Management - Fifth Canadian Edition PDF

Management Fifth Canadian Edition John R. Schermerhorn, Jr. Barry Wright Chapter 1 Management Today  Planning Ahead – Key Takeaways Recognize the challenges of working in the new economy. Describe the nature of organizations as work settings. Discuss what it means to be...

Management Fifth Canadian Edition John R. Schermerhorn, Jr. Barry Wright Chapter 1 Management Today  Planning Ahead – Key Takeaways Recognize the challenges of working in the new economy. Describe the nature of organizations as work settings. Discuss what it means to be a manager. Explain the functions, roles, and activities of managers. Identify essential managerial skills and discuss how they are learned. Copyright ©2018 John Wiley & Sons, Inc. 2  Working Today Talent Intellectual capital is the combined brainpower and shared knowledge of an organization’s employees A knowledge worker’s mind is a critical asset to employers and adds to the intellectual capital of an organization Copyright ©2018 John Wiley & Sons, Inc. 3  Working Today Technology Tech IQ is a person’s ability to use current technologies at work and in personal life: Checking inventory, making a sales transaction, ordering supplies Telecommuting Virtual teams Copyright ©2018 John Wiley & Sons, Inc. 4  Working Today Globalization The worldwide interdependence of resource flows, product markets, and business competition that characterize our economy Copyright ©2018 John Wiley & Sons, Inc. 5  Working Today Ethics Code of moral principles that set standards of conduct of what is “good” and “right”, as well as “bad” and “wrong” An individual behaviour In business practices  How would you reconcile ethics and business profitability?? Copyright ©2018 John Wiley & Sons, Inc. 6  Working Today Which of the following constitute intellectual capital? A. Knowledge B. Skills C. Savings in the bank D. Experiences E. Diploma Copyright ©2018 John Wiley & Sons, Inc. 7  Working Today Corporate Governance Board of directors hold top management responsible for organizational performance Copyright ©2018 John Wiley & Sons, Inc. 8  Working Today Diversity Workforce diversity reflects differences with respect to gender, age, race, ethnicity, religion, sexual orientation, and able-bodiedness A diverse and multicultural workforce both challenges and offers opportunities to employers Copyright ©2018 John Wiley & Sons, Inc. 9  Working Today Diversity How diversity bias can occur in the workplace: Prejudice – the display of negative, irrational opinions and attitudes Discrimination – unfairly treating members of some groups Glass ceiling effect – an invisible barrier or ceiling Copyright ©2018 John Wiley & Sons, Inc. 10  Organizations Organizations A collection of people working together to achieve a common purpose Organizations provide goods and services of value to customers and clients, and seek to serve society Copyright ©2018 John Wiley & Sons, Inc. 11  Organizations Why are organizations important? Copyright ©2018 John Wiley & Sons, Inc. 12 The Magic of Synergy! Copyright ©2018 John Wiley & Sons, Inc. 13  Organizations Organizations as open systems interact with their environments Copyright ©2018 John Wiley & Sons, Inc. 14  Organizations Organizational performance “Value creation” is a very important notion for organizations Value is created when an organization’s operations add value to the original cost of resource inputs When value creation occurs: Businesses earn a profit Nonprofit organizations add wealth to society Copyright ©2018 John Wiley & Sons, Inc. 15  Organizations Organizational performance (cont.) Productivity: An overall measure of the quantity and quality of work performance with resource utilization taken into account Performance effectiveness: An output measure of task or goal accomplishment Performance efficiency: An input measure of the resource costs associated with goal accomplishment Copyright ©2018 John Wiley & Sons, Inc. 16  Organizations Productivity and the dimensions of organizational performance Copyright ©2018 John Wiley & Sons, Inc. 17  Organizations Workplace changes that provide a context for studying 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 Copyright ©2018 John Wiley & Sons, Inc. 18  Managers Importance of human resources and managers People are not ‘costs to be controlled’ High performing organizations treat people as valuable strategic assets – human capital Copyright ©2018 John Wiley & Sons, Inc. 19  Managers Manager Directly supports, supervises, and helps activate the work efforts of others The people who managers help are the ones whose contributions represent the real work of the organization Copyright ©2018 John Wiley & Sons, Inc. 20  Managers Levels of management Board of directors makes sure the organization is run well Top managers are responsible for performance of an organization as a whole or for one of its major parts Middle managers oversee large departments or divisions Team leaders supervise non-managerial workers Copyright ©2018 John Wiley & Sons, Inc. 21  Managers Management levels in a typical business and non-profit organizations Copyright ©2018 John Wiley & Sons, Inc. 22  QWL Quality of work life (QWL) An indicator of the overall quality of human experiences in the workplace Copyright ©2018 John Wiley & Sons, Inc. 23  QWL Indicators QWL Indicators Respect Fair pay Safe working conditions Opportunities to learn and use new skills Room to grow and progress in a career Protection of individual rights Copyright ©2018 John Wiley & Sons, Inc. 24  Managers The organization as an upside-down pyramid A manager’s job is to support workers’ efforts The best managers are known for helping and supporting Customers at the top served by workers who are supported by managers Copyright ©2018 John Wiley & Sons, Inc. 25  Managers The organization viewed as an upside-down pyramid Copyright ©2018 John Wiley & Sons, Inc. 26  The Management Process Managers achieve high performance for their organizations by best utilizing its human and material resources Management is the process of planning, organizing, leading, and controlling the use of resources to accomplish performance goals All managers are responsible for the four functions The functions are carried on continually Copyright ©2018 John Wiley & Sons, Inc. 27  The Management Process Four functions of management – planning, organizing, leading, and controlling Copyright ©2018 John Wiley & Sons, Inc. 28  The Management Process Functions of Management Planning The process of setting objectives and determining what actions should be taken to accomplish them Organizing The process of assigning tasks, allocating resources, and coordinating work activities Copyright ©2018 John Wiley & Sons, Inc. 29  The Management Process Functions of Management Leading The process of arousing people’s enthusiasm and inspiring them to work hard to achieve goals Controlling The process of measuring work performance, comparing results, and taking corrective action Copyright ©2018 John Wiley & Sons, Inc. 30  The Management Process Characteristics of managerial work Long hours Intense pace Fragmented and varied tasks Many communication media Filled with interpersonal relationships Copyright ©2018 John Wiley & Sons, Inc. 31 Questions!!! 32  Copyright Copyright © 2018 John Wiley & Sons Canada, Ltd. All rights reserved. Reproductions or translations of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein. Copyright ©2018 John Wiley & Sons, Inc. 33  Management Fifth Canadian Edition John R. Schermerhorn, Jr., Daniel G. Bachrach, Barry Wright Chapter 2 Management Learning Past to Present Copyright ©2021 John Wiley & Sons Canada, Ltd. Learning Objectives 2.1 Describe the principal insights of classical management thinking. 2.2 Identify key insights of the behavioral management approaches. 2.3 Explain the core foundations of modern management theory and practice. Copyright ©2021 John Wiley & Sons, Inc. 35 Major Classical Approach Branches to Management Major branches in the classical approach to management Copyright ©2021 John Wiley & Sons Canada, 36 Ltd. Classical Management Approaches (1 of 8) Four guiding principles of scientific management (Frederick Taylor) 1. Develop a “science” that includes rules of motion, standardized work implements, and proper working conditions for every job. 2. Carefully select workers with the right abilities for the job. 3. Carefully train workers to do the job and give them incentives to cooperate with the job “science.” 4. Support workers by carefully planning their task and by smoothing the way as they do their work. Copyright ©2021 John Wiley & Sons Canada, 37 Ltd. Classical Management Approaches (2 of 8) Scientific management (the Gilbreths) Motion study o Science of reducing a job or task to its basic physical motions o Eliminating wasted motions improves performance o Improved performance results in increased productivity Copyright ©2021 John Wiley & Sons Canada, 38 Ltd. Classical Management Approaches (3 of 8) 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 Copyright ©2021 John Wiley & Sons Canada, 39 Ltd. Classical Management Approaches (4 of 8) Administrative principles (Henri Fayol) – rules / duties of management: Foresight o to complete a plan of action for the future Organization o to provide and mobilize resources to implement the plan Command o to lead, select, and evaluate workers to get the best work toward the plan Copyright ©2021 John Wiley & Sons Canada, 40 Ltd. Classical Management Approaches (5 of 8) Administrative principles (Henri Fayol) – rules / duties of management (cont’d): Coordination o to fit diverse efforts together and ensure information is shared and problems solved Control o to make sure things happen according to plan and to take necessary corrective action Copyright ©2021 John Wiley & Sons Canada, 41 Ltd. Classical Management Approaches (6 of 8) Bureaucratic organization (Max Weber) Bureaucracy o An ideal, intentionally rational, and very efficient form of organization o Based on