Part A- Origin of an enterprise

UNIT 1
Business Management = OBS 114
Chapter 1

Learning outcome 1

1.What is entrepreneurship?

A way of thinking that is opportunity obsessed and holistic in approach and leadership (Balanced).
It is an ability to create a vision and creatively act on it.

The connection (NEXUS) between identified problems+ opportunities and the available resources to
solve problems which later can result in profits.

2.What are the natures of entrepreneurship? or How do entrepreneurs recognise new ideas for their
business?

 Opportunity
 Creating a new product/process + New market entry
 New organisation or current/old organisation
 Risk of failure vs Reward
 Profit driven or social

Learning Outcome 2

Key ideas when starting your own entrepreneurial venture

*Self-efficacy – believing in yourself

*Business plan = Opportunity + Resource + Team

=Business provides the language to communicate the quality of the 3 driving forces of the model.

Opportunity – Creation + recognition

- Market readiness = consumer treads + behaviours + competition

Team – nature of the opportunity determines the size + shape of the team

- Be able to balance leadership + creativity + maintaining effective communication

Learning opportunity 3

Identify action that is key to becoming a small business owner.

*Boundary – where is your business situated

*Intention- desire to start business

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*Resources- Capital + entrepreneurial mindset + land + labour

*Exchange – Resource for money + money for resource

Learning Outcome 4

Why are small businesses important to our economy + community?

- New jobs
- Small businesses are employers because they are more willing than most large businesses to
hire atypical (they represent a specific group of people- have not really acquired high degrees;
example people who are looking for part time jobs) workers. Employment issues are the core of
what makes small businesses attractive to local authorities and government.

- Innovation

Joseph Schumpeter - creative destruction – newly created goods, services or firms can hurt
existing goods, services and firms. Sometimes its effects are detrimental temporally or even
permanently (businesses must close).

- Creation of new opportunities

Gives us opportunity to enjoy goods and services.

2 aspects of global entrepreneurships:

3 Different economies that drive entrepreneurship

Factor – driven economies

Little manufacturing, most industries relate to farming and extraction of raw materials e.g.,
mining.

Efficiency- driven economies

Economies develop and go beyond manufacturing to a more industrialized economy.

Innovation- driven economies

Focuses on high value manufacturing, a large service sector and the provision of high-end
products and services to the local and export markets.
Entrepreneurs are interested in having their idea used or owned = This means MINDSHARE

A movement from the factor driven basis to an innovation driven basis; the proportion of
the opportunity driven entrepreneurship increases.

2 types of entrepreneurs
One type of entrepreneur is going into business to improve themselves financially.
The other type goes into business to launch a new improved product or service into the
market.
1.Opportunity driven entrepreneurship
2.Necissity driven entrepreneurship

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 GEM – Global Entrepreneurship monitor
TEA- Total Entrepreneurship Activity

There is a global push for entrepreneurship in countries and within those countries the
growth of global trade; helped by the potential of e-commerce [ e-commerce is another
powerful impact on entrepreneurship).

CSI Entrepreneurship

Corporate entrepreneurs – are employed by others in existing companies

Social entrepreneurs – founders of social ventures – new charitable and civic organisations
that are self-sufficient or profit companies that use of their income to fund into charity
Independent entrepreneurs -people who plan to start a business of their own.

Different forms Customer focus Creation Efficiency Innovation

of - refers to being -making of a - Doing the - Looks @
entrepreneurs in tune with new entity most work with new things
your market fewest and a new
= entrepreneurs resources way of
will accept low doing
profits if it things
means keeping
customers
happy
Corporate * * *
e.g., new Apple
iPhone
Social * * * Have little
e.g., funds.
Independent * * * *
Well-funded –
given start-up
capital

4. Sustainable entrepreneurship or green entrepreneurship: social ventures that focus on

saving the environment.

Profit is not mentioned as a focus because a goal of a business is not entirely on profit.

Learning outcome 5

Recognize the key aspects of an entrepreneurial personality

We look @ the ways people are the same and are also different and patterns that lead to a
successful entrepreneurial behaviour:

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The five Ps of successful entrepreneurial behaviour:

1.Passion

2.Perseverance – learned optimism during adversity

3.Promotion- prevention focus

Internal focus – what human beings have naturally

Promotion focus – intention to maximise gains/profits
Prevention focus – intention to minimise losses – leads to inactive or protective action
E.g., excuses

4.Planning Style

Comprehensive planners
Takes a long-term view and develops long range plans – they start a language, and they keep
it going. Best style
Opportunistic planners
Start with a goal and look for opportunities to achieve it
Reactive planners – worst style. Plan around the most important aspects of the business
Habit based planners – Do not plan @ all because their routines.

5.Professionalisation

Expert business professionalism

= When most of the business succeed the industry standards
Specialised business professionalism
= When one or 2 aspects of the business are @ the level
Minimalized business professionalism
= When none of the aspects of the business meets the industry standards.

Learning Opportunity 5B

Assess the operational competencies of successful entrepreneurs:

Competencies = All aspects of the entrepreneurial depends on hard work but there are other
specific types of business-related expertise.

Key business functions

Certain fundamental activities that all business performance.

 Industry specific knowledge

Understand a particular industry and market
 Resource competencies
Gain access to resources
 Determination competencies
Determination driven skills

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  Opportunity competencies
Exchange deals with the actual process of exploiting the opportunity for profit.
Entrepreneurial life cycle
Emergence
Existence
=liabilities of newness – Problems of mastering these 3 areas
Getting expertise as quickly as possible
Success
Slack resources = extra profits – flexibility
Resource maturity
Take-off
Learning Outcome
Identify the sources of opportunities entrepreneurs
Opportunity Recognition
Searching and capturing entrepreneurial ideas that lead to business
opportunities. Process that includes CREATIVE THINKING.
Entrepreneurial alertness
- Observational +thinking skills that assists and entrepreneurs in
identifying opportunities.

