same kind of knowledge, LO 1-3 Differentiate tools, or techniques to perform their jobs. Within each department are all three among three levels levels of management. Next we examine why organizations use a hierarchy of of management, and understand the tasks managers and group them, by the jobs they perform, into departments. and responsibilities of managers at Levels of Management different levels in the Organizations normally have three levels of management: first-line managers, organizational hierarchy. middle managers, and top managers (see Figure 1.3). Managers at each level have different but related responsibilities for using organizational resources to first-line manager increase efficiency and effectiveness. A manager who is At the base of the managerial hierarchy are first-line managers, often called responsible for the supervisors. They are responsible for daily supervision of the nonmanage- daily supervision rial employees who perform the specific activities necessary to produce goods of nonmanagerial and services. First-line managers work in all departments or functions of an employees. organization. Figure 1.3 Levels of Managers CEO Top Managers Middle Managers First-Line Managers on62538_ch01_002-043.indd 13  Final PDF to printer 14 Chapter One Examples of first-line managers include the supervisor of a work team in the manufacturing department of a car plant, the head nurse in the obstetrics depart- ment of a hospital, and the chief mechanic overseeing a crew of mechanics in the service function of a new car dealership. At Dell, first-line managers include the supervisors responsible for controlling the quality of its computers or the level of customer service provided by telephone salespeople. When Michael Dell started his company, he personally controlled the computer assembly process and thus acted as a first-line manager or supervisor. middle manager Supervising the first-line managers are middle managers, responsible for find- A manager who ing the best way to organize human and other resources to achieve organizational supervises first-line goals. To increase efficiency, middle managers find ways to help first-line managers managers and is and nonmanagerial employees better use resources to reduce manufacturing costs responsible for finding or improve customer service. To increase effectiveness, middle managers evaluate the best way to use whether the organization’s goals are appropriate and suggest to top managers how resources to achieve organizational goals. goals should be changed. Often the suggestions that middle managers make to top managers can dramatically increase organizational performance. A major part of the middle manager’s job is developing and fine-tuning skills and know-how, such as manufacturing or marketing expertise, that allow the organization to be effi- cient and effective. Middle managers make thousands of specific decisions about the production of goods and services: Which first-line supervisors should be chosen for this particular project? Where can we find the highest-quality resources? How should employees be organized to allow them to make the best use of resources? Behind a first-class sales force, look for the middle managers responsible for training, motivating, and rewarding the salespeople. Behind a committed staff of high school teachers, look for the principal who energizes them to find ways to obtain the resources they need to do outstanding and innovative jobs in the classroom. top manager In contrast to middle managers, top managers are responsible for the perfor- A manager who mance of all departments.14 They have cross-departmental responsibility. Top manag- establishes ers establish organizational goals, such as which goods and services the company organizational should produce; they decide how the different departments should interact; and goals, decides how they monitor how well middle managers in each department use resources to departments should achieve goals.15 Top managers are ultimately responsible for the success or fail- interact, and monitors the performance of ure of an organization, and their performance (like that of Michael Dell or Tim middle managers. Cook) is continually scrutinized by people inside and outside the organization, such as other employees and investors.16 The chief executive officer (CEO) is a company’s most senior and important man- ager, the one all other top managers report to. Today the term chief operating officer (COO) refers to the company’s top manager, such as Tim Cook, who was groomed by Steve Jobs to take over as CEO. Together the CEO and COO are responsible for developing good working relationships among the top managers of various departments (manufacturing and marketing, for example); usually these top managers have the title “vice president.” A central concern of the CEO is the top management creation of a smoothly functioning top management team, a group composed of team A group the CEO, the COO, and the vice presidents most responsible for achieving orga- composed of the CEO, nizational goals.17 Tim Cook has worked hard to build such a team at Apple to the COO, and the vice counter threats from competitors. presidents of the most The relative importance of planning, organizing, leading, and controlling— important departments the four principal managerial tasks—to any particular manager depends on the of a company. manager’s position in the managerial hierarchy.18 The amount of time managers  Final PDF to printer The Management Process Today 15 Figure 1.4 Relative Amount of Time That Managers Planning Organizing Leading Controlling Spend on the Four Managerial Tasks Top managers Middle managers First-line managers spend planning and organizing resources to maintain and improve organizational performance increases as they ascend the hierarchy (see Figure 1.4).19 Top man- agers devote most of their time to planning and organizing, the tasks so crucial to determining an organization’s long-term performance. The lower that managers’ positions are in the hierarchy, the more time the managers spend leading and controlling first-line managers or nonmanagerial employees. LO 1-4 Distinguish