GMS Final Exam Notes PDF

GMS Exam Notes Introduction to Global Management (GMS 200) GMS Final Exam Notes Chapters: 1, 7, 5, 2, 8, 10, 14, 6, 11 Chapter 1: Management Today 1.1: Working Today People and their talents - what they know, what they learn, and what they ach...

GMS Exam Notes Introduction to Global Management (GMS 200) GMS Final Exam Notes Chapters: 1, 7, 5, 2, 8, 10, 14, 6, 11 Chapter 1: Management Today 1.1: Working Today People and their talents - what they know, what they learn, and what they achieve - are the crucial foundations for organizational performance Intellectual capital: combined brain-power and shared knowledge of an organization’s employees ○ Strategic asset - organizations use to transform human creativity, insight, and decision-making into performance ○ Personal asset - should be nurtured and continually updated Intellectual capital equation: ○ Intellectual capital = competency * commitment Competency: represents your personal talents or job-related capabilities Commitment: represents how hard you work to apply your talents and capabilities to important tasks Workplace talents in today’s age of information, technology, and change are dominated by knowledge workers Knowledge workers: workers whose minds - their creativity and insights - are critical assets to employers Because of the increased use of technology, it is critical to build and maintain a high Tech IQ Tech IQ: the ability to use current technologies at work and in your personal life, combined with the commitment to keep yourself updated as technology continues to evolve Globalization: the worldwide interdependence of resource flows, product markets, and business competition ○ Govt leaders worry about competitiveness of nations ○ Corporate leaders worry about business competitiveness ○ Countries and people interconnected through labour markets, employment patterns, and financial systems ○ Job migration: shifting of jobs from one country to another Controversial consequence of globalization ○ Reshoring: shift of manufacturing and jobs back home from overseas 8 0  Flip side of job migration Ethics: a code of moral principles that sets standards for conduct that is “good” and “right” as well as “bad” and “wrong” ○ Depend on both individuals and employers to act ethically Corporate governance: active oversight of top management decisions, corporate strategy, and financial reporting by a company’s board of directors ○ Ethics indicator Another indicator of ethics in organizations is the emphasis given to social responsibility and sustainability practices Workforce diversity: composition of a workforce in terms of gender, age, race, ethnicity, religion, sexual orientation, and able-bodiedness Prejudice: display of negative, irrational opinions and attitudes regarding members of diverse populations ○ Becomes active discrimination when members of some groups are unfairly treated and denied the full benefits of organizational membership Subtle form of discrimination called the glass  ceiling effect, an invisible barrier or ceiling that prevents women and visible minorities from rising to top jobs Careers and connections ○ Shamrock organization: an organization that operates with a core group of full-time long-term workers supported by others who work on contracts and part-time ○ Free-agent economy: where people change jobs more often and work on flexible contracts with a shifting mix of employers over time ○ Self management: being able to assess yourself realistically, recognize strengths and weaknesses, make constructive changes, and manage personal development Early career survival skills Mastery Networking Entrepreneurship Technology Marketing Renewal ○ Connections are very important in a free-agent economy Social networking: the use of dedicated websites and applications to connect people having similar interests 8 0 1.2: Organizations Organization: a collection of people working together to achieve a common purpose ○ Unique social phenomenon that enables its members to perform tasks for beyond the reach of individual accomplishments ○ Purpose is to provide goods or services of value to customers and clients Organizations as systems ○ Open systems: systems that transform resource inputs from the environment into product outputs Organizational performance ○ Organizations create value when they use resources well to produce good products and take care of their customers ○ Productivity: measures the quantity and quality of outputs relative to the cost of inputs Involves both performance effectiveness and performance efficiency ○ Performance effectiveness: an output measure of task or goal accomplishment ○ Performance efficiency: an input measure of the resource costs associated with goal accomplishment Changing nature of organizations ○ Some organizational trends and transitions relevant to the study of management: Focus on valuing human capital Demise of “command-and-control” emphasis on teamwork Pre-eminence of technology Importance of networking New workforce expectations Concern for sustainability 1.3: Managers Managers: people in organizations who directly support, supervise, and help activate the work efforts and performance accomplishments of others 8 0  Levels of managers ○ Board of directors: members are elected by shareholders to represent their ownership interests ○ Top managers: constitute an executive team that reports to the board and is responsible for the performance of the organization as a whole or for one of its larger parts ○ Middle managers: report to top managers; in charge of relatively large departments or divisions consisting of several smaller work units ○ Team leader: someone in charge of a small work group composed of non-managerial workers Responsibilities ○ Board of directors Make sure that the organization is always being well run and managed in a lawful and ethical manner ○ Top managers Set strategy and lead the organization consistent with its purpose and mission Should pay special attention to the external environment Be alert to potential long-run problems and opportunities ○ Middle managers Working with top managers Coordinating with peers Supporting lower-level team members Types of managers: ○ Line managers: responsible for work that makes a direct contribution to the organization’s outputs ○ Staff managers: use special techniques and expertise to advise and support the efforts of line workers ○ Functional managers: have responsibility for a single area of activity such as finance, marketing, production, HR, accounting, or sales ○ General managers: responsible for activities covering many functional areas ○ In public or non-profit organizations, managers may be called administrators Managerial performance ○ Accountability: the requirement of one person to answer to a higher authority for performance results in his or her area of work responsibility Flows upward in the traditional organizational structure 8 0  ○ Effective managers: successfully help others achieve both high performance and satisfaction in their work ○ Quality of work (QWL): indicator of the overall quality of human experiences at work Changing nature of managerial work ○ Upside-down pyramid: concept that fits well with the changing mindset of managerial work today 1.4: The Management Process Management process: four functions of management ○ Planning ○ Organizing ○ Leading ○ Controlling Planning: the process of setting performance objectives and determining what actions should be taken to accomplish them Organizing: the process of assigning tasks, allocating resources, and coordinating the activities of individuals and groups to accomplish plans Leading: the process of arousing people’s enthusiasm and inspiring their efforts to work hard to fulfill plans and accomplish objectives Controlling: the process of measuring work performance, comparing results, and taking corrective actions as needed Managerial roles: ○ Mintzberg’s common roles filled by management Interpersonal roles How a manger interacts with people Informational roles How a manager exchanges and processes information Decisional roles How a manger uses information in decision making Managerial activities ○ Must master key roles and implement them in intense and complex work settings ○ Work is busy, demanding, and stressful Managerial agendas and networks: 8 0  ○ Agenda setting: develop action priorities that include goals and plans spanning long and short time frames Implement agendas by networking ○ Networking: the process of building and maintaining positive relationships with people whose help may be needed to implement one’s agendas Creates social capital ○ Social capital: a capacity to attract support and help from others in order to get things done 1.5: Learning How to Manage Learning: changing behaviour through experience ○ Begins with self-awareness - a real, unbiased understanding of your strengths and weaknesses Lifelong learning: the process of continuous learning from all our daily experiences and opportunities Skill: the ability to translate knowledge into action that results in desired performance Essential skills of managers have three categories ○ Technical skill: the ability to use a special proficiency of expertise to perform particular tasks ○ Human skill: the ability to work well in cooperation with other persons Emotional intelligence: ability to manage ourselves and our relationships effectively ○ Conceptual skill: the ability to think analytically Chapter 7: Information and Decision-Making 7.1: Information, Technology, and Management Career and personal success increasingly requires three competencies: ○ Technological competency: the ability to understand new technologies and to use them to their best advantage 8 0  ○ Information competency: the ability to locate, gather, organize, and display information ○ Analytical competency: the ability to evaluate and analyze information to make actual decisions and solve real problems Information and information systems ○ Data: raw facts and observations ○ Information: data made useful and meaningful for decision-making Five criteria Timely High quality Complete Relevant Understandable ○ Management information systems: use the latest technologies to collect, organize, and distribute data ○ Intelligence information: gathered from stakeholders and external environment ○ Internal information: flows up, down, around, and across organizations ○ Public information: disseminated to stakeholders and external environment Data mining and analytics ○ Data mining: the process of analyzing data to produce useful information for decision makers Big data: collected in huge quantities and are difficult to mine without using sophisticated mathematical and analytical techniques ○ Analytics: the systematic evaluation and analysis of data to make informed decisions Also called business  analytics or management analytics Business intelligence and executive dashboards ○ Business intelligence: the process of tapping or mining information systems to extract data that are most potentially useful for decision-makers Data can provide Competitive information Big picture information Function-specific information ○ Executive dashboards: visually display and update key performance metrics in the form of graphs, charts, and scorecards in real time One of the trends in business intelligence 8 0 7.2: Problem Solving and Managerial Decisions Decisional roles ○ Information used for entrepreneurship, resource allocation, disturbance handling, negotiation Interpersonal roles ○ Information used for ceremonies, motivation, and networking Informational roles ○ Information sought, received, transferred among insiders and outsiders Managers as problem solvers ○ Problem solving: the process of identifying a discrepancy between an actual and a desired state of affairs, and then taking corrective action to resolve the problem ○ Decisions: choices among alternative possible courses of action ○ Performance threat: something is already wrong or has the potential to go wrong ○ Performance opportunity: offers the chance for better future performance if the right steps are taken Problem solving approaches and styles ○ Openness to problem solving Problem avoiders: ignore information that would otherwise signal the presence of a performance opportunity or threat Problem solvers: willing to make decisions and try to solve problems, but only when forced into it by the situation Problem seekers: constantly process information and proactively look for problems to solve, even before they occur ○ Systematic and intuitive thinking Systematic thinking: individuals approach problems using a rational, step-by-step, analytical process Slow and methodical Breaks complex problem into smaller components Intuitive thinking: more flexible and spontaneous in problem solving Quick and broad evaluation of the situation as well as possible alternative courses of action Multi-dimensional thinking: an ability to view many problems simultaneously, in relationship to one another and across both long and short term horizons 8 0  ○ Strategic opportunism: the ability to remain focused on long-term objectives while being flexible enough to resolve short-term problems and opportunities in a timely way Cognitive styles: the way individuals deal with information while making decisions ○ Four styles Sensational thinkers Emphasize the impersonal rather than the personal Realistic approach to problem solving