Opportunity Recognition
Substitutes
Combine
Adapt
Magnify or modify
Put to other uses
Eliminate
Rearrange or reverse
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FEEL = CHECK = PLAN = DO
(Recognize- Assess what you know = offer your product or service= if
you get enough sales [keep going])

Graham Walls consisting of 4 steps:

1.Preparation
2.Incubation
3.Illumination
4.Verification

Learning Outcome 8

Business model Canvas

= Ways to identify and organize key information and how they
achieve their goals
1. Customer
2. Problem
3. Solution offerings (ideas)
4. Value proposition
5. Revenue stream
6. Channels
7. Revenue Streams
8. Revenue stream
9. Key resources
10.People

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 11Cost Structure

Value Proposition
- It describes a bundle of products and services that create VALUE
for a specific customer segment.
A great value proposition is essential for any business hoping to
clearly hope to clearly communicate to its customers why they
are better.

=What are you selling?

=What problem do you have to solve?
=What value do you create?

 Newness
 Performance
 Customization
 “Getting the job done”
 Design
 Brand/status
 Price
 Cost reduction
 Risk reduction
 Accessibility
 Convenience /usability

The 3 forms differ in which aspects of entrepreneurship they focus

on:
1.Creation

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2.Customer focus
3.Efficiency
4.Innovation

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Chapter 2
Unit 3
Leadership
Learning Outcome 1
What is leadership?
What is power?
Sources of managerial Power
1.Expert
2.Referent – comes from the respect from your subordinate
3.Legimate
4.Coercive
5.Reward

What is empowerment
- We are allowing subordinates to take a more active role in leading themselves.
- Increases managers ability to getting more things done
- Increased involvement of subordinates to get things done
- Increase knowledge acquirement
- Increases time for managers to focus on pressing matters
Learning Outcome 2
Identify the traits that show the strongest relationship to leadership, the behaviours leaders
engage in and the limitations of the trait behaviour model

Trait Model of leadership focused on identifying the personal characteristics (not personal
traits but rather leader’s skills and abilities) of effective leadership.

There needs to be a consistent relationship between leadership effectiveness and leadership

traits.

 Intelligence – understand complexes problems

 Knowledge and Expertise – make good decisions

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 Dominance – influence their subordinates
 Self Confidence – persisting when faced with adversity
 High Energy – Behave ethically
 Tolerance for stress
 Integrity and honesty
 Maturity
Learning outcome 7
Behaviour Model
2 Main Behaviours
1.Consideration- manager cares + trusts subordinate
2.Initiating Structure- behaviours that managers engage in to ensure that work gets done.
(Efficient + Effective)

Learning outcome 2
Contingency (Situational) Models
Personal characteristics can influence effectiveness
Contingency models of leadership propose whether a leader who possesses certain traits or
performs certain behaviours is effective is contingent on the SITUATION.
3 Main Theories
Leadership -refers to managers characteristics approach to leadership
 Fiedler’s Contingency Model – Helps to explain why a manager be effective in one
situation but not in another.

Relationship- orientated leadership / leader-member relation

Task orientated leadership

 Situational characteristics
 Leader- member relation
 Task structure
 Position power (from the 5 we did previously)
 Combination of leadership style and situation

 House’s Path Goal theory -How effective leaders motivate their followers?
Find out what outcomes your subordinates are trying to achieve from their
jobs?

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 Reward subordinates for high performance and goal attainment?
Clarify the paths to goal attainment for the subordinates + remove any
obstacles and express confidence in subordinate’s capabilities?

4 kinds of leadership
 Directive behaviours – like initiating structure e.g., goal setting +
assigning tasks
e.g., beneficial when subordinates are having difficulty completing
assigned assignment + detrimental for subordinates who are
independent thinkers
 Supportive behaviours –like consideration e.g., expressing concerns
e.g., advisable when subordinates are experiencing high levels of
stress
 Participative behaviours – subordinates have a say in matters
e.g., when the subordinates support is needed
 Achievement orientated behaviours – motivate subordinates to
perform at the highest level possible e.g., set challenging tasks +
increase motivation levels

 Leader substitutes model – This model suggests that under certain conditions
managers do not have to play a leadership role – members of an organisation can
sometimes perform at a higher level without a manager exerting influence over
them. Substitutes for leadership are present
Substitutes for leadership – frees up some of the manager’s valuable time.
Characteristics of subordinates / The people who work for you (highly skilled)
Characteristics of the context + situation/The nature of the work – is it enjoyable
Empowerment
Self-managed teams

Learning outcome 4
Transformational leadership

Transformational Leadership – occurs when managers change their subordinates in 3 ways.

Makes subordinates aware of the importance of their jobs and performance to the
organisation and e.g., Job happiness
aware of their own needs for personal growth and e.g., training
that motivates subordinates to work for the organisation e.g., absenteeism with no
valid reason affects the team (co-workers).

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 Transformational managers
-Are charismatic – vision of how good things could be. – paves the way for gaining
competitive advantage
-Intellectually stimulate subordinates- leads subordinates to view problems as
challenges they can accomplish
-Engage in developmental consideration – support and engage with subordinates

Subordinates
-Have awareness of the importance of their job
-Are aware of their own needs for growth + development + accomplishment
(Work for the good of the organization)

TRANSACTIONAL LEADERSHIP

Use their rewards and coercive powers to encourage high performance, e.g.., reward
high performance and punish poor performance
Lower level of job satisfaction and job performance.

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UNIT 2
Chapter 3 -Managers and management
Learning Outcome 1
In this chapter we consider what managers do and the skills, knowledge and abilities they
must possess to lead their organisation effectively. We also identify the different kinds of
managers that organisations rely on to help guide them. We consider some of the
challenges that managers must overcome to help their business prosper.

What is management?

Managers all work in organisations. An Organisation is a collection of people that work

together and coordinate their actions to achieve a wide variety of goals or desired future
outcomes.
Management is planning, organising, leading and controlling of human and other resources
to achieve organisational goals

What is a manager?

They are people responsible for supervising and making the most of an organisation’s
human and other resources to achieve its goals.

