CHAPTER 1 Understanding the Manager's Job

Learning Outcomes
After studying this chapter, you should be able to:
1 Define management, describe the kinds of managers found in organizations,
identify and explain the four basic management functions, describe the
fundamental management skills, and comment on management as a science and art
2 Justify the importance of history and theory to managers, and explain the
evolution of management thought through the classical, behavioral and quantitative
perspectives
3 Identify and discuss key contemporary management perspectives represented by
the systems and contingency perspectives, and identify the major challenges and
opportunities faced by managers today.
Management in action
Reed Hastings Creates Chaos with Netflix
“Don’t be afraid to change the model.”
Several years ago, Reed Hastings, a California entrepreneur, incurred a $40 late fee
at Blockbuster. “It was six week late,” he admits. “I had misplaced the cassette
[and] I didn’t want to tell my wife… I was embarrassed about it”. The next day he
dropped off the VHS cassette and paid the late fee on his way to the local gym. As
it turns out, his itinerary for the day was quite opportune: In the middle of his
workout, he recalis,” I realized [the gym] had a much better business model. You
could pay $30 or $40 a month and work out as little or as much as you wanted.”
Thus was born the idea for Netflix- paying a monthly fee for unlimited video
rentals. But Hastings knew he need to start slowly. So, when Netflix was launched
in 1997, its only real innovation involved the convenience of ordering movies
online and receiving and returning them by mail; Netflix merely rented movies for
$4 apiece plus $2 for postage (and, yes, its charged late fees). Basically, the
customer base consisted of people who wanted to watch movies without having to
leave their home. But Hastings and cofounder Marc Randolph then quickly moved
to test the subscription-based model, unlimited rentals by mail for a flat fee, and,
perhaps more important, no due dates (and thus no late fees). Current customers
were first offered the opportunity to shift from their pay-per-rental plans to
subscription plans on
1.1 An Introduction to Management
An organization is a group of people working together in a structured and
coordinated fashion to achieve a set of goals, which may include profit, the
discovery of knowledge, nation defense, the coordination of various local charities,
or social satisfaction.
Management is a set of activities (including planning and decision making,
organizing, leading, and controlling) directed at an organization’s resources
(human, financial, physical, and information) with the aim of achieving
organizational goals in an efficient and effective manner.
A manager is someone whose primary responsibility is to carry out the
management process.
Efficient means using resources wisely and in a cost-effective way.
Effective means making the right decisions and successfully implementing them
1.1a Kinds of Managers
Levels of Management:
Top managers are the small group of executives who control the organization by
setting its goals, overall strategy, and operating policies. Top managers also
represent the organization to the external environment. Job titles for top managers
include chief executive officer (CEO), president, and vice president (VP).
a. Middle managers are the largest group of managers in most companies.
These managers hold positions such as plant manager, operations manager, and
division head. They primarily take the policies and plans designed by top managers
and put them into effect. They supervise lower-level managers.
b. First-line managers supervise and coordinate the activities of operating
employees. They often have job titles such as supervisor, coordinator, and office
manager. The majority of their work is direct supervision of their subordinates.
1. Managing in Different Areas of the Organization
a. Marketing managers work in areas related to the marketing function of the
organization. They help to find ways to get consumers and clients to buy the
organization’s products or services.
b. Financial managers deal primarily with an organization’s financial resources
and are involved in such activities as accounting, cash management, and
investments.
c. Operations managers are concerned with creating and managing the systems
that create an organization’s products and services. They achieve their goals
through production control, inventory control, quality control, site selection, and
plant layout.
d. Human resources managers are responsible for hiring and developing
employees. They are concerned with recruiting and selecting employees, training
and development, and discharging low-performing and problem employees.
e. Administrative managers are generalists who have some basic familiarity
with all functional areas of management rather than specialized training in any one
area.
f. Specialized types of managers include those who work in public relations,
R&D, internal consulting, and international business.
A. Basic Management Functions
The management process, as noted earlier, involves the four basic functions of
planning and decision making, organizing, leading, and controlling
1. Planning
a. Planning means setting an organization’s goals and deciding how best to
achieve them.
b. Decision making, a part of the planning process, involves selecting a course
of action from a set of alternatives.
2. Organizing
Organizing involves3. Leading
Leading is the set of processes used to get members of the organization to work
together to further the interests of the organization.
determining how activities and resources are to be grouped
4. Controlling
Controlling is monitoring the progress of the organization as it works toward its
goals to ensure that it is effectively and efficiently achieving these goals.
B. Fundamental Management Skills
1. Technical Skills
Technical skills are necessary to accomplish or understand the specific kind of
work done in an organization.
2. Interpersonal Skills
Interpersonal skills rely on the ability to communicate with, understand, and
motivate individuals and groups.
3. Conceptual Skills
Conceptual skills include the ability to think in abstract terms and the mental
capacity to understand the “big picture” or the overall workings of the organization
and its environment.
4. Diagnostic Skills
Diagnostic skills consist of the ability to recognize the symptoms of a problem and
then determine an action plan to fix it.
5. Communication Skills
Communication skills are abilities to effectively convey ideas and information to
others and effectively receive ideas and information from others.
6. Decision-Making Skills
Decision-making skills include the ability to correctly recognize and define
problems and opportunities and to then select an appropriate course of action to
solve problems and capitalize on opportunities.
7. Time Management Skills
Time management skills are abilities such as prioritizing work, working
efficiently, and delegating appropriately.
C. The Science and the Art of Management
1. The Science of Management
Management is partly a science, because some aspects of management are
objective and can be approached with rationality and logic.
2. The Art of Management
Management is partly an art, because some aspects of management are subjective
and are based on intuition and experience.
I. The Evolution of Management
A. The Importance of History and Theory
1. Why Theory?
A theory provides a simple conceptual framework for organizing knowledge and
providing a blueprint to help organizations achieve their goals
2. Why History?
Contributions from past industrialists have molded the American culture, and
managers can benefit from an awareness of these contributions.
B. The Historical Context of Management
While the practice of management can be traced back thousands of years, it was
not given serious attention until the 1800s, when large organizations emerged.
C. The Classical Management Perspective
The classical management perspective includes two approaches: scientific
management and administrative management.
1. Scientific Management
Scientific management focuses on ways to improve the performance of individual
workers.
a. Frederick W. Taylor saw workers soldiering, or deliberately working
beneath their potential. He divided each job into parts and determined how much
time each part of the job should take, thus indicating what each worker should be
producing. He designed the most efficient way of doing each part of the job, and
instituted a piecework pay system with incentives for workers who met or
exceeded the target output level.
b. Frank and Lillian Gilbreth, a husband-and-wife team, also helped to find
more efficient ways for workers to produce output.
2. Administrative Management
Administrative management focuses on managing the total organization.
a. Henri Fayol was the first to identify the four management functions—
planning, organizing, leading, and controlling—and he developed guidelines for
managers to follow.
b. Lyndall Urwick is best known for integrating scientific management with
administrative management.
c. Max Weber outlined the concept of bureaucracy based on a rational set of
guidelines for structuring organizations in the most efficient manner. His work is
the foundation of contemporary organization theory.
3. The Classical Management Perspective Today
a. Contributions of the classical management perspective are that it laid the
foundation for management theory; it identified key techniques and approaches
that are still relevant today; and it made management a valid subject of scientific
inquiry.
b. Limitations include that it is not well suited for complex or dynamic
organizations, it provided universal procedures that are not appropriate in all
settings, and it slighted the role of the individual in organizations.
D. The Behavioral Management Perspective
The behavioral management perspective placed more emphasis on individual
attitudes and behaviors and on group and behavioral processes. Hugo Munsterberg
and Mary Parker Follett were early contributors to this perspective.
1. The Hawthorne Studies
a. The Hawthorne studies, performed by Elton Mayo, showed that when
illumination was increased, productivity increased. However, productivity also
increased in a control group, where the lighting did not change. The increase in
productivity was attributed to the fact that the workers were having extra attention
paid to them for perhaps the first time.
b. Other studies found that employees will not work as fast as they can when
being paid piecework wages. Instead, they will perform to the level informally set
by the group in order to be accepted by the group. These two studies, and others,
led Mayo to the conclusion that individual and social processes played major roles
in shaping employee attitudes and behavior at work.
2. The Human Relations Movement
The human relations movement, which stemmed from the Hawthorne studies, is
based on the idea that a manager’s concern for workers will lead to increased
satisfaction and improved performance. The movement includes the need theories
of motivation, such as Maslow’s hierarchy of needs and McGregor’s Theory X
and Theory Y.
3. Contemporary Behavioral Science in Management
The emergence of organizational behavior occurred because of the too-simplistic
descriptions of work behavior by the human relationists. Organizational behavior
takes a holistic view of behavior and addresses individual, group, and organization
processes.
4. The Behavioral Management Perspective Today
a. Contributions include that it gave insights into interpersonal processes,
focused managerial attention on these processes, and challenged the view of
employees as tools and not resources.
b. Limitations include that prediction is difficult due to the complexity of
human behavior, managers may be reluctant to adopt some of the behavioral
concepts, and contributions may not be communicated to practicing managers in an
understandable form.
E. The Quantitative Management Perspective
The quantitative management perspective focuses on decision making, cost-
effectiveness, mathematical models, and the use of computers in organizations.
The two branches of the quantitative perspective are management science and
operations management.
1. Management Science
Management science focuses specifically on the development of mathematical
models. These models help organizations to try out various activities with the use
of a computer. Modeling can help managers locate the best way to do things and
save money and time.
2. Operations Management
Operations management is an applied form of management science that helps
organizations develop techniques to produce their products and services more
efficiently.
3. The Quantitative Management Perspective Today
a. Contributions include that it developed sophisticated quantitative techniques
that improve decision making, and it increased understanding of complex
organizational processes.
b. Limitations are that it cannot fully explain or predict behavior, that
mathematical sophistication may come at the expense of other important
managerial skills, and that the models may require unrealistic or unfounded
assumptions.
II. Contemporary Management Perspectives
A. The Systems Perspective
1. A system is an interrelated set of elements functioning as a whole. An
organization as a system is composed of four elements: inputs (material, human,
financial, and informational resources), transformation processes (technological
and managerial processes), outputs (products or services), and feedback (reactions
from the environment).
2. Open systems are systems that interact with their environment. Closed
systems do not interact with their environment.
3. Subsystems are systems within a broader system.
4. Synergy refers to units that are more successful working together than
working alone.
5. Entropy is the process that leads to decline.
B. The Contingency Perspective
Universal perspectives try to identify the “one best way” to manage
organizations. The contingency perspective argues that universal theories cannot
be applied to organizations because each organization is unique
C. Contemporary Management Challenges and Opportunities
1. Contemporary Applied Practices
Books that highlight the management practices of successful firms or outline
conceptual or theoretical models to guide managers are having an important impact
on the theory and practice of management today.
2. Contemporary Management Challenges
a. Globalization is a significant challenge as managers must reach out across
cultural and national boundaries.
b. There is renewed importance placed on ethics, social responsibility, and
corporate governance.
c. Quality also poses an important challenge, as a basis for competition,
lowering costs, and increasing productivity.
d. The shift toward a service economy continues to be important, challenging
managers who may be more familiar with manufacturing sectors.
e. The economic recession of 2008–2010 and slow recovery in 2011–2015
pose many challenges as well as offer some opportunities.
f. Managers must contend with the changing nature of the workplace,
including workforce reductions and expansion.
g. The management of diversity is an important opportunity and challenge,
especially with regard to younger generations of workers.
h. Organizations need more than ever to monitor the environment and change
to keep pace with it.
i. Technological advances, especially in communications, have increased the
pace of work, reduced managers’ available time to consider decisions, and
increased the amount of information managers must process.