Intuitive thinkers Comfortable with abstraction and unstructured situations Logical and impersonal but also tend to avoid details Intuitive feelers Prefer broad and global issues Value flexibility and human relationships Sensation feelers Emphasize both analysis and human relations Open communications and sensitive to feelings and values Types of problem-solving decisions ○ Structured problems: familiar, straightforward, and clear with respect to information needs Programmed decisions: use solutions or decision rules already available from past experience ○ Unstructured problems: new or unusual situations characterized by ambiguities and information deficiencies Nonprogrammed decisions: novel solutions are specifically crafted to meet the demands of the unique situation at hand Crisis problems ○ Crisis decision: an unexpected problem that can lead to disaster if not resolved quickly and appropriately ○ Six rules for crisis management Figure out what is going on Remember that speed matters Remember that slow counts, too Respect the danger of the unfamiliar Value the sceptic Be ready to “fight fire with fire” Types of decision environments ○ Three different decision conditions or environments 8 0  Certain environment: full and complete factual information is available about possible alternative courses of action and their outcomes Risk environment: facts and information on action alternatives and their consequences are incomplete Uncertain environment: facts are few and information is poor, most difficult decision-making condition 7.3: The Decision-Making Process Decision-making process: has 5 steps ○ Identify and define the problem ○ Generate and evaluate alternative solutions ○ Choose a preferred course of action ○ Implement the decision ○ Evaluate results Step 1: identify and define the problem ○ Three common mistakes Defining the problem too broadly or too narrowly Focusing on symptoms instead of causes Choosing the wrong problem to deal with at a particular point in time Step 2: generate and evaluate alternative courses of action ○ Unintended consequences: unanticipated positive or negative side effects that result from a decision Step 3: choose a preferred course of action ○ Classical decision model: views the manager as acting rationally in a certain world Optimizing decision: gives the absolute best solution to the problem ○ Behavioural decision model: people act with only partial knowledge about the available action alternatives and their consequences Bounded rationality: managerial decisions are rational only within the boundaries set by the available information and known alternatives, both of which are incomplete Satisficing decision: choosing the first satisfactory alternative that comes to your attention Step 4: implement the decision 8 0  ○ Lack-of-participation error: a failure to adequately involve in the process individuals whose support is necessary to put the decision into action Step 5: evaluate the results ○ If the desired outcomes are not achieved or if undesired side effects result, corrective action should be taken At all steps - check ethical reasoning ○ Decision should test positive on these four ethics criteria Utility Rights Justice Caring 7.4: Decision-Making Pitfalls and Creativity Decision errors and traps ○ Heuristics: rules of thumb ○ Framing error: occurs when a problem is evaluated and resolved in the context in which it is perceived ○ Availability bias: occurs when people assess a current event or situation by using information that is “readily available” from memory ○ Representativeness bias: occurs when people assess the likelihood of something happening based on its similarity to a stereotyped set of occurrences ○ Anchoring and adjustment bias: occurs when decisions are influenced by inappropriate deference to a previous value or starting point ○ Confirmation error: noticing, accepting and seeking out only information that confirms or is consistent with the decision we just made ○ Escalating commitment: occurs as a decision to increase effort and perhaps apply more resources to pursue a course of action that is not working Creativity in decision-making ○ Creativity: novel idea or unique approach to solving problems or exploiting opportunities ○ Big-C creativity: extraordinary things are done by exceptional people ○ Little-C creativity: average people come up with unique ways to deal with daily events and situations ○ Design thinking: 8 0  Experiencing Ideation Prototyping ○ Personal creativity drivers Task expertise Task motivation Creativity skills ○ Situational creativity drivers Team creativity skills Management support Organizational culture Chapter 5: Global Management and Cultural Diversity 5.1: Management and Globalization Global economy: resources, supplies, product markets, and business competition have a worldwide scope Globalization: growing interdependence among the components in the global economy World 3.0: form of globalization in which national identities remain strong even as countries cooperate in the global economy Global management: management in businesses and organizations with interests in more than one country ○ Global managers: have a strong global perspective, are culturally aware, and are informed about current international issues and events Why companies go global ○ International businesses: conduct for-profit transactions of goods and services across national boundaries ○ Benefits: Profits Customers Suppliers Labour 8 0  Capital Risk Economic development How companies go global ○ Market-entry strategies Global sourcing importing/exporting Licensing Franchising ○ Direct investment strategies Strategic alliances Joint ventures Wholly owned subsidiaries ○ Global sourcing: the process of purchasing materials, manufacturing components, or locating business services around the world Reshoring: moving foreign manufacturing and jobs back home ○ Exporting: selling locally made products in foreign markets ○ Importing: buying foreign-made products and selling them in local markets ○ Licensing agreement: foreign firms pay a fee for rights to make or sell another company’s products in a specified region ○ Franchising: a form of licensing in which a foreign firm buys the rights to use another’s name and operating methods in its home country ○ Insourcing: describes FDI that results in local job creation ○ Joint venture: a co-ownership agreement in which foreign and local partners agree to pool resources, share risk, and jointly operate the new business ○ Global strategic alliances: foreign and domestic firms work together for mutual benefit ○ Foreign subsidiary: local operation completely owned and controlled by a foreign firm ○ Greenfield venture: subsidiary built from