C17EB Management in a Global Context Week 2 Slides PDF

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

C17EB Management in a global context Week 2. The business environment  Session content Understand how organisations conduct business internationally Understand the business environment Perform a PESTEL analysis Understand the driving forces of competition in an industry ©copyright, Heriot-Watt University, 2024  Competing values framework Quinn et al. (2015) ©copyright, Heriot-Watt University, 2024  1. Managing internationally ©copyright, Heriot-Watt University, 2024 Themes in international management ©copyright, Heriot-Watt University, 2024 Boddy, D. (2020), Management: Using Practice and Theory to Develop Skill, 8th ed, Harlow: Pearson, p. 89  Conducting business internationally 1/2 Offshoring – contracting out activities to other countries Exporting & Importing – physically moving products/materials Foreign Direct Investments – Build or acquire facilities in another country and manage them directly ©copyright, Heriot-Watt University, 2024  Conducting business internationally 2/2 Licensing – production of goods or services to a company in another country to deliver under licence Joint Ventures - Where two organisations share the risks and resources Wholly Owned subsidiary – A standalone company but directly owned/operated by a holding company ©copyright, Heriot-Watt University, 2024  Conducting business internationally 3/3 Multinational companies Based in one country, operate in many Transnational companies Operate in many, but decentralise (while maintaining consistent image) Global companies Closely integrated operations across many countries ©copyright, Heriot-Watt University, 2024  2. International PESTEL analysis ©copyright, Heriot-Watt University, 2024  International PESTEL analysis 6 external factors when considering to invest overseas / a company is operating in different countries They affect company policies and practices how companies can run their business They may represent an opportunity or a challenge A simplified framework Managers working internationally need to be aware of the global context and adapt ©copyright, Heriot-Watt University, 2024  International PESTEL analysis POLITICAL Political rules on foreign ownership Level of state intervention in the economy Government attitudes to foreign investment Policy on employment practices, working conditions, job protection Patent and intellectual property policy Political stability Corruption >> shape the political risk ©copyright, Heriot-Watt University, 2024  International PESTEL analysis ECONOMIC Why do nations trade with each other, rather than be self-sufficient? The theory of absolute advantage – this theory states that there is an economic advantage for countries to specialize in the production of good and services that they can produce more cheaply than other countries. ©copyright, Heriot-Watt University, 2024  International PESTEL analysis SOCIO-CULTURAL Socio-cultural factors recognize that different societies have different social practices and understandings. Managers working internationally must be aware of cultural difference. Cultural intelligence – when a person is skilled and flexible about understanding a culture and learns when they interact with it. ©copyright, Heriot-Watt University, 2024  International PESTEL analysis SOCIO-CULTURAL – Geertz Hofstede’s 5 dimensions of national culture High Low Power distance Accept inequality of power Less acceptance of power inequality Uncertainty avoidance Not comfortable with ambiguity Happy with ambiguity Individualism /collectivism Focus on individualism Focus on collectivity Masculinity / femininity Gender roles are clearly defined Gender roles overlap Long-term and short- term Concern about future More short-term oriented orientation ©copyright, Heriot-Watt University, 2024  International PESTEL analysis TECHNOLOGICAL Technological factors include all aspects of infrastructure – ports, airports, surface transport, electricity, telecommunications, and internet. NEOM in Progress ©copyright, Heriot-Watt University, 2024  International PESTEL analysis ENVIRONMENTAL Environmental factors generally refer to natural resources – oil, coal, minerals, land, climate, and water. Aluminum in Canada video ©copyright, Heriot-Watt University, 2024  International PESTEL analysis LEGAL Trade agreements and trade groupings GATT and WTO, European Union ©copyright, Heriot-Watt University, 2024  The external environment ©copyright, Heriot-Watt University, 2024  General environment – PESTEL analysis POLITICAL ECONOMIC SOCIO-CULTURAL Taxation policy Interest and inflation rates Demographics (population and household Privatisation/regulation policies Consumer confidence numbers) Environmental legislation The business cycle Values in society Health & safety regulation Economic growth prospects Lifestyle (e.g., attitudes to work and leisure) Public expenditure controls Unemployment rates Consumer preferences (e.g., attitudes to European Union directives Disposable incomes green issues) Government stability Labour cost Levels of education TECHNOLOGICAL ENVIRONMENTAL LEGAL Housing stock Climate change Employment law Scientific discoveries