principles of logic, order, and legitimate authority o Believed that it would use resources more efficiently and treat employees more fairly Copyright ©2021 John Wiley & Sons Canada, 42 Ltd. Classical Management Approaches (7 of 8) Characteristics of bureaucratic organizations: Clear division of labour Clear hierarchy of authority Formal rules and procedures Impersonality Careers based on merit Copyright ©2021 John Wiley & Sons Canada, 43 Ltd. Classical Management Approaches (8 of 8) Possible disadvantages of bureaucracy Excessive paperwork or “red tape” Slowness in handling problems Rigidity in the face of shifting customer needs High resistance to change Employee apathy Copyright ©2021 John Wiley & Sons Canada, 44 Ltd. Behavioural Management Approaches (1 of 16) Foundations in the behavioural or human resource approaches to management Copyright ©2021 John Wiley & Sons Canada, 45 Ltd. Behavioural Management Approaches (2 of 16) Follett’s organizations as communities (Mary Parker Follett) Groups and human cooperation o Groups allow individuals to combine their talents for a greater good o Organizations are cooperating “communities” of managers and workers o Manager’s job is to help people cooperate and achieve an integration of goals and interests Copyright ©2021 John Wiley & Sons Canada, 46 Ltd. Behavioural Management Approaches (3 of 16) Organizations as communities Forward-looking management insights: o Making every employee an owner creates a sense of collective responsibility precursor of employee ownership, profit sharing, and gain- sharing o Business problems involve a variety of inter-related factors precursor of systems and contingency thinking o Private profits must be considered relative to public good precursor of managerial ethics and corporate social responsibility Copyright ©2021 John Wiley & Sons Canada, 47 Ltd. Behavioural Management Approaches (4 of 16) Hawthorne studies Initial study examined how economic incentives and physical conditions affected worker output No consistent relationship found “Psychological factors” influenced results Copyright ©2021 John Wiley & Sons Canada, 48 Ltd. Behavioural Management Approaches (5 of 16) Hawthorne studies Social setting and human relations o Manipulated physical work conditions to assess impact on output o Designed to minimize the “psychological factors” of previous experiment o Mayo and colleagues concluded: New “social setting” led workers to do good job Good “human relations” = higher productivity Copyright ©2021 John Wiley & Sons Canada, 49 Ltd. Behavioural Management Approaches (6 of 16) Hawthorne studies Employee attitudes and group processes o Some things satisfied some workers but not others o People restricted output to adhere to group norms Copyright ©2021 John Wiley & Sons Canada, 50 Ltd. Behavioural Management Approaches (7 of 16) Lessons from the Hawthorne Studies Social and human factors are keys to productivity Hawthorne effect — people who are singled out for special attention perform as expected Copyright ©2021 John Wiley & Sons Canada, 51 Ltd. Behavioural Management Approaches (8 of 16) Maslow’s theory of human needs A need is a physiological or psychological deficiency a person feels compelled to satisfy o Physiological o Safety o Social o Esteem o Self-actualization Copyright ©2021 John Wiley & Sons Canada, 52 Ltd. Behavioural Management Approaches (9 of 16) Maslow’s hierarchy of human needs Copyright ©2021 John Wiley & Sons Canada, 53 Ltd. Behavioural Management Approaches (10 of 16) Maslow’s theory of human needs Deficit principle o A satisfied need is not a motivator of behavior – people try to satisfy deprived needs Progression principle o A need becomes a motivator once the preceding lower-level need is satisfied – people try to satisfy these needs in sequence Both principles cease to operate at self-actualization level Copyright ©2021 John Wiley & Sons Canada, 54 Ltd. Behavioural Management Approaches (11 of 16) McGregor’s Theory X assumes that workers: Dislike work Lack ambition Are irresponsible Resist change Prefer to be led Copyright ©2021 John Wiley & Sons Canada, 55 Ltd. Behavioural Management Approaches (12 of 16) McGregor’s Theory Y assumes that workers are: Willing to work hard Willing to accept responsibility Capable of self control Capable of self-direction Imaginative and creative Copyright ©2021 John Wiley & Sons Canada, 56 Ltd. Behavioural Management Approaches (13 of 16) Implications of Theory X and Theory Y: Managers create self-fulfilling prophecies Theory X managers create situations where workers become dependent and reluctant Theory Y managers create situations where workers respond with initiative and high performance o Central to notions of empowerment and self-management Copyright ©2021 John Wiley & Sons Canada, 57 Ltd. Behavioural Management Approaches (14 of 16) Argyris’s theory of adult personality Classical management principles and practices inhibit worker maturation and are inconsistent with the mature adult personality Psychological success occurs when people define own goals Copyright ©2021 John Wiley & Sons Canada, 58 Ltd. Behavioural Management Approaches (15 of 16) Argyris’s theory of adult personality Management practices should accommodate the mature personality by: o Increasing task responsibility o Increasing task variety o Using participative decision making Copyright ©2021 John Wiley & Sons Canada, 59 Ltd. Behavioural Management Approaches (16 of 16) Foundations for continuing developments in management Quantitative analysis and tools Organizations as systems Contingency thinking Quality management Evidence-based management Copyright ©2021 John Wiley & Sons Canada, 60 Ltd. Modern Management Foundations (1 of 8) Quantitative Analysis and Tools Analytics – the use of large data bases and mathematics to solve problems and make informed decisions using systematic analysis Typical quantitative approach to managerial problem-solving o Problem encountered, it is systematically analyzed, appropriate mathematical models and computations applied, optimal solution identified Copyright ©2021 John Wiley & Sons Canada, 61 Ltd. Modern Management Foundations (2 of 8) Organizations as systems System o Collection of interrelated parts that function together to achieve a common purpose Subsystem o A smaller component of a larger system Open systems o Organizations that interact with their environments in the continual process of transforming resource inputs into outputs Copyright ©2021 John Wiley & Sons Canada, 62 Ltd. Modern Management Foundations (3 of 8) Organizations as complex networks of interacting subsystems Copyright ©2021 John Wiley & Sons Canada, 63 Ltd. Modern Management Foundations (4 of 8) Contingency thinking Tries to match managerial responses with problems and opportunities unique to different situations No “one best way” to manage in all circumstances The appropriate way to manage depends on the situation Copyright ©2021 John Wiley & Sons Canada, 64 Ltd. Modern Management Foundations (5 of 8) Quality management Managers and workers in progressive organizations are quality conscious o Quality and competitive advantage are linked Total quality management (TQM) o Comprehensive approach to continuous improvement for the entire organization o The focus is on meeting customers’ needs by doing things right the first time Copyright ©2021 John Wiley & Sons Canada, 65 Ltd. Modern Management Foundations (6 of 8) Quality management Continuous improvement o Continual search for new ways to improve quality o Something always can and should be improved ISO certification o Global quality management standards o Refine and upgrade quality to meet ISO requirements o A rigorous assessment to ensure standards are met Copyright ©2021 John Wiley & Sons Canada, 66 Ltd. Modern Management Foundations (7 of 8) Evidence-Based Management Making management decisions based on “hard facts” about what really works Managers should be well informed and knowledgeable when making decisions Management must conduct solid and meaningful research using scientific methods Copyright ©2021 John Wiley & Sons Canada, 67 Ltd. Modern Management Foundations (8 of 8) Evidence-Based Positive Human Resource Management Practices Employment security Selective hiring Self-managing teams High pay based on merit Training and development Reduced status distinctions Shared information Copyright ©2021 John Wiley & Sons Canada, 68 Ltd. Copyright Copyright © 2021 John Wiley & Sons Canada, Ltd. All rights reserved. Reproductions or translations of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein. Copyright ©2021 John Wiley & Sons Canada, Ltd. 69  Management Fifth Canadian Edition John R. Schermerhorn, Bachrach, Jr. Barry Wright Chapter 5 Global Management and Cultural Diversity This slide deck contains animations. Please disable animations if they cause issues with your device. Copyright ©2021 John Wiley & Sons Canada, Ltd. Learning Objectives 5.1 Discuss the implications of globalization for management and organizations. 5.2 Describe global corporations and the issues they face and create. 5.3 Define culture and identify ways to describe diversity in global cultures. 