Organisations resources include assets, people’s skills, know-how and experience,

machinery, raw materials, computers and IT, patents, financial capital and loyal customers
and employees.

Learning Outcome 2

Describe what management is, why management is important, what managers do, how
managers use their organisational resources efficiently and effectively to achieve
organisational goals.

Organisational performances are the measure how efficiently and effectively managers use
available resources satisfy customers and achieve organisational goals.

Organisational performance increases in proportion to efficiency and effectiveness.

1.High and Low Efficiency = Was there a poor or good use of the resources?
2.High and Low Effectiveness= Whether managers choose the right or wrong goals to purse?

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 Efficiency = is the measure of how productively resources are used to achieve a goal.
Therefore, managers are most efficient when they minimise the amount of input
cost or the amount of time given to produce a given output of goods and services.

Effectiveness = is the measure of the appropriateness of the goals that the managers
have selected for the organisation to pursue. The degree to which the organisation
achieves those goals.
Therefore, organisations are most effective when they choose goals and can achieve them.

Effective managers are those who choose the right organisational goals to pursue and have
the skills to utilise resources efficiently.

Learning outcome 2 continuation

Identify the 4 principles tasks managers perform in organisations and how explain how
managers handle each one that affects organisational performance.

Essential managerial skills

How do managers accomplish the objective that the job of management is to help
organisations make the best use of the resources to achieve its goals?

4 Managerial tasks

1.Planning
2.Organizing
3.Leading
4.Controlling

Managers @ all levels of management and departments perform these tasks.

Effective management means managing these activities successfully.

1.Planning – managers choose appropriate organisational goals and courses of action to

best achieve these goals.
3 Steps involved in planning:

1.Deciding which goals the organisation will pursue.

2.Deciding what strategies to adopt to attain these goals.
3.Dedicing how to allocate organisational resources to pursue the strategies that attain
those goals.

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2. Organising –

Establish tasks and authority relationships that allow people to work to together to achieve
organisational goals. Organising people into departments into the kinds of job specific tasks
they perform lays out the lines of authority and responsibility between individuals and
groups.

Organisation must be structured in such a way as to maintain its core values and business
strategies.

3.Leading –
Motivate, coordinate and energize individuals and groups to work together to achieve
organizational goals. An organisations vision is a short and inspiring statement of what the
organisation intends to become and the goals it is seeking to achieve.
 Managers articulate a clear organisational vision
 Energise and enable employees so everyone understands the part he/she plays in
trying to achieve the organisational goals.

The outcome of organising is the creation of organisational structure.

*Organisational Structure:
A formal system of tasks and reporting relationships that coordinates and motivates
members, so they work together to achieve the organisational goals. It determines how an
organisations resources can be best used to create goods and services.

4.Controlling
Establish accurate measuring and monitoring systems to evaluate how well the organisation
has achieved its goals and to take any corrective action needed to maintain and improve
performance.

The outcome of the control process is the ability to measure performance accurately and
regulate organisational efficiency and effectiveness.

To exercise control Managers must:

 Decide which goals to measure (perhaps goals pertaining to productivity, quality or
responsiveness to customers.)
 They must design control systems that will provide the information necessary to
assess performance (determine to what degree the goals have been met.)
 The controlling task also helps managers evaluate how well they themselves are
performing the other 3 tasks of management: planning, organising and leading and
taking corrective action.

Effective management means performing these 4 managerial skills successfully and

increasing efficiency and effectiveness.

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Performing managerial task: Mintzberg typology

Types of roles
1.Decisional
 Entrepreneur- develop innovative goods + services
 Disturbance handler-Move quickly to take corrective action
 Resource allocator -allocate resources to different departments
 Negotiator – reach agreement with suppliers – working with other organisations
2.Interpersonal
 Figurehead- outline organisational goal
 Leader -Give direct commands
 Liaison – establish alliance between diff organisations
3.Informational
 Monitor – watch for change in the organisation + monitor performance of managers
 Disseminator - Inform employees about change
 Spokesperson – give a speech to inform local community

Many managers accept their subordinates’ failures as a normal part of a learning experience
and a rite of passage to become an effective manager.

Learning outcome 3
Levels and skills of managers

Levels and skills of management

What is a department?

Levels of management.
CEO – Chief Executive Officer
Top manager – COO – Chief Operating Officer
Middle manager
Low level manager – first line manager – departmental supervisors – supervisors

Learning Outcome 4

Learning Outcome 5

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Discuss some major changes in management practices today that have occurred as a
result of globalisation and the uses of advanced technology:

2 Major Factors

1.Restructuring
2.Outsourcing

Learning Outcome 6
Identify and explain the 5 challenges managers face in today’s increasing competitive.

1. Global organisation
5 major challenges
Efficiency
Quality
Innovation
Customer responsiveness

#Maintaining ethical and socially responsible standards

#Managing diverse workforce
#Utilising technology and e-commerce
#Practising global Crisis management

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Unit 4

Chapter 3
Part B - Manager as a person

We focus on the manager as a feeling, thinking human being.

We describe the enduring characteristics that influence how managers work
How managers values, attitudes and moods play out in the organisation?

Learning Outcome 1 –
Describe the various personality traits that affect how managers think, feel and behave.

Personality traits – particular tendencies to feel, think and act in certain ways that can be
used to describe the personality of every individual.

The big 5 personality traits

- Either High or Low
- Effectiveness is determined by a complex interaction between the characteristics of
managers and the nature of the job and organisation they are working in.

Extraversion- tendency to experience positive emotions and moods and to feel good
about oneself and the rest of the world.
Extravert – High on extraversion- sociable, outgoing, friendly
Introvert – Low on extraversion – Less inclined to social interaction and a less
positive outlook
- Managers who are low in extraversion tend to be more effective and efficient if their
jobs require no social interaction
Negative affectivity -tendency to feel negative emotions and moods, feel distressed
and to be critical of oneself and others.