Water resources Company law Communications technology Energy supplies Business regulation Production technology Infrastructure (e.g., power, transport) ©copyright, Heriot-Watt University, 2024  General environment – PESTEL analysis STEPS IN THE ANALYSIS Identify the external forces Which ones are the most important / most likely to affect the industry? How the organisation considers these forces? (changes in practices) ©copyright, Heriot-Watt University, 2024  General environment – PESTEL analysis WHAT ARE THE LIMITS OF A PESTEL ANALYSIS? Oversimplification of complex environments Static analysis while the environment may rapidly change Takes time to collect the information > need to prioritise which factors are most important Mostly descriptive and not prescriptive (set of strategic actions to take?) Broad analysis which doesn’t consider internal factors > other analysis are needed (SWOT, 5 forces, scenario planning, company's resources and capabilities) Depend on the quality of data, not always available (e.g., unstable regions) May be hard to assess the impact of the factors (financial cost) ©copyright, Heriot-Watt University, 2024  3. Porter’s 5 forces of competition ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) Threat of new entrants Bargaining power Rivalery among Bargaining power of suppliers competing sellers of buyers Availability of substitute products ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) INTENSITY OF RIVALRY Greater rivalry = less profit Rivalry increases when: many firms, but none dominant market growing slowly, so firms fight for share high fixed costs encourage overproduction loyalties (family businesses or political support) prolong overcapacity ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) THREAT OF NEW ENTRANTS Affected by entry barriers such as: high costs of equipment and facilities lack of distribution facilities customers loyal to established brands small companies lack economies of scale subsidies/regulations favour existing firms ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) BARGAINING POWER OF BUYERS Greater power of buyers = less profit to seller Power of buyer increases if: Buyer takes high percentage of supplier’s sales Many alternative products or suppliers available Product is a high percentage of buyer’s costs, creating incentive to seek alternatives Cost of switching to other suppliers is low ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) BARGAINING POWER OF SUPPLIERS High power of supplier = less profit to buyer Power of supplier is high if: Buyer takes small percentage of sales Few alternative products or suppliers (distinctive product keeps buyers loyal) available Product a low percentage of buyer’s costs, little incentive to seek alternatives Cost of switching suppliers high ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) SUBSTITUTES Easy to substitute = less profit for the competing firms [internal rivalry] Substitution becomes easier if: Buyers willing to change buying habits Technological developments enable new products and services Transport costs fall New suppliers enter the market ©copyright, Heriot-Watt University, 2024  Let’s apply the 5 forces to the luggage industry ©copyright, Heriot-Watt University, 2024  Porter’s 5 forces analysis (1980) MANAGING THE 5 forces of competition A model to assess the attractiveness of the industry A model to understand the most important forces driving the ability to make profits Managers can try to reduce the power of competition ©copyright, Heriot-Watt University, 2024 ©copyright, Heriot-Watt University, 2024 C17EB – Management in a Global Context Week 5 – Decision-Making Key learning from the last lecture: Session aims Understand the iterative elements in making decisions Explore programmed and non-programmed decisions Examine decision contexts – certainty, risk, uncertainty, and ambiguity Understand theories of decision-making processes – rational, judgmental, negotiated, and adaptive Explore the common sources of bias in decision-making Examine decision-making in groups Definitions A decision is a specific commitment to action (and usually a commitment of resources). Decision-making is the process of identifying and defining problems and opportunities and making plans to resolve them. Boddy, D. (2020), Management: Using Practice and Theory to Develop Skill, 8th ed, Harlow: Pearson, p. 170 Key points from the video Decision-making is important – how we respond in a situation We make thousands of decisions a day We often use intuition to make decisions, but psychological research has argued that sometimes this isn’t good enough Most of the time people aren’t trained in how to make good decisions Managers need to build decision-making skills, for: Problem-solving Setting goals Prioritising Dealing with change Types of decisions What kinds of decisions might managers make? What sorts of decisions do you think managers typically make each day, week, year? Types of Decision Programmed (Structured) Non-Programmed Decisions (Unstructured) Decisions A routine decision that can be A unique decision that requires a handled by a routine approach. custom-made solution when Decisions are guided by a information is lacking or unclear. procedure or policy. There is no clear precedent and/or information gaps exist. (Simon, 1960) Relationship between problem type, decision type and level in organisation Poorly structured Top Non-programmed Decisions Type of Level in problem organisation Programmed Decisions Well structured Lower (Robbins & Coulter, 2005)  Bright, David S., Anastasia H. Cortes, David S. Bright, and Anastasia H. Cortes. Examples 2019. ‘2.3 Programmed and Nonprogrammed Decisions - Principles of Management | OpenStax’. OpenStax. 