5.4 Identify the benefits of global learning for management and organizations. Copyright ©2021 John Wiley & Sons Canada, Ltd. 71 Management and Globalization (1 of 18) Key concepts in the challenges of globalization: Global economy Globalization World 3.0 Global management Global manager Copyright ©2021 John Wiley & Sons Canada, Ltd. 72 Management and Globalization (2 of 18) Global economy Resources, supplies, product markets, and competition are worldwide in scope Globalization The growing interdependence among elements in the global economy World 3.0 Balancing cooperation in the global economy with national identities and interests Copyright ©2021 John Wiley & Sons Canada, Ltd. 73 Management and Globalization (3 of 18) Global management Managing business and organizations with interests in more than one country Global manager Has global perspective, and is culturally aware and informed on current international affairs Copyright ©2021 John Wiley & Sons Canada, Ltd. 74 Management and Globalization (4 of 18) International businesses Conducting for-profit transactions of goods and services across national boundaries Reasons why businesses go global: Profits Customers Suppliers Labour Capital Risk Copyright ©2021 John Wiley & Sons Canada, Ltd. 75 Management and Globalization (5 of 18) Market entry strategies involve the sale of goods or services to foreign markets but do not require expensive investments Copyright ©2021 John Wiley & Sons Canada, Ltd. 76 Management and Globalization (6 of 18) Types of market entry strategies: Global sourcing Exporting Importing Licensing agreement Franchising Copyright ©2021 John Wiley & Sons Canada, Ltd. 77 Management and Globalization (7 of 18) Types of direct investment strategies: Strategic alliance Joint venture Wholly owned subsidiary Copyright ©2021 John Wiley & Sons Canada, Ltd. 78 Management and Globalization (8 of 18) Common forms of global business Copyright ©2021 John Wiley & Sons Canada, Ltd. 79 Management and Globalization (9 of 18) How Companies Go Global: Global Sourcing the process of purchasing materials, manufacturing components, or locating business services around the world Exporting selling locally made products in foreign markets Importing buying foreign-made products and selling them domestically Copyright ©2021 John Wiley & Sons Canada, Ltd. 80 Management and Globalization (10 of 18) How Companies Go Global: Licensing Agreement one firm pays fee for rights to make or sell another company’s products Franchising a fee is paid for rights to use another firm’s name, branding, and methods Copyright ©2021 John Wiley & Sons Canada, Ltd. 81 Management and Globalization (11 of 18) Foreign direct investment involves setting up and buying all or part of a business in another country. Insourcing refers to local job creation that results from foreign direct investment. Copyright ©2021 John Wiley & Sons Canada, Ltd. 82 Management and Globalization (12 of 18) Types of insourcing: Joint ventures: operate in a foreign country through co- ownership by foreign and local partners Strategic alliances: a partnership in which foreign and domestic firms share resources and knowledge for mutual gains Foreign subsidiaries: local operation completely owned by a foreign firm Copyright ©2021 John Wiley & Sons Canada, Ltd. 83 Management and Globalization (13 of 18) Criteria for choosing a joint venture partner: Familiarity with your firm’s major business Strong local workforce Values its customers Future expansion possibilities Strong local market for partner’s own products Good profit potential Sound financial standing Copyright ©2021 John Wiley & Sons Canada, Ltd. 84 Management and Globalization (14 of 18) Global business environments Legal and political systems Trade agreements and trade barriers Regional economic alliances Copyright ©2021 John Wiley & Sons Canada, Ltd. 85 Management and Globalization (15 of 18) Legal and political systems Differing laws and practices regarding o Business ownership o Negotiation and implementation of contracts o Foreign currency exchange o Protection of intellectual property rights Counterfeit merchandise Copyright ©2021 John Wiley & Sons Canada, Ltd. 86 Management and Globalization (16 of 18) Legal and political systems Political risk o Potential loss in value or control of a foreign investment due to instability and political changes in the host country Political risk analysis o Forecast political disruptions that threaten the security of a foreign investment Copyright ©2021 John Wiley & Sons Canada, Ltd. 87 Management and Globalization (17 of 18) Trade Agreements and Trade Barriers World Trade Organization (WTO) deals with issues about o Most favoured nation status o Tariffs o Non-tariff barriers o Protectionism Copyright ©2021 John Wiley & Sons Canada, Ltd. 88 Management and Globalization (18 of 18) Regional Economic Alliances NAFTA or USMCA – North American Free Trade Agreement (United States-Mexico-Canada Agreement) EU – European Union (Recent departure of the UK) APEC – Asia Pacific Economic Cooperation ASEAN – Association of Southeast Asian Nations SADC – Southern Africa Development Community TPP11 – Trans-Pacific Partnership (includes 11 countries) Copyright ©2021 John Wiley & Sons Canada, Ltd. 89 Global Businesses (1 of 8) Types of global businesses: Global corporation o MNE (multinational enterprise) or MNC (multinational corporation) with extensive business operations in many foreign countries Transnational corporation o A global corporation that operates worldwide on a borderless basis, without being identified to one national home Copyright ©2021 John Wiley & Sons Canada, Ltd. 90 Global Businesses (2 of 8) Mutual benefits for host country and global corporation or MNC: Shared growth opportunities Shared income opportunities Shared learning opportunities Shared development opportunities Copyright ©2021 John Wiley & Sons Canada, Ltd. 91 Global Businesses (3 of 8) What should go right and what can go wrong in global corporation and host-country relationships Copyright ©2021 John Wiley & Sons Canada, Ltd. 92 Global Businesses (4 of 8) Host country complaints about MNCs: Excessive profits Domination of local economy Interference with local government Hiring the best local talent Limited technology transfer Disrespect for local customs Copyright ©2021 John Wiley & Sons Canada, Ltd. 93 Global Businesses (5 of 8) MNC complaints about host countries: Profit limitations Overpriced resources Exploitative rules Foreign exchange restrictions Failure to uphold contracts Copyright ©2021 John Wiley & Sons Canada, Ltd. 94 Global Businesses (6 of 8) Ethical challenges for Global Businesses: Corruption Child labour Sweatshops Conflict minerals Copyright ©2021 John Wiley & Sons Canada, Ltd. 95 Global Businesses (7 of 8) Ethical issues for Global Businesses: Corruption – illegal practices that further one’s business interests Corruption of Foreign Public Officials Act (CFPOA) – makes it illegal for Canadian firms and their representatives to engage in corrupt practices overseas o Bribes to foreign officials o Excessive commissions o Non-monetary gifts Copyright ©2021 John Wiley & Sons Canada, Ltd. 96 Global Businesses (8 of 8) Child labour, Sweatshops, and Conflict Minerals: Child labour – employment of children for work otherwise done by adults Sweatshops – employment of workers at very low wages for long hours in poor working conditions Conflict Minerals – gains from sale of minerals used to help finance armed violence (such as in the DRC) Copyright ©2021 John Wiley & Sons Canada, Ltd. 97 End of Part#1, Part 2 Next week Copyright ©2021 John Wiley & Sons Canada, Ltd. 98 Cultures and Global Diversity (1 of 11) Culture The shared set of beliefs, values, and patterns of behavior common to a group of people Culture shock Confusion and discomfort a person experiences in an unfamiliar culture Copyright ©2021 John Wiley & Sons Canada, Ltd. 99 Cultures and Global Diversity (2 of 11) Cultural intelligence The ability to adapt and adjust to new cultures Ethnocentrism Tendency to consider one’s own culture as superior to others Copyright ©2021 John Wiley & Sons Canada, Ltd. 100 Cultures and Global Diversity (3 of 11) Stages in adjusting to a new culture: Confusion Small victories The honeymoon Irritation and anger Reality Copyright ©2021 John Wiley & Sons Canada, Ltd. 101 Cultures and Global Diversity (4 of 11) Silent languages of culture: Context o Low context o High context Space o Proxemics Time o Monochronic o Polychronic Copyright ©2021 John Wiley & Sons Canada, Ltd. 102 Cultures and Global Diversity (5 of 11) Context Low context cultures - emphasize communication via spoken or written words o United States o Canada o Germany Copyright ©2021 John Wiley & Sons Canada, Ltd. 103 Cultures and Global Diversity (6 of 11) Context High context cultures – rely on nonverbal and situational cues as well as on spoken or written words o Thailand o Malaysia Copyright ©2021 John Wiley & Sons Canada, Ltd. 104 Cultures and Global Diversity (7 of 11) Time Monochronic cultures – people tend to do one thing at a time o Canada Polychronic cultures – time is used to accomplish many different things at once o Egypt Copyright ©2021 John Wiley & Sons Canada, Ltd. 105 Cultures and Global Diversity (8 of 11) Space Proxemics – study of how people use space to communicate o In North America people value “personal space” o Many Latin and Asian cultures expect much less personal space Copyright ©2021 John Wiley & Sons Canada, Ltd. 106 Cultures and Global Diversity (9 of 11) Tight and Loose Cultures Cultural tightness-looseness o Strength of norms that govern social behavior o Tolerance for any deviation from norms o Tight = Japan, Korea, Malaysia o Loose = Australia, Brazil, Hungary Copyright ©2021 John Wiley & Sons Canada, Ltd. 107 Cultures and Global Diversity (10 of 11) Values and national cultures (Hofstede): Power distance Uncertainty avoidance Individualism-collectivism Masculinity-femininity Time orientation Copyright ©2021 John Wiley & Sons Canada, Ltd. 108 Cultures and Global Diversity (11 of 11) How countries compare on Hofstede’s dimensions of national Copyright ©2021 John Wiley & Sons Canada, Ltd. 109 Global Management Learning (1 of 2) Comparative management How management practices systematically differ among countries and/or cultures Intercultural competencies Skills and personal characteristics that help us be successful in cross-cultural situations. Global managers Need to successfully apply management functions across international boundaries Copyright ©2021 John Wiley & Sons Canada, Ltd. 110 Global Management Learning (2 of 2) Global learning goals: Practices not universal Engage critical thinking Look everywhere for new management ideas Always consider culture Copyright ©2021 John Wiley & Sons Canada, Ltd. 111 Copyright Copyright © 2021 John Wiley & Sons Canada, Ltd. All rights reserved. Reproductions or translations of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein. Copyright ©2021 John Wiley & Sons Canada, Ltd. 112  Management Fifth Canadian Edition John R. Schermerhorn, Bachrach, Jr. Barry Wright Chapter 6 Entrepreneurship and New Ventures This slide deck contains animations. Please disable animations if they cause issues with your device. Copyright ©2021 John Wiley & Sons Canada, Ltd. Learning Objectives 6.1 Define entrepreneurship and identify characteristics of entrepreneurs. 