Managerial Skills among three kinds of Both education and experience enable managers to recognize and develop the managerial skill, and personal skills they need to put organizational resources to their best use. Michael explain why managers Dell realized from the start that he lacked sufficient experience and technical are divided into different expertise in marketing, finance, and planning to guide his company alone. Thus departments to perform he recruited experienced managers from other IT companies, such as IBM and their tasks more HP, to help build his company. Research has shown that education and experi- efficiently and effectively. ence help managers acquire and develop three types of skills: conceptual, human, and technical.20 conceptual skills Conceptual skills are demonstrated in the general ability to analyze and diag- The ability to analyze and nose a situation and to distinguish between cause and effect. Top managers diagnose a situation and require the best conceptual skills because their primary responsibilities are plan- to distinguish between ning and organizing.21 By all accounts, Steve Jobs was chosen as CEO to transform cause and effect. Apple, and he then picked Tim Cook to succeed him, because of his ability to identify new opportunities and mobilize managers and other resources to take advantage of those opportunities. Formal education and training are important in helping managers develop conceptual skills. Business training at the undergraduate and graduate (MBA) lev- els provides many of the conceptual tools (theories and techniques in marketing, on62538_ch01_002-043.indd 15  Final PDF to printer 16 Chapter One finance, and other areas) that managers need to perform their roles effectively. The study of management helps develop the skills that allow managers to under- stand the big picture confronting an organization. The ability to focus on the big picture lets managers see beyond the situation immediately at hand and consider choices while keeping in mind the organization’s long-term goals. Today continuing management education and training, including training in advanced IT, are an integral step in building managerial skills because theories and techniques are constantly being developed to improve organizational effec- tiveness, such as total quality management, benchmarking, and web-based organi- zation and business-to-business (B2B) networks. A quick scan through a magazine such as Forbes or Fortune reveals a host of seminars on topics such as advanced mar- keting, finance, leadership, and human resource management that are offered to managers at many levels in the organization, from the most senior corporate executives to middle managers. Microsoft, IBM, Oracle, and many other organi- zations designate a portion of each manager’s personal budget to be used at the manager’s discretion to attend management development programs. In addition, organizations may wish to develop a particular manager’s abilities in a specific skill area—perhaps to learn an advanced component of departmen- tal skills, such as international bond trading, or to learn the skills necessary to implement total quality management. The organization thus pays for managers to attend specialized programs to develop these skills. Indeed, one signal that a manager is performing well is an organization’s willingness to invest in that man- ager’s skill development. Similarly, many nonmanagerial employees who are per- forming at a high level (because they have studied management) are often sent to intensive management training programs to develop their management skills and to prepare them for promotion to first-level management positions. human skills The Human skills include the general ability to understand, alter, lead, and con- ability to understand, trol the behavior of other individuals and groups. The ability to communicate, to alter, lead, and control coordinate, and to motivate people, and to mold individuals into a cohesive team the behavior of other distinguishes effective from ineffective managers. By all accounts, Tim Cook and individuals and groups. Michael Dell possess a high level of these human skills. Like conceptual skills, human skills can be learned through education and train- ing, as well as be developed through experience.22 Organizations increasingly utilize advanced programs in leadership skills and team leadership as they seek to capitalize on the advantages of self-managed teams.23 To manage personal interactions effec- tively, each person in an organization needs to learn how to empathize with other people—to understand their viewpoints and the problems they face. One way to help managers understand their personal strengths and weaknesses is to have their superiors, peers, and subordinates provide feedback about their job performance. Thorough and direct feedback allows managers to develop their human skills. technical skills Technical skills are the job-specific skills required to perform a particular type of The job-specific work or occupation at a high level. Examples include a manager’s specific man- knowledge and ufacturing, accounting, marketing, and increasingly, IT skills. Managers need a techniques required range of technical skills to be effective. The array of technical skills managers need to perform an depends on their position in their organization. The manager of a restaurant, for organizational role. example, may need cooking skills to fill in for an absent cook, accounting and bookkeeping skills to keep track of receipts and costs and to administer the pay- roll, and aesthetic skills to keep the restaurant looking attractive for customers. As noted earlier, managers and employees who possess the same kinds of tech- nical skills typically become members of a specific department and are known as,  Final PDF to printer The Management Process Today 17 Figure 1.5 Types and Levels of Managers CEO Top Managers Middle Managers First-Line Managers Research and Marketing Manufacturing Accounting Materials development and sales department department management department department department for example, marketing managers or manufacturing managers.24 Managers are