20 March 2019. Programmed decisions Non-programmed decisions Deciding how many raw materials to order based A manager trying to decide whether or not to on anticipated production, existing stock, and adopt a new technology. anticipated length of time for the delivery of the final product. A retail store manager developing the weekly A product development team planning a new work schedule for part-time employees, based product type. on how busy the store is expected to be and employee availabilities. For programmed decisions, managers often develop heuristics, or mental shortcuts, to help reach a decision. E.g. the retail store manager may not know how busy the store will be the week of a big sale but might routinely increase staff by 30% every time there is a big sale (because this has been fairly effective in the past). Decision Making Conditions Certainty describes the situation when all the information the decision maker needs is available. Risk refers to situations in which the decision maker is able to estimate the likelihood of the alternative outcomes. Uncertainty is when people are clear about their goals, but have little information about which course of action is most likely to succeed. Ambiguity is when people are uncertain about their goals and how best to achieve them. Dependency is when a decision is dependent upon other decisions or outcomes. Boddy, 2019. p.50 Dependency of decisions Decisions may be dependent upon other decisions or outcomes. (Cooke & Slack, 1991) Decision-making models Decision-making models Rational model Judgemental model Negotiated model Adaptive approach (remember these from last week?) Note the link between decision-making and strategy.  Rational Model Assumes that people make consistent choices to maximise economic value within specified constraints. E.g. deciding on which job offer to accept: Define criteria that meet your end goal Specify goal Gather Evaluate and identify information options Minimum salary options and set against Take action Location within 10 miles criteria criteria Opportunities for career progression Etc. Add weights to prioritise some criteria over others Assign scores for each option against your criteria and determine the optimum decision. Judgemental Model When people make decisions in uncertain, ambiguous situations. Used when problems are unstructured. Bounded rationality – choices made are limited by an individual’s ability to process information Satisficing – is the acceptance by decision makers of the first solution that is ‘good enough’ (rather than optimum among all solutions) Intuition and tacit knowledge may be used. Example: when choosing an app to store and organise your university notes, you might identify a few but not explore all options, and ‘satisfice’ to accept one that is good enough, based on a gut feeling that it covers your needs. Negotiated Model Organisations contain groups with diverse interests, goals and values. Different managers may disagree about priorities and solutions. Information may be ambiguous and incomplete. Managers debate and argue their priorities and solutions. Decisions arise from bargaining and discussion. Example: when organising a conference, negotiations may take place between senior managers who hold the overall budget, communications managers, and sustainability managers – regarding the extent to spend money on physical marketing tools such as posters, brochures, and branded pens and t-shirts. Adaptive Approach Remember the case of the IKEA emergent strategy (last lecture)? The intended strategy did not play out, instead the strategy was adapted to circumstances. Decision-makers adapt their perspectives based on chance meetings and new situations – solutions are found when participants and problems come together. Example: https://www.bbc.com/worklife/article/202004 13-how-factories-change-production-to- quickly-fight-coronavirus Summary Features Rational Judgemental Negotiated Adaptive Clarity of problem Clear problem and Vague problems & Conflict over goals Goals and solutions and goal goals goals independent Degree of Certainty High degree of High degree of Uncertainty or Ambiguity certainty uncertainty conflict Available Much information Little information Conflicting views Costs and benefits information on about options unconnected at cost/benefits start Method of Choice Rational choice to Satisficing choice – Bargaining amongst Choice by accidental maximise benefit good enough players merging of streams Are we good at making decisions? Bias in decision-making Prior hypothesis bias results from a tendency to base decisions on strong prior beliefs, even if the evidence shows that they are wrong. Representativeness