Questions for Review
1. What are the three basic levels of management that can be identified in most
organizations? How precise are the lines differentiating these levels? In which of
the basic areas do managers work?
Top managers manage the overall organization. They create the organization’s
goals, overall strategy, and operating policies. Middle managers are primarily
responsible for implementing the policies and plans developed by top managers
and for supervising and coordinating the activities of lower-level managers. First-
line managers supervise and coordinate the activities of operating employees. How
well defined are the lines differentiating these levels often depends on the type of
organization and its size.
Managers may work in various areas within an organization. Common areas
include marketing, financial, operations, human resources, and administrative.
2. What four basic functions make up the management process? How are they
related to one another?
Planning and decision making, leading, organizing, and controlling are the four
basic management functions. Each is related to and must occur simultaneously
with the others. Planning and decision making are perhaps the most intertwined
with the three other functions. For example, managers must plan and make
decisions about how to lead, organize, and control. Another example of an
important interrelationship is how managers must balance the need for control
against the need for autonomy that makes leadership easier.
3. Identify several of the important skills that help managers succeed. Give an
example of each. How might the importance of different skills vary by level and
area within an organization?
Managerial skills include technical, interpersonal, conceptual, diagnostic,
communication, decision making, and time management. Technical skills are
specialized skills related to a specific area or a specialized industry. An example is
an oil and gas exploration project leader who holds an engineering degree.
Interpersonal skills are the ability to understand and motivate others. An example
is a manager who knows how to give rewards that will motivate workers.
Conceptual skills consist of abstract and logical thinking that will aid the manager
as an innovator and an integrator. An example is an architect who is able to see
what a house will look like from just studying a blueprint.
Diagnostic skills are the ability to observe the current situation and understand the
cause-and-effect relationships that are leading to success or failure. An example is
a manager who recognizes that productivity is dropping in an area and is able to
investigate and isolate the problem.
Communication skills are the ability to give and receive information. An example
is a manager who has the skills needed to plan and run an effective business
meeting.
Decision-making skills are the capacity to choose the correct course of action,
based on information. An example is a manager who introduces a new product just
at the time when customers are demanding that product.
Time management skills are the ability to prioritize appropriately and to use time
resources effectively. An example is a manager who spends more time on critical
tasks, such as training workers, and less time on routine tasks, such as reading
routine reports.
In a large organization with distinct layers of management, these skills are likely to
vary significantly, but may not be so in smaller organizations where these levels
are not distinct.
4. Briefly describe the principles of scientific management and administrative
management. What assumptions do these perspectives make about workers? To
what extent are these assumptions still valid today?
The principles of scientific management and administrative management are
founded upon concerns about efficiency. Scientific management looks at the
performance of individual workers and attempts to improve productivity through
measures such as incentive pay systems, optimal task design, specialized training,
and careful selection of the most productive workers. Administrative management
looks at the performance of the organization as a whole and attempts to improve
overall organizational efficiency by utilizing bureaucracy, effective planning, top-
down coordination and control, and so on.
Both scientific management theory and administrative management theory assume
that workers do not like to work, accept responsibility, or change their behavior;
that they are motivated only by money; and that they prefer to be told exactly what
to do. One could argue that many of these assumptions are valid even today.
5. Describe the systems perspective. Why is a business organization considered
an open system?
The systems perspective describes an organization as a set of elements that
function together as a whole. The theory looks at the linkages between elements
and at the functioning of the system, from inputs to transformation processes to
outputs and feedback. Systems theory also investigates the interaction of the
system with its environment. A business organization has a lot of interactions with
its environment, including the labor force, customers, regulators, and local
communities. Thus, a business organization is considered to be an open system
because it interacts with its environment.
Questions for Analysis
1. Recall a recent group project or task in which you have participated. Explain
how members of the group displayed each of the managerial skills.
Clearly, answers will vary. Students should have no trouble thinking of a situation.
They should then describe how technical, interpersonal, conceptual, diagnostic,
communication, decision-making, or time management skills were used in that
situation.
2. The text notes that management is both a science and an art. Recall an
interaction you have had with someone at a higher level in an organization
(manager, teacher, group leader, or the like). In that interaction, how did the
individual use science? If he or she did not use science, what could have been done
to use science? In that interaction, how did the individual use art? If he or she did
not use art, what could have been done to use art?
Students’ answers will vary, depending on the situation they describe. Examples of
the use of science would include mention of rational, systematic, objective decision
making or the use of quantitative models and scientific approaches to problem
solving. Examples of the use of art would include mention of intuition, experience,
instinct or personal insights. Other examples would include the use of
communication or interpersonal skills.
3. Watch a movie that involves an organization of some type. Harry Potter,
Avatar, The Avengers, Flight, and Up in the Air would all be good choices.
Identify as many management activities and skills as you can.
Depending on the movie selected, answers will vary. Students who choose a Harry
Potter movie, for example, will find examples of leading and planning as well as a
variety of roles and skills.
4. Young, innovative, or high-tech firms often adopt the strategy of ignoring
history or attempting to do something radically new. In what ways might this
strategy help them? In what ways might this strategy hinder their efforts?
Innovations that are truly radical are the only ones that have the potential to break
through tradition and create something that has a chance of great success. Also, if
the new firm is able to innovate in a way that is valued by consumers, they will
attain an advantage over their rivals that may endure for a long time—a sustainable
competitive advantage. On the other hand, willfully ignoring history increases the
chances of repeating an error—for example, of trying a strategy or creating a
product that has already been shown to be a failure or dead end. Also, by ignoring
history, firms reject strategies and techniques that are known to work, and so they
risk terrible failure.
5. Can a manager use tools and techniques from several different perspectives
at the same time? For example, can a manager use both classical and behavioral
perspectives? Give an example of a time when a manager did this, and explain how
it enabled him or her to be effective.
Managers can and do use multiple tools and techniques at the same time. This is
often necessary to effectively cope with complex, varied situations and persons.
Students will give different examples, but here is one possibility: “When I worked
at a fast food restaurant, the manager had problems with one employee. This
employee made mistakes, arrived at work late, and had a poor attitude. First, the
manager tried to use a behavioral approach, where the manager reasoned with the
employee and asked the other employees to use peer pressure to change the
problem employee’s behavior. Next, the manager tried to use needs theories of
motivation by threatening to cut the employee’s pay if the employee continued to
create difficulties. Finally, the manager used scientific management to assign that
employee to tasks where politeness, accuracy, and timeliness were less important,
such as cleaning the restrooms and taking out the trash.”
Experiential Exercise
Johari Window
a. Purpose
This exercise has two purposes: to encourage students to analyze themselves more
accurately and to start them working on small-group cohesiveness. This exercise
encourages students to share data about themselves and then to assimilate and
process feedback.
b. Format
Students individually complete three lists:
Quadrant 1—things that they and others know about themselves
Quadrant 3—things that they know about themselves that others do not know
Quadrant 2—things that they did not know about themselves but that they learned
from others last semester
c. Follow-Up
You might want to lead a group discussion on interpersonal perception as a follow-
up to this exercise. Any students who wish to share how they have moved
information about themselves from, say, Quadrant 3 to Quadrant 1 should be
encouraged to do so.
If you are doing a major group project throughout the course, you may want to use
this exercise around the middle of the term, having each student focus on the Johari
Window as it relates to his or her group.
Chapter 2: The Environments of Organizations and Managers
Management in Action
The Canary in Starbucks’ Coal Mine
The opening vignette discusses the sustainability efforts of Starbucks. In recent
years, the company has taken greater strides in incorporating sustainability
practices into its operations. Some of the sustainability goals that Starbucks has set
include cutting in-store water consumption by 25 percent, recycling the disposable
cups that its beverages are sold in, attaining LEED (Leadership in Energy &
Environmental Design) certification for all new and renovated stores, and buying
“ethically sourced” coffee from producers.
LECTURE OUTLINE
I. The Organization’s Environments
The external environment is everything outside an organization that might affect it
and contains the general environment and the task environment. The general
environment consists of broad dimensions and forces in an organization’s
surroundings that determines its overall context, while the task environment is the
specific organizations or groups that have a direct impact on a firm.
The internal environment consists of conditions and forces within the organization.
A. The General Environment
The general environment of a business has three dimensions: economic,
technological, and political–legal.
1. The Economic Dimension
The economic dimension includes the overall health of the economic system in
which the organization operates, which is related to inflation, interest rates,
unemployment, and so on.
2. The Technological Dimension
The technological dimension refers to the methods available for converting
resources into products or services.
3. The Political–Legal Dimension
The political-legal dimension refers to government regulation of business and the
relationship between business and government.
B. The Task Environment
The task environment of a business includes competitors, customers, suppliers,
strategic partners, and regulators.
1. Competitors
Competitors consist of other organizations that compete for the same resources.
2. Customers
Customers are those who pay money to acquire an organization’s products or
services.
3. Suppliers
Suppliers include organizations that provide resources for other organizations.
4. Regulators
Regulators have the potential to control, regulate, or influence an organization’s
policies and practices.
a. Regulatory agencies are created by the government to protect the public
from certain business practices or to protect organizations from one another.
Examples include the Environmental Protection Agency (EPA) and the Food and
Drug Administration (FDA).
b. Interest groups are groups organized by their members to attempt to
influence organizations. Examples include Mothers Against Drunk Driving
(MADD) and the National Rifle Association (NRA).
5. Strategic Partners
Strategic partners (also called strategic allies) occur when two or more
companies work together in joint ventures or other partnerships.
C. The Internal Environment
The internal environment of a business consists of the owners, board of directors,
employees, and physical work environment.
1. Owners
Owners are whoever can claim property rights to an organization. Owners can be a
single individual who establishes and owns a small business, partners who jointly
own the business, individual investors who buy stock in a corporation, or other
organizations.
2. Board of Directors
A board of directors, elected by stockholders, is responsible for corporate
governance and charged with overseeing the management of the firm to ensure that
it is being run in a way that best serves the stockholders’ interests.
3. Employees
a. Employees are another significant element of the internal environment.
b. The composition of the workforce is changing, employees are asking for
increased job participation and ownership, and organizations are increasingly
relying on temporary workers.
4. Physical Work Environment
a. A firm’s physical work environment—where facilities are located and how
they are furnished and arranged—is also important.
b. Employee safety and health regulations have caused many organizations to
pay more attention to their internal environment.
II. The Ethical and Social Environment of Management
A. Individual Ethics in Organizations
Ethics are an individual’s personal beliefs regarding right and wrong behavior.
Ethical behavior is behavior that conforms to generally accepted social norms.
Unethical behavior is behavior that does not conform to generally accepted social
norms.
1. Managerial Ethics
Managerial ethics are standards of behavior that guide individual managers in
their work.
a. One important area of managerial ethics is the treatment of employees by the
organization. This includes hiring and firing, wages and working conditions, and
employee privacy and respect.
b. Numerous ethical issues stem from how employees treat the organization,
especially in regard to conflicts of interest, secrecy and confidentiality, and
honesty.
c. Managerial ethics comes into play in the relationship between the firm and
its employees with customers, competitors, stockholders, suppliers, dealers, and
unions. The behaviors between the organization and these agents that may be
subject to ethical ambiguity include advertising and promotions, financial
disclosures, ordering and purchasing, shipping and solicitations, and bargaining
and negotiation.
2. Managing Ethical Behavior
Effective management of ethical behavior includes the following:
a. Top managers should set ethical standards for the organization.