6.2 Describe how small businesses get started and the common problems they face. 6.3 Explain how entrepreneurs plan, legally structure, and fund new business ventures. Copyright ©2021 John Wiley & Sons Canada, Ltd. 114 The Nature of Entrepreneurship (1 of 5) Entrepreneurship Strategic thinking and risk-taking behaviour that result in new opportunities Classic entrepreneur Pursues opportunities others fail to recognize or view as problems or threats Copyright ©2021 John Wiley & Sons Canada, Ltd. 115 The Nature of Entrepreneurship (2 of 5) Serial entrepreneur Starts and runs businesses and nonprofits over and over again First-mover advantage First to spot or exploit a niche or enter a new market Copyright ©2021 John Wiley & Sons Canada, Ltd. 116 The Nature of Entrepreneurship (3 of 5) Personality traits and characteristics of entrepreneurs Copyright ©2021 John Wiley & Sons Canada, Ltd. 117 The Nature of Entrepreneurship (4 of 5) Women and minority entrepreneurs are growing in numbers Necessity-based entrepreneurship Starting a business because of few or no other employment or career options Copyright ©2021 John Wiley & Sons Canada, Ltd. 118 The Nature of Entrepreneurship (5 of 5) Social entrepreneurship Unique form of ethical entrepreneurship that seeks novel ways to solve pressing social problems Social entrepreneurs o Take risks to help meet needs not being effectively served by government and the private sector, such as poverty, illiteracy, illness, homelessness Copyright ©2021 John Wiley & Sons Canada, Ltd. 119 Entrepreneurship and Small Business (1 of 8) Small business statistics Provided about 70.5% of private-sector workforce in 2015 Accounted for 27% of total R and D expenditure in 2013 Represented an average 30% of GDP for their respective provinces. A small business has 5 - 100 employees Copyright ©2021 John Wiley & Sons Canada, Ltd. 120 Entrepreneurship and Small Business (2 of 8) Starting a small business Franchise o One business owner sells to another the right to operate the same business in another location Business model o Plan for making a profit by generating revenues that are greater than costs Copyright ©2021 John Wiley & Sons Canada, Ltd. 121 Entrepreneurship and Small Business (3 of 8) Starting a small business Startup o New and temporary venture that is trying to establish a profitable business model Lean startups o Use open source software and free web services to contain costs while staying small and keeping operations simple Copyright ©2021 John Wiley & Sons Canada, Ltd. 122 Entrepreneurship and Small Business (4 of 8) Why small businesses fail Industry Canada reports that: o Over 85% of new businesses survive the first year o Some 70% survive the first two years o Only 51% survive the first five years That is a 49% failure rate in the first five years Copyright ©2021 John Wiley & Sons Canada, Ltd. 123 Entrepreneurship and Small Business (5 of 8) Why small businesses fail Reasons why small businesses fail o Lack of experience o Lack of commitment o Lack of strategy and strategic leadership o Ethical failure o Lack of expertise o Growing too fast o Poor financial control o Insufficient financing Copyright ©2021 John Wiley & Sons Canada, Ltd. 124 Entrepreneurship and Small Business (6 of 8) Eight reasons why many businesses fail Copyright ©2021 John Wiley & Sons Canada, Ltd. 125 Entrepreneurship and Small Business (7 of 8) Family-owned small businesses Account for 80% of private firms in Canada Provide 60% of the nation’s GDP Feuds result when family members disagree over how the business is run Possible succession problems o Who will run the business when the current head leaves? o Succession plan outlines leadership transition and financial matters Copyright ©2021 John Wiley & Sons Canada, Ltd. 126 Entrepreneurship and Small Business (8 of 8) Small business development Business incubator o Offers space, shared administrative services, special equipment, and management advice to get small businesses started Business Development Program (BDP) o Offers guidance to entrepreneurs and small business owners on how to set up and manage business operations o This service is provided by the Government of Canada Copyright ©2021 John Wiley & Sons Canada, Ltd. 127 New Venture Creation (1 of 11) Stages in the life cycle of an entrepreneurial firm Copyright ©2021 John Wiley & Sons Canada, Ltd. 128 New Venture Creation (2 of 11) Business plan Describes the details needed to obtain start-up financing and operate a new business Banks want to see a well-developed business plan before lending money Copyright ©2021 John Wiley & Sons Canada, Ltd. 129 New Venture Creation (3 of 11) Sample Business Plan Outline: Executive summary Industry analysis Company description Products and services description Market description Marketing strategy Copyright ©2021 John Wiley & Sons Canada, Ltd. 130 New Venture Creation (4 of 11) Sample Business Plan Outline: Operations description Staffing description Financial projection Capital needs Milestones Copyright ©2021 John Wiley & Sons Canada, Ltd. 131 New Venture Creation (5 of 11) Forms of ownership Sole Proprietorship o An individual or married couple pursuing business for a profit. This does not involve incorporation. o It is simple to start, run, and terminate. o It’s the most common form of small business ownership in Canada. Copyright ©2021 John Wiley & Sons Canada, Ltd. 132 New Venture Creation (6 of 11) Forms of ownership Partnership o Two or more people agree to contribute resources to start and operate a business together o It’s usually supported by a written partnership agreement o There are three common forms of partnership arrangements Copyright ©2021 John Wiley & Sons Canada, Ltd. 133 New Venture Creation (7 of 11) Forms of partnership arrangements: General Partnership The owners share management responsibilities Limited Partnership General partner(s) manage the business Limited partners do not participate in day-to-day management Limited partners share profits, but losses are limited to their investment in the business Limited Liability Partnership Limits the liability of one partner for the negligence of another Copyright ©2021 John Wiley & Sons Canada, Ltd. 134 New Venture Creation (8 of 11) Forms of ownership Corporation o A legal entity that exists separately from its owners o Incorporated by an Act of provincial or federal government Benefit Corporation (B Corp) o Corporate form for businesses whose stated goals are to combine making a profit with benefiting society and the environment o This ownership type typically adopts the goals of social entrepreneurship and social enterprises Copyright ©2021 John Wiley & Sons Canada, Ltd. 135 New Venture Creation (9 of 11) Forms of ownership Limited Liability Corporation (LLC) o A combination of sole proprietorship, partnership, and corporation Protects owners’ assets from claims made against the company Treated as a proprietorship or partnership for tax purposes Copyright ©2021 John Wiley & Sons Canada, Ltd. 136 New Venture Creation (10 of 11) Financing Debt Financing o Involves borrowing money from another person, a bank, or a financial institution Equity Financing o Involves exchanging ownership shares for outside investment monies Venture Capitalists o Involves making large investments in new ventures in return for an equity stake in the business Copyright ©2021 John Wiley & Sons Canada, Ltd. 137 New Venture Creation (11 of 11) Financing Angel Investor o A wealthy individual willing to invest in return for equity in a new venture Crowdfunding o Entrepreneurs starting new ventures go online to get startup financing from a “crowd” of investors Copyright ©2021 John Wiley & Sons Canada, Ltd. 138 Copyright Copyright © 2021 John Wiley & Sons Canada, Ltd. All rights reserved. Reproductions or translations of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein. Copyright ©2021 John Wiley & Sons Canada, Ltd. 139  Management Fifth Canadian Edition John R. Schermerhorn, Bachrach, Jr. Barry Wright Chapter 7 Data and Decision-Making This slide deck contains animations. Please disable animations if they cause issues with your device. Copyright ©2021 John Wiley & Sons Canada, Ltd. Learning Objectives 7.1 Discuss the role of information, data, and analytics in management. 7.2 Identify different ways managers approach and deal with problems. 7.3 Explain the six steps in the decision-making process. 