grouped into different departments because a major part of a manager’s respon- sibility is to monitor, train, and supervise employees so their job-specific skills and expertise increase. Obviously this is easier to do when employees with similar skills are grouped into the same department because they can learn from one another and become more skilled and productive at their particular job. Figure 1.5 shows how an organization groups managers into departments on the basis of their job-specific skills. It also shows that inside each department, a managerial hierarchy of first-line, middle, and top managers emerges. At Dell, for example, Michael Dell hired experienced top managers to take charge of the marketing, sales, and manufacturing departments and to develop work proce- dures to help middle and first-line managers control the company’s explosive sales growth. When the head of manufacturing found he had no time to supervise computer assembly, he recruited experienced manufacturing middle managers from other companies to assume this responsibility. core competency The specific set of Today the term core competency is often used to refer to the specific set of departmental skills, departmental skills, knowledge, and experience that allows one organization to knowledge, and outperform its competitors. In other words, departmental skills that create a core experience that allows competency give an organization a competitive advantage. Dell, for example, was one organization to the first PC maker to develop a core competency in materials management that outperform another. allowed it to produce PCs at a much lower cost than its competitors—a major  Final PDF to printer 18 Chapter One source of competitive advantage. Similarly, 3M is well known for its core compe- tency in research and development (R&D) that allows it to innovate new products at a faster rate than its competitors, and Xerox has been working to strengthen its ability to provide a full-range of imaging services that can be customized to meet the needs of each of the companies it serves. Effective managers need all three kinds of skills—conceptual, human, and technical—to help their organizations perform more efficiently and effectively. The absence of even one type of managerial skill can lead to failure. One of the biggest problems that people who start small businesses confront, for example, is their lack of appropriate conceptual and human skills. Someone who has the technical skills to start a new business does not necessarily know how to manage the venture successfully. Similarly, one of the biggest problems that scientists or engineers who switch careers from research to management confront is their lack of effective human skills. Ambitious managers or prospective managers are con- stantly in search of the latest educational contributions to help them develop the conceptual, human, and technical skills they need to perform at a high level in today’s changing and increasingly competitive global environment. Developing new and improved skills through education and training has become a priority for both aspiring managers and the organizations they work for. As we dis- cussed earlier, many people are enrolling in advanced management courses; but many companies, such as Microsoft, GE, and IBM, have established their own col- leges to train and develop their employees and managers at all levels. Every year these companies put thousands of their employees through management programs designed to identify the employees who the company believes have the competen- cies that can be developed to become its future top managers. Most organizations closely link promotion to a manager’s ability to acquire the competencies that a par- ticular company believes are important.25 At Apple and 3M, for example, the ability to successfully lead a new product development team is viewed as a vital require- ment for promotion; at Accenture and IBM, the ability to attract and retain clients is viewed as a skill their IT consultants must possess. We discuss the various kinds of skills managers need to develop in most of the chapters of this book. Recent Changes The tasks and responsibilities of managers have been changing dramatically in recent years. Two major factors that have led to these changes are global competition and in Management advances in information technology. Stiff competition for resources from organizations both at home and abroad Practices has put increased pressure on all managers to improve efficiency and effectiveness. Increasingly, top managers are encouraging lower-level managers to look beyond the goals of their own departments and take a cross-departmental view to find new opportunities to improve organizational performance. Modern IT gives managers at all levels and in all areas access to more and better information and improves their ability to plan, organize, lead, and control. IT also gives employees more job-related infor- mation and allows them to become more skilled, specialized, and productive.26 Restructuring and Outsourcing To utilize IT to increase efficiency and effectiveness, CEOs and top manage- ment teams have been restructuring organizations and outsourcing specific  Final PDF to printer The Management Process Today 19 organizational activities to reduce the number of employees on the payroll and make more productive use of the remaining workforce. restructuring Restructuring involves simplifying, shrinking, or downsizing an organization’s Downsizing an operations to lower operating costs, as both Dell and Xerox have been forced to organization by do. The financial crisis that started in 2009 forced most companies—large and eliminating the jobs small, and profit and nonprofit—to find ways to reduce costs because their cus- of large numbers tomers are spending less money, so their sales and revenues decrease. Restruc- of top, middle, and turing can be done by eliminating product teams, shrinking departments, and first-line managers and nonmanagerial reducing levels in the hierarchy, all of which result in the loss of large numbers of employees. jobs of top, middle, or first-line managers, as well as nonmanagerial