the ground up Global business environments ○ Legal and political systems Political risk: the potential loss in value of an investment or managerial record or control over a foreign asset because of instability and political changes in the host country Political-risk analysis: a planning technique to forecast the probability of disruptive events that can threaten the security of foreign investments 8 0  ○ Trade agreements and trade barriers World Trade Organization (WTO): global organization established to promote free trade and open markets around the world 64 member nations Members are supposed to give one another most  favoured nation status - the most favourable treatment for imports and exports Tariffs: constitute taxes that governments impose on imports Non-tariff barriers: discourage imports in non-tax ways Protectionism: giving favourable treatment to domestic businesses ○ Regional economic alliances: where nations agree to work together for economic gains Ex. NAFTA (North American Free Trade Agreement) European Union (EU): regional economic and political alliance of global importance Common currency - euro  Asia Pacific Economic Cooperation (APEC) South Africa Development Community (SADC) Trans-Pacific Partnership (TPP) 5.2: Global Businesses Types of global businesses ○ Global corporations: business firms with extensive international operations in many foreign countries Also called multinational  enterprises (MNEs) and multinational  corporations (MNCs) ○ Transnational corporations: do business around the world without being identified with one national home Pros and cons of global businesses ○ Globalization gap: large multinationals and industrialized nations gaining disproportionately from globalization ○ Host-country issues Benefits Larger tax base Increased employment opportunities Technology transfers 8 0  Introduction of new industries Development of local resources Costs Excessive profits Dominate the local economy Interfere with local government No respect for local customs and laws Fail to help domestic firms develop Hire the most talented local personnel from domestic firms Fail to transfer their most advanced technologies to the host country ○ Home-country issues Tax inversion: a domestic based MNC buys a firm in a low-tax country in order to shield foreign earnings from domestic taxes Ethics challenges for global businesses ○ Corruption: when people engage illegal practices to further their personal business interests Corruption of Foreign Public Officials Act (CFPOA): makes it illegal for Canadian firms and their representatives to engage in corrupt practices overseas ○ Child labour and sweatshops Child labour: the employment of children to perform work otherwise done by adults Sweatshops: business operations that employ workers at low wages for long hours in poor working conditions ○ Conflict minerals: minerals sourced in areas of armed conflict, particularly around the Democratic Republic of Congo and surrounding region, whose sale finances armed groups that perpetuate violence 5.3: Cultures and Global Diversity Culture: the shared set of beliefs, values, and patterns of behaviour common to a group of people Culture shock: the confusion and discomfort a person experiences when in an unfamiliar culture ○ Culture shock is experienced in the following stages when adjusting to a new culture: 8 0  Confusion Small victories The honeymoon Irritation and anger Reality Cultural intelligence ○ Ethnocentrism: a tendency to view one’s culture as superior to that of others ○ Cultural intelligence: ability to adapt, adjust, and work well across cultures Often called “CQ” for “cultural quotient” Silent languages of culture ○ Context Low context cultures: most communication takes place via the written or spoken word Common in Canada, the USA, and Germany High context cultures: what is actually said or written may convey only part of the real message Ex. Thailand, Malaysia ○ Time Monochronic cultures: often do one thing at a time Ex. Canada Polychronic cultures: more flexible in their views of time, try to work on many different things at once Ex. Egypt ○ Space Proxemics: study of how people use space to communicate Tight and loose cultures ○ Tight culture: social norms are strong and clear Ex. Korea, Japan or Malaysia ○ Loose culture: social norms are relaxed and less clear-cut Ex. Australia, Brazil, or Hungary Values and national cultures ○ Hofstede’s cultural dimensions Power distance: the degree that society accepts or rejects the unequal distribution of power among people in organizations and the institutions of society Individualism-collectivism: degree to which a society emphasizes individual accomplishments and self-interests versus the collective accomplishments of groups 8 0  Uncertainty avoidance: the degree to which a society is uncomfortable with risk, change, and situational uncertainty, versus having tolerance for them Masculinity-femininity: the degree to which a society values assertiveness and materialism versus feelings, relationships, and quality of life Time orientation: the degree to which a society emphasizes short-term versus long-term goals and gratifications ○ Ecological fallacy: acting with the mistaken assumption that a generalized cultural value applies equally to all members of the culture 5.4: Global Management Learning Cooperative management: how management perspectives and practices systematically differ among countries and cultures Intercultural competencies: skills and personal characteristics that help us function successfully in cross-cultural situations ○ Three pillars of intercultural competency Perception management A person must be inquisitive and curious about cultural differences Flexible and non judgemental Relationship management Person must be genuinely interested in others, be sensitive to one’s own emotions and feelings, and be able to make personal adjustments Self-management Person must have a strong sense of personal identity and understand his or her own emotions and values 8 0 Chapter 2: Management Learning Past to Present 2.1: Classical Management Approaches Three major classical approaches ○ Scientific management ○ Administrative principles ○ Bureaucratic organization Scientific management ○ Frederick W. Taylor - “father of scientific management” ○ Includes four guiding principles Develop a “science” that includes the rules of motion, standardized work implements, and proper working conditions for every job Carefully select workers with the right abilities for the job Carefully train workers to do the job and give them incentives to cooperate with the job “science” Support workers by carefully planning their work and by smoothing the way as they do their work ○ Some practical insights from scientific management: Make results-based compensation a performance incentive Carefully design jobs with efficient work methods Carefully select workers with the abilities to do these jobs Train workers to perform jobs to the best of their abilities Train supervisors to support workers so they can perform to the best of their abilities ○ Motion study: the science of reducing a job or task to its most basic physical aspects Administrative principles ○ Henri Fayol identified four “rules” or “duties” of management, which support the four functions of management Foresight: to complete a plan of action for the future Organization: to provide and mobilize resources to implement the plan Command: to lead, select, and evaluate workers to get the best work toward the plan Coordination: to fit diverse efforts together and to ensure information is shared and problems solved 8 0  Control: to make sure things happen according to plan and to take necessary corrective action ○ Fayol also defined 14 “principles” to help managers Some of these principles: Scalar chain principle: there should be a clear and unbroken line of communication from the top to the bottom of the organization Unity of command principle: each person should receive orders from only one boss Unity of direction principle: one person should be in charge of all activities that have the same performance objective Bureaucratic organization ○ Max Weber - believed in bureaucracy (an intentionally rational and very efficient form or organization) Founded on the principles of logic, order, and legitimate authority ○ Defining characteristics of Weber’s bureaucratic organization: Clear division of labour Clear hierarchy of authority Formal rules and procedures Impersonality Careers based on merit ○ Disadvantages: Bogged down in excessive paperwork Slow in handling problems Rigid in the face of shifting customer needs High in resistance to change and employee apathy ○ Management challenge is to know when bureaucratic features work well and what the best alternatives are when they don’t 2.2: Behavioural Management Approaches Major branches in the behavioural approaches to management: ○ Organizations as communities - Mary Parker Follett ○ Hawthorne studies - Elton Mayo ○ Theory of human needs - Abraham Maslow ○ Theory X and Theory Y - Douglas McGregor ○ Personality and organization - Chris Argyris 8 0  Follett’s Organizations as Communities ○ Taught respect for workers’ experiences and knowledge, warned against the dangers of too much hierarchy, and called for visionary leadership ○ Thought of organizations as “communities” where managers and workers should labour in harmony without one party dominating the other, and with the freedom to talk over and truly reconcile conflicts and differences ○ Groups were a way for individuals to combine their talents toward a greater good ○ It was the job of managers to help workers cooperate with one another and to integrate their goals and interests The Hawthorne Studies ○ Elton Mayo - led a team to learn how economic incentives and workplace conditions affected workers’ outputs ○ Concluded that unforeseen “psychological factors” somehow interfered with their experiments ○ Social setting and human relations One study focused on worker fatigue and output Six assembly workers were isolated for intensive study in a special test room Their production was measured as changes were made to the length of rest pauses, workdays, and workweeks Results showed that productivity increased regardless of the changes Researchers concluded that the new “social setting” in the test room made workers want to do a good job ○ Lessons of the Hawthorne Studies Hawthorne effect: the tendency of workers singled out for special attention to perform well, or better than anticipated because of expectations created by the situation Maslow’s Theory of Human Needs ○ Need: a physiological or psychological deficiency a person feels compelled to satisfy ○ Lowest to highest in order: Physiological Safety Social Esteem Self-actualization ○ Based on two underlying principles: 8 0  Capital Risk Economic development How companies go global ○ Market-entry strategies Global sourcing importing/exporting Licensing Franchising ○ Direct investment strategies Strategic alliances Joint ventures Wholly owned subsidiaries ○ Global sourcing: the process of purchasing materials, manufacturing components, or locating business services around the world Reshoring: moving foreign manufacturing and jobs back home ○ Exporting: selling locally made products in foreign markets ○ Importing: buying foreign-made products and selling them in local markets ○ Licensing agreement: foreign firms pay a fee for rights to make or sell another company’s products in a specified region ○ Franchising: a form of 8licensing 0 in which a foreign firm buys the rights to use another’s name and operating methods in its home country  ○ Insourcing: describes FDI that results in local job creation ○ Joint venture: a co-ownership agreement in which foreign and local partners agree to pool resources, share risk, and jointly operate the new business ○ Global strategic alliances: foreign and domestic firms work together for mutual benefit ○ Foreign subsidiary: local operation completely owned and controlled by a foreign firm ○ Greenfield venture: subsidiary built from the ground up Global business environments ○ Legal and political systems Political risk: the potential loss in value of an investment or managerial record or control over a foreign asset because of instability and political changes in the host country Political-risk analysis: a planning technique to forecast the probability of disruptive events that can threaten the security of foreign investments 8 0  ○ Trade agreements and trade barriers World Trade Organization (WTO): global organization established to promote free trade and open markets around the world 64 member nations Members are supposed to give one another most favoured nation status - the most favourable treatment for imports and exports Tariffs: constitute taxes that governments impose on imports Non-tariff barriers: discourage imports in non-tax ways Protectionism: giving favourable treatment to domestic businesses ○ Regional economic alliances: where nations agree to work together for economic gains Ex. NAFTA (North American Free Trade Agreement) European Union (EU): regional economic and political alliance of global importance Common currency - euro Asia Pacific Economic Cooperation (APEC) South Africa Development Community (SADC) Trans-Pacific Partnership (TPP) 5.2: Global Businesses Types of global businesses ○ Global corporations: business firms with extensive international