Agreeableness – the tendency to get along with others. Tend to be affectionate and
care about others
Low on agreeableness – distressful of others, unsympathetic, uncooperative and
sometimes antagonistic.
High on agreeableness – its important for managers whose responsibilities require
that they develop good, close relationships with others.
- Managers who are high on the agreeableness continuum are
Conscientious – a tendency to be careful, scrupulous and persevering
Managers who are high on conscientious continuum are self-disciplined and
organised.
Mangers who are low on conscientious continuum appear to lack direction and self-
discipline.

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 Conscientious is a GOOD INDICATOR OF PERFORMANCE in many kinds of jobs.

Openness to experience – tendency to be original have broad interests, be open to a

wide range of stimuli, be daring and take risks.

High on Openness to experience – managers who are likely to take risks and be innovative in
their planning and decision making.
Low on openness to experience - managers who are not willing to take risks and are not
innovative in their planning and decision making.

Personality traits enhance managerial effectiveness.

Other personality traits that affect managerial behaviour:

1.Locus of control
2.Self- esteem
3.Needs for achievement, affiliation and power.
Locus of control

1.Internal Locus of control

Decisive determinants – behaviours and actions
*Helps ensure ethical behaviour and decision making in an organisation because
people feel accountable and responsibilities,
2.External Locus of control
*Tend not to intervene to try to change a situation or solve a problem or leaving it to
some else.

Self-esteem – degree to which individuals feel good about themselves and their
capabilities.

High in self-esteem – believe they are competent deserving and can handle most
situations. Desirable for managers because it facilitates their setting and keeping
high standards for themselves and pushes them ahead on difficult projects and gives
them confidence they need to make and carry out important decisions.
Low – poor opinions about themselves, are unsure about their capabilities and
question their ability to succeed @ different endeavours.

People tend to choose activities and goals consistent with the level of self-esteem.

Needs for achievement, affiliation and power:

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 
Needs for achievement – Desire to perform challenging tasks

Needs for affiliation – establishing and maintaining good interpersonal
relationships
 Needs for power – Control or influence others
Learning Outcome 2
Explain what values and attitudes are, and describe their impact on managerial
action?

Values, attitudes, emotions and moods capture how managers experience their jobs
as individuals.

- Values + Attitudes + Moods + Emotions

Values
1.Terminal Values -sense of accomplishment

- equality, self- respect

-comfortable life (exciting and active life)
- freedom (independence)
- social recognition (respect + admiration)
E.g., Developing a new product that can save lives or prolong lives.
The relative importance that that each manager places on each terminal value helps explain
what they are striving to achieve in their in their organisation and where they will put their
focus into.

2.Instrumental values – important modes of conduct for managers

- ambitious (hardworking and aspiring)

- broadminded (open – minded)
- Capable (competent and effective)
- responsible (dependable and reliable)
-Self- controlled (restrained and self-disciplined)
The relative importance that each manager places on each of the instrumental values and
others will be a significant determinant of actual behaviours on the job.

If a manager considers being “imaginative” important – they are likely to be innovative and
take risks.
If managers consider being “honest” important – they are likely to ensure that all members
of a unit or organisation act ethically.

Norms + value system+ Attitudes

Two types of attitudes

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 1. Job Satisfaction
2. Organisational commitment

Job Satisfaction
-Level of satisfaction increases as one moves up the hierarchy in the organisation.
-Satisfied managers are willing to go above and beyond their job requirements.
They will perform organisation citizenship behaviours.
“Going above and beyond call duty”
Helping subordinates, coming up with creative ideas and overcoming adversity.
-High degree of loyalty towards their organisation.

Organisational commitment

-When employees and managers believe in organisational values this leads to

organisational culture.
-Organisational commitment helps managers perform some of their figurehead and
spokesperson roles.
-If a manager believes in the organisation’s values, it will be easier for them to
persuade people from inside or outside the organisation.
-Difference in job satisfaction and organisational commitment among managers in
different kinds of opportunities and rewards because they face different economic,
political and sociocultural forces in their organisation.
- The level of job satisfaction and organisational commitment depends on the extent
to which countries have legislation affecting firings, lay offs and the extent to which
citizens of the country are geographically mobile

Learning Outcome 3
Describe how moods and emotions influence all members of an organisation

Moods – feeling or a state of mind

Emotions- are more intense feelings than moods and are more short lived.

Both negative and positive mood states can potentially contribute to creativity in
different ways.
Moods and emotions play an important role in ethical decision making.
Moods and emotions give managers and all employees important information and
signals on what is going on in the workplace.
Positive emotions and moods – signals things are going well and can lead to playful
thinking.
Negative emotions and moods – signals that they are problems in need of attention and
areas of improvement.

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Learning Outcome 4
Describes the nature of emotional intelligence and its role in management.

Emotional Intelligence – is the ability to understand and manage one’s own moods and
emotions and moods and emotions of others. (Be able to respond to the change in moods
and emotions)

High Level of emotional intelligence – are more likely to understand how they are feeling
and why they are more able to effectively manage their feelings.

Emotional intelligence helps to contribute to effective leadership in many ways and helps
managers understand and relate to others well.
Helps managers attain their enthusiasm and confidence and energise subordinates to help
the organisation attain its goals.

Learning Outcome 5
Define Organisational culture and explain how managers both created and
influenced by the organisational culture.

Organisational Culture
*Shared beliefs and values that help to motivate and coordinate subordinate’s
actions to achieve organisational goals.
-How customers in a particular hotel chain are treated from the time they are
greeted at check until they leave.
-Or shared work routines that research teams use to guide new product
development.

When organisations share intense cultural values etc strong organisational culture
exists.

The role of values and norms in the organisational culture.

Value of the founders – long term

Socialisation – teaching newcomers the values and beliefs of the organisation
Ceremonies and rites
 Rite of passage – training
 Rite of integration – Christmas parties in the organisation
 Rite of enhancement – award ceremonies
Stories and languages

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  Attraction selection attrition framework – Posits that when founders hire
employees for their new ventures they tend to be attracted to and choose
employees whose personalities are like their own.