b. Committees can investigate possible unethical activities internally.
c. Employees can attend training sessions to learn to act more ethically when
faced with certain situations.
d. A code of ethics is a formal, written statement of the values and ethical
standards that guide the firm’s actions
B. Emerging Ethical Issues
A number of ethical issues are receiving widespread attention today.
1. Ethical Leadership
a. A challenge for CEOs is to display ethical leadership and to establish an
ethical culture for the entire organization.
b. The Sarbanes-Oxley Act of 2002 requires CEOs to vouch personally for the
truthfulness and fairness of their firm’s financial disclosures and imposes tough
new measures to deter and punish corporate and accounting fraud and corruption.
2. Corporate Governance
Corporate governance is another area with many ethical concerns. Boards of
directors are under increased pressure to provide effective oversight.
3. Ethics and Information Technology
Information technology poses new ethical issues in the area of privacy
C. Social Responsibility in Organizations
Social responsibility is the set of obligations that an organization has to protect
and enhance the societal context in which it functions
1. Arguments for Social Responsibility
a. Businesses create problems and should therefore help solve them.
b. Corporations are citizens in our society too and should not avoid their
obligations as citizens.
c. Businesses often have the resources to help solve social problems.
d. Businesses should be partners in society, along with the government and the
general population.
2. Arguments against Social Responsibility
a. Businesses have the responsibility to focus on making a profit for their
owners.
b. Involvement in social programs gives businesses too much power.
c. There is a potential for conflicts of interest.
d. Organizations lack the expertise to manage social programs.
D. Managing Social Responsibility
Organizations should view social responsibility as a major challenge that requires
careful planning, decision making, consideration, and evaluation. They may
accomplish this through both formal and informal dimensions of managing social
responsibility.
1. Formal Organizational Dimensions
a. Legal compliance is the extent to which the organization complies with
local, state, federal, and international laws.
b. Ethical compliance is the extent to which the firm and its members follow
ethical standards of behavior.
c. Philanthropic giving occurs through the awarding of funds or gifts to
charities or other worthy causes.
2. Informal Organizational Dimensions
a. Informal organizational dimensions, including the culture and leadership
practices of an organization, can define the social responsibility stance adopted by
the organization and its members.
b. Whistle-blowing occurs when an employee discloses illegal or unethical
conduct by ot III. The International Environment of Management
A. Trends in International Business
1. After World War II, businesses in war-torn countries had to rebuild from
scratch. Many U.S. companies profited greatly during this era; however, many also
grew somewhat complacent.
2. U.S. firms are no longer isolated from global competition or the global
market, and many are finding that international operations are an increasingly
important element of their sales and profits.
3. Virtually all businesses today must be concerned with international
competition.
B. Levels of International Business Activity
Firms can choose various levels of international business activity as they seek to
gain a competitive advantage in other countries. The general levels are exporting
and importing, licensing, strategic alliances, and direct investment.
1. Exporting and Importing
Importing or exporting (or both) is usually the first type of international business in
which a firm gets involved.
a. Exporting is making the product in the firm’s domestic marketplace and
selling it in another country.
b. Importing means a good, service, or capital is brought into the home
country from abroad
2. Licensing
Licensing is an arrangement whereby one company allows another to use its brand
name, trademark, technology, patent, copyright, or other assets in exchange for a
royalty based on sales. Franchising is a special form of licensing.
3. Strategic Alliances
A strategic alliance occurs when two or more firms jointly cooperate for mutual
gain. A joint venture is a special type of strategic alliance in which the partners
actually share ownership of a new enterprise.
4. Direct Investment
Direct investment occurs when a firm headquartered in one country builds or
purchases operating facilities or subsidiaries in a foreign country. Maquiladoras
are light assembly plants built in northern Mexico close to the U.S. border. These
plants receive tax breaks from the Mexican government, and the area is populated
with workers willing to work for low wages.
C. The Context of International Business
1. The Cultural Environment
The cultural environment can create challenges for managers, when the countries
in which a firm is manufacturing or selling a product or service have different
cultures. Religious beliefs, time and schedules, and language can all pose problems
for managers in a foreign country.
2. Controls on International Trade
A government can impose a variety of controls on international trade to protect its
country.
a. A tariff is a tax collected on goods shipped across national boundaries.
b. A quota is a limit on the number or value of goods that can be traded.
c. Export restraint agreements are agreements that convince other
governments to voluntarily limit the volume or value of goods exported to or
imported from a particular country.
d. “Buy national” legislation gives preference to domestic producers through
content or price restrictions
3. Economic Communities
Economic communities are sets of countries that have agreed to significantly
reduce or eliminate trade barriers among its member nations.
a. The European Union, or EU, is the first and most important international
market system.
b. The North American Free Trade Agreement (NAFTA) is an agreement
between Canada, Mexico, and the United States to promote trade with one another.
4. The Role of the GATT and WTO
The General Agreement on Trade and Tariffs (GATT) and the World Trade
Organization (WTO) both play significant roles in regulating international trade.
a. GATT, first ratified in 1948, is an attempt to reduce trade barriers. One of its
provisions, the most favored national (MFN) principle, specifies that a member
country must extend equal treatment to all nations that sign the agreement.
b. The WTO was begun in 1995 as a replacement for GATT. The WTO works
to promote trade, reduce trade barriers, and resolve international trade disputes.
IV. The Organization’s Culture
Organizational culture is the set of values, beliefs, behaviors, customs, and
attitudes that helps the members of the organization understand what it stands for,
how it does things, and what it considers important.
A. The Importance of Organizational Culture
A strong organizational culture can shape the firm’s overall effectiveness and long-
term success and help employees to be more productive.
B. Determinants of Organizational Culture
Culture develops over a long period of time. It often starts with the organization’s
founder; however, corporate success and shared experiences also shape culture.
C. Managing Organizational Culture
In order to manage corporate culture, managers must first understand the current
culture.
1. If the culture is one that is in the best interest of the firm, managers can
reward behavior that is consistent with the existing culture in order to enforce it.
2. If the culture needs to be changed, managers must know what it is they want
the culture to be and then take actions that will help to change the culture into the
type management wants.
END-OF-CHAPTER
Questions for Review
1. Identify and discuss each major dimension of the general environment and
the task environment.
The general environment consists of three dimensions: economic, technological,
and political–legal. The economic dimension is the overall health and vitality of
the economic system in which the organization operates and includes factors such
as inflation, interest rates, and unemployment. The technological dimension is
made up of the methods available for converting resources into products or
services. The political–legal dimension consists of government regulation of
business and the relationship between business and government.
Competitors, customers, suppliers, regulators, and strategic allies comprise the task
environment. Competitors are firms that are competing for resources, and
customers are those that purchase the firm’s products. Suppliers include
organizations that supply resources to the firm. Regulators control, legislate, or
influence an organization’s policies and practices and include regulatory agencies
and interest groups. Strategic allies are partners with the firm in joint ventures.
2. Do organizations have ethics? Why or why not?
As defined here, organizations do not have ethics—only individuals have ethics.
However, the ethical norms and climate that exist within an organization can
significantly affect the organization.
3. What are the arguments for and against social responsibility on the part of
businesses? In your opinion, which set of arguments is more compelling?
Arguments for social responsibility include: (a) organizations create problems and
should be responsible for solving them; (b) corporations are citizens in our society,
too, and should not avoid their obligations as citizens; (c) many large businesses
have surplus revenues that could be used to help solve social problems; and (d)
businesses are partners in our society, along with the government and the general
population. Arguments against social responsibility include:
(a) businesses should simply focus on making a profit; (b) involvement with social
programs would give businesses too much power; (c) there is the potential for
conflicts of interest; and
(d) businesses lack the expertise to understand how to assess and make decisions
about worthy social programs.
4. Describe the basic levels of international business involvement. Why might
a firm use more than one level at the same time?
There are four levels of international business activity: exporting and importing,
licensing, strategic alliances, and direct investment. (1) Exporting involves making
a product in the firm’s domestic marketplace and selling it in another country,
while importing involves bringing a good, service, or capital into the home country
from abroad. (2) Licensing is an arrangement whereby one company allows
another company to use its brand name, trademark, technology, patent, copyright,
or other assets in exchange for a royalty based on sales. (3) A strategic alliance is a
cooperative arrangement between two or more firms for mutual gain. (4) Direct
investment occurs when a firm headquartered in one country builds or purchases
operating facilities or subsidiaries in a different country from the one where it has
its headquarters.
Many organizations use more than one level at the same time. This is done in order
to adapt to the needs of different countries or regions, or to implement different
strategies for different countries.
5. Describe various barriers to international trade. Why do such barriers exist?
The cultural environment and controls on international trade (tariffs, quotas, export
restraint agreements, and “buy national” laws) are areas of challenge for
international managers. They exist for a variety of reasons, including the interests
of the host government in protecting home businesses and simply the differences
across countries.
Questions for Analysis
1. Can you think of dimensions of the task environment that are not discussed
in this chapter? Indicate their linkages to those that are discussed.
Students’ responses will vary, but one environmental dimension that was not
discussed in the text was climate and weather. The climate and weather may have a
great impact on the farming industry. A late frost in Florida may hurt the orange
crop, or a drought in the Midwest may be responsible for poor grain yields. For the
downhill skiing industry, sustained low temperatures and snow are prerequisites,
so climate in this instance may dictate the location of the industry. Climate and
weather are also important to surgeons specializing in skin cancer and orthopedic
surgeons who specialize in broken limbs.
2. What is the relationship between the law and ethical behavior? Can a
behavior be ethical but illegal at the same time?
The law mandates or prohibits certain behaviors, with relatively little flexibility or
subjectivity. Ethics suggests desired behaviors, but is equally concerned with the
intention and reasons behind a behavior as with the behavior itself. Ethics is based
on standards that are flexible and subjective.
Individuals or organizations can act in what they feel is an ethical manner while
also breaking the law. For example, some individuals try to block abortion clinics
in an effort to stop actions that they believe are harmful. In their eyes, these actions
are ethical, but to the police, who may arrest them for trespassing, the actions are
illegal. In the news today are stories about pharmaceutical companies in China,
Africa, and India that illegally produce patented drugs, which they feel is an ethical
necessity to stop the spread of contagious diseases in countries where drugs
produced in the United States are prohibitively expensive.
3. What is your opinion of whistle-blowing? If you were aware of criminal
activity in your organization but knew that reporting it would probably cost you
your job, what would you do?
Answers will vary. Some will say that it is their duty to society to report criminal
activities, whereas others may feel it is their duty to protect the organization and
not report criminal activity. Still others will feel that their primary responsibility is
to themselves or their families, which would require them to protect their jobs.
4. What industries do you think will feel the greatest impact of international
business in the future? Will some industries remain relatively unaffected by
globalization? If so, which ones? If not, explain why not.
International industries generally involve mass-produced consumer or industrial
products such as automobiles, electronics, steel, chemicals, and so forth. In
contrast, industries that would experience high costs for shipping or manufacturing
goods in distant locations are somewhat sheltered from the effects of globalization,
as are industries where local tastes and needs are very different from global tastes.
Examples would include restaurants, home builders, and plant nurseries. However,
you can point out to students that consumer preferences are becoming more global,
with more Americans buying imported chocolates and more Latin Americans
buying Nikes, for example.
5. What is the culture of your college, university, or place of employment?
How clear is it? What are its most positive and its most negative characteristics?
Students should recognize that all organizations have a culture, but they may differ
in their perceptions of the existence of a culture and what that culture is. Generally,
a majority will agree on a “party,” “athletics,” “research,” or “scholarly” culture.
Words such as these will be used to describe the culture to outsiders. You can
remind students that every culture has its positive and negative characteristics,
encouraging them to think more deeply about culture’s effects.