bias results from a tendency to generate inappropriately from a small sample or a single vivid event. Illusion of control is a bias that leads from a tendency to overestimate one’s ability to control activities and events. Escalating commitment is a bias that leads to increased commitment to a previous decision despite evidence that it may have been wrong. Emotional attachment is when a decision is based upon emotional factors rather than rational factors. See Boddy, 2019, p. 167-168) Example: bias in jury decisions Previous juror decision-making research has shown that factors such as race, gender and the socioeconomic status of the defendant can all have a biasing effect on decision-making. Over a series of experiments, we showed that sometimes jurors do not use all the information available to make a decision. We showed that verdicts favoured before all the information has been shown can lead to confirmation bias and pre-decisional distortion. Confirmation bias is when decision makers see evidence that chimes with their beliefs in a positive manner, and ignore evidence that does not; pre-decisional distortion is when the decision maker twists how they view a piece of evidence so that it aligns with their preconceived beliefs and expectations. Some jurors seem to reach a point (or a threshold) that allows them to have a pre-decisional preference in relation to the verdicts (that is, a leading verdict). Curley, 2018. https://theconversation.com/how-juror-bias-can-be-tackled-to- ensure-fairer-trials-100476 Collective and collaborative decision-making  Involve diverse perspectives Identify blindspots Increase employee engagement Increase collaboration Landry, 2020. Harvard Business Review https://online.hbs.edu/blog/post/team-decision-making Vroom & Yetton’s Decision Tree Vroom & Yetton’s (1973) model refers to options a team manager can choose regarding the extent to which to involve team members in different decisions. Vroom and Yetton’s options for involving others AI (Autocratic) – The manager doesn’t involve the team. All (Information-seeking) – The manager gathers the information from the team but makes the decision themselves. CI (Consulting) – You speak to each individual in turn without bringing them together and make the decision CII (Negotiating) – You share the problem as a group, obtain ideas and suggestions then make the decision G (Group) – Your share the problem, discuss alternatives and reach a decision as a consensus Groupthink (Janis, 1972) A pattern of biased thinking when a group becomes too cohesive – leads to a lack of challenge and critical appraisal Illusion of invulnerability – we can do no wrong! Belief in the inherent morality of the group – justifying decisions Rationalisation – Playing down the risks or consequences Stereotyping out groups – Characterising opponents or doubters negatively Self-Censorship – Suppressing doubts for the good of the group Direct pressure – Members of the group making it clear dissent will not be welcome Mindguards – Keeping negative information out of the group Illusion of unanimity – Playing down doubts even as they grow Groupthink example ‘Groupthink’ blamed for poor UK government decision-making during Covid pandemic (e.g. delays in closing borders, delays to testing system…) Janis coined ‘groupthink’ in his analysis of decision-making during the US invasion of Cuba in April 1961 – the so-called Bay of Pigs fiasco. The failure of the US invasion was was rooted in a series of stereotypic assumptions about Fidel Castro and the Cubans as inept and weak. When critics pointed out the problems with these assumptions, their criticisms were simply ignored. But not all groups suffer from groupthink – sometimes disagreement and debate are encouraged. Reicher and Drury (2021) suggest that ‘the notion that some 30 psychologists, anthropologists, sociologists and other social scientists could quietly agree on anything is quite frankly laughable’. https://www.theguardian.com/commentisfree/2021/jun/02/covid-mistakes- groupthink-government-dominic-cummings Exercise In small groups – identify and discuss a decision one of you has made recently. Was it a programmed or a non- programmed decision? What approach did you use to make the decision? (rational, judgemental, negotiated, adaptive) Was there any sort of bias at play? Summary – key points Decision-making is a skill (or a set of different skills) Decisions can be programmed or non-programmed Various decision-making methods/models exist You may need to use different methods for different problems or contexts Beware of bias in decision-making! Groups can make decisions in several ways…but watch out for groupthink! C17EB –Management in a Global Context Communicating and teams Recap from last lecture key learning: programmed and non-programmed decisions Poorly structured Top Non-programmed Decisions Type of Level in problem organisation Programmed Decisions Well structured Lower (Robbins & Coulter, 2005) Lecture overview Aims: Key learning: 1. To describe and illustrate the The central role of communication processes of communicating in in organisations. organisations. Communication process theory 2. To outline the significance of Selecting