PRINCIPLES OF BUSINESS

ADMINISTRATION
UNAV GRADO MARKETING 2022 2023 / 1st SEMESTER

Esteban Santirso
Guillaume Bonnet
 STRUCTURE OF THE COURSE
• PART 1: From the idea to the business model
Lecture 2/09 & 16/09 & 23/09 & 30/09(GB)
• PART 2: Financing the business
Lecture 5/09 & 19/09 & 26/09 & 3/10 (ES)
• CASE STUDY nº1
Lecture 7/10 & 10/10 (you!)
• PART 3: People, people & people !
Lecture 14/10 & 21/10 & 28/10 & (GB)
• PART 4: Organization models, Decision making process, management
Lecture 18/10 & 25/10 (ES)
• CASE STUDY nº2
Lecture 4/11 & 8/11 (you!)
• PART 5: The environement
Lecture 16/11 & 18/11 & 22/11 & 29/11 (ES)
• PART 5: The environement
Lecture 11/11 & 25/11 & 2/12(GB)
…what do YOU expect of your future company?
WHY DO PEOPLE MATTER SO MUCH ? … because people actually ARE the company !
HOW CAN WE ATTRACT / HIRE / MOTIVATE / RETAIN THE RIGHT PEOPLE?

• WHO DOES NOT BELONG IN OUR COMPANY ? HOW DO WE LET THEM GO?
• CONTRIBUTE TO COMPANY LONG TERM GOAL
 • INDIVIDUALITY
• ORGANISATION & CULTURE
IMPORTANT • ETHICS & SOCIAL
RESPONSABILITY
MATTERS TO
CONSIDER • COMMUNICATION
• MOTIVATION
• HR MANAGEMENT
• THE POWER OF TEAMWORK
PEOPLE ARE INDIVIDUAL
HUMAN BEINGS
People are the most important resource

+ Human individuals are diverse

+ Individuals have diverse expectations and varying with time
+ Individuals form groups inside the company
+ Informal (vs. formal) organization
+ International companies
+ Individual dialogue versus collective treatment
+ Social environment influence
_________________________________________
= HIGH COMPLEXITY

=> Every manager must be a people manager

INDIVIDUAL DIVERSITY
Age, gender, race, …
+ Educational background
+ Values
+ Social / geographical background

Inherited and impact of the environment

_______________________________________________

= Personality ( all the ways that an individual interacts with

others)
MYERS BRIGGS TYPE INDICATOR (MBTI) (1944)

• Extraversion/Introversion

• Sensing/Intuition

• Thinking/Feeling

• Judging/Perceiving
“OCEAN”BIG FIVE PERSONALITY TRAITS
(MILTON) ROKEACH PERSONAL VALUES SURVEY
The terminal values in RVS (end states of existence)are:

True Friendship Mature love Self-Respect

A Comfortable Life Wisdom An Exciting Life
A World of Beauty Pleasure Social Recognition
Inner Harmony Salvation Family Security
National Security Equality A Sense of Accomplishment
A World at Peace Freedom Happiness
 ROKEACH INSTRUMENTAL VALUES
(MODES OF BEHAVIOUR)

Cheerfulness Ambition Love

Self-Control Capability Courage
Honesty Responsibility Imagination
Independence Intellect Broad-Mindedness
Logic Obedience Helpfulness
Forgiveness Politeness Cleanliness
GENERATIONAL
VALUES
INTERNATIONAL DIFFERENCES ADD TO COMPLEXITY
INTERNATIONAL CULTURAL DIFFERENCES
HUMANS ARE HUMAN
“from my point of view…”
Our perception of other people is a result of
• Ourself / our personality
• the object of our observation
• the situation

to attribute to internal or external causes

• Selective perception
• Halo
• Contrast
• Stereotype
COMPANY
CULTURE:
UNITE THE
PEOPLE
 GERRY JOHNSON 1988
Gerry Johnson (1988) described a cultural web, identifying a number of elements that can be used to describe
or influence organizational culture:

• The paradigm: What the organization is about, what it does, its mission, its values.
• Control systems: The processes in place to monitor what is going on. Role cultures would have vast rule-
books. There would be more reliance on individualism in a power culture.
• Organizational structures: Reporting lines, hierarchies, and the way that work flows through the business.
• Power structures: Who makes the decisions, how widely spread is power, and on what is power based?
• Symbols: These include organizational logos and designs, but also extend to symbols of power such as
parking spaces and executive washrooms.
• Rituals and routines: Management meetings, board reports and so on may become more habitual than
necessary.
• Stories and myths: build up about people and events and convey a message about what is valued within the
organization.
These elements may overlap. Power structures may depend on control systems, which may exploit the very
rituals that generate stories which may not be true.
 EXPECT MORE THAN COFFE

From the beginning, Starbucks set out to be a different kind of company. One
that not only celebrated coffee but also connection. We’re a neighborhood
gathering place, a part of your daily routine. Get to know us and you’ll see:
we are so much more than what we brew. We call our employees partners
because we are all partners in shared success. We make sure everything we
do is through the lens of humanity—from our commitment to the highest-
quality coffee in the world, to the way we engage with our customers and
communities to do business responsibly.

OUR MISSION

To inspire and nurture the human spirit - one person, one cup and one
neighborhood at a time.
 OUR VALUES

With our partners, our coffee and our customers at our core, we live these
values:

• Creating a culture of warmth and belonging, where everyone is welcome.