7.4 Describe the potential pitfalls and sources of creativity in managerial decision making. Copyright ©2021 John Wiley & Sons Canada, Ltd. 141 Managerial competencies Managers must have Technological competency o Ability to understand new technologies and to use them to their best advantage Information competency o Ability to locate, gather, organize, and display information for decision-making and problem solving Analytical competency o Ability to evaluate and analyze information to make actual decisions and solve real problems Copyright ©2021 John Wiley & Sons Canada, Ltd. 142 Information, Technology, & Management (1 of 6) What is useful information? Data o Raw facts and observations Information o Data made useful and meaningful for decision-making Information drives management decision-making Copyright ©2021 John Wiley & Sons Canada, Ltd. 143 Information, Technology, & Management (2 of 6) Characteristics of useful information: Timely High quality Complete Relevant Understandable Management Information System: Using the latest technologies to collect, organize, and distribute data Copyright ©2021 John Wiley & Sons Canada, Ltd. 144 Information, Technology, & Management (3 of 6) Data Mining and Analytics Data mining is the process of analyzing data to produce useful information for decision-makers. Big data exist in huge quantities and are difficult to process without sophisticated mathematical and analytical techniques. Management analytics involves the systematic evaluation and analysis of data to make informed decisions. Copyright ©2021 John Wiley & Sons Canada, Ltd. 145 Information, Technology, & Management (4 of 6) Business Intelligence and Data Visualization Business Intelligence o Taps information systems to extract and report data in organized ways that are useful to decision-makers Data Visualization o Visually update and display key performance metrics and information on a real-time basis through executive dashboards Copyright ©2021 John Wiley & Sons Canada, Ltd. 146 Information, Technology, & Management (5 of 6) Information needs in organizations Information exchanges with the external environment: o Gather intelligence information o Provide public information Information exchanges within the organization: o Facilitate decision- making o Facilitate problem- solving Copyright ©2021 John Wiley & Sons Canada, Ltd. 147 Information, Technology, & Management (6 of 6) Internal and external information needs in organizations Copyright ©2021 John Wiley & Sons Canada, Ltd. 148 Problem Solving and Managerial Decisions (1 of 16) Problem Solving and Managerial Decisions Managers as Information Processors o Continually gather, share, and receive information o Today, as much electronic as it is face to face o Always on, always connected Copyright ©2021 John Wiley & Sons Canada, Ltd. 149 Problem Solving and Managerial Decisions (2 of 16) The manager as an information processor and nerve centre for planning, organizing, leading, and controlling Copyright ©2021 John Wiley & Sons Canada, Ltd. 150 Problem Solving and Managerial Decisions (3 of 16) Problem solving The process of identifying a discrepancy between actual and desired performance and taking action to resolve it. Copyright ©2021 John Wiley & Sons Canada, Ltd. 151 Problem Solving and Managerial Decisions (4 of 16) Problem solving Decision o A choice among possible alternative courses of action Performance threat o Something is wrong or has the potential to go wrong Performance opportunity o Situation offers the chance for a better future if the right steps are taken Copyright ©2021 John Wiley & Sons Canada, Ltd. 152 Problem Solving and Managerial Decisions (5 of 16) Problem solving approaches or styles: Problem avoiders Inactive in information gathering and solving problems Problem solvers Reactive in gathering information and solving problems Copyright ©2021 John Wiley & Sons Canada, Ltd. 153 Problem Solving and Managerial Decisions (6 of 16) Problem solving approaches or styles: Problem seekers Proactive in anticipating problems and opportunities and taking appropriate action to gain an advantage Copyright ©2021 John Wiley & Sons Canada, Ltd. 154 Problem Solving and Managerial Decisions (7 of 16) Systematic versus intuitive thinking: Systematic thinking o approaches problems in a rational, step-by-step, and analytical fashion Intuitive thinking o approaches problems in a flexible and spontaneous fashion Copyright ©2021 John Wiley & Sons Canada, Ltd. 155 Problem Solving and Managerial Decisions (8 of 16) Multi-dimensional thinking applies both intuitive and systematic thinking Effective multi-dimensional thinking requires skill at strategic opportunism o Remaining focused on long-term objectives o Being flexible to resolve short-term problems Copyright ©2021 John Wiley & Sons Canada, Ltd. 156 Problem Solving and Managerial Decisions (9 of 16) Managers use different cognitive styles The four different types of cognitive thinkers Copyright ©2021 John Wiley & Sons, Inc. 157 Problem Solving and Managerial Decisions (10 of 16) Types of problems Structured problems are ones that are familiar, straightforward, and clear with respect to information needs Programmed decisions apply solutions that are readily available from past experiences to solve structured problems Copyright ©2021 John Wiley & Sons Canada, Ltd. 158 Problem Solving and Managerial Decisions (11 of 16) Types of problems Unstructured problems are ones that are full of ambiguities and information deficiencies Non-programmed decisions apply a specific solution to meet the demands of a unique problem Commonly faced by higher-level management Copyright ©2021 John Wiley & Sons Canada, Ltd. 159 Problem Solving and Managerial Decisions (12 of 16) Crisis decision-making A crisis involves an unexpected problem that can lead to disaster if not resolved quickly and appropriately. Copyright ©2021 John Wiley & Sons Canada, Ltd. 160 Problem Solving and Managerial Decisions (13 of 16) 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 skeptic Be ready to “fight fire with fire ” Copyright ©2021 John Wiley & Sons Canada, Ltd. 161 Problem Solving and Managerial Decisions (14 of 16) Managers make decisions with various amounts of information Certain environment o offers complete factual information on possible action alternatives and their consequences Risk environment o lacks complete information but offers probabilities of the likely outcomes for possible action alternatives Copyright ©2021 John Wiley & Sons Canada, Ltd. 162 Problem Solving and Managerial Decisions (15 of 16) Managers make decisions with various amounts of information Uncertain environment o lacks so much information that it is difficult to assign probabilities to the likely outcomes of alternatives Copyright ©2021 John Wiley & Sons Canada, Ltd. 163 Problem Solving and Managerial Decisions (16 of 16) Three environments for problem solving and decision-making Copyright ©2021 John Wiley & Sons Canada, Ltd. 164 The Decision-Making Process (1 of 11) Steps in the decision-making process Copyright ©2021 John Wiley & Sons Canada, Ltd. 165 The Decision-Making Process (2 of 11) Step 1 — Identify and define the problem Focuses on information gathering, information processing, and deliberation Decision objectives should be established Common mistakes in defining problems: o Defining the problem too broadly or too narrowly o Focusing on symptoms instead of causes o Choosing the wrong problem to deal with Copyright ©2021 John Wiley & Sons Canada, Ltd. 166 The Decision-Making Process (3 of 11) Step 2 — Generate and Evaluate Alternative Courses of Action Potential solutions are formulated and more information is gathered, data are analyzed, the advantages and disadvantages of alternative solutions are identified Approaches for evaluating alternatives: o Stakeholder analysis o Cost-benefit analysis Copyright ©2021 John Wiley & Sons Canada, Ltd. 167 The Decision-Making Process (4 of 11) Step 2 — Generate and Evaluate Possible Courses of Action Criteria for evaluating alternatives: o Benefits o Costs o Timeliness o Acceptability o Ethical soundness Copyright ©2021 John Wiley & Sons Canada, Ltd. 168 The Decision-Making Process (5 of 11) Step 2 — Generate and Evaluate Possible Courses of Action Common mistakes: o Abandoning the search for alternatives too quickly o Lack of self-confidence and commitment o Unanticipated positive or negative side effects Copyright ©2021 John Wiley & Sons Canada, Ltd. 169 The Decision-Making Process (6 of 11) Step 3 — Decide on a Preferred Course of Action Two different approaches o Classical model leads to optimizing decisions o Behavioural model leads to satisficing decisions Copyright ©2021 John Wiley & Sons Canada, Ltd. 170 The Decision-Making Process (7 of 11) Differences in the classical and behavioural decision-making models Copyright ©2021 John Wiley & Sons Canada, Ltd. 171 The Decision-Making Process (8 of 11) Step 4 — Implement the Decision Involves taking action to make sure the solution decided upon becomes a reality Managers need to have willingness and ability to implement action plans. Lack-of-participation error should be avoided. Copyright ©2021 John Wiley & Sons Canada, Ltd. 172 The Decision-Making Process (9 of 11) Step 5 — Evaluate Results Involves comparing actual and desired results Positive and negative consequences of chosen course of action should be examined. If actual results fall short of desired results, the manager returns to earlier steps in the decision-making process. Copyright ©2021 John Wiley & Sons Canada, Ltd. 173 The Decision-Making Process (10 of 11) At all steps, check ethical reasoning! Ask these spotlight questions: Utility o Does the decision satisfy all constituents or stakeholders? Rights o Does the decision respect the rights and duties of everyone? Copyright ©2021 John Wiley & Sons Canada, Ltd. 174 The Decision-Making Process (11 of 11) At all steps, check ethical reasoning! Ask these spotlight questions: Justice o is the decision consistent with the canons of justice? Caring o is the decision consistent with my responsibilities to care? Copyright ©2021 John Wiley & Sons Canada, Ltd. 175 Issues in Managerial Decision-Making (1 of 6) Issues in decision-making Why do decision errors happen? How do we frame the problem? Heuristics are strategies for simplifying decision-making. Copyright ©2021 John Wiley & Sons Canada, Ltd. 176 Issues in Managerial Decision-Making (2 of 6) Availability Bias bases a decision on recent information or events Representativeness Bias bases a decision on similarity to other situations Anchoring and Adjustment Bias bases a decision on incremental adjustment from a prior decision point Copyright ©2021 John Wiley & Sons Canada, Ltd. 177 Issues in Managerial Decision-Making (3 of 6) Framing Error trying to solve a problem in the context perceived, positive or negative Confirmation Error focusing on information that confirms a decision already made Escalating Commitment continuing a course of action even though it is not working Copyright ©2021 John Wiley & Sons Canada, Ltd. 178 Issues in Managerial Decision-Making (4 of 6) Creative Decision-Making: Creativity is the generation of a novel idea or unique approach that solves a problem or exploits an opportunity o Big-C creativity occurs when extraordinary things are done by exceptional people. o Little-C creativity occurs when average people come up with unique ways to deal with daily events and situations. Copyright ©2021 John Wiley & Sons Canada, Ltd. 179 Issues in Managerial Decision-Making (5 of 6) Copyright ©2021 John Wiley & Sons Canada, Ltd. 180 Issues in Managerial Decision-Making (6 of 6) The three types of situational creativity drivers Copyright ©2021 John Wiley & Sons Canada, Ltd. 181 Copyright Copyright © 2021 John Wiley & Sons Canada, Ltd. All rights reserved. Reproductions or translations of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein. Copyright ©2021 John Wiley & Sons Canada, Ltd. 182  Management Fifth Canadian Edition John R. Schermerhorn, Bachrach, Jr. Barry Wright Chapter 8 Planning Processes and Techniques This slide deck contains animations. Please disable animations if they cause issues with your device. Copyright ©2021 John Wiley & Sons Canada, Ltd. Learning Objectives 8.1 Identify the importance of planning and steps in the planning process. 