Quiz1

2. What is a characteristic of the art, rather than the science, of management? intuitive

3. Many managers are facing an increased work pace, less time to think through a decision, and more

information to process. This can all be tied to what contemporary management challenge? *new

technology

4. William has mathematical models that he relies on at the start of each new project to determine how

to allocate the resources within his department. William is making use of ___. *

management science

5. ___ management deals with improving the performance of individual employees. Scientific

7. William believes that people view work as a natural part of their lives. As a manager, he feels that he

can get the best out of his staff by creating an environment in which they will seek and accept

responsibility and where they will receive personal rewards when they reach certain goals. William's

management style is informed by what view within the behavioral management perspective? * Theory

8.Corey is a manager for a privately owned Midwestern trucking company. He was recently

approached by Tara, whose department has been closely monitoring on-time performance. Tara is

concerned about the rise in credits that are being issued to customers for late truck arrivals.Which area

of the organization does Tara work in? * operations

9.Human resources Marketing Finance Operations Stephen just got promoted and now has the title of

Division Head. In terms of his level in the organization, what type of manager is Stephen? * middle

manager
10.The ___ perspective suggests that universal theories cannot be applied to organizations because

each organization is unique. * contingency

11. Janel runs a mid-sized agricultural company operating in an emerging economy. She faces

conditions of rapid growth and labor supply shortages. If Janel adopts the principles of behavioral

management theory, she is most likely to employ ___ to address her immediate concerns. industrial

psychology

12. Renee believes that people naturally do not like work. As a manager, she feels that she must

control, direct, coerce, and even threaten her employees to get them to work towards the
organization's goals. Renee's management style is informed by what view within the behavioral
management perspective? * Theory X

13. When considering the basic management functions, decision making is part of what process?

*planning

16. JoAnn applied for a management position in her company. After interviewing JoAnn and speaking

with her current supervisor, the hiring manager rejected JoAnn for the position. She told JoAnn that

JoAnn had not yet demonstrated the ability to think in the abstract and did not seem to grasp how all

the parts of the organization fit together and gave JoAnn some advice on how to improve these skills.

JoAnn is being told to work on her ___ skills. *conceptual

17. ___ developed the system of scientific management. Frederick Taylor

18. In some countries, it is expected that people shake hands when they are introduced. In other

cultures, the appropriate action is to bow slightly or to exchange business cards. These are examples of

___ processes that vary in a global economy. *behavioral

20. Neil's department was recently assigned a new project. His next task on the project is to determine:

organizing

22. As part of the task environment, ___ work together in joint ventures or similar arrangements.

*strategic partners

23. Which of the following is a part of an organization's general environment? *Interest rates

24. Tricon Oil is a major division of a global energy company with an oil exploration unit, a

distribution unit, and a retail gas station unit. CEO Gary Jacobs is conducting a situational analysis in

order to develop a five-year strategic plan. Over the next several years, Jacobs expects electric vehicles
to impact revenues in the retail unit. This development is an example of the ___ dimension.