communication channels teams at work, and some Interpersonal skills for theories about how they develop communicating and perform. Types of teams and team composition Reading: Textbook chapters 16 Team roles theory (communicating) and 17 (Teams) Stages of team development Communicating Why is (good) communication important? Communication – the exchange of information through written or spoken words, symbols and actions to reach a common understanding (Boddy 2020, p. 403). Managers spend most of their time communicating through one or several means (Stewart 1967, Mintzberg 1973). Managers may perceive themselves to be good communicators, but staff may have different views. What communication channels do contemporary managers use? Discuss in groups of 2 or 3. Good communication is essential for: Innovation Quality Delivery A workplace communication challenge https://www.bbc.com/worklife/article/20240307- gen-z-casual-workplace-language A 2018 study published in Harvard Business Review showed that weak executive presence and poor communication style are the two most critical factors that can stall career progress. And although it's true an informal approach in the workplace can help build connections, if employees are perceived as too casual, it can have the opposite effect. In the aftermath of the pandemic, dress codes are looser, hours are more flexible and people work from home more often. All of this means communication too, is evolving in offices around the world. In the UK, an August 2023 survey by Barclays showed nearly three-quarters of respondents say that Gen Z are changing the formality of language in the workplace. https://www.youtube.com/watch?v=gCfzeONu3Mo  Communication process theory 1. Message (what you think) 2. Encoding (what you write/say) 3. Decoding (what you think it means) 4. Noise (anything that interferes with the message) 5. Feedback (the reaction to the message) Boddy, D. (2020), p. 406 Quality of Information Information is only as useful if it is accurate, timely and relevant: Accuracy – is the information a true account of the facts Timeliness – Is the information given as a time before it is either outdated or irrelevant Relevance – Is the information critical and useful or is it marginal or even a distraction. Boddy, D. (2020), pp.407-408  Selecting communication channels Lengel and Daft (1988) theorised information richness of different channels of communication. They argue that information richness depends on whether the medium can: Demonstrate multiple cues at one time (voice tone, body language, words, etc) Allow for quick two-way feedback Establish a personal focus for the communication Lengel-Daft media richness hierarchy. Match the Heriot-Watt communications channels to levels of information richness. Do the following have high, medium or low information richness? Canvas announcement Personalised email Individual student-tutor meeting Interpersonal skills for communicating Boddy, D. (2020), p. 413 Senders Receivers 1.Be clear and complete 1.Pay attention 2.Encode messages in symbols the 2.Be a good listener receiver understands 3.Be empathetic 3.Select medium appropriate for the message 4.Select a medium the receiver monitors 5.Avoid noise  Whetten and Cameron (2011) – supportive communication 1) Problem-oriented, not person-oriented 4) Specific, not global A focus on problems and issues that can be A focus on specific events or behaviours, avoiding changed rather than people and their general, extreme or vague statements. characteristics. 6) Conjunctive, not disjunctive 2) Congruent, not incongruent A focus on statements that flow from what has A focus on honest messages in which verbal been said and facilitating interaction. messages match thoughts and feelings. 7) Owned, not disowned 3) Descriptive, not evaluative A focus on taking responsibility for your statements by using personal (‘I’) words. A focus on describing an objective occurrence, your reaction to it, and offering an alternative. 8) Supportive listening, not one-way listening A focus on using a variety of responses, with a bias 4) Validating, not invalidating towards reflective responses. A focus on statements that communicate respect, flexibility and areas of agreement. Influencing tactics – Yukl and Falbe 1990 Teams Definition of a team Team = ‘a small number of people with complementary skills who are committed to a common purpose, performance goals, and approach for which they hold themselves mutually accountable’ (Katzenbach and Smith, 1993) Some characteristics A small number – usually 2-10, more than 12 can be hard to manage Common purpose – need clear performance goals Common approach – there needs to be agreement on how things will get done, and how conflict will be managed Mutual accountability – all members must be accountable to each other Boddy, D. (2020), p. 408 Types of teams (Hackman, 1990) Types of teams Formal team – deliberately created teams to perform specific tasks to meet organizational goals Vertical team – manager and subordinates Horizontal team – staff at same level doing different functions Informal groups – a group that emerges from regular interaction Self-managing teams – teams that are responsible for an entire