MGT1002 Principles of Management Revision Notes 2024/25 Semester 1 PDF

The Hang Seng University of Hong Kong 2024/25 Semester 1 MGT1002 Principles of Management – Revision Notes Mid-term Test (25% of Continuous Assessment) Coverages: Date: 19 Oct 2024(Saturday) 13:30-14:30 Chapter 1: Managers and...

The Hang Seng University of Hong Kong 2024/25 Semester 1 MGT1002 Principles of Management – Revision Notes Mid-term Test (25% of Continuous Assessment) Coverages: Date: 19 Oct 2024(Saturday) 13:30-14:30 Chapter 1: Managers and You in the Workplace Chapter 2: Making Decisions Chapter 3: Influence of the External Environment and the Organization’s Culture Chapter 6: Managers and Ethical Behaviour Chapter 7: Managing Changes It consists of 40 MCQs with five answer choices. Topic 1: Introduction of Management (Week 1) Learning Objective 1: Explain why managers are important to organizations. Learning Objective 2: Tell who managers are and where they work. Learning Objective 3: Describe the functions, roles, and skills of managers. - 4 Functions (Planningà Organizingà Leadingà Controlling), - 3 Roles (Interpersonal Roles, Informational Roles, Decisional Roles), - 3 Skills (Technical, Human Skills, Conceptual Skills) Learning Objective 4: Challenges facing managers today and into the future. A manager coordinates and manages the work of other people so that the organizational goals can be accomplished. Levels of Management: -1-  Ø First-line Managers (Department Head): - Make short-term operating decisions - Manage the work of non-managerial employees. Ø Middle Managers: - Implement policies of top managers above them - manage the work of first-line managers. Ø Top Managers: - responsible for making organization-wide decisions, - establishing plans and goals that affect the entire organization and, - manage the work of middle managers. Organization is a deliberate arrangement of people to accomplish some specific purpose. Management involves coordinating and overseeing the work activities of others, so their activities are completed efficiently and effectively. Efficiency Effectively - Doing things right. - Attaining organizational goals. - Getting the most output for the least inputs. The four functions of Management: 1. Planning: - Defining goals - Establishing strategies to achieve goals - Developing plans to integrate and coordinate activities Achieving the 2. Organizing: (Division of labour/ tasks) Lead to organization’s stated - Arranging and structuring work to accomplish goals. purposes -2-  3. Leading: - Working with people to accomplish goals. 4. Controlling: - Monitoring, comparing, and correcting work. Roles of Manager: Figurehead 1. Interpersonal Roles Leader Liaison Monitor 2. Informational Roles Spokesperson Disseminator Entrepreneur Resources Allocator 3. Decisional Roles Disturbance Handler Negotiator Skills Managers need 1. Technical Skills - Job-specific knowledge and techniques needed to perform work tasks proficiently. 2. Human Skills - The ability to work well with other people. - To develop relationshipsàgood relationships/ less humour. 3. Conceptual Skills - The ability to think and conceptualize about abstract and complex situations concerning the organization. -3-  Challenges Facing Managers Today and into the Future 1. Focus on Technology Ø Managers must get employees on board with new technology. Ø Managers must oversee the social interactions and challenges involved in using collaborative technologies. 2. Focus on Disruptive Innovation Ø Disruptive innovation involves new products, processes, or services that radically change the rules of the game. Ø One example is how the automobile destroyed the horse-drawn buggy industry 3. Focus on Social Media Ø Social media: forms of electronic communication through which users create online communities to share ideas, information, personal messages, and other content. 4. Focus on Ethics Ø We commonly see unethical business practices in the news Ø Examples include pharmaceutical firms raising drug prices by 500% or someone turning in fake receipts for expenses. 