*technological

25. The actual physical environment, such as an office or a warehouse, and the work that people do are

all part of the__ environment. * internal

26. Jeremy bought stock in Pollack Food Services, giving him legal property rights to the business.

Jeremey is now a(n) ___ of Pollack Food Services. *owner

27. Pollack Food Services supplies meals for all the schools in the Culver City public school system.

Kellers Bakery provides all the bread and buns that Pollack uses in its meals. For Pollack, Kellers may

be considered part of the ___ dimension of the task environment. *supplier

28. What is a tariff? A tariff is a tax collected on goods shipped across national boundaries.

29. The language, values, symbols, and beliefs that guide behavior in a country are that country's ___.

*cultural environment

30. ___ occurs when a firm headquartered in one country, purchases operating facilities in a foreign

country. *Direct investment

31. Keane Industries is a privately owned firm that manufactures and installs large, deep well digging

equipment which can be operated with little technical expertise. The company has a cash surplus due to

a highly profitable decade of sales in its domestic market. Now ready to enter foreign markets, the

biggest priority for the owners is to maintain full control of any new operations.What level of

international business activity is Keane Industries seeking? *Direct investment

32. The ___ is the first and most important international market system. European Union

33. GoldLeaf and HappyFarms are both grocery stores. They serve the same geographic area, and both

emphasize fresh produce, natural foods, and whole foods. Their prices are similar, and consumers

switch back and forth between them based upon weekly specials. GoldLeaf and HappyFarms are ___.

*competitors

34. BritTrek is a British bicycle company. It produces its mountain bikes in England and sells them

throughout North America. Which of the following best characterizes this arrangement? *

BritTrek is exporting its products to North America.

36. Car manufacturers must meet certain emissions standards as dictated by the federal and state

governments. This requirement is an aspect of what dimension of the general environment? *political-
legal

37. Tricon Oil is a major division of a global energy company with an oil exploration unit, a

distribution unit, and a retail gas station unit. CEO Gary Jacobs is conducting a situational analysis in

order to develop a five-year strategic plan. Airlines, storage tank producers, and strategic allies are all

constituents or stakeholders in Tricon's ___ environment. * task

38. Pollack Food Services supplies meals for all the schools in the Culver City public school system.

The school system students may be considered part of the ___ dimension of the task environment

*customer

39. The ___ environment is everything outside an organization's boundaries that might affect it.

*external

41. BritTrek is a British bicycle company. If the United States has a policy that BritTrek can import

only 400,000 bicycles into the United States each year, what type of trade restriction is being

implemented? * quota

Quiz2

1. Steve has been tasked with the job of outlining decisions about resource allocation, priorities, and

action steps that are necessary to reach one of his company's strategic goals. What is Steve developing?

strategic plan

2. What is true of a tactical plan? It is developed to implement specific parts of a strategic plan.

3. The planning process takes place within a(n) ___ context. environmental

4. In Pleasantville, JJ's Auto Repair is where most residents go for any type of car repair. Inspired by

his entrepreneurial son, JJ has decided to open a detailing shop on adjoining property. If JJ elected to

open an auto repair shop in the neighboring county, he would be expanding his ___. business scope

5. ___ is the set of strategic alternatives from which an organization chooses as it manages its

operations simultaneously across several industries and several markets. Corporate-level strategy

6. Lighthouse Cinema has enjoyed a successful history in the town of Battle Ridge, VA. Despite the

growth of multiplex theaters in most population centers, Lighthouse Cinema has remained a popular

entertainment option for the surrounding area, but sales have been stagnant over the past few years. A

national theater chain recently announced that it will build a 10-theater facility on the outskirts of
Battle Ridge. This development calls for Lighthouse Cinema to pursue a strategy that will___.neutralize
the impending threat

8. When devising a new strategy, it is best to start with what? a SWOT analysis

9. Lighthouse Cinema has enjoyed a successful history in the town of Battle Ridge, VA. Despite the

growth of multiplex theaters in most population centers, Lighthouse Cinema has remained a popular

entertainment option for the surrounding area, but sales have been stagnant over the past few years. A

national theater chain recently announced that it will build a 10-theater facility on the outskirts of

Battle Ridge. The owner of Lighthouse Cinema has learned that the new competitor's prices will be

20% higher than his theater admissions. Consequently, Lighthouse Cinema should strongly consider a

business-level strategy based on ___. cost leadership

10. Product differentiation, low costs, and the development of new products or services are key to a

company's success at what stage of the product life cycle? decline

11. Lighthouse Cinema has enjoyed a successful history in the town of Battle Ridge, VA. The movie

theater has remained a popular entertainment option for the surrounding area, but sales have been

stagnant over the past few years. The theater is currently in the ___ stage of the product life

cycle. maturity

12._____ describes the number of different businesses that an organization runs and the extent to

which these businesses relate to one another. Differentiation

13. The market for memory chips for electronic devices is growing at an incredible rate, and GloTech

has the largest share of that market. According to the BCG matrix, GloTech is a ___. star

14. Camille's Coffee Shop has a very small share of the market and has no plans for growth. According

to the BCG matrix, this business is a ___. dog

15. Jones International is a large organization with holdings in the U.S., Europe, and Southeast Asia.

The corporation's mix of strategic business units (SBUs) allows the company to exploit its strengths

and capabilities in more than one line of business and to exploit synergies across business lines. Jones

International employs a(n) ___ related diversification

16. What is the first step that a manager should take in executing a tactical plan? evaluate every

possible course of action in light of the goal it is intended to reach

17. The ultimate success of a tactical plan depends on: the way it is carried out.
18. Tactical plans must flow from and be consistent with ___.a strategic plan

20.Carduci Corporation is a food processing company that specializes in a complete line of artisan

sausage products. The top leaders in the organization have established a strategy that involves

increasing the marketing budget to grow sales. Neal is the head of the marketing department. Under his

guidance, marketing supervisors have developed a 3-stage operating plan to support the organization's

goals. Stage 3 involves launching an online ordering system for retail and restaurant accounts. The new

system simplifies and clearly outlines the steps to be followed from sales inquiry to final order

payment. Stage 3 is a ___, which is a standing plan that is developed to enhance the ongoing efficiency

of the order management process. standard operating procedure

21.Leader Books Inc. sponsors the Fairfax Public Library's summer reading program every year. The

Fairfax Public Library holds a summer reading program to encourage children to read, and gives prizes

based on how many hours or pages the participants read during each week of the program. The Fairfax

regional manager of Leader Books sends a check to the Fairfax Public Library in February of each year

in order for them to prepare for the reading program. The regional manager's decision about when to

send the check is a(n) ___ decision. programmed

22.Light On! Power Company (LO!PO) is nearing capacity at its current St. Doraldo plant. One option

being considered by the general manager is the acquisition and conversion of a nearby production

facility to increase LO!PO's output. To determine if this is a feasible option, he is currently calculating

the costs of acquiring and converting the property and estimating the power generation potential of the

new operation. At what stage of the decision-making process is the general manager? identifying

alternatives

23.A _ refers to a condition in which the decision maker knows with reasonable certainty what the

alternatives are and what conditions are associated with each alternative. state of certainty

24.Light On! Power Company (LO!PO) is nearing capacity at its current St. Doraldo plant. For the past

three months, the general manager has been considering the acquisition and conversion of a nearby

production facility to increase LO!PO's output. He is only partially aware of the risks and

consequences associated with this option and has not yet evaluated all of his options. The general

manager is making a decision under conditions of ___. uncertainty

25.The site manager for a company is negotiating for a new site to build an office complex. After
several counter-offers, the seller gave the company a final offer. The manager has the option to accept

or reject the offer. If the manager accepts the offer, he gets a site in time to meet the relocation

schedule, but at a price above budget. If he rejects the contract, he may get a more favorable price if

the seller is bluffing, but he may lose out on the location and not be able to find another one in time if it

is not. The manager is making a decision in a state of ___. risk

27.Janice is the owner of a beauty salon. Her shop operates in a leased property on Main Street. The

owner of the building plans to convert the property into a dog grooming shop. Now Janice has to select

a new location for her beauty salon. She is using a rational decision making model to evaluate the

alternatives before her. Each of her four options is feasible and satisfies her decision criteria. Which of

the following options should Janice choose? Option C, which has low financial costs and low

nonfinancial costs

28.Which of the following is true of decision makers in the classical decision model? They have

complete information about the decision situation.

29.Blair works at a convenience store. One of the three slushy machines in the store has clogged four

times this week. Blair is weighing the advantages and disadvantages of each of her three choices:

repair the machine again, replace it, or simply remove it and be left with only two machines. Blair is

currently ___. evaluating alternatives

30.Which of the following is a recommendation made by the proponents of evidence- based

management? Avoid basing decisions on what has been done in the past.