8.2 List and give examples of the types of plans used by managers. 8.3 Discuss useful planning tools and techniques. 8.4 Explain how goals and participation influence planning success. Copyright ©2021 John Wiley & Sons Canada, Ltd. 184 Why and How Managers Plan (1 of 6) Planning The process of setting objectives and determining how best to accomplish them Objectives and goals Identify the specific results or desired outcomes that one intends to achieve Plan A statement of action steps to be taken in order to accomplish the objectives Copyright ©2021 John Wiley & Sons Canada, Ltd. 185 Why and How Managers Plan (2 of 6) Steps in the planning process: Define your objectives Determine where you stand vis-à-vis objectives Develop premises regarding future conditions Analyze alternatives and make a plan Implement the plan and evaluate results Copyright ©2021 John Wiley & Sons Canada, Ltd. 186 Why and How Managers Plan (3 of 6) The roles of planning and controlling in the management process Copyright ©2021 John Wiley & Sons Canada, Ltd. 187 Why and How Managers Plan (4 of 6) Benefits of planning: Improves focus and flexibility Improves action orientation Improves coordination and control Improves time management Copyright ©2021 John Wiley & Sons Canada, Ltd. 188 Why and How Managers Plan (5 of 6) Personal time management tips: DO say “no” to requests that distract from what you should be doing DON’T get bogged down in details that can be addressed later DO screen telephone calls, emails, and meeting requests Copyright ©2021 John Wiley & Sons Canada, Ltd. 189 Why and How Managers Plan (6 of 6) More personal time management tips: DON’T let drop-in visitors, text messaging use up your time DO prioritize your important and urgent work DON’T become calendar bound by letting others control your schedule DO follow priorities; do most important and urgent work first Copyright ©2021 John Wiley & Sons Canada, Ltd. 190 Types of Plans Used by Managers (1 of 5) Types of plans Long-term plans look three or more years into the future Short-term plans typically cover one year or less Copyright ©2021 John Wiley & Sons Canada, Ltd. 191 Types of Plans Used by Managers (2 of 5) Most of us 3 month time frame A few of us 1 year time frame Very few of us 20 year time frame Copyright ©2021 John Wiley & Sons Canada, Ltd. 192 Types of Plans Used by Managers (3 of 5) Strategic plans — set broad, comprehensive, and longer-term action directions for the entire organization or a major division Vision – clarifies purpose of the organization and what it hopes to be in the future Tactical plans – specify how the organization’s resources are used to implement strategy (often take the form of functional plans) Copyright ©2021 John Wiley & Sons Canada, Ltd. 193 Types of Plans Used by Managers (4 of 5) Functional plans – indicate how different components within the organization will help accomplish the overall strategy Production plans Financial plans Facilities plans Logistics plans Marketing plans Human resource plans Copyright ©2021 John Wiley & Sons Canada, Ltd. 194 Types of Plans Used by Managers (5 of 5) Operational plans — describe short-term activities to implement strategic plans Policies are standing plans that communicate broad guidelines for decision making Procedures are rules that describe actions to be taken in specific situations Budgets are single-use plans that commit resources to projects or activities o Zero based budgets allocate resources as if each budget were brand new Copyright ©2021 John Wiley & Sons Canada, Ltd. 195 Planning Tools and Techniques (1 of 5) Forecasting Attempts to predict the future Qualitative forecasting uses expert opinions Quantitative forecasting uses mathematical models and statistical analysis of historical data and surveys Copyright ©2021 John Wiley & Sons Canada, Ltd. 196 Planning Tools and Techniques (2 of 5) Contingency planning Identifying alternative courses of action to take when things go wrong Contingency plans anticipate changing conditions Contingency plans contain trigger points to indicate when to activate alternatives Copyright ©2021 John Wiley & Sons Canada, Ltd. 197 Planning Tools and Techniques (3 of 5) Scenario planning A long-term version of contingency planning Identifying alternative future scenarios Plans made for each future scenario Increases organization’s flexibility and preparation for future shocks Copyright ©2021 John Wiley & Sons Canada, Ltd. 198 Planning Tools and Techniques (4 of 5) Benchmarking Use of external and internal comparisons to better evaluate current performance Adopting best practices: things people and organizations do that lead to superior performance Copyright ©2021 John Wiley & Sons Canada, Ltd. 199 Planning Tools and Techniques (5 of 5) Staff planners Experts who assist in all steps of the planning process Goal setting Using SMART goals will impact how performance targets are achieved and provide motivation for such achievements Copyright ©2021 John Wiley & Sons Canada, Ltd. 200 Implementing Plans to Achieve Results (1 of 6) The five characteristics of great goals Copyright ©2021 John Wiley & Sons Canada, Ltd. 201 Implementing Plans to Achieve Results (2 of 6) Goal alignment in a sample hierarchy of objectives Copyright ©2021 John Wiley & Sons Canada, Ltd. 202 Implementing Plans to Achieve Results (3 of 6) Goal Alignment Between Team Leader and Team Member Jointly plan: set objectives, set standards, choose actions Individually act: perform tasks (member), provide support (leader) Jointly control: review results, discuss implications, renew cycle Copyright ©2021 John Wiley & Sons Canada, Ltd. 203 Implementing Plans to Achieve Results (4 of 6) Participatory Planning unlocks the motivational potential of goal setting management by objectives (MBO) promotes participation participation increases understanding and acceptance of plan and commitment to success Copyright ©2021 John Wiley & Sons Canada, Ltd. 204 Implementing Plans to Achieve Results (5 of 6) How participation and involvement help build commitment to plans Copyright ©2021 John Wiley & Sons Canada, Ltd. 205 Implementing Plans to Achieve Results (6 of 6) Resilience even with the best made plans, unexpected events can occur this may be seen as a traumatic events or an opportunities to learn you can choose to see them as a challenge and not a threat you can choose to be resilient, be optimistic, and face your fears head on Copyright ©2021 John Wiley & Sons Canada, Ltd. 206 Copyright Copyright © 2021 John Wiley & Sons Canada, Ltd. All rights reserved. Reproductions or translations of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein. Copyright ©2021 John Wiley & Sons Canada, Ltd. 207  Management Fifth Canadian Edition John R. Schermerhorn, Bachrach, Jr. Barry Wright Chapter 10 Strategy and Strategic Management This slide deck contains animations. Please disable animations if they cause issues with your device. Copyright ©2021 John Wiley & Sons Canada, Ltd. Learning Objectives 10.1 Discuss the process and importance of strategic management. 10.2 Identify the essential elements in strategic analysis. 10.3 Compare alternative corporate strategies. 10.4 Explain alternative business-level strategies. 10.5 Describe the foundations for strategy implementation. Copyright ©2021 John Wiley & Sons Canada, Ltd. 209 Strategic Management (1 of 9) Basic concepts of strategy: Competitive advantage — ability to do something so well that one outperforms competitors Sustainable competitive advantage — one that is difficult or costly for competitors to imitate Copyright ©2021 John Wiley & Sons Canada, Ltd. 210 Strategic Management (2 of 9) Sources of competitive advantage Technology Cost and quality Knowledge and speed Barriers to entry Financial resources Copyright ©2021 John Wiley & Sons Canada, Ltd. 211 Strategic Management (3 of 9) Basic concepts of strategy: Strategy o a comprehensive plan guiding resource allocation to achieve long-term organization goals Strategic intent o focusing all organizational energies on a unifying and compelling goal Copyright ©2021 John Wiley & Sons Canada, Ltd. 212 Strategic Management (4 of 9) Levels of strategies Corporate o Sets long-term direction for the total enterprise Business o How a division or strategic business unit will compete in its product or service domain Functional o Guides the use of resources within one specific area of operations Copyright ©2021 John Wiley & Sons Canada, Ltd. 213 Strategic Management (5 of 9) The three levels of strategy in organizations Copyright ©2021 John Wiley & Sons Canada, Ltd. 214 Strategic Management (6 of 9) Strategic Management Process: Strategic management o the process of formulating and implementing strategies to accomplish long-term goals and sustain competitive advantage Strategic analysis o process of analyzing the organization, the