area without supervision Virtual teams – teams over virtual networks  Matrix team structure Source: https://asana.com/resources/matrix-organization  Team roles - Meredith Belbin https://www.belbin.com/resources/session-ideas-handouts Talk to your neighbours: Which of Belbin’s team roles do you think you can play in a team, based on your individual strengths? Which of the team roles would you need to fill gaps and complement your own strengths? Stages of team development Even if you put together a balanced team in terms of strengths and roles, achieving a high-performing team can take time… Tuckman’s (1965) model of 5 stages of team development. https://www.youtube.com/watch?v=-RwkZxGPQb8 Effective Meetings Successful Meetings Failure Meetings Scheduled well in advance Fixed at short notice Have an agenda with No agenda or papers documents available in advance Have a start and finish time Lack of structure, drift and times for each item Decisions for action are Decisions lack clarity, no circulated within 24hrs shared understanding Related groups or teams are Team is not aware of what kept updated other teams are doing Tips for team management Agree on tasks and output Agree on how to achieve the goals of the team Setting and following timetables Recording action points that have been agreed Giving tasks to members Setting and keeping meeting dates Agree on consequences/strategies for when members don’t meet deadlines Ensure that members have the skills to complete tasks assigned References Belbin, R.M. (2010) Team Roles at Work. (2nd ed.) Butterworth/Heinemann, Oxford. Boddy, D. (2020) Management: Using Practice and Theory to Develop Skill, 8th ed, Pearson, Harlow. Hackman, J.R. (1990) Groups that work (and those that don’t) Jossley-Bass, San Francisco, CA. Katzenback, J.R. and Smith, D.K. (1993) The Wisdom of Teams, Harvard Business School Press, Boston, MA. Knight, R. M. (2024) Not all employers are tolerating Gen Z's laid-back language. BBC Worklife, 11th March 2024. Available from: https://www.bbc.com/worklife/article/20240307-gen-z-casual-workplace-language Lengel, R.H. and Daft R.L. (1988) The selection of communication media as an executive skill, Academy of Management Executive, vol. 11, no. 3, pp.225-32. Mintzberg, H. (1973) The Nature of Managerial Work, Harper & Row, New York. Stewart, R. (1967) Managers and their Jobs, Macmillan, London. Tuckman, B and Jensen, N. (1977) Stages of small group development revisited, Group and Organizational Studies, vol. 2, pp. 419-27 Yukl, G. and Falbe, C.M. (1990) Influence tactics in upward, downward and lateral influence attempts, Journal of Applied Psychology, vol. 75, no. 2, pp.132-40. Management in a Global Context C17EB Week 11 – course review and exam prep Learning Objectives Review key theories and concepts (*Exam topics could be from theories outside of these slides) Understand some strategies for exam prep Identify qualities of good exam answers Exam The exam will be an in-person closed book exam, during the December Exam and Assessment Diet (4th December 2024). You will have 2 hours to answer 2 out of 5 essay questions. Management models The 4 management models Remember to revise the details of the 4 models: - Rational Goal - Internal Process - Human Relations - Open Systems  Comparison of the four models Theory Rational goal Internal process Human relations Open systems Criteria of Productivity, profit Stability, continuity Commitment, Adaptability, external effectiveness cohesion, morale support Means-end theory Clear direction adds Rules, routines, lead Involvement brings Continuous most value to stability commitment innovation secures resources Practices Clarifying goals, Clear roles, Participation, team Creating, solving emphasised rational analysis documentation working, problems, innovating measurement development Focus of action Compete Control Collaborate Create Competing values framework Managing internationally  Offshoring – contracting out activities to other countries Exporting & Importing – physically moving products/materials Foreign Direct Investments – Build or acquire facilities in another country and manage them directly Licensing – production of goods or services to a company in another country to deliver under licence Joint Ventures - Where two organisations share the risks and resources Wholly Owned subsidiary – A standalone company but directly owned/operated by a holding company Multinational companies Based in one country, operate in many Transnational companies Operate in many, but decentralise (while maintaining consistent image) Global companies Closely integrated operations across many countries  General environment – PESTEL analysis POLITICAL ECONOMIC SOCIO-CULTURAL Taxation policy Interest and inflation rates Demographics (population and household Privatisation/regulation policies Consumer confidence numbers) Environmental legislation The business cycle Values in society Health & safety regulation Economic growth prospects Lifestyle (e.g., attitudes to work and leisure) Public expenditure controls Unemployment rates Consumer preferences (e.g., attitudes to European Union directives Disposable incomes green issues) Government stability Labour cost Levels of