5. Focus on Political uncertainty Ø Brexit and the USMCA are examples of that shift Ø Some countries have placed additional regulations on business 6. Focus on the Customer Ø Managing customer relationships is the responsibility of all managers and employees Ø Consistent, high-quality customer service is essential -4- Topic 2: Decision Making Learning Objective 1: Describe the eight steps in the decision-making process. Step 1: Identifying a Problem Step 2: Identifying Decision Criteria Step 3: Allocating Weights to the Criteria Step 4: Developing Alternatives Step 5: Analyzing Alternatives Step 6: Selecting an Alternative Step 7: Implementing the Alternative Step 8: Evaluating Decision Effectiveness Learning Objective 2: Explain the five approaches managers can use when making decisions. - Rationality - Bounded Rationality - Intuition - Evidence-based Management (EBMgt) - Crowdsourcing Learning Objective 3: Classify decisions and decision-making styles. a. Types of Decisions: - Structured Problems - Programmed Decisions: Procedure, Rule, Policy - Non-programmed Decisions b. Decision-making Styles: - Directive - Analytic - Conceptual - Behavioral Learning Objective 4: Describe how biases affect decision-making. 1. Overconfidence Bias 2. Immediate Gratification Bias 3. Self-servicing Bias 4. Selective Perception Bias 5. Framing Bias Learning Objective 5: Identify cutting-edge approaches for improving decision-making. - Design thinking - Big Data and AI - AI -5-  Decision: a choice among two or more alternatives. Decision-making Process: 1. Identifying a Problem - Problem: an obstacle that makes it difficult to achieve a desired goal or purpose. - E.g.: Amanda is a sales manager whose reps need new laptops. 2. Identifying Decision Criteria - Decision criteria are factors that are important to resolving the problem. - E.g.: memory and storage capabilities, display quality, battery life, warranty, and carrying weight are the relevant criteria in her decision. 3. Allocating Weights to the Criteria - If the relevant criteria aren’t equally important, the decision maker must weigh the items in order to give them the correct priority in the decision. 4. Developing Alternatives - List viable alternatives that could solve the problem. 5. Analyzing Alternatives - Once you identify the alternatives you need to analyze them using the criteria established in Step 2. 6. Selecting an Alternative - Choose the alternative that generates the highest total in Step 5. -6- 7. Implementing the Alternative - Put the chosen alternative into action. - Convey the decision to those affected and get their commitment to it. 8. Evaluating Decision Effectiveness - Evaluate the result or outcome of the decision to see if the problem was resolved. Five Approaches to Decision-making: 1. Rationality (most objective, perfect/ nearly perfect) Ø Definition: choices that are logical and consistent and maximize value. Ø Ideal method and a theory. 2. Bounded Rationality Ø Definition: decision-making that’s rational, but limited by an individual’s ability to process information Ø Satisfice: accepting solutions that are “good enough” is not the best but it satisfies the company’s decision. Ø Satisfice > Maximize 3. Intuition Ø Definition: making decisions on the basis of experience, feelings, and accumulated judgment, which are based on the gut-feelings. 4. Evidence-based Management (EBMgt) à not only one method Ø Definition: the systematic use of the best available evidence to improve management practice. 5. Crowdsourcing à find solutions from outside Ø Definition: a decision-making approach where you solicit ideas and input from a network of people outside of the traditional set of decision-makers. Types of Decisions: - Structured Problem: straightforward, familiar, and easily defined problems. - Programmed Decisions: repetitive decisions that can be handled by a routine approach. » Procedure: a series of sequential steps used to respond to a well-structured problem (e.g. Applying for Annual Leave/ Maternity Leave). » Rule: an explicit statement that tells managers what can or cannot be done (e.g. Lateness/ Absentee) » Policy: a guideline for making decisions (e.g. Sales and Returns) - Unstructured Problems: that are new or unusual and for which information is ambiguous or incomplete (e.g. COVID-19). - Non-programmed Decisions: unique and nonrecurring and involve custom-made solutions. -7-  Four Decision-making Styles: - Research has identified four different individual decision-making styles based on two dimensions: 1. An individual’s way of thinking 2. An individual’s tolerance for ambiguity i. Directive Style: low tolerance for ambiguity and seek rationality ii. Analytic style: seek rationality but have a higher tolerance for ambiguity iii. Conceptual style: intuitive decision makers with a high tolerance for ambiguity iv. Behavioral style: intuitive decision makers with a low tolerance for ambiguity Heuristics (rules of thumb): can help make sense of complex, uncertain, or ambiguous information. -8-  However, they can also lead to errors and biases in processing and evaluating information. Decision-making Biases and Errors: 1. Overconfidence Bias: holding unrealistically positive views of oneself and one’s performance. 