31.What is escalation of commitment? the tendency of decision makers to become so committed to the

courses of action suggested by those decisions that they stay with them, even when the decisions

appear to have been wrong

32.WholePath Cereals introduced a new line of whole grain cereal for children. For the second quarter

in a row, sales are well below forecast. Formal surveys have shown that customers do not like the taste

of the cereal, and even those who bought it once are not repeat customers. WholePath invested a lot of

money in developing the new recipe, as well as in marketing to roll out the new product line. They

cannot afford to lose that investment, so they have increased their advertising budget to try to increase

enthusiasm about the product and generate additional sales. Which of the following concepts is

illustrated in the scenario? escalation of commitment

risk missing a critical shipping deadline. He sent out requests for bids to three vendors. The first bid he

received met his price point and he accepted the bid immediately, without waiting for the other bids to

arrive or do any further research. This is an example of ___. satisficing

34.What model reflects the subjective considerations that often impact decision making and explain

why, when a decision is made with little regard for logic, it can still turn out to be correct ?

administrative

35.Renee Ortiz, manager of Bath and Beauty Boutique, expects her staff to make a certain amount of

decisions based on their experience and the practice they have in making decisions in similar

situations. In other words, she wants them to, at times, rely on ___.intuition

37.One advantage of team decision making is that: better decisions generally emerge.

38.When a group arrives at a decision that seems to not be in the best interest of the organization but

resulted from a process that avoided any conflict, it is likely that ___ occurred. groupthink

39.Taylor owns and manages a franchise sandwich shop in rural Texas. Most of his employees earn

minimum wage. Recently, there has been much attention on how difficult it is for workers to support

themselves on a minimum wage salary. The organization is under public scrutiny nationally, and

pressure to raise salaries for lower-end employees is escalating. The corporate office has created a task

force made up of influential and engaged franchise owners. The goal of the task force is to propose a

national policy that will be presented to all franchise owners. Members of the task force have been

instructed to openly discuss and consider the ramifications of increasing the minimum wage for all

franchise employees. The group has two months to agree upon the best course of action. The task force

is an example of a(n) ___ group.interacting

40.What type of group is a group in name only, as the members are brought together in a face-to-face

setting but do not talk to one another freely? Nominal

Quiz 3

1. Sandra is the warehouse manager at a bottling company. Employees are on a four-week schedule

during which each employee spends one week loading trucks, unloading trucks, verifying invoices, and

pulling inventory from storage. Sandra is using the job ___ approach to job design. rotation

3. What is delegation? the process by which a manager assigns a portion of his or her total workload to
others

4. James is the human resource manager at a large bottle manufacturing company. Ten years ago, when

the business moved to its current location, the company structured operations by grouping together

jobs that involved the same or similar activities. What type of departmentalization structure is this?

functional

5. At a car rental agency, reservations has to provide greeters with information about how many cars

are being rented and returned each day and at what time. The maintenance staff responsible for

cleaning and fueling the cars, as well as performing other routine maintenance, need to know which

cars to prepare and when. If any of these groups does not do its jobs properly, the others will be

affected. This is an example of ___ interdependence. reciprocal

7. When Lawrence opened his accounting firm with his wife Laura, it was just both of them. Over the

years, Lawrence gained expertise and a reputation in the area of auditing, while Laura handled

administrative tasks for him. Lawrence's firm is now the largest of its kind in the state of Nebraska, but

unmanaged growth has led to massive inefficiencies and disorganization. Lawrence has decided he

needs a legitimate and formal system of authority at his firm. The type of organizational model

Lawrence needs to establish for his firm is a(n) ___. bureaucracy

8. The best examples of bureaucracies today include: government agencies

9. Which of the following is a characteristic of the ideal bureaucracy? A hierarchy of positions

10. Ben's Beef Barn takes one order at a time and custom grills burgers or steaks to the customer's

specifications. Ben's Beef Barn uses ___ technology. small-batch

11. When Lawrence opened his accounting firm, he faced a great deal of uncertainty. Over the years,

Lawrence developed a specialization in auditing and his business environment stabilized. Lawrence's

firm is now the largest of its kind in the state of Nebraska. Even though he has over 40 associates,

Lawrence retains the majority of power and authority as the founding manager. Lawrence's accounting

firm is a(n) ___ organization mechanistic

13. Two advantages of a ___ design are that it enhances flexibility and gives employees considerable

opportunities to learn new skills. matrix

14. Delta Destinations is an international business operating in over 20 countries. It began as a regional

hotel chain and then expanded into travel and vacation planning services. The company evaluates
employees on their demonstrated ability for continuously improved performance. Delta Destinations

uses a ___ organization to maximize the company's ability to adapt to its changing environment.

learning

16. An example of an internal force that drives an organization toward change is: workers' demand for a

change in working hours.

17. Chartab's analysis has indicated that the market for its products should grow three to five percent

each of the next five years. To prepare for this, Chartab is making arrangements to expand its

manufacturing facility and increase staff to meet the increased demand. In this scenario, Chartab is

making a(n) ___ change. planned

18. Changes in car emissions standards forced automakers to design and build more fuel efficient

vehicles. In this situation, the automakers are responding to a(n) ___ force for change. external

19. The Fed lowered adjusted interest rates, making it difficult for Chartab to get the loans needed to

expand certain operations. Chartab had to adjust its production and sales forecasts accordingly. In this

scenario, Chartab is responding to an external force for change in the ___ dimension. economic

20. The new CEO at Chartab is a big believer in functional organization structure and has begun

implementing changes in the organization to match this structure. In this situation, Chartab is

responding to a(n) ___ force for change. internal

21. Which of the following is an external force that drives an organization toward change?

Technological innovations in the market

23. For years, Martin's purchasing department has used a cycle counting system to monitor inventory

levels. Upper management has decided to convert to an automated perpetual inventory system that will

reduce costs and improve accuracy. Martin is aware of his employees' anxiety about the change.

During the conversion, he made only the necessary changes, announced those changes well in advance,

and allowed time for employees to adjust to new ways of doing things. This ___ technique was an

effective way for Martin to overcome resistance to change. facilitation

24. Which of the following is used to overcome resistance to organizational change? force-field

analysis

25. Employees at Chartab Industries feel that they are underpaid. They took their complaint to

management. In response, management was able to collect data from the industry to show that the firm
pays a competitive wage and offers excellent benefits. In this scenario, Chartab management is trying

to change ___.perceptions

26. What type of OD technique is intended to promote overall group effectiveness? team building

27. In response to the Affordable Care Act, Chartab Industries had to make significant changes to the

health insurance segment of its employee benefits package. This is an example of a change in the area

of ___.organization structure and design

28. The management at BigWell Industries understands the need to innovate in order to remain

competitive. Unfortunately, BigWell does not have the creative personnel on staff to drive innovations,

and lacks the budget for any new hires this year. BigWell's failure to innovate can be blamed on what?

lack of resources

29. EvruTech developed an innovative new way to deliver products to its customers. At this point, most

companies in the industry have access to this delivery method and are using it. EvruTech's new

delivery method is what type of innovation? process

30. ___ innovations are changes in the physical characteristics or performance of existing products or

services or the creation of brand-new products or services. Product

32. Zero Defect Machinery (ZDM) is a mid-sized tool and die fabrication shop located in Peoria, IL.

The company services several large manufacturing accounts based in the Illinois River Valley. . As part

of its cost-containment measures, all hourly employees are limited to a 40-hour work week so as not to

incur overtime pay. ZDM maintains these guidelines in order to satisfy requirements of the ___. Fair

Labor Standards Act

34. Benjamin needs to hire a new staff member. Where can he get information about applicants'

previous work history and educational backgrounds? application blank

35. How does BARS overcome some of the limitations of standard rating scales? Each point on the

scale is accompanied by a behavioral anchor.

36. Edna is a manager at TruTech Enterprises. She appraises her staff's performance by measuring their

actual output. What might keep those appraisals from being fair? opportunity bias

37. At TruTech Enterprises, the managers are evaluated by their boss, their peers, and their

subordinates. This is known as ___. 360-degree feedback

38. The ___ decision is a management policy decision about whether a firm wants to pay above, at, or
below the going rate for labor in the industry or the geographic area. wage-level

39. ___ is an attempt to assess the worth of each job relative to other jobs. Job evaluation

40. Tango Toppers is a chain of taco restaurants in the Midwest. Last year, management began

recruiting Hispanic chefs from U.S.-Mexico border states to help innovate the company's product

offering. When the job was given to one of those Hispanic chefs, a relatively recent hire, who Tim felt

has less managerial experience than he does and is far less qualified for the job, Tim became angry and

started causing trouble for the company. What is the primary source of this conflict? Tim feels the other

individual was promoted because of his diversity status.

41. ___ may arise if there is an environment of fear, distrust, or individual prejudice. Conflict

42. For employees to form a new local union, several things must occur. First, employees must become

interested in having a union. The second step is to: collect employees' signatures on authorization

cards.

44. Delta Destinations is an international business operating in over 20 countries. It began as a regional

hotel chain and then expanded into travel and vacation planning services. Delta Destinations needs to

be a highly adaptable organization to respond to continually evolving customer expectations. The

company relies heavily on employees who add intellectual value, especially those with experience in

digital and socially interactive technologies. Delta Destinations relies heavily on ___ workers.

knowledge

45. Which of the following is NOT a reason for diversity as a source of conflict? Conflict can arise

when diversity is understood.

Quiz 4

2. Renee works for a landscaping company. She would like to make more money. After speaking with

her manager, Renee took on some of the harder, less desirable jobs, with the idea that this type of work

would result in a higher hourly wage. She has done this work for two weeks, and has not yet received a

raise. So she is feeling even more frustrated and less motivated to work hard. At this point, Renee is at

what step in the motivation framework? evaluation of need satisfaction

3. Richard is a contractor who hires a crew to help him during his busy season. As a small employer, he

personally selects capable team members with solid construction experience. Daniel has worked on

Richard's crew for five years. The job site and expectations are consistent with those in previous years.
Yet this year Daniel has been both unreliable and unproductive. ___ is most likely the cause of Daniel's

poor performance.A lack of motivation

4. According to Maslow's hierarchy of needs theory, belongingness needs: relate to social processes.

5. Ella is a high school student with a high need for achievement. Which of the following is most likely

to be true of Ella? She has a desire to assume personal responsibility.