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 Unit 5
Decision making

Learning Outcome 1

Managerial Decision making

The process by which managers respond to opportunities and threats by
analysing options and making determinations about specific
organisational goals and courses of action

Decision making
 In response to an opportunity
This type of decision making “occurs when managers search for
ways to improve organisational performance to benefit
customers,
employees, and other stakeholder groups”
 In response to a threat
when events inside
or outside the organisation adversely affect organisational
performance, and managers
search for ways to increase performance.

1.Differentiate between programmed and non-programmed

decisions
• Programmed decisions
Are decisions that have been made so many times in the past that
managers have developed rules or guidelines to be
applied when certain situations inevitably occur.
Usual and mostly known opportunities and threats.
Routine and an automatic process.
Example: policy
• Non programmed decisions
Decisions made in response of unusual opportunities and threats.
Non-routine decisions

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 Rules do not exist because the situation is unexpected or
uncertain and managers lack the information needed to develop
rules to cover it.
How do managers make decisions in the absence of decision
rules?
 Managers may rely on their intuition which refers to
feelings, beliefs, and hunches that come readily to mind,
require less/little effort and information gathering and may result
in on-the-spot decisions
 Reasoned judgements - decisions that take time
and effort and result from careful information gathering and
the generation and evaluation
of alternatives.

Different decision-making theories

Classical Model Administrative Model

Specifies how decisions should be made. Explains why decision making

uncertain and risky?
Assumptions Why managers make satisfactory and
A decision maker can identify and evaluate not optimum decisions?
alternatives and consequences.
Decision maker can make the best decision. Based on 3 important concepts
Results in an optimum decision because a) Bounded rationally
managers have access to all the information. b) Incomplete Information
Recognising there is a need for a decision c) Satisficing

Steps taken
1.List all alternative courses of action possible. Bounded Rationally
(Assuming all information is made available to Unable to interpret, process and act
managers.) on information.
2.Rank each alternative from least preferred to Difficulty for manager to evaluate
most preferred. information before deciding because
3.Select alternative that leads to desired future of the large number of alternatives.
outcomes.
Incomplete Information
Information is
incomplete because the full range of
decisionmaking alternatives is
unknowable and the

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 consequences are uncertain
a) Uncertainty and risk
b) Ambiguous info
c) Time constraints and info costs
Satisficing
Searching for and choosing an
acceptable or satisfactory response
to problems
and opportunities, rather than trying
to make
the best decision.

Learning Outcome 2

Discuss the six steps managers should take to make the best decisions
and explain how cognitive biases can lead managers to make poor
decisions.

Six steps managers should take to make the Best decisions:

Step 1 – Recognise the need for a decision - becomes apparent when
new opportunities and threats arise.
Step 2 – Generate alternatives – Define opportunity and threats and set
criteria that should influence the selection.
Step 3 – Assess alternatives (Advantages and disadvantages + define the
opportunity and threat and select the criteria that should influence the
decision.

Four criteria are used to evaluate the pros and cons of alternative
courses of action.
a) Legal?
b) Ethical?
c) Economical?
d) Practical?
One reason for bad decisions is that managers often fail to specify the
criteria:
Legality

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  Ensure possible course of action does not violate Government
regulations, domestic or international laws etc.
Ethicalness
 Ensure course of action is ethical and does not harm the
stakeholders.
Economic feasibility
 Managers must decide whether the alternatives can be
accomplished given the organisation’s goals
Practicality
 Managers must decide whether they have the capabilities and
resources required to implement the alternatives.
 Make sure the alternative will not threaten the attainment of
other organisational goals.

Step 4 – Choose among alternatives

 Rank the various alternatives and make a decision.
Step 5 – Implement the chosen alternative
 Implement and many subsequent related decisions must be made.
Step 6 – Learn from feedback
 Conduct a retrospective analysis to see what they can learn from
their past success and failures. Less likely to make the same
mistake again and again.
 Evaluation Process
a) Compare what happened and what was EXPECTED to
happen as a result of a decision.
b) Explore why expectations of the decisions were not met.
c) Derive guidelines that will in the future decision making.
Cognitive Biases
Decision biases are cognitions or mental behaviours that prejudice
decision quality in a significant number of decisions for a significant
number of people.
• They are also termed cognitive or judgement biases.
• Decision biases can be viewed as deviations from rational decision
making.
Decision makers are subject to bounded rationality, they tend to use
heuristics.

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 • Heuristics - Are rules of thumb that simplify the process of making
decisions.
Rules of thumb are often useful because they help decision makers
make sense of complex, uncertain, and ambiguous information.
• Can lead to systematic errors in the way decision makers process
information.
• Systematic errors - Errors that people make over and over and that
result in poor decision making.

Four sources of bias that can adversely affect the way managers make
decisions

i. Prior Hypothesis
Decisions based on those beliefs even when
presented with evidence that their beliefs are
wrong.
ii. Representative
Tendency to inappropriately generalise from a small
sample or even from a single vivid case or episode.
iii. Illusion of control
Tendency of decision makers to overestimate
their ability to control activities and events.
iv. Escalating commitment
Tendency to commit more resources to the project
even if the project is failing.