• Delivering our very best in all we do, holding ourselves accountable for
results.
• Acting with courage, challenging the status quo and finding new ways to
grow our company and each other.
• Being present, connecting with transparency, dignity and respect.
• We are performance driven, through the lens of humanity.
BENEFIT OF A STRONG CORPORATE CULTURE
• Aligning the company towards achieving its vision, mission, and goals
• High employee motivation and loyalty
• Increased team cohesiveness among the company's various
departments and divisions
• Promoting consistency and encouraging coordination and control
within the company
• Shaping employee behavior at work, enabling the organization to be
more efficient
CULTURE VERSUS
STRATEGY
• However, in a perfect scenario, culture and
strategy complement and nurture each other.

• Strategy and culture should be created

simultaneously, making sure they are perfectly
aligned
SHARING THE VISION: ALIGNING PEOPLE

Our Purpose
We create vehicles by
listening and responding to
you. Why? Because it’s our
belief that our cars should
do more than help you go
places on the road, they
should also help you go
places in life.
 • Acceptable principles in an organization to
conduct business
• Ethical versus legal
ETHICAL • How do you reach targets and not only which
BUSINESS targets
CULTURE
• Role of example of top management
• Values of the company & code of ethics
• Offer training
• Reward ethical handling and punish non ethical
• Create consulting system
Facebook files ( Frances Haugen)
Facebook knew Instagram was 'toxic' for teens
• Another significant revelation from the Facebook Files was the discovery that the
company had conducted detailed research into how Instagram was affecting teenagers
but did not share its findings when they suggested that the platform was a "toxic" place
for many youngsters.

• According to slides reported by the Wall Street Journal, 32% of teenage girls surveyed
said that when they felt bad about their bodies, Instagram made them feel worse.
Has Facebook been promoting positive stories about itself?

• This week, the New York Times suggested that Facebook had started an initiative to
pump pro-Facebook content into people's news feeds in order to boost its image.
• The newspaper said Project Amplify was designed to "show people positive stories about
the social network".
German officials raid Deutsche Bank's DWS over 'greenwashing' claims
Reuters BERLIN, May 31 (Reuters) –

German prosecutors raided asset manager DWS (DWSG.DE) and the

headquarters of its majority owner Deutsche Bank (DBKGn.DE) on Tuesday over
allegations of misleading investors about "green" investments, the prosecutors
said. Regulators and policymakers have pledged to clamp down on companies
making exaggerated claims about the sustainability credentials of their products
as they try to cash in on booming demand for ESG investing.

Enforcement action has been minimal so far, although watchdogs are beginning
to tighten the screws. Last week, the SEC said BNY Mellon Investment Adviser
had paid $1.5 million to resolve charges it misstated ESG investment policies for
some mutual funds it managed.
Cum-Ex Raid On The Auditor KPMG GERMANY (Sep 21, 2022)

Officials have searched the offices of the auditing and consulting firm KMPG in Frankfurt
in connection with the investigation into the Cum-Ex tax scandal. It’s not the first
crackdown on the affair.

In connection with the cum-ex scandal about tax deals at the expense of the state
treasury, investigators searched the offices of the auditor KPMG in Frankfurt. The public
prosecutor’s office in Cologne is executing search warrants against a consulting company
in Frankfurt, the authority said. In addition, the private homes of five lawyers and tax
consultants who used to work there would also be searched.

“The measures are related to cum-ex transactions that are the subject of the proceedings
and related tax evasion models,” the authority said. It’s all about finding relevant emails or
other written correspondence. About 60 prosecutors, tax investigators and police officers
were involved in the search.
 • Legal protection for the company:
BENEFITS OF stability & growth
DOING • Increase company pride and loyalty
BUSINESS • Increase consumer / public / investors /
stake-holders goodwill
ETHICALY • Improve loss prevention
• Improve quality & productivity
ETHICAL BUSINESS AT
• Total operates in a large number of countries with
diverse, complex economic and sociocultural
environments. This situation can expose us to safety,
security, health, environmental and ethical risks. For
this reason, states and civil society have particularly
high expectations with regard to our industry. Each
and every day, we therefore rely on our values to
guide our actions and relationships with our
stakeholders, taking a collective approach to achieve
our ambition of becoming the responsible energy
major.
SOME ETHICALLY
REPREHENSIBLE
BEHAVIOURS
• Abusive & intimidating behaviour
• Conflict of interests
• Harmful products

• The role of the whistle blower

(Russel Crow “the insider”)
STATEMENT BEFORE CONGRESS (1994)
“I BELIEVE THAT NICOTINE IS NOT ADDICTIVE”
Witnesses:
William Campbell, President & CEO, Philip Morris, USA
James W. Johnston, Chairman and CEO, R.J. Reynolds Tobacco Company
Joseph Taddeo, President, U.S. Tobacco Company
Andrew H. Tisch, Chairman and CEO, Lorillard Tobacco Company
Edward A. Horrigan, Chairman and CEO, Liggett Group Inc.
Thomas E. Sandefur, Chairman and CEO, Brown and Williamson Tobacco Corp.
Donald S. Johnston, President and CEO, American Tobacco Company
COMPANY
FRAUD AND
SCANDALS
EVERGRANDE
Oct 13, 2022 03:45 AMECONOMY
CIFI Holdings Faces Rising Debt Payment Uncertainty
 EVERGRANDE UPDATE (OCT 20TH)
Bloomberg Oct 20 th “Grace Period Nears End”

China Evergrande Group investors remain in the dark about the property developer’s
progress in negotiating stake sales to meet its looming debt obligations, as a grace period
on some of its dollar notes enters its final days.
Evergrande has yet to comment on a Reuters report that a yuan bond coupon due