6. Maxwell has a wife and two children. Struggling to cover daily and monthly living expenses, both

he and his wife work full-time jobs to support their family of four. In addition, Maxwell works a

second job on weekends in hope of being able to purchase their first home next year. He and his wife

have no free time to socialize or pursue personal interests because of their busy schedule. Based on

Maslow's hierarchy of needs, Maxwell is currently striving to meet his ___ needs. security

7. ___ theory suggests that motivation depends on how much we want something and how likely we

think we are to get it. Expectancy

8. Brianna's employer has announced a goal of increasing production by 10 percent. In order to

accomplish that, Brianna's group must produce twelve more units each day, a challenging, but

reasonable, number. Brianna recognizes that this is her new goal. However, there is no extra reward for

reaching it, so she is not willing to work harder to produce the extra units. Which attribute of the

expanded goal-setting theory is not being met in this example? commitment

9. ___ contends that people are motivated to seek social parity in the rewards they receive for

performance. Equity theory

10. Ahmed has a management by wandering around leadership style. He stops by each of his

departments at least once a day, interacting with employees throughout the office. When he sees

behavior that he wants to discourage, he withholds praise. What type of reinforcement method is

Ahmed exercising? extinction

11. A number of employees at Madlo Tree Service come to work late, which disrupts scheduling and

overall productivity. The managers clearly defined this behavior as something to be improved upon.

They then introduced a reward schedule based upon punctuality, providing rewards for individuals and

to the staff as a whole when certain goals are met. What technique is Madlo using? organizational

behavior modification

12. TruTech recently moved to a new office complex about 10 miles from its previous location.
TruTech conducted an employee survey and found that many employees felt constrained by their job

schedule and were beginning to feel resentment toward the company. In an effort to counter this,

TruTech wants to introduce a new work schedule program on a trial basis. In assessing the survey

responses, the managers noted that a significant number of employees felt that their work day was too

long because of the amount of time it took them to travel between home and the new location. What

type of work schedule should TruTech try? Telecommuting

13. Eva has worked in the accounts payable department at her firm for over 20 years. Her job has

evolved during this time to accommodate advancements in computer technology and the need to make

productivity gains. Most of those changes have eliminated simpler tasks, so the job itself has become

more sophisticated. Eva's husband has recently had some health issues, and Eva is struggling to

maintain a full-time work schedule. Which of the following .. Job sharing

14. To have the best chance of encouraging employees to work harder or better, rewards need to be
tied

specifically to ___ performance

15. TruTech just instituted an organization-wide incentive in which a certain amount of money, based

on the company's earnings, is placed into a pool. At the end of the year, that money is evenly divided

and distributed to all employees. This type of reward system is an example of ___. profit sharing

16. Steve's usual method for getting his staff to do their jobs is to threaten to dock their pay or put

reprimands in their files if they do not comply. This is an example of ___ power. coercive

17. Diane is the department head of the cardiac wing at Jenkins Hospital in Miami, Florida. She is

considered a great leader. No one at the hospital has more experience than Diane in the field of

cardiology. In addition, she has been instrumental in establishing the systems and policies that have

been adopted throughout the hospital. In addition to powers she has because of her position in the

to powers she has because of her position in the organization, Diane has ___ power. expert

18. The use of non-coercive influence to shape the group's goals and motivate behavior toward the

achievement of those goals is the definition of the ___.process of leadership

19. Leaders using consideration behavior: attempt to establish a friendly and supportive climate.

21. Caleb manages the contract division of the largest property management company in New England.

His division is full of high performers in terms of processing volume and speed. However, absenteeism
is high among his employees. Many members of his department are openly dissatisfied with their jobs.

Using the Managerial Grid, Caleb can improve the effectiveness of his leadership style by increasing

his concern for ___. people

22. Jordan Automotives is a large producer of parts used by U.S. automakers. By today's standards, the

company's mainframe computer system is antiquated. Requirements for car manufacturers are so

stringent that Jordan Automotives risks losing its supplier certification status if a significant upgrade is

not made. In fact, a highly-integrated system that links MRP, production, inventory, and sales is

warranted. The costs of such a system are high, and the conversion process is extensive. Because it

involves dramatic changes to job and process designs, management anticipates resistance throughout

the company. Facing the decision for a major computer upgrade, which situational leadership model is

best suited to prescribe appropriate leadership behavior at Jordan Automotive? Vroom's decision tree

approach

23. Which style of leadership identified in LPC theory is similar to job-centered and initiating-structure

behaviors in the generic approaches to leadership? task oriented

24. Jordan Automotives is a large producer of parts used by U.S. automakers. By today's standards, the

company's mainframe computer system is antiquated. . Management anticipates resistance throughout

the company. In choosing a situational leadership model to support the company's needs, which of the

following factors is most important in this scenario? Subordinate participation in the decision-making

process

25. ___ is a concept that identifies situations in which leader behaviors are neutralized or replaced by

characteristics of the subordinate, the task, and the organization. Substitutes for leadership

26. CEO George Buckley of 3M is making the firm more efficient and profitable while maintaining a

leadership role in innovation. He changed the reward system, overhauled procedures, and restructured

the firm. Buckley is a(n) ___ leader. transformational

27. Eva has worked in the accounts payable department at her firm for over 20 years. Her job has

changed during this time as advancements in computer technology have essentially eliminated all

potential for processing errors. Eva operates with little supervision because of her extensive experience

and the routine nature of her job. Based on her status, Eva should be managed with a ___ form of

leadership substitute
28. Megawatt Manufacturing is a 125 year-old U.S. manufacturing firm. Until recently, the

overwhelming majority of workers in the assembly plant were white men. Russell, the new plant

manager, is one of those new hires. He has worked at a number of manufacturing plants throughout the

country and has experience working with and managing a diverse work force. Russell was hired for his

___ leadership skills. cross-cultural

29. A manager who threatens to withhold support or rewards is ___ as a political tactic. using coercion

30. Rachel works in a male-dominated industry. She is a passionate advocate for increasing gender

diversity. For years she has championed the recruitment and advancement of qualified female

employees at her firm. As she worked her way up the corporate ladder, Rachel's influence increased.

Rachel's efforts to further her goals are an example of ___ behavior conducted to achieve preferred

Outcomes . political

31. The managers at Moto To Go, a large rental car company, have been reviewing processes in one of

its divisions. They have discovered a certain deviation and have decided, at this time, to change the

standard to meet that deviation. Which step have they reached in the control process? considering

corrective action

32. ___ is the regulation of organizational activities in such a way as to facilitate goal attainment.

Control

33. Stan works for Moto To Go, a large rental car company. Before he was able to work independently

in his job, he had to complete four training courses. Stan had to pass each course with a minimum

achievement level of 90%. Moto To Go's new employee training program is a method of control over

the company's ___ resources. human

34. Stan works for Moto To Go, a large rental car company. Before he was able to work independently

in his job, he had to complete four training courses. Stan must pass each course with a minimum

achievement level of 90%. The 90% achievement level is a control ___ set in the first step of the

control process. standard

35. Quality control is a type of ___ control. operations

36. Tracy is a quality assurance agent at Purity Water Filtration Systems. The company uses a reverse

osmosis double pass system to purify water for industrial applications. Water purity is monitored

continuously through the filtration operation to achieve 99% removal of total dissolved solids (TDS)
and 97% of naturally occurring organics. This afternoon, water tested at the end of the batch run

indicated TDS levels of 1.8%. Measuring TDS and organic content after the filtration process is a form

of ___ operational control. postaction

37. Stan works for Moto To Go, a large rental car company. Before he was able to work independently

in his job, he had to complete four training courses. Stan must pass each course with a minimum

achievement level of 90%. Moto To Go's new employee training program represents a ___ form of

operational control. Preliminary

38. Everyone who works at Smiles Elementary School must go through a thorough background check

and drug testing before being hired. This is an example of ___ control. preliminary

39. Maria is the controller for a specialty spice company. She has been analyzing the company's

various financial statements. Right now she is reviewing a list of the assets and liabilities that the

company currently holds. What is Maria looking at? a balance sheet

40. Maria is the controller for a specialty spice company. She has been analyzing the company's

various financial statements. Right now she is focusing on the long-term financial obligations of the

company. What type of ratio should she calculate to determine if the company has the ability to meet

those obligations? debt

41. Slim Pickin's is a small start-up company located in Kansas City, MO. Its owner, Sharon,

developed a line of gluten- and dairy-free power bars that is gaining the attention of health-minded

consumers and those with diet restrictions. Slim Pickin's has few formal job assignments or work

boundaries. Everyone pitches in where needed. Sharon distributes a generous share of profits with all

of the workers equally. As Sharon continues to build her organization, a ___ type of structural control

is recommended to ensure that the organizational design is achieving its intended results. decentralized

42. Which of the following is true of organizations using bureaucratic control? They rely on a strict

rules and a rigid hierarchy.

43. ___ control is aimed at ensuring that an organization is maintaining an effective alignment with its

environment and moving toward achieving its strategic goals. Strategic

44. The employees at LWC Co. take on new projects every three to four months. Elaine finished her

current project four days ahead of schedule. This is the second time this year she has beat her schedule.