environment, its competitive positioning, and current strategies Copyright ©2021 John Wiley & Sons Canada, Ltd. 215 Strategic Management (7 of 9) Major elements in the strategic management process Copyright ©2021 John Wiley & Sons Canada, Ltd. 216 Strategic Management (8 of 9) Strategy formulation The process of developing a new or revised strategy Involves assessing existing strategies, organization, and environment to create new strategies and strategic plans capable of delivering future competitive advantage Copyright ©2021 John Wiley & Sons Canada, Ltd. 217 Strategic Management (9 of 9) Strategy implementation The process of allocating resources and putting strategies into action All organizational and management systems must be mobilized to support and reinforce the accomplishment of strategies Copyright ©2021 John Wiley & Sons Canada, Ltd. 218 Essentials of Strategic Analysis (1 of 15) Strategic Questions: What is our business mission? Who are our customers? What do our customers value? What have been our results? What is our plan? Copyright ©2021 John Wiley & Sons Canada, Ltd. 219 Essentials of Strategic Analysis (2 of 15) Analysis of mission: The reason for an organization’s existence Good mission statements identify: o What are we moving to? o What is our dream? o What kind of difference do we make? o What do we want to be known for? Copyright ©2021 John Wiley & Sons Canada, Ltd. 220 Essentials of Strategic Analysis (3 of 15) Stakeholders Individuals and groups directly affected by the organization and its strategic accomplishments An important test of the mission is how well it serves the organization’s stakeholders Copyright ©2021 John Wiley & Sons Canada, Ltd. 221 Essentials of Strategic Analysis (4 of 15) External stakeholders as strategic constituencies in an organization’s mission Copyright ©2021 John Wiley & Sons Canada, Ltd. 222 Essentials of Strategic Analysis (5 of 15) Analysis of Core values: Broad beliefs about what is or is not appropriate behaviour Organizational culture reflects the predominant value system of the organization as a whole Copyright ©2021 John Wiley & Sons Canada, Ltd. 223 Essentials of Strategic Analysis (6 of 15) Analysis of objectives: Operating objectives are specific results that organizations try to accomplish Copyright ©2021 John Wiley & Sons Canada, Ltd. 224 Essentials of Strategic Analysis (7 of 15) Typical operating objectives of a business include: Profitability Sustainability Social responsibility Financial health Cost efficiency Copyright ©2021 John Wiley & Sons Canada, Ltd. 225 Essentials of Strategic Analysis (8 of 15) Typical operating objectives of a business include: Customer service Product quality Market share Human capacity Innovation Copyright ©2021 John Wiley & Sons Canada, Ltd. 226 Essentials of Strategic Analysis (9 of 15) Analysis of organizational resources and capabilities: Core competency is a special strength that gives an organization competitive advantage An important goal of the organization is assessing core competencies Copyright ©2021 John Wiley & Sons Canada, Ltd. 227 Essentials of Strategic Analysis (10 of 15) Potential core competencies: Special knowledge or expertise Superior technology Efficient supply chains Unique product distribution systems Copyright ©2021 John Wiley & Sons Canada, Ltd. 228 Essentials of Strategic Analysis (11 of 15) SWOT Analysis Examination of an organization’s current position by looking at o Internal strengths and weaknesses o Environmental opportunities and threats Copyright ©2021 John Wiley & Sons Canada, Ltd. 229 Essentials of Strategic Analysis (12 of 15) SWOT analysis of strengths, weaknesses, opportunities, and threats Copyright ©2021 John Wiley & Sons Canada, Ltd. 230 Essentials of Strategic Analysis (13 of 15) Porter’s model of five strategic forces affecting industry competition Copyright ©2021 John Wiley & Sons Canada, Ltd. 231 Essentials of Strategic Analysis (14 of 15) Porter’s Model of Five Strategic Forces Affecting Competition: Industry competition o Intensity of rivalry among firms and their competitive behaviour New entrants o Threat of new competitors entering the market Substitute products or services o Threat of substitute products or services Copyright ©2021 John Wiley & Sons Canada, Ltd. 232 Essentials of Strategic Analysis (15 of 15) Porter’s Model of Five Strategic Forces Affecting Competition: Bargaining power of suppliers o Ability of resource suppliers to influence the cost of products or services Bargaining power of customers o Ability of customers to influence the price they will pay for products or services Copyright ©2021 John Wiley & Sons Canada, Ltd. 233 Corporate-Level Strategy Formulation (1 of 13) Corporate-level strategy formulation Portfolio planning model: o Portfolio planning seeks the best mix of investments among alternative business opportunities BCG Matrix analyzes business opportunities according to market growth rate and market share Copyright ©2021 John Wiley & Sons Canada, Ltd. 234 Corporate-Level Strategy Formulation (2 of 13) BCG matrix Ties strategy formulation to analysis of business opportunities according to … o Industry or market growth rate Low versus high o Market share Low versus high Copyright ©2021 John Wiley & Sons Canada, Ltd. 235 Corporate-Level Strategy Formulation (3 of 13) The BCG Matrix approach for portfolio planning in corporate-level strategy formulation Copyright ©2021 John Wiley & Sons Canada, Ltd. 236 Corporate-Level Strategy Formulation (4 of 13) BCG matrix — business conditions and related strategies: Stars o High share/high growth businesses o Preferred strategy — growth Cash cows o High share/low growth businesses o Preferred strategy — stability or modest growth Copyright ©2021 John Wiley & Sons Canada, Ltd. 237 Corporate-Level Strategy Formulation (5 of 13) BCG matrix—business conditions and related strategies: Question marks o Low share/high growth businesses o Preferred strategy — growth for promising question marks and restructuring or divestiture for others Dogs o Low share/low growth businesses o Preferred strategy — retrenchment/divestiture Copyright ©2021 John Wiley & Sons Canada, Ltd. 238 Corporate-Level Strategy Formulation (6 of 13) Growth strategies — Seek an increase in size and the expansion of current operations Types of growth strategies: Concentration strategies o Grow within the same business area Copyright ©2021 John Wiley & Sons Canada, Ltd. 239 Corporate-Level Strategy Formulation (7 of 13) Types of growth strategies: Diversification: Grow by acquiring or investing in new and different business areas o Related diversification o Unrelated diversification Integration: Acquiring suppliers or distributors o Vertical integration – (backward or forward) Copyright ©2021 John Wiley & Sons Canada, Ltd. 240 Corporate-Level Strategy Formulation (8 of 13) Retrenchment and restructuring strategies: Pursue radical changes to solve problems Chapter 11 bankruptcy o Protects a firm from creditors while management re- organizes to restore solvency Copyright ©2021 John Wiley & Sons Canada, Ltd. 241 Corporate-Level Strategy Formulation (9 of 13) Types of retrenchment and restructuring strategies Liquidation o Business closes and sells assets to pay creditors Downsizing o Decreases size of operations Copyright ©2021 John Wiley & Sons Canada, Ltd. 242 Corporate-Level Strategy Formulation (10 of 13) Types of retrenchment and restructuring strategies Divestiture o Sells off parts of the organization to refocus attention on core business areas Turnaround Strategy o Tries to fix specific performance problems Copyright ©2021 John Wiley & Sons Canada, Ltd. 243 Corporate-Level Strategy Formulation (11 of 13) Global strategies: Globalization strategy o World is one large market; standardize products and advertising as much as possible Multidomestic strategy o Customize products and advertising to fit local markets as much as possible Transnational strategy o Balance efficiencies in global operations and responsiveness to local markets Copyright ©2021 John Wiley & Sons Canada, Ltd. 244 Corporate-Level Strategy Formulation (12 of 13) Cooperative strategies Strategic alliances — two or more organizations partner to pursue an area of mutual interest Types of strategic alliances: o Outsourcing alliances o Supplier alliances o Distribution alliances Copyright ©2021 John Wiley & Sons Canada, Ltd. 245 Corporate-Level Strategy Formulation (13 of 13) Co-opetition – working with rivals on projects of mutual benefit Copyright ©2021 John Wiley & Sons Canada, Ltd. 246 Business-Level Strategy Formulation (1 of 6) Business-level strategy formulation Good strategies help achieve above average returns Key question is “How can we best compete for customers in our market and with our products or services?” Copyright ©2021 John Wiley & Sons Canada, Ltd. 247 Business-Level Strategy Formulation (2 of 6) Porter’s competitive strategies model Business-level strategic decisions are driven by: o Market scope o Source of competitive advantage Market scope and source of competitive advantage combine to generate three generic strategies Copyright ©2021 John Wiley & Sons Canada, Ltd. 248 Business-Level Strategy Formulation (3 of 6) Porter’s competitive strategies framework with soft-drink industry examples Copyright ©2021 John Wiley & Sons Canada, Ltd. 249 Business-Level Strategy Formulation (4 of 6) Porter’s generic strategies for gaining competitive advantage: Differentiation strategy Cost leadership strategy Focus strategy: o Focused cost leadership o Focused differentiation Copyright ©2021 John Wiley & Sons Canada, Ltd. 250 Business-Level Strategy Formulation (5 of 6) Differentiation strategy Seeks competitive advantage through uniqueness Cost leadership strategy Seeks competitive advantage by operating with lower costs than competitors Copyright ©2021 John Wiley & Sons Canada, Ltd. 251 Business-Level Strategy Formulation (6 of 6) Focus strategy Concentrates on a special market segment Two types: o Focused differentiation – offers a unique