employees. Modern IT’s ability to improve efficiency has increased the amount of downsiz- ing in recent years because IT makes it possible for fewer employees to perform a particular work task. IT increases each person’s ability to process information and make decisions more quickly and accurately, for example. U.S. companies are spending over $100 billion a year to purchase advanced IT that can improve efficiency and effectiveness. We discuss the many dramatic effects of IT on man- agement in Chapter 13 and throughout this book. Restructuring, however, can produce some powerful negative outcomes. It can reduce the morale of remaining employees, who worry about their own job security. And top managers of many downsized organizations realize that they downsized too far when their employees complain they are overworked and when increasing numbers of customers complain about poor service.27 Dell faced this charge in the 2010s as it continued to reduce the number of its customer service representatives and outsource their jobs to India to lower costs. outsourcing Outsourcing involves contracting with another company, usually in a low-cost Contracting with another country abroad, to have it perform a work activity the organization previously company, usually abroad, performed itself, such as manufacturing, marketing, or customer service. Out- to have it perform an sourcing increases efficiency because it lowers operating costs, freeing up money activity the organization and resources that can be used in more effective ways—for example, to develop previously performed new products. itself. The need to respond to low-cost global competition has speeded outsourcing dramatically in the 2000s. Over 3 million U.S. jobs in the manufacturing sector have been lost since 2000 as companies have moved their operations to countries such as China, Taiwan, and Malaysia. Tens of thousands of high-paying IT jobs have also moved abroad, to countries like India and Russia, where programmers work for one-third the salary of those in the United States. Dell employs over 12,000 customer service reps in India, for example.28 Large for-profit organizations today typically employ 10% to 20% fewer peo- ple than they did 10 years ago because of restructuring and outsourcing. Ford, IBM, AT&T, HP, Dell, and DuPont are among the thousands of organizations that have streamlined their operations to increase efficiency and effectiveness. The argument is that the managers and employees who have lost their jobs will find employment in new and growing U.S. companies where their skills and expe- rience will be better utilized. For example, the millions of manufacturing jobs that have been lost overseas will be replaced by higher-paying U.S. jobs in the service sector that are made possible because of the growth in global trade. At the same time, many companies have experienced growing problems with outsourc- ing in the 2010s, and the move to insource jobs (that is, to bring them back to the United States) has been increasing as discussed in the following “Managing Globally.”  Final PDF to printer 20 Chapter One MANAGING GLOBALLY First Outsourcing, Now Insourcing Outsourcing has become a major global strategic imperative over the last decades; to survive against low- cost competitors U.S. companies have been forced to find ways to reduce costs by moving manufacturing overseas. First, millions of unskilled manufacturing jobs were outsourced to countries in Asia and Central America; then semiskilled and skilled jobs in engineering and information technology followed. There is a huge talented workforce in coun- tries such as India and China, where millions of workers have the skills to satisfy job requirements and are willing to work for a fraction of what companies must pay workers in the United States. In some areas, such as the production of clothes and shoes and the assembly of elec- tronic devices such as iPhones and PCs that are labor intensive, countries such as the United States will never be able to regain a competi- tive advantage because of low labor costs over- seas. However, there are other areas in which companies that depend on a reliable supply of high-quality components and finished prod- ucts have experienced problems with outsourc- ing production abroad, and many companies have or are in the process of moving back pro- duction to the United States—the process of insourcing. There are many reasons for this: Boeing embraces insourcing: the first Boeing 787 Dreamliner is Some relate to quality issues and some relate being built at Boeing’s Paine Field near Everett, Washington. to the enormous problems that most electron- ics companies experienced after the disastrous flooding in Thailand and the tsunami that struck Japan cut off the supply of vital components. Thousands of U.S. companies were unable to obtain the chips and memory circuits necessary to maintain production, and they became backlogged with orders and lost billions in potential sales. Boeing experienced firsthand the problems in controlling quality and product development during the building of the Boeing 787 Dreamliner that was finally delivered to its first customer in 2011. Boeing had experienced great success with outsourcing the production of many important components when it developed its previous new airliner, the 777. To tap into the skills of engineers in countries abroad and to reduce costs, Boeing decided early in development of the 787 to work closely with its suppliers who invested in the equipment and facilities neces- sary to meet Boeing’s demands. Its Dreamliner team has about 50 suppliers from the United States and around the world; the partnership features six companies from Japan, six from Britain, five from France, two from Germany, two from Swe- den, and one each from South Korea and Italy.29 They make sections of the fuse- lage, landing gear, parts of the wing, pumps, valves, engines, brakes, doors, waste systems, escape slides, tires, tubing, cabin lighting, and ducts. Boeing announced the first of several important delays in delivery dates of key components with overseas suppliers in 2007.30 A major setback was a problem that  Final PDF to