Learning Outcome 3 Identify the advantages and

disadvantages of group

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 decision making and 1. Groupthink - A pattern of
describe techniques that can faulty and biased decision
improve it. making that occurs in
groups whose members
Advantages of group decision strive for agreement
making: among themselves at the
expense of accurately
1.Choices of alternatives are assessing information
less likely to fall victim to the relevant to the decision.
biases and errors discussed 2. Devil’s Advocacy - Critical
previously. analysis of a preferred
2. Draw on the combined alternative, made in
skills, competencies and response to challenges
knowledge of group raised by a group member
members. who is playing the role of
3. Process more information devil’s advocate. A person
and correct one another’s who defends unpopular or
errors. opposing alternatives for
4. And in the implementation the sake of the argument.
phase, all managers affected 3. Dialectical Inquiry -
by the decisions agree to Critical analysis of two
cooperate. preferred alternatives in
5. When a group of managers makes a order to find an even
decision the probability that the better alternative for the
decision will be implemented organisation to adopt -
successfully increases. time consuming.
Difference between devil’s
advocacy and dialectical
inquiry:

Disadvantages of group decision

making:

Learning Outcome 4:

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Explain the role that organisational Develop personal mastery
learning and creativity play in helping  For organisational learning to
managers to improve their decisions occur, top managers must allow
every person in the organisation to
develop a sense of personal
Organisational learning mastery.
The process through which managers  Managers must empower
seek to improve employees’ desires employees and allow them to
and ability to understand and experiment, create, and explore
manage the organisation and its task what they want.
environment.
Build complex, challenging mental
Learning Organisation models
An organisation in which  Encourage employees to develop
managers try to maximise and use complex mental models -
the ability of individuals sophisticated ways of thinking that
and groups to think and challenge them to find new or
behave creatively and thus better ways of performing a task.
maximise the potential for • Purpose: Deepen their
learning to take place. understanding of what is involved in
a particular activity.
Creativity
Promote team Learning
A decision maker’s ability to
discover original and novel Managers must do everything they
ideas that lead to feasible can to promote group creativity.
alternatives courses of action. • Team learning (learning that takes
place in a group or team) is more
Create learning organisation: important than individual learning
a) Develop personal in increasing organisational learning
mastery
b) Build complex,
challenging Build Shared vision
mental models  Managers must emphasise the
c) Promote team learning importance of building a shared
d) Build shared vision vision.
e) Encourage systems thinking

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 A common mental model that all  To create a learning organisation,
organisational members use to managers must recognise the
frame problems or opportunities effects of one level of learning on
another.
Encourage systems thinking
Managers must encourage systems
thinking.

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 Unit 6 – Groups and teams
Learning Outcome 1:

Explain why groups and teams are key contributors to organisational

effectiveness

Groups - Two or more people who interact with each other to

accomplish certain goals or meet certain needs.

Teams - Is a group whose members work intensely with one another to

achieve a specific common goal or objective

The two characteristics that distinguish teams from groups are the
intensity with which team members work together and the presence of
a specific objective.

Groups and teams can:

a) Enhance performance
b) Increase responsiveness to customers
c) Increase innovation
d) Increase motivation and satisfaction
To gain competitive advantage

Enhance performance
Enhancers
 Synergy
People working in a group or team can produce more or
higher-quality outputs as all their individual efforts were
later combined.

Factors that can contribute to synergy in groups include:

•Ability of group members to bounce ideas off one another.
• To correct one another’s mistakes.
• To solve problems immediately as they arise.
• To bring a diverse knowledgebase.
• To accomplish work that is too vast or all-encompassing
for any individual to achieve all

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 To take advantage of synergy in groups, managers should:

• Groups should be composed of members who have

complementary skills and knowledge relevant to the
objective.
• Groups should have enough autonomy to solve problems
and determine how to achieve goals and objectives.
• Managers should empower and coach subordinates and
give them resources to perform as a group/team.

Increase responsiveness to customers

Being responsive to customers is not always easy.

• Diversity - Bringing for example salespeople, research and

development experts, and members of other departments
together in a group or cross-functional team can enhance
responsiveness to customers.

Increase INNOVATION

Innovation - The creative development of new products,

new technologies, new services, or even new organisational
structures.
• Team members can often uncover one another’s errors or
false assumptions.
• Team members can critique one another’s approaches
and build off one another’s strengths while compensating
for weaknesses.

Increase motivation and satisfaction

 Members of groups/teams are likely to be more satisfied

than they would have been if they had been on their own.

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 • The experience of working alongside other highly charged
and motivated people can be stimulating and motivating.

• A motivated workforce increases market competitiveness

Learning Outcome 2

Unit 8

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Chapter 4 – Ethics and Social Responsibility
Learning Outcome 1

Describe the nature of ethics

Ethics
The inner guiding moral principles, values, and beliefs that people use to
analyse or interpret a situation and then decide what is the right or
appropriate way to behave
Ethical dilemma
The quandary people find themselves in when they have to decide if
they should act in a way that might help another person or group even
though doing so might go against their own self-interest.

Learning Outcome 2

Differentiate between the claims of different stakeholder group that

are affected by managers and their company’s action

Stakeholder- Various groups of people that may benefit or be harmed by

how managers make their decisions.
-a person with an interest or concern in something, especially a
business.

Different groups of people may dispute which actions are ethical or

unethical depending on their personal self-interest, specific attitudes,
beliefs and values.

Neither laws nor ethics are fixed principles. Ethical beliefs change over
time and laws change to reflect the changing ethical beliefs of a society.

There are many kinds of laws that govern businesses.

Different types of stakeholders in the company:
Managers – responsible for using financial, capital and human resources
to increase company’s performances
Customers- in order to have sales
Community, society and nation-state
Suppliers and distributors

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 Employees
Stockholder

Learning Outcome 3
Describe four ways that can help companies and managers act in
ethical ways

Rules Ethical decision making

a) Utilitarian Rule
b) Justice Rule
c) Practical Rule
d) Moral Rights Rule

Utilitarian Rule
An ethical decision is a decision that produces the greatest good for the
greatest number of people.

Moral Rights Rule

An ethical decision is one that best maintains and protects the fundamental or
inalienable rights and privileges of the people affected by it.

“Do unto others as you would have them do unto you.”

 What are the shortcomings of this approach?

Justice Rule
An ethical decision distributes benefits and harms among people and groups in
a fair, equitable, or impartial way.

 This rule is commonly applied in which settings?

Practical Rule

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An ethical decision is one that a manager has no reluctance about
communicating to people outside the company because the typical person in
a society would think it is acceptable.
1.Does my decision fall within the accepted values or standards that
typically apply in business activity today?
2. Am I willing to see the decision communicated to all people and
groups affected by it—for example, by having it reported on TV or via
social media?
3. Would the people with whom I have a significant personal
relationship, such as family members, friends, or even managers in
other organisations, approve of the decision?