operations in many foreign countries Also called multinational enterprises (MNEs) and multinational corporations (MNCs) ○ Transnational corporations: do business around the world without being identified with one national home Pros and cons of global businesses ○ Globalization gap: large multinationals and industrialized nations gaining disproportionately from globalization ○ Host-country issues 8 0 Benefits  Larger tax base Increased employment opportunities Technology transfers 8 Introduction of0new industries Development of local resources Costs  Costs Excessive profits Dominate the local economy Interfere with local government No respect for local customs and laws Fail to help domestic firms develop Hire the most talented local personnel from domestic firms Fail to transfer their most advanced technologies to the host country ○ Home-country issues Tax inversion: a domestic based MNC buys a firm in a low-tax country in order to shield foreign earnings from domestic taxes Ethics challenges for global businesses ○ Corruption: when people engage illegal practices to further their personal business interests Corruption of Foreign Public Officials Act (CFPOA): makes it illegal for Canadian firms and their representatives to engage in corrupt practices overseas ○ Child labour and sweatshops Child labour: the employment of children to perform work otherwise done by adults Sweatshops: business operations that employ workers at low wages for long hours in poor working conditions ○ Conflict minerals: minerals sourced in areas of armed conflict, particularly around the Democratic Republic of Congo and surrounding region, whose sale finances armed groups that perpetuate violence 5.3: Cultures and Global Diversity Culture: the shared set of beliefs, values, and patterns of behaviour common to a group of people Culture shock: the confusion and discomfort a person experiences when in an unfamiliar culture ○ Culture shock is experienced in the following stages when adjusting to a new culture: 8 0  Confusion Small victories The honeymoon Irritation and anger Reality Cultural intelligence ○ Ethnocentrism: a tendency to view one’s culture as superior to that of others ○ Cultural intelligence: ability to adapt, adjust, and work well across cultures Often called “CQ” for “cultural quotient” Silent languages of culture ○ Context Low context cultures: most communication takes place via the written or spoken word Common8 in Canada, 0 the USA, and Germany High context cultures: what is actually said or written may convey only part of the real message  only part of the real message Ex. Thailand, Malaysia ○ Time Monochronic cultures: often do one thing at a time Ex. Canada Polychronic cultures: more flexible in their views of time, try to work on many different things at once Ex. Egypt ○ Space Proxemics: study of how people use space to communicate Tight and loose cultures ○ Tight culture: social norms are strong and clear Ex. Korea, Japan or Malaysia ○ Loose culture: social norms are relaxed and less clear-cut Ex. Australia, Brazil, or Hungary Values and national cultures ○ Hofstede’s cultural dimensions Power distance: the degree that society accepts or rejects the unequal distribution of power among people in organizations and the institutions of society Individualism-collectivism: degree to which a society emphasizes individual accomplishments and self-interests versus the collective accomplishments of groups 8 0  Uncertainty avoidance: the degree to which a society is uncomfortable with risk, change, and situational uncertainty, versus having tolerance for them Masculinity-femininity: the degree to which a society values assertiveness and materialism versus feelings, relationships, and quality of life Time orientation: the degree to which a society emphasizes short-term versus long-term goals and gratifications ○ Ecological fallacy: acting with the mistaken assumption that a generalized cultural value applies equally to all members of the culture 5.4: Global Management Learning Cooperative management: how management perspectives and practices systematically differ among countries and cultures Intercultural competencies: skills and personal characteristics that help us function successfully in cross-cultural situations ○ Three pillars of intercultural competency Perception management A person must be inquisitive and curious about cultural differences Flexible and non judgemental Relationship management Person must be genuinely interested in others, be sensitive to one’s own emotions and feelings, and be able to make personal adjustments Self-management 8 0 Person must have a strong sense of personal identity and understand his or her own emotions and values 8 0 Chapter 2: Management Learning Past to Present 2.1: Classical Management Approaches Three major classical approaches ○ Scientific management ○ Administrative principles ○ Bureaucratic organization Scientific management ○ Frederick W. Taylor - “father of scientific management” ○ Includes four guiding principles Develop a “science” that includes the rules of motion, standardized work implements, and proper working conditions for every job Carefully select workers with the right abilities for the job Carefully train workers to do the job and give them incentives to cooperate with the job “science” Support workers by carefully planning their work and by smoothing the way as they do their work ○ Some practical insights from scientific management: Make results-based compensation a performance incentive Carefully design jobs with efficient work methods Carefully select workers with the abilities to do these jobs Train workers to perform jobs to the best of their abilities Train supervisors to support workers so they can perform to the best of their abilities ○ Motion study: the science of reducing a job or task to its most basic physical aspects Administrative principles ○ Henri Fayol identified four “rules” or “duties” of management, which support the four functions of management Foresight: to complete a plan of action for the future Organization: to provide and mobilize resources to implement the plan Command: to lead, select, and evaluate workers to get the best work toward the plan Coordination: to fit diverse efforts together and to ensure information is shared and problems solved 8 0  Control: to make sure things happen according to plan and to take necessary corrective action ○ Fayol also defined 14 “principles” to help managers Some of these principles: Scalar chain principle: there should be a clear and unbroken line of communication from the top to the bottom of the organization Unity of command principle: each person should receive orders from8 only 0 one boss Unity of