education TECHNOLOGICAL ENVIRONMENTAL LEGAL Housing stock Climate change Employment law Scientific discoveries Water resources Company law Communications technology Energy supplies Business regulation Production technology Infrastructure (e.g., power, transport) Porter’s 5 forces analysis (1980) Threat of new entrants Bargaining power Rivalry among Bargaining power of suppliers competing sellers of buyers Availability of substitute products Organisational culture Types of culture – competing values framework Corporate responsibility Planning and managing strategy Planning = the iterative task of setting goals, specifying how to achieve them, acting on the plan and monitoring the results (Boddy, p.170). Strategy = a plan of action designed to achieve a long-term or overall aim (Oxford English Dictionary). Types of plans Strategic plans (or strategies) – sets out the overall direction for the business. They are broad in scope and cover all major activities. (Boddy, p. 171). Business plan – a plan setting out a proposal for a business, including markets, financing, and other key areas of operation. (Boddy, p. 171). Operational plans – plans that specify how overall objectives are going to be achieved by senior leaders, identifying what tasks each department will undertake. (Boddy, p. 171). Activity plans – set out what a unit, work group or individual is expected to do to help achieve the larger plan (Boddy, p. 173). Other – other varieties of plans exist within larger organisations such as an annual plan or a standing plan (to deal with recurring issues or complaints), or a recovery plan. (Boddy, p. 173). The process of planning Analyse Strengths, Weaknesses, Opportunities and Threats – perhaps taking into account a PESTEL analysis and Porter’s (1980) 5 forces. Forecasting – trend analysis, horizon scanning, modelling and simulating the future Set goals (e.g. financial, employee satisfaction, environmental performance…) Organising – identifying resources needed Communicating the plan Implementing and monitoring the plan https://www.flickr.com/photos/agirregabiria/51807624244 Theories of strategy (Boddy, p.195-199) Rational Judgemental Negotiated Adaptive Business level strategic options (Porter, 1985) Cost leadership Differentiation Focus Minimising operation costs. Distinct, unique. Niche market segment. Economies of scale. Able to charge a higher price or maintain customer loyalty. e.g. Saga travel and insurance for e.g. Ryanair, Amazon, Lidl, Aldi e.g. Apple, Coca Cola. over 50s, NFU mutual insurance for farmers. Decision-making Relationship between problem type, decision type and level in organisation Poorly structured Top Non-programmed Decisions Type of Level in problem organisation Programmed Decisions Well structured Lower (Robbins & Coulter, 2005) Dependency of decisions Decisions may be dependent upon other decisions or outcomes. (Cooke & Slack, 1991) Summary – decision-making approaches Features Rational Judgemental Negotiated Adaptive Clarity of problem Clear problem and Vague problems & Conflict over goals Goals and solutions and goal goals goals independent Degree of Certainty High degree of High degree of Uncertainty or Ambiguity certainty uncertainty conflict Available Much information Little information Conflicting views Costs and benefits information on about options unconnected at cost/benefits start Method of Choice Rational choice to Satisficing choice – Bargaining amongst Choice by accidental maximise benefit good enough players merging of streams Bias in decision-making Prior hypothesis bias results from a tendency to base decisions on strong prior beliefs, even if the evidence shows that they are wrong. Representativeness bias results from a tendency to generate inappropriately from a small sample or a single vivid event. Illusion of control is a bias that leads from a tendency to overestimate one’s ability to control activities and events. Escalating commitment is a bias that leads to increased commitment to a previous decision despite evidence that it may have been wrong. Emotional attachment is when a decision is based upon emotional factors rather than rational factors. See Boddy, 2019, p. 167-168 Vroom and Yetton’s options for involving others AI (Autocratic) – The manager doesn’t involve the team. All (Information-seeking) – The manager gathers the information from the team but makes the decision themselves. CI (Consulting) – You speak to each individual in turn without bringing them together and make the decision CII (Negotiating) – You share the problem as a group, obtain ideas and suggestions then make the decision G (Group) – Your share the problem, discuss alternatives and reach a decision as a consensus Groupthink (Janis, 1972) A pattern of biased thinking when a group becomes too cohesive – leads to a lack of challenge and critical appraisal Illusion of invulnerability – we can do no wrong! Belief in the inherent morality of the group – justifying decisions Rationalisation – Playing down the risks or consequences Stereotyping out groups – Characterising opponents or doubters negatively Self-Censorship – Suppressing doubts for the good of the group Direct pressure – Members of the group making it clear dissent