Learning Outcome 4:
Discuss why it is important for managers to behave ethically

Ethical behaviour

 Increases the effectiveness and efficiency of production and trade.

 Increases company performance.
 Increases the national standing of living, well-being and prosperity.

Unethical behaviour decreases the benefits of ethical behaviour.

Why is it important that managers behave ethically?

Trust - The willingness of one person or group to have faith or confidence in

the goodwill of another person, even though this puts them at risk.
Reputation -The esteem or high repute that individuals or organisations gain
when they behave ethically

Learning Outcome 5
Identify the four main sources of managerial ethics.

Where does the managers ethics come from?

 Societal ethics
 Individual ethics
 Organizational ethics
 Occupational ethics
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 Societal Ethics
Standards that govern how members of a society should deal with one
another in matters involving issues such as fairness, justice, poverty, and
the rights of the individual.

Occupational Ethics
Standards that govern how members of a profession, trade, or craft
should conduct themselves when performing work-related activities.

Individual Ethics
Personal standards and values that determine how people view their
responsibilities to others and how they should act in situations when
their own self-interests are at stake.

Organisational Ethics
The guiding practices and beliefs through which a particular company
and its managers view their responsibility toward their stakeholders.

Learning Outcome 5:
Distinguish among the four main approaches toward social responsibility
that a company can take.

What is the social responsibility of an organisation?

Four approaches to Social responsibility:
From Low social responsibility to high social responsibility:
a) Obstructionist approach
b) Defensive approach
c) Accommodative approach
d) Proactive approach

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Obstructionist approach
Companies and their managers choose not to behave in a socially responsible
way and instead behave unethically and illegally.
Defensive approach
Companies and their managers behave ethically to the degree that they stay
within the law and strictly abide by legal requirements.
Accommodative approach
Companies and their managers behave legally and ethically and try to balance
the interests of different stakeholders as the need arises.

Proactive approach
Companies and their managers actively embrace socially responsible
behaviour, going out of their way to learn about the needs of different
stakeholder groups and using organisational resources to promote the
interests of all stakeholders
What is a credo?
A statement of the beliefs or aims which guide someone's actions.
Ethical ombudsperson has authority to look into ethical problems organization
wide
Moral scruples – tell a person what is right or wrong

Unit 8 – Managing in a multicultural environment

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 Learning Outcome 1:

Discuss the increasing diversity of the workforce and

the organisational environment.

Diversity – differences among people

e.g.; Ages, Gender, Race, physical appearance, education, capabilities, socio
-economic background {combination of social class and income-related
factors}.

Reasons why diversity is a pressing matter in management

1. Ethical imperative (command) that diverse people must receive equal

opportunities and be treated fairly and justly. Unfair treatment is illegal.
2. Improve organisational effectiveness by managing diversity.
They encourage other members to treat diverse members fairly
Diversity is an important organisational resource that can help the
organisation gain a competitive advantage.
3. Still substantial evidence that diverse individual experience unfair
treatment in the workplace on a global level.

Glass ceiling – suggests the invisible barrier that prevent minorities from
climbing up the corporate leader.

Major equal employment opportunity laws affecting human resources

management.
Law
The equal pay acts.
>Require that men and women be paid equally if they are performing equal
jobs
Title VII of the civil Rights act
>Prohibits discrimination in employment decisions on the basis of race,
religion, sex, colour or national region
Age discrimination in employment act
>Prohibits discrimination against workers over the age of 40 and restricts
mandatory retirement

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 Wide range of employment decisions – Hiring + firing + pay promotion +
working conditions
Pregnancy discrimination act
>Prohibits discrimination against women in employment decisions on the
basis of pregnancy
Americans with disabilities act
>prohibits discrimination against disable individuals
Civil rights act
>compensatory damages to back in cases of intentional discrimination
Family and medical leave act
>12 weeks of unpaid leave for medical and family reasons

Discrimination – To show favour, prejudice or bias for or against a person

on any arbitrary grounds such as biases, race, gender, pregnancy etc.

• Two types of discrimination in SA

1. Fair discrimination
2. Unfair discrimination

By law discrimination is allowed on four grounds:

1. Affirmative action
2. Inherent job requirements
3. Compulsory discrimination
4. Based on productivity

1.Affirmative action = Designed to promote employment equity (fairness

in favour of designated groups – race + women + disabilities)
Examples:
Main aim – Representation in the workforce

2.Inherent (existing in something as an essential) job requirements –

relates to the specific set of requirements needed to perform a specific
job.

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 Example: A person with poor eyesight cannot be employed as an airline
pilot

3.Compulsory discrimination – In certain cases employers are not allowed

to employ people.

Example: Children under the age of 15 and pregnant women four week
before giving birth.

4.Based on productivity – An employer is allowed to discriminate against

employees on the basis of productivity.

Example -Increases based on merit (based on the fairness of criteria used.)

2 forms of unfair Discrimination:

1.Direct Discrimination
2.Indirect Discrimination

Direct Discrimination – Easy to identify and involves differential treatment

between employees and job applicants based on arbitrary grounds.

e.g. Paying female employees less

Indirect Discrimination – Not easy to identify and a subtler form of
discrimination and are seen as policies that are neutral but have negative
effect on individuals or groups.
e.g., sexual harassment, medical testing, phycological testing and HIV
testing.

Learning Outcome 2
Explain the central role that managers play in the effective management
of diversity.

Mintzbergs Managerial Roles and diversity:

Interpersonal
1. Figurehead – Conveys that the effective management of diversity
is valued goal and objective.

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 2. Leader -Serves as a role model and institutes policies and
procedures to ensure that diverse members are treated fairly.
3. Liaison-Enables diverse individuals to coordinate their efforts and
cooperate with one another.