2. Immediate Gratification Bias: choosing alternatives that offer immediate rewards and avoid immediate costs. (always focus on the short-term impacts àsave for labour/ production costs) 3. Self-serving Bias: taking quick credit for successes and blaming outside factors for failures. 4. Selective Perception Bias: selecting, organizing and interpreting events based on the decision maker’s biased perceptions. 5. Framing Bias: selecting and highlighting certain aspects of a situation while ignoring other aspects. Cutting-edge Decision-making: - Technology has changed the ability of managers to access information. Two technology-driven cutting-edge aides to decision-making are: Ø Design thinking: approaching management problems as designers approach design problems Ø Big data and Artificial Intelligence: big data refers to huge and complex data sets now available. Big data has opened the door to widespread use of artificial intelligence (AI) Ø Artificial Intelligence (AI): uses computing power to solve complex problems. -9-  Topic 3: Influence of the External Environment and the Organization’s Culture Learning Objective 1: Describe the constraints and challenges facing managers in today’s external environment. External Factors: (***PEST + Demographic + Global) 1. Political/ Legal 2. Economic 3. Sociocultural 4. Technological 5. Demographic 6. Global Learning Objective 2: Discuss the characteristics and importance of organizational culture. 6 Dimensions of Organizational Culture: 1. Adaptability (Innovation and Flexible) 2. Attention to detail 3. Outcome orientation (result>process) 4. People orientation (focus on people's feelings, aim to have close relationships) 5. Team orientation (focus on teamwork) 6. Integrity (honesty and ethics) Managerial Constraints External constraints Internal constraints The Environment and Environment Uncertainty Ø Environment (definition): institutions or forces outside of the organization that could potentially affect performance. Ø Differ on degree of environmental uncertainty: - Degree of Change: Stable (e.g. Customer preferences, Legislation within a particular industry) Dynamic (e.g. Fashion, Technology) - Degree of Complexity Complex (e.g. Equipped well with knowledge) Simple - 10 - Ø The External Environment Factors (PEST + Demographic + Global) 1. Political/ Legal - Political Stability (e.g. Anti-Chinese, Wars, Strikes) - Laws (e.g. Protecting employees and employers) 2. Economic - Interest Rate - Inflation (raising the cost of productionàlower the profit), - Employment Rate - Business Cycle - Rental Cost 3. Sociocultural - Values - Trends - Traditions - Lifestyles - Pattern of Behaviour 4. Technological - Level of technology and skilled labour 5. Demographic - Age - Gender - Educational Level - Race - Family Composition - Birth Rate 6. Global - Globalization and a world economy Ø The Specific EnvironmentàDirectly affect profit - The part of the environment directly relevant to the achievement of organizational goals. » Most of the management’s attention typically focuses on the specific environment » The specific environment stakeholders are: - Suppliers - Customers - Competitors - Government agencies (e.g. Equal Opportunity Commission 平機會) - 11 -  Organizational Culture: - The shared values, principles, traditions, and ways of doing things influence the way organizational members act and distinguish the organization from other organizations. - 6 Dimensions of Organizational Culture: 1. Adaptability (Innovation and Flexible) 2. Attention to detail 3. Outcome orientation (result>process) 4. People orientation (focus on people's feelings, aim to have close relationships) 5. Team orientation (focus on teamwork) 6. Integrity (honesty and ethics) - Strong culture: the key values are intensely held and widely shared - Weak culture: Values are only limited to a few people. Employees have little identification with the culture. - Where culture comes from and how it continues The original source of the culture usually reflects the vision of the founders and the actions of top managers. Employees learn culture from stories, rituals, material artifacts and symbols, and language. » Storiesà mainly related to the founder. - Stories and legends produce emotions in listeners, and these emotions tend to improve their memory of the lessons within the stories and legends. - They have the greatest effect when they describe real people, are assumed to be true, and are known by all employees. » Rituals à daily life habits - The programmed routines of daily organizational life. - Examples: how visitors are greeted, how seniors visit subordinates, how people communicate, how much time employees take for lunch, etc. à Can be developed » Material Arifacts and Symbols - Artifacts(工藝品) are the observable symbols and signs of organizational culture. - Examples: how employees dress, types of automobiles provided to top executives, office furniture, company location etc. - 12 -  » Language - Many organizations use language to help members identify with the culture, attest to their acceptance of it, and help preserve it. - New employees may at first be overwhelmed by acronyms (e.g. Be Right Back, FYI, BTW) and jargons (術語, e.g. 