will not be welcome Mindguards – Keeping negative information out of the group Illusion of unanimity – Playing down doubts even as they grow Communicating and teams  Communication process theory 1. Message (what you think) 2. Encoding (what you write/say) 3. Decoding (what you think it means) 4. Noise (anything that interferes with the message) 5. Feedback (the reaction to the message) Boddy, D. (2020), p. 406  Selecting communication channels Lengel and Daft (1988) theorised information richness of different channels of communication. They argue that information richness depends on whether the medium can: Demonstrate multiple cues at one time (voice tone, body language, words, etc) Allow for quick two-way feedback Establish a personal focus for the communication Lengel-Daft media richness hierarchy.  Whetten and Cameron (2011) – supportive communication 1) Problem-oriented, not person-oriented 4) Specific, not global A focus on problems and issues that can be A focus on specific events or behaviours, avoiding changed rather than people and their general, extreme or vague statements. characteristics. 6) Conjunctive, not disjunctive 2) Congruent, not incongruent A focus on statements that flow from what has A focus on honest messages in which verbal been said and facilitating interaction. messages match thoughts and feelings. 7) Owned, not disowned 3) Descriptive, not evaluative A focus on taking responsibility for your statements by using personal (‘I’) words. A focus on describing an objective occurrence, your reaction to it, and offering an alternative. 8) Supportive listening, not one-way listening A focus on using a variety of responses, with a bias 4) Validating, not invalidating towards reflective responses. A focus on statements that communicate respect, flexibility and areas of agreement. Types of teams Formal team – deliberately created teams to perform specific tasks to meet organizational goals Vertical team – manager and subordinates Horizontal team – staff at same level doing different functions Informal groups – a group that emerges from regular interaction Self-managing teams – teams that are responsible for an entire area without supervision Virtual teams – teams over virtual networks Belbin’s team roles Stages of team development Even if you put together a balanced team in terms of strengths and roles, achieving a high-performing team can take time… Tuckman’s (1965) model of 5 stages of team development. Human resource management Types of Manager General Managers Functional Managers Line Managers Staff Managers Project Managers Entrepreneurs Mintzberg’s (1973) ten management roles Boddy, D. (2020) p. 13 Human resource planning Detailed analysis of the size and nature of the workforce to fulfil the organisation’s strategy 3 Stages of human resource planning Forecasting Job analysis Recruitment and selection Predictive accuracy of different selection methods (Beardwell and Thompson, 2014) What motivates people? (textbook chapter 15) Content theories of motivation: based on goals/needs people pursue Money Quality of supervision Safe working environment Secure employment Good working relationships Responsible, challenging work Career prospects Etc. Example: Maslow’s (1970) hierarchy of needs What motivates people? Process theories e.g. Goal Setting Theory (Locke, 1968; Locke and Latham, 2002) Challenging Goals – Lead to higher performance than easy goals Specific Goals – Lead to higher performance than vague goals Participation – in setting the goals improves commitment to achieving the goals Knowledge of results – feedback on past performance helps people attain the new goals Textbook chapter 15 introduces further content and process theories of how to motivate people at work. These theories have implications for reward strategies and management styles.  Equal opportunities and diversity Torrington et al. (2008) distinguished two broad Diversity management – improving approaches: opportunities for individuals, whatever their background, by stressing the Equal opportunities – legislation value which a more diverse workforce encourages or require employers to can add create systems and procedures to ensure fair treatment, e.g. UK Equality Act: E.g. a diverse selection panel can help reduce bias Creativity, innovation and change Definitions What is creativity? What is innovation? The ability to combine ideas to produce something new and useful Creativity results in ideas which can be applied to add value new ideas Updates or improvements Models of change in practice Operations management Exam tips Exam Prep Strategies Study theories/concepts from the text and examples or applications Write clear, descriptive, and orderly answers (essays) Answer the questions provided (not some other question) Answer BOTH questions If you can add references (in-text) then that is great (Boddy, 2020) Outline your answers (both of them) before you start writing Introduction including thesis statement (argument) – body containing analysis and examples – conclusion. Watch your time Good answers include… Description of the concepts and theories Good examples of application to a business context Good answers are… Well structured Complete Questions? Good luck!