Informational
1. Monitor – Evaluates that extent to which all employees are
treated fairly
2. Disseminator - Informs employees about diversity policies and
initiatives and the intolerance of discrimination. (change).
3. Spokesperson – Supports diversity initiatives in the wider
community and speaks to diverse groups to interest them in
career opportunities.

Decisional
1. Entrepreneur – Commits resources to develop new ways to
effectively manage diversity and eliminate biases and discrimination.
2. Disturbance handler – Takes quick action to correct inequalities and
curtail discriminatory behaviour.
3. Resource allocator – Allocates resources to support and encourages
effective management of diversity.
4. Negotiator – Works with the organisation (e.g., suppliers) and
groups (e.g. labour unions) to support and encourage the effective
management of diversity.

Learning Outcome 3
Explain why the effective management of diversity is both ethical and
business imperative (command- responsibility)

The ethical imperative to management diversity effectively

Two moral principles guide managers in their efforts to meet this
imperative (responsibility towards society):

1.Distributive justice
2.Procedural justice

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 Distributive justice = Dictates fair distribution of pay, promotions, job titles,
interesting job assignments, office space, and other organisational
resources.

Based on meaningful contributions that individuals have made to the

organisation (such as time, effort, education, skills, abilities and performance
levels). One might be rewarded extra for the extra hours they put in.
- Managers have an obligation to ensure that distributive justice exists in the
organisation.

Procedural justice – requires that managers use fair procedures to

determine how to distribute outcomes to organisational members.

1.Applies to procedures such as apprising subordinates’ performance,

deciding who should receive a raise or a promotion and deciding whom to
lay off when an organisation is forced to downsize.
2.Consider any environmental obstacles to high performance beyond the
subordinate’s control
e.g.; Lack of suppliers + machine breakdowns + dwindling customer
demand

Distributive and Procedural justice

-Ensure ethical conduct
-To avoid costly lawsuits

Learning Outcome 4
Discuss how perceptions and the use of schemes can result in unfair
treatment.

Perception and Unfair treatment

Perception – Process through which people select, organise and interpret
sensory input – what they see, hear, touch, smell, and taste – to give
meaning and order to the world around them.

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 All decisions and actions of managers are based on their subjective
perceptions and not because they take actions as a result of objective
determination of the issues involved and the surrounding situation.

When these perceptions are relatively accurate – close to the true nature
of what is actually being perceived – good decisions are likely to be made
and appropriate actions taken.

When managers perceptions are relatively inaccurate, managers are likely

to make bad decisions and take inappropriate actions that hurt
organisational effectiveness (goals will not be met).

Factors that influence managerial perception:

Differ from manager to manager because managers differ in personality,
values, attitudes and moods,

E.g.; Older middle manager who is high on openness to experience is likely

to perceive the recruitment of able young managers as a positive learning
opportunity.

A manager who has a high level of job satisfaction and organisational

commitment may perceive a job transfer to another department or
geographic location that has different employees (age, ethnicity etc.) as an
opportunity to learn and develop new skills. A dissatisfied, uncommitted
manager may perceive the same transfer as a demotion.

Schemas – Abstract knowledge structures stored in memory (past

experiences and knowledge) that allow people to organise(animal, dog,…)
and interpret information about a person, an event or a situation.
Bad decisions concerning diversity for reasons of age, ethnicity or sexual
orientation include:
e.g.;
I sense something…
I pay attention to … (physical stimulus and neural activities)
I recall info from episodic / semantic memory (animal, dog…)
I “activate’ the adequate schema (dog)
I respond (run, cuddle…)

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 People tend to pay attention to info that is consistent with their schemas
and they ignore inconsistent info.
Gender schemas
=persons preconceived notions about the nature of men and women and
their traits, attitudes, behaviours and preferences.

1.Not hiring qualified people

2.Failing to promotes top performing subordinates who subsequently may
take their skills to competing organisations and
3.Promoting poorly performing managers because they have the same
“diversity profile” as the manager or managers making the decision.

Perception as a determinant of unfair treatment

-Gender schema is a kind of STEREOTYPE.
Biases – are systematic tendencies to use info about others in ways that
result in inaccurate perceptions.

Overt Discrimination
- Knowingly and willing denying diverse individuals access to opportunities
and outcomes in an organisation.
- Clear violation of the principles of distributive and procedural justice

Learning Outcome 5
List the steps managers can take to manage diversity effectively

Managing Diversity

A number of managers can take a number of steps to change attitudes and

values and promote the effective management of diversity

Promoting the effective management of diversity

 Secure top management commitment
 Increase the accuracy of perceptions
 Increase diversity awareness
 Increase diversity skills
 Encourage flexibility

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  Pay close attention to how employees are evaluated
 Consider the numbers
 Empower employees to challenge discriminatory
behaviours, actions and remarks
 Rewards employees for effectively managing diversity
 Provide training, utilizing a multipronged, ongoing approach
 Encourage mentoring of diverse employees.

Secure top management

- Top managers need to develop the correct ethical values and performance or business-
oriented attitudes that allow them to make appropriate use of their human resources.
Strive to increase the accuracy of perceptions
-Managers should consciously attempt to open to other points of view and perspectives.
Increase diversity awareness
-Providing organisational members with accurate info about diversity
-Uncovering personal biases and stereotypes
-Assessing personal beliefs, attitudes and values and learning about other points of view
-Overturning inaccurate stereotypes and beliefs about different groups
-Developing an atmosphere in which people feel free to share their differing perspectives
and points of view.
-Improving understanding of others who are different from oneself.
Increase diversity skills
-Efforts to increase diversity skills focus on improving how managers and their subordinates
interact with each other and improving their ability to work with different kinds of people.
Encourage flexibility
- Managers and their subordinates must learn how to be open to different approaches
and ways of doing things.
Pay close attention to how organizational members are evaluated
-rely on an objective performance indicator because they are less subject to bias
Consider numbers
- Look at the number of minority groups in various positions at various levels in the
hierarchy
Mentoring – a process by which an experienced member of an organisation provides advice
and guidance to less experienced (protege)

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