打貓, 射波, 靚仔). How Culture Affects Managers’ - An organization’s culture constrains what they can and cannot do and how they manage, it’s particularly relevant to managers. à Plan: Goal and strategies (outcome orientation? Risking taking?) à Organizing: Division of tasks (team orientation /individualism?) à Leading: Leadership, motivation (people orientation? Open-minded?) à Controlling: Criteria of control, tighten control or employee can control by themselves (outcome orientation? High trust) Types of Managerial Decisions affected by Culture - 13 - Topic 4: Socially Conscious Management Learning Objective 1: Discuss what it means to be socially responsible and what factors influence that decision. Learning Objective 2: Discuss the factors that lead to ethical and unethical behaviour. Managers and Ethical Behaviour Ethics: principles, values, and beliefs that define right or wrong behaviour. Ø Stage of Moral Development by Lawrence Kohlberg - Level I: Pre-conventional Level » 1st Stage: React to punishment à Sticking to rules to avoid physical punishment. » 2nd Stage: React to rewards à Following rules only when doing so is in your immediate interest. - Level II: Conventional Level » 3rd Stage: “Good Boy/ Nice Girl” Morality à Living up to what is expected by people close to you (e.g. parents, friends). » 4th Stage: “Law and Order” Stage à Maintaining conventional order by fulfilling obligations to which you have agreed. - Level III: Principled Level » 5th Stage: Individual rights àValuing the rights of others and upholding absolute values and rights regardless of the majority’s opinion. » 6th Stage: Highest stage à Follow self-chosen ethical principles even if they violate the law. - 14 -  Factors that Determine Ethical and Unethical Behavior: 1. Individual Characteristics - Values: à Basic convictions about what is right and wrong. à 2 Basic moral convictions: a. Utilitarianism 功利主義 - Focuses on the end whether an action is right or wrong depends on the consequences of that action b. Deontology 義務論 - An action is right or wrong judged by absolute value (e.g. Christianity, Buddhism, other personal beliefs) - Ego Strength: a personality measure of the strength of a person’s conviction. - Locus of Control: a personality attribute that measures the degree to which people believe they control their own fate. 2. Organization’s Culture - Consists of the shared organizational values. - Reflects what the organization stands for and what it believes in that influences employee behaviour ethically or unethically. à outcome-oriented, aggressive, risk-taking culture à customer-oriented, strong ethical value - 15 - 3. Issue Intensity 4. Structure Variables - Organization Structure à Ambiguity of the chain of comment and accountability - Formal Rules and Regulation - Performance Appraisal System à Goal-setting and unethical behaviour - Reward Allocation - 16 -  Ethics in an International Context - Ethical standards are not universal - Foreign Corrupt Practices Act - United Nations Global Contract Ø The 10 Principles of the UN Global Compact Principles Human Rights Principle 1 Business should support and respect the protec;on of interna;onally proclaimed human rights within their sphere of influence; and Principle 2 Make sure they are not complicit in human rights abuses. Labour Standards Principle 3 Business should uphold the freedom of associa;on and the effec;ve recogni;on of the right to collec;ve bargaining; Principle 4 The elimina;on of all forms of forced and compulsory labor; Principle 5 The effec;ve aboli;on of child labor; and Principle 6 The elimina;on of discrimina;on in respect to employment and occupa;on. Environment Principle 7 Business should support a precau;onary approach to environmental challenges; Principle 8 Undertake ini;a;ves to promote greater environmental responsibility; and Principle 9 Encourage the development and diffusion of environmentally friendly technologies. An7-Corrup7on Principle 10 Business should work against corrup;on in all its forms, including extor;on and bribery. Ways