However, rather than turning in the completed work and securing her next assignment, Elaine holds on
to the project until the due date. She is concerned that if she consistently beats her deadlines, the

manager will start giving her shorter schedules on all her projects. Elaine's resistance to control is

based on ___. rewards for inefficiency

45. It is important that the customer service techs at LWC Co. wear uniforms so they are easily

recognizable when they go out to service accounts. Whenever changes need to be made to the

uniforms, various options are assembled and the service techs are polled to help choose the new

uniforms. LWC is using ___ to reduce resistance to control. Participation

Chapter 1
1. What is a characteristic of the art, rather than the science, of management? Intuitive
2. _____ management deals with improving the performance of individual employees. Scientific
3. _____ refers to a normal process leading to system decline. Entropy
4. _____ interact with their environment. Open systems
5. What is often considered to be the most important and most challenging of all management
activities? Leading
6. The managerial function of controlling involves: monitoring an organization's progress toward
its goals.
7. An individual who gets along well with others at all levels in the organization is said to have
good _____ skills. Interpersonal
8. What type of manager would be responsible for supervising and coordinating the activities
of operating employees? first-line manager
10. What area of classical management should you study to learn more about managing the total
organization? Administrative
11. When considering the basic management functions, decision making is part of what process?
Planning
12. _____skills are necessary to accomplish or understand the specific kind of work done in an
organization. Technical
13. When the right decisions are made and implemented, the management process is considered
to be _____. Effective
14. Selecting the course of action that would most likely lead to success would be included in
which management function? Planning
15. What is a Theory X assumption? People prefer to be directed and to avoid responsibility.
16. A(n) _____ is an interrelated set of elements functioning as a whole. System
17. Neil is known to take a very scientific approach to management. When making decision, he
seems to be _____. Objective
18. _____ is a pessimistic and negative view of workers consistent with the views of scientific
management. Theory X
19. a group of people working together in a structured and coordinated fashion to
achieve a set of goals. Organization
 20. a set of activities (including planning & decision making, organizing, leading, and
controlling) directed at an organization's resources (human, financial, physical,
and information), with the aim of achieving organizational goals in an efficient
and effective manner. management
21. someone whose primary responsibility is to carry out the management process.
manager
22. using resources wisely in a cost effective way. efficient
23. making the right decisions and successfully implementing them
planning. effective
24. setting an organization's goals and deciding how to best achieve them.
25. part of the planning process that involves selecting a course of action from a set
of alternatives. decision making
26. determining how activities and resources are to be grouped. organizing
27. the set of processes used to get members of the organization to work together to
further the interests of the organization. leading
28. monitoring organizational progress toward goal attainment. controlling
29. the skills necessary to accomplish or understand the specific kind of work done
in an organization. technical skills
30. the ability to communicate with, understand, and motivate both individuals and
groups. interpersonal skills
31. the managers ability to think in the abstract. conceptual skills
32. the manager's ability to visualize the most appropriate response to a situation.
diagnostic skills
33. the managers abilities both to effectively convey ideas and information to others
and to effectively recieve ideas and information from others. communication
skills
34. the manager's ability to correctly recognize and define problems and
opportunities and to then select an appropriate course of action to solve
problems and capitalize on opportunities. decision-making skills

35. the managers ability to prioritize work, to work efficiently, and to delegate
appropriately. time management skills
36. a conceptual framework for organizing knowledge and providing a blueprint for
action. theory
37. consists of 2 distinct branches--- scientific management & administrative
management. classical management perspective
38. concerned with improving the performance of individual workers. scientific
management
39. employees deliberately working at a slow pace soldiering
40. administrative management
41. focuses on managing the total organization.
42. behavioral management perspective
43. emphasizes individual attitudes and behaviors and group processes.
44. human relations movement
45. argued that workers respond primarily to the social context of the workplace.
46. theory x
 47. a pessimisstic and negative view of workers consistent with the views of
scientific management.
48. a positive view of workers; it represents the assumptions that human relations
advocates make. theory y
49. contemporary field focusing on behavioral perspectives on management.
organizational behavior
50. applies quantitive techniques to management. quantitative management
perspective
51. focuses specifically on the development of mathematical models. management
science
52. concerned with helping the organization more efficiently produce its products or
services. operations management
53. an interrelated set of elements functioning as a whole. system
54. a system that interacts with its environment. open system
55. that does not interact with its environment closed system
56. a system with another system subsystem
57. 2 or more subsystems working together to process more than the total of what
they might produce working alone synergy
58. a normal process leading to system decline entropy
59. an attempt to identify the one best way to do something. universal perspective
60. suggests that appropriate managerial behavior in a given situation depends on,
or is contingent on, unique in a given situtaion. contingency perspective

CHAPTER 2
1. As part of the task environment, _____ work together in joint ventures or similar arrangements.
Strategic partners

2. Which of the following is a part of an organization's general environment? Interest rates

3. Which of the following is a dimension of an organization's task environment? Regulators

4. What type of regulator is formed by its members to attempt to influence organizations? interest
group

5. The _____ environment is everything outside an organization's boundaries that might affect it.
External

6. The board of directors is part of an organization's _____ environment. Internal

7. What is a key disadvantage to licensing agreements as an approach to internationalization?

8. The language, values, symbols, and beliefs that guide behavior in a country are that country's_____.
cultural environment
9. _____ occurs when a firm headquartered in one country, purchases operating facilities in a foreign
country. Direct investment

10. The _____ is the first and most important international market system. European Union

11. A disadvantage of direct investment is: greater economic risk.

12. The United States, Canada, and Mexico entered into what agreement to eliminate barriers to trade
among them? NAFTA

13. Everything outside an organization's boundaries that might affect it. external
environment
14. The set of broad dimensions and forces in an organization's surroundings that
determines its overall context general environment
15. Specific organizations or groups that affect the organization. task environment
16. The conditions and forces within an organization internal environment
17. The overall health and vitality of the economic system in which the organization
operates. economic dimension
18. The methods available for converting resources into products or services
technological dimension
19. The government regulation of business and the relationship between business and
government. political-legal dimension
20. An organization that competes with other organizations for resources. competitor
21. Whoever pays money to acquire an organization's products or services customer
22. An organization that proves resources for other organizations supplier
23. A body that has the potential to control legislate, or otherwise influence the
organization's policies and practice. regulator
24. An agency created by the government to regulate business activities. regulatory
agency
25. A group organized by its members to attempt to influence organizations. interest
group
26. An organization working together with one or more other organizations in a joint
venture or similar arrangement. strategic partners (also called strategic ally)
27. Whoever can claim property rights to an organization owners
28. Governing body that is elected by a corporation's stockholders and charged with
overseeing the general management of the firm to ensure that it is being run in a way
that best serves the stockholder's interests. board of directors
29. An individual's personal beliefs about whether a behavior, action, or decision is right
or wrong ethics
30. Behavior that conforms to generally accepted social norms ethical behavior
31. Behavior that does not conform to generally accept social norms unethical behavior
32. Standards of behavior that guide individual managers in their work. managerial
ethics
33. A formal, written statement of the values and ethical standards that guide a firm's
action codes of ethics
34. A law that requires CEOs and CFOs to vouch personally air the truthfulness and
fairness of their firms' financial disclosures and imposes tough new measures to deter
and punish corporate and accounting fraud and corruption Sarbanes-Oxley Acts of 2002
35. The set of obligations that an organization has to protect and enhance the societal
context in which it functions. social responsibility
36. The extent to which an organization complies with local, state, federal, and
international laws legal compliance
37. The extent to which an organization and its members follow basic ethical standards
of behavior ethical compliance
38. The disclosure, by an employee, of illegal or unethical conduct on the part of others
within the organization. whistle-blowing
39. Awarding funds or gifts to charities or other worthy causes philanthropic giving
40. Making a product in the firm's domestic marketplace and selling it in another country
exporting
41. Bringing a good, service, or capital into the home country importing
42. An arrangement whereby one company allows another company to use its brand
name, trademark, technology, patent, copyright, or other assets in exchange for a
royalty based on sales licensing
43. A cooperative arrangement between two or more firms for mutual gain strategic
alliance
44. A special type of strategic alliance in which the partners share in the ownership of
an operation on an equity basis joint venture
45. When a firm builds or purchases operating facilities or subsidiaries in a different
country from the one where it has its headquarters direct investment
46. Light assembly plants that are built in Northern Mexico close to the U.S. border and
are given special tax breaks by the Mexican government maquiladoras
47. A tax collected on goods shipped across national boundaries tariff
48. A limit on the number or value of goods that can be traded quota
49. Accords reached by governments in which countries voluntarily limit the volume or
value of goods they export to or import from one another. export restraint agreements
50. A set of countries that agree to markedly reduce or eliminate trade barriers among
member nations (a formalized market system) economic community
51. The first and most important international market system European Union (EU)
52. An agreement among the United States, Canada, and Mexico to promote trade with
one another North American Free Trade Agreement (NAFTA)
53. A trade agreement intended to promote international trade by reducing trade
barriers and making it easier for all nations to compete in international markets General
Agreement on Tariffs and Trade (GATT)
54. An organization, which currently includes 140 member nations and 32 observer
countries, that requires members to open their markets to international trade and to
follow WTO rules. World Trade Organization (WTO)
55. The set of values, beliefs, behaviors, customs, and attitudes that helps the
organization's members understand what it stands for, how it does things, and what it
considers important Organizational Culture