printer arose in 2009 when major structural problems were found in the design of the assembly connecting the wing to the fuselage. Boeing was forced to postpone the date of introduction of the innovative new 787, and when it was finally delivered, it was over two years late to market. In 2012 it was still having the problem of obtaining components fast enough to ramp up production of the 787 in order to better meet customer demand, and in 2013 the new fleet of Dreamliners was grounded until a major battery problem was solved. It is reevaluating its outsourcing strategy and has already decided to insource production of more components in order to obtain more control over its global supply chain. Like many other companies Boeing has seen the disadvan- tages of offshore production, including shipping costs, logistical problems, and quality issues. And many U.S. companies are working with their employees and unions to establish pay rates that will make it practical to insource production of many complex or bulky products. For example, GE worked with its unions to establish an agreement that would allow it to bring back to the United States the manufacturing of water heaters and many of the complex components that go into its appliances. Similarly, Caterpillar announced that it would reorganize global production of excavators and triple the volume of excavators made in the United States for export to the Americas. Every manufacturing job brought back to the United States is valuable, especially in a recession.31 The growing rate of insourc- ing provides a signal to all U.S. companies that they need to have a second source of supply to ensure they do not suffer when unexpected problems from natural and political factors arise quickly and disrupt their manufacturing activities. Empowerment and Self-Managed Teams The second principal way managers have sought to increase efficiency and empowerment effectiveness is by empowering lower-level employees and moving to self- The expansion of managed teams. Empowerment is a management technique that involves giving employees’ knowledge, employees more authority and responsibility over how they perform their work tasks, and decision- activities. The way in which John Deere, the well-known tractor manufacturer, making responsibilities. empowered its employees illustrates how this technique can help raise perfor- mance. The employees who assemble Deere’s vehicles possess detailed knowledge about how Deere products work. Deere’s manag- ers realized these employees could become persuasive salespeople if they were given training. So groups of these employees were given intensive sales training and sent to visit Deere’s customers and explain to them how to operate and service the company’s new products. While speaking with customers, these newly empowered “salespeople” also collect information that helps Deere develop new products that better meet customers’ needs. The new sales jobs are temporary; employees go on assignment but then return Lonnie Love, an Illinois farmer, checks out the custom wiring job on his John Deere tractor. Technicians, such as the one working on to the production line, where they use their Love’s tractor, add irreplaceable know-how to help John Deere’s new knowledge to find ways to improve effi- sales force. ciency and quality. 21  Final PDF to printer 22 Chapter One Often companies find that empowering employees can lead to so many kinds LO 1-5 Discuss some of performance gains that they use their reward systems to promote empower- major changes in ment. For example, Deere’s moves to empower employees were so successful management practices that the company negotiated a new labor agreement with its employees to pro- today that have mote empowerment. The agreement specifies that pay increases will be based occurred as a result of on employees’ learning new skills and completing college courses in areas such globalization and the use of advanced information as computer programming that will help the company increase efficiency and technology (IT). quality. Deere has continued to make greater use of teams throughout the 2010s, and its profits have soared because its competitors cannot match its user-friendly machines that are the result of its drive to respond to its customers’ needs. IT is being increasingly used to empower employees because it expands employees’ job knowledge and increases the scope of their job responsibili- ties. Frequently IT allows one employee to perform a task that was previously performed by many employees. As a result, the employee has more autonomy self-managed and responsibility. IT also facilitates the use of a self-managed team, a group of team A group of employees who assume collective responsibility for organizing, controlling, and employees who assume supervising their own work activities.32 Using IT designed to give team members responsibility for real-time information about each member’s performance, a self-managed team organizing, controlling, can often find ways to accomplish a task more quickly and efficiently. Moreover, and supervising their self-managed teams assume many tasks and responsibilities previously performed own activities and monitoring the quality of by first-line managers, so a company can better utilize its workforce.33 First-line the goods and services managers act as coaches or mentors whose job is not to tell employees what to they provide. do but to provide advice and guidance and help teams find new ways to per- form their tasks more efficiently.34 Using the same IT, middle managers can easily monitor what is happening in these teams and make better resource allocation decisions as a result. We discuss self-managed teams in more detail in Chapter 11. Challenges for Because the world has been changing more rapidly than ever before, managers and other employees throughout an organization must perform at higher and higher lev- Management els.35 In the last 20 years, rivalry between organizations competing domestically (in the same country) and glob- in a Global ally (in countries abroad) has increased dramatically. The rise of global organizations, organizations that operate Environment