in Encouraging Ethical Behaviour: 1. Code of Ethics and Decision Rules - Code of Ethics: a formal statement of an organization’s primary values and the ethical rules it expects its employees to follow - Example: - 17 -  2. Ethical Leadership - What managers do have a strong influence on employees’ decisions whether to behave ethically. à they uphold the shared values and set the cultural tone à they’re role models in both words and actions Being an Ethical Leader Be a good role model by being ethical and honest. Tell the truth always. Don’t hide or manipulate information. Be willing to admit your failures. Share your personal values by regularly communicating them to employees. Stress the organization’s or team’s important shared values. Use the reward system to hold everyone accountable to the values. 3. Ethics Training - setting up seminars, workshops, and similar ethics training programs to encourage ethical behaviour. 4. Job Goals and Performance Appraisal - Under the stress of unrealistic goals, otherwise ethical employees may feel they have no choice but to do whatever is necessary to meet those goals. - Examples: Economical goals? Attitude? Relationship? 5. Independent Social Audits - Evaluate decisions and management practices in terms of the organization’s code of ethics. - Examples: Human resources policy, Operations, Marketing, Accounting Procedure, etc. 6. Protective Mechanisms for Whistle-Blower - Whistle-blower: the individual raises ethical concerns or issues to others. - Example: Set up toll-free ethics hotlines. (Anonymous reportà protects the whistle-blower) - 18 - Topic 5: Managing Change Learning Objective 1: External and Internal Forces for Change Learning Objective 2: Describe the Change Process Learning Objective 3: Classify areas of Organizational change Learning Objective 4: Explain how to manage change. Know how to be change ready by overcoming your resistance to change. External Factors: - Changing consumer needs and wantsà convenience - New governmental Lawsà Legislation (e.g. Municipal Solid Waste) - Changing technologyà higher level (Mechanization, Automation) - Economic changes à economic recovery/ economic downturn (smaller the scale of business) Internal Factors: - New organizational strategyà low-end (less purchasing power customers) to high-end (high purchasing power customers) market - Change in composition of workforce à e.g. age, race - New equipment - Changing employee attitudes (stableà dynamic) The Three-step Change Process by Kurt Lewin Ø Calm Waters Metaphor: 1. Unfreezing the status quo 現狀 - Done by increasing the driving forces 2. Changing to a new state - Implementation of change 3. Refreezing (Stabilizing) to make the change permanent - Stabilize the new situation - 19 -  Ø White-water Rapids Metaphor: - The lack of environmental stability and predictability requires that managers and organizations continually adapt and manage change actively to survive. Reactive Change Process: reacting to a situation that has occurred Proactive Change Process: acting in advance of a situation 4 Types of Change: Ø Strategy - Failure to change strategy when circumstances dictate could undermine a company’s success. (e.g. Ryan Air à European Airline) e.g. Merger and Acquisition, Joint Venture, Localization vs Globalization, High-ended vs Low-ended, etc. Ø Structure - Changing structural components e.g. Departmental responsibilities, No. of Authority Level - Changing structural design e.g. Functional structure, Matrix structure Ø Technology - New equipment, tools, or methods - Automation: tasks done by machines, robotic technology - Computerization: sophisticated information systems Ø People - Organizational development: change methods that focus on people and the nature and quality of interpersonal work relationships - Examples: team building, survey feedback, intergroup development. - The most popular Organizational Development (OD) techniques: - 20 -  Why do people resist Change? Ø Uncertainty Ø Habit Ø Fear of loss Ø Change is inconsistent with the goals of the organization (e.g. Strategy change à cost saving vs high- ended) Techniques for reducing resistance to Change? Ø Education (offer workshops, training) and Communication (clarify the work purpose): let the employee see the logic of the change effort. Ø Participation: involves employees into the decision-making process. Ø Facilitation (counselling, therapy serviceà mental support) and Support: help the employees deal with fear during the change effort. Ø Negotiation: exchange something valuable for an agreement. Ø Coercion: direct threats (e.g. terminate the contract) against the resisters. - 21 -