product to a special market segment o Focused cost leadership – seeks the lowest cost of operations within a special market segment Copyright ©2021 John Wiley & Sons Canada, Ltd. 252 Strategy Implementation (1 of 6) Strategy implementation Must be supported in every aspect of management o Planning o Controlling o Organizing o Leading Copyright ©2021 John Wiley & Sons Canada, Ltd. 253 Strategy Implementation (2 of 6) Strategic planning failures that hinder strategy implementation: Failures of substance o Inadequate attention to major strategic planning elements Failures of process o Poor handling of strategy implementation Lack of participation error Goal displacement error Copyright ©2021 John Wiley & Sons Canada, Ltd. 254 Strategy Implementation (3 of 6) Strategic control Makes sure strategies are well implemented and that poor strategies are scrapped or modified Corporate governance System of control and monitoring of top management Copyright ©2021 John Wiley & Sons Canada, Ltd. 255 Strategy Implementation (4 of 6) Corporate governance: Intended to ensure that strategic management of the organization is successful Done by boards of directors and other major stakeholder representatives Controversies regarding roles of inside directors and outside directors Increasing emphasis on corporate governance in contemporary businesses Consideration for more diversity in the Boardroom Copyright ©2021 John Wiley & Sons Canada, Ltd. 256 Strategy Implementation (5 of 6) Strategic leadership Inspires people to continually change, refine, and improve strategies and their implementation Copyright ©2021 John Wiley & Sons Canada, Ltd. 257 Strategy Implementation (6 of 6) Critical tasks of strategic leadership Maintain strategic control Be the guardian of trade-offs Create a sense of urgency Ensure that everyone understands the strategy Be a teacher Copyright ©2021 John Wiley & Sons Canada, Ltd. 258 Copyright Copyright © 2021 John Wiley & Sons Canada, Ltd. All rights reserved. Reproductions or translations of this work beyond that permitted by Access Copyright (The Canadian Copyright Licensing Agency) is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd. The purchaser may make back-up copies for his or her own use only and not for distribution or resale. The author and the publisher assume no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information contained herein. Copyright ©2021 John Wiley & Sons Canada, Ltd. 259  Management Fifth Canadian Edition John R. Schermerhorn, Bachrach, Jr. Barry Wright Chapter 11 Organization Structures This slide deck contains animations. Please disable animations if they cause issues with your device. Copyright ©2021 John Wiley & Sons Canada, Ltd. Learning Objectives 11.1 Explain organizing as a management function and contrast formal and informal organization structures. 11.2 Identify the strengths and weaknesses of traditional organizational structures. 11.3 Identify the strengths and weaknesses of team, virtual, and network structures. 11.4 Discuss how and why organizational designs are changing in today’s workplace. Copyright ©2021 John Wiley & Sons Canada, Ltd. 261 Organizing as a Management Function (1 of 6) Organizing as a management function Organizing o Arranges, connects, integrates people and other resources to accomplish a goal Organization structure o The system of tasks, workflows, reporting relationships, and communication channels connecting work and activities Copyright ©2021 John Wiley & Sons Canada, Ltd. 262 Organizing as a Management Function (2 of 6) Organizing viewed in relationship with the other management functions Copyright ©2021 John Wiley & Sons Canada, Ltd. 263 Organizing as a Management Function (3 of 6) An organization chart is a diagram describing reporting relationships and the formal arrangement of work positions within an organization. It includes: Division of work Supervisory relationships Communication channels Major subunits Levels of management Copyright ©2021 John Wiley & Sons Canada, Ltd. 264 Organizing as a Management Function (4 of 6) Informal structures  The set of unofficial working relationships among organization members Social network analysis (sociometrics) o Identifies patterns of informal structures and social relationships in the organization Copyright ©2021 John Wiley & Sons Canada, Ltd. 265 Organizing as a Management Function (5 of 6) Informal structures and social networks Potential advantages of informal structures: o Allow people to make contacts with others who can help them get things done o Stimulate informal learning as people work and interact together o Sources of emotional support and friendship that satisfy members’ social needs Copyright ©2021 John Wiley & Sons Canada, Ltd. 266 Organizing as a Management Function (6 of 6) Potential disadvantages of informal structures: Susceptibility to rumor May carry inaccurate information May breed resistance to change Diversion of work efforts from important objectives Presence of “in and out groups” Feeling of alienation by “outsiders” Copyright ©2021 John Wiley & Sons Canada, Ltd. 267 Traditional Organization Structures (1 of 13) Traditional organization structures: 1. Functional Structures 2. Divisional Structures 3. Matrix Structures Copyright ©2021 John Wiley & Sons Canada, Ltd. 268 Traditional Organization Structures (2 of 13) 1. Functional Structures o People with similar skills and performing similar tasks are grouped together into formal work units o Members work in their functional areas of expertise o Are not limited to businesses o Work well in stable environments and for organizations producing few products or services Copyright ©2021 John Wiley & Sons Canada, Ltd. 269 Traditional Organization Structures (3 of 13) Functional structures in a business, branch bank, and community hospital Copyright ©2021 John Wiley & Sons Canada, Ltd. 270 Traditional Organization Structures (4 of 13) Potential advantages of functional structures: Economies of scale with efficient use of resources Task assignments consistent with expertise and training High-quality technical problem-solving In-depth training and skill development within functions Clear career paths within functions Copyright ©2021 John Wiley & Sons Canada, Ltd. 271 Traditional Organization Structures (5 of 13) Potential disadvantages of functional structures: focus primarily on their own concerns avoid communications with other functions neglect “big picture” issues Functional chimneys problem o Sense of cooperation and common purpose break down o Narrow view of performance objectives o More common as organizations grow larger Copyright ©2021 John Wiley & Sons Canada, Ltd. 272 Traditional Organization Structures (6 of 13) 2. Divisional Structures o Group together people who work on the same product or process, serve similar customers, and/or are located in the same area or geographical region o Common in complex organizations o Avoid problems associated with functional structures Copyright ©2021 John Wiley & Sons Canada, Ltd. 273 Traditional Organization Structures (7 of 13) Divisional structures based on product, geography, customer, and process Copyright ©2021 John Wiley & Sons Canada, Ltd. 274 Traditional Organization Structures (8 of 13) Potential advantages of divisional structures: More flexibility in responding to environmental changes Improved coordination across functional areas Clear points of responsibility for product or service delivery Expertise focused on specific customers, products, and regions Greater ease in restructuring Copyright ©2021 John Wiley & Sons Canada, Ltd. 275 Traditional Organization Structures (9 of 13) Potential disadvantages of divisional structures: Duplication of resources and efforts across divisions Competition and poor coordination across divisions Emphasis on divisional goals at expense of organizational goals Copyright ©2021 John Wiley & Sons Canada, Ltd. 276 Traditional Organization Structures (10 of 13) 3. Matrix Structures Combine functional and divisional structures to gain advantages and minimize disadvantages of each Create permanent, cross-functional teams to achieve goals Used in: o Manufacturing o Service industries o Professional fields o Non-profit sector o Multi-national corporations Copyright ©2021 John Wiley & Sons Canada, Ltd. 277 Traditional Organization Structures (11 of 13) Matrix structure in a small, multi-project business firm Copyright ©2021 John Wiley & Sons Canada, Ltd. 278 Traditional Organization Structures (12 of 13) Potential advantages of matrix structures: Better communication and cooperation across functions Improved decision-making, problem-solving Increased flexibility in restructuring Better customer service Better performance accountability Improved strategic management Copyright ©2021 John Wiley & Sons Canada, Ltd. 279 Traditional Organization Structures (13 of 13) Potential disadvantages of matrix structures: Increased costs due to adding team leaders to structure Two-boss system is susceptible to power struggles Two-boss system can create task confusion and conflict in work priorities Team meetings are time consuming Team may develop “groupitis ” Copyright ©2021 John Wiley & Sons Canada, Ltd. 280 Horizontal Organization Structures (1 of 14) Team structures Extensively use permanent and temporary teams to solve problems, complete special projects, and accomplish day- to-day tasks Often use cross-functional teams composed of members from different functional departments Project teams are convened for a specific task or project and disbanded once completed Copyright ©2021 John Wiley & Sons Canada, Ltd. 281 Horizontal Organization Structures (2 of 14) How a team structure uses cross-functional teams for improved lateral relations Copyright ©2021 John Wiley & Sons Canada, Ltd. 282 Horizontal Organization Structures (3 of 14) Potential advantages of team structures: Breakdown of interpersonal barriers and mobilizing of diverse talents Improved morale Greater sense of task involvement and identification Increased enthusiasm f