direction principle: one person should be in charge of all activities that have the same performance objective  Bureaucratic organization ○ Max Weber - believed in bureaucracy (an intentionally rational and very efficient form or organization) Founded on the principles of logic, order, and legitimate authority ○ Defining characteristics of Weber’s bureaucratic organization: Clear division of labour Clear hierarchy of authority Formal rules and procedures Impersonality Careers based on merit ○ Disadvantages: Bogged down in excessive paperwork Slow in handling problems Rigid in the face of shifting customer needs High in resistance to change and employee apathy ○ Management challenge is to know when bureaucratic features work well and what the best alternatives are when they don’t 2.2: Behavioural Management Approaches Major branches in the behavioural approaches to management: ○ Organizations as communities - Mary Parker Follett ○ Hawthorne studies - Elton Mayo ○ Theory of human needs - Abraham Maslow ○ Theory X and Theory Y - Douglas McGregor ○ Personality and organization - Chris Argyris 8 0  Follett’s Organizations as Communities ○ Taught respect for workers’ experiences and knowledge, warned against the dangers of too much hierarchy, and called for visionary leadership ○ Thought of organizations as “communities” where managers and workers should labour in harmony without one party dominating the other, and with the freedom to talk over and truly reconcile conflicts and differences ○ Groups were a way for individuals to combine their talents toward a greater good ○ It was the job of managers to help workers cooperate with one another and to integrate their goals and interests The Hawthorne Studies ○ Elton Mayo - led a team to learn how economic incentives and workplace conditions affected workers’ outputs ○ Concluded that unforeseen “psychological factors” somehow interfered with their experiments ○ Social setting and human relations One study focused on worker fatigue and output Six assembly workers were isolated for intensive study in a special test room Their production was measured as changes were made to the length of rest pauses, workdays, and workweeks Results showed that productivity increased regardless of the changes 8 0 Researchers concluded that the new “social setting” in the test room made workers want to do a good job  ○ Lessons of the Hawthorne Studies Hawthorne effect: the tendency of workers singled out for special attention to perform well, or better than anticipated because of expectations created by the situation Maslow’s Theory of Human Needs ○ Need: a physiological or psychological deficiency a person feels compelled to satisfy ○ Lowest to highest in order: Physiological Safety Social Esteem Self-actualization ○ Based on two underlying principles: 8 0  Deficit principle: a satisfied need that does not motivate behaviour Progression principle: the five needs that exist in a hierarchy of “prepotency” A need at any level becomes active only when the next lower level need is satisfied ○ Implies that managers who understand and help workers to satisfy their important needs at work will get more productivity out of their employees McGregor’s Theory X and Theory Y ○ Theory X: assumption that employees generally dislike work, have little ambition, are irresponsible, resist change, and prefer to be led rather than to lead Managers act in a very directive, command-and-control, top-down way that gives employees little say over their work ○ Theory Y: assumption that employees are willing to work hard, accept responsibility, are capable of self control and self direction, and are imaginative and creative Managers behave in ways that engage workers, giving them more job involvement, freedom, and responsibility ○ Self fulfilling prophecies: when managers behave consistent with the assumptions, they end up encouraging employees to act in ways that confirm managers’ original expectations Argyris’s Theory of Adult Personality ○ Contrasts management practices found in traditional, bureaucratic organizations with the needs and capabilities of mature adults ○ Believed that common problems, such as absenteeism, turnover, apathy, alienation, and low morale, may be signs of a mismatch ○ Argued that managers who treat employees as responsible adults will achieve the highest productivity 2.3: Modern Management Foundations Quantitative analysis and tools ○ Typical quantitative approach to management works like this: A problem is encountered It is systematically analyzed 8 0 Appropriate mathematical techniques are applied An optimum solution is identified  ○ Analytics: the systematic analysis of large databases - often called “big data” - to solve problems and make informed decisions Organizations as systems 8 0 ○ Important to understand the full complexity of organizations as a system of interrelated parts or subsystems that work together to achieve common  goals ○ Open systems: interact with their environment in a continual process of transforming inputs into outputs Contingency thinking: matches actions with problems and opportunities specific to different people and settings Chapter 8: Planning Processes and Techniques 8.1: Why and How Managers Plan Planning: sets the stage for the other functions of management by providing a sense of direction ○ Involves deciding exactly what needs to be accomplished and how best to go about it Importance of planning ○ When planning is done well it creates a solid platform for the other management functions ○ Helps with organizing - allocating and arranging resources to accomplish tasks ○ Helps with leading - guiding and inspiring others to achieve high levels of task accomplishment ○ Helps with controlling - monitoring task accomplishments and taking corrective action when needed The planning process ○ Five basic steps Define your objectives Determine where you stand vis-a-vis objectives Develop premises regarding future conditions Analyze alternatives and make a plan Implement the plan and evaluate results ○ Objectives and goals: specific results aor desired outcomes 8 0  ○ Stretch goals: performance targets that we have to work extra hard and really stretch to reach ○ Plan: a statement of action steps to be taken in order to accomplish objectives and goals Benefits of planning ○ Planning improves focus and flexibility ○ Planning improves action orientation Complacency trap: simply being carried along by the flow of events ○ Planning improves coordination and control Planning and time management ○ Benefit of good planning - time management ○ A lot of time management skill comes down to discipline and priorities 8.2: Types of Plans Used by Managers 8 0 Long-term and short-term plans ○ Long-term plans: looked three or more years into the future  ○ Short term plans: covered one year or less Strategic and tactical plans ○ Strategic plans: focused on the organization as a whole or a major component Longer-term plans Set forth the goals and objectives needed to accomplish the organization’s vision in terms of mission or purpose and what it hopes to be in the future ○ Tactical plans: developed and used to implement strategic plans Specify how the organization’s resources can be used to put strategies into action Take the form of functional plans that indicate how different components of the enterprise will contribute to the overall strategy Production plans Financial plans Facilities plans Logistics plans Marketing plans Human resource plans 8 0  Operational plans: guide behaviour and describe what needs to be done in the short term to support strategic and tactical plans ○ Include both standing plans like policies and procedures that are used over and over again, and single-use plans like budgets that apply to one specific task or time period ○ Policies and procedures Policy: communicates broad guidelines for making decisions and taking action in specific circumstances Procedures: describe specific rules for what actions are to be taken in various situations ○ Budgets: single-use plans that commit resources for specific time periods to activities, projects, or programs Zero-based budget: approaches each new budget period as it if were brand new 8.3: Planning Tools and Techniques Forecasting: the process of predicting what will happen in the future Contingency planning: identifying alternative courses of action that can be implemented if circumstances change Scenario planning: a long term version of contingency planning ○ Involves identifying several possible future scenarios or states of affairs and then making plans to deal with each scenario should it actually occur Benchmarking: the use of external and internal comparisons to better evaluate the current performance and identify possible ways to improve for the future ○ Best practices: things people and organizations do that help them to achieve superior performance Staff planning ○ Use of staff planners - specialists that are experts in all steps of the 8 planning process, as well as0 in the use of planning tools and techniques 8.4: Implementing Plans to Achieve Results Goal setting ○ SMART goals 8 0  specific - clearly targeted, with key results and outcomes to be accomplished Measurable - described so results can be measured without ambiguity Attainable - including a challenging stretch factor while still being realistic and possible to achieve Relevant - focused on important results, not just on activities or effort expended Timely - linked to specific timetables and due dates ○ More difficult aspect of goal setting is making performance objectives as measurable as possible Best to achieve agreement on a measurable end product Goal management ○ Learning goals: create the knowledge and skills required for performance ○ Outcome goals: set targets for actual performance results Goal alignment ○ Hierarchy of goals or hierarchy of objectives: a tool of goal-setting in which lower-level goals and objectives support accomplishment of higher-level goals and objectives Participation and involvement ○ Participatory planning: includes in all planning steps the people who will be affected by the plans and asked to help implement them Chapter 10: Strategy and Strategic Management 10.1: Strategic Management Competitive advantage: describes an organization’s ability to use resources so well that it performs better than the competition ○ Typical sources of competitive advantage are: Technology Cost and quality Knowledge and speed Barriers to entry Financial resources 8 0  ○ Sustainable competitive advantage: competitive advantage that is durable and difficult or costly for others to copy or imitate Strategy and strategic intent ○ Strategy: is a comprehensive action plan that identifies the long-term direction for an organization and that guides resource utilization to achieve sustainable competitive advantage ○ Strategic intent: the focus on and application of organizational energies on a unifying and compelling goal Levels of strategy ○ Corporate-level strategy Corporate strategy: directs the organization as a whole toward 8 sustainable competitive0 advantage Corporate level strategic question - “In what industries and markets  should we compete? ○ Business-level strategy Business strategy: sets the direction for a single business unit or product line Business-level strategic question - “How are we going to compete for customers in this industry and market?” ○ Functional strategy: guides the use of organizational resources to implement business strategy Functional-level strategic question - “How can we best utilize resources within a function to implement our business strategy?” Strategic management process ○ Strategic management: the process of formulating and implementing strategies to accomplish long-term goals and sustain competitive advantage ○ Process: Strategic analysis: assess the organization, its environment, its competitive positioning, and its current strategies Strategy formulation: developing a new or revised strategy Strategy implementation: using resources to put strategies into action, and then evaluating results so that the implementation can be improved or the strategy changed 8 0 10.2: Essentials of Strategic Analysis Core set of strategic questions that any top manager should be prepared to answer ○ What is our business mission? ○ Who are our customers? ○ What do our customers value? ○ What have been our results? ○ What is our plan? Analysis of mission, values, and objectives ○ Mission and stakeholders Mission: describes its reason for existence in society Stakeholders: individuals and groups - including customers, shareholders, members, employees, suppliers, creditors, etc - who are directly affected by the organization and its accomplishments ○ Core values and culture Core values: broad beliefs about what is or not appropriate behaviour Organizational culture: the predominant value system of the organization as a whole ○ Objectives Operating objectives: direct activities toward key performance areas Typical operating objectives for a business: 8 0 ○ Profitability ○ Sustainability ○ Social responsibility  Social responsibility ○ Financial health ○ Cost efficiency ○ Customer service ○ Product quality ○ Market share ○ Human capacity ○ Innovation SWOT analysis of organization and environment ○ SWOT analysis: an internal analysis of organizational strengths and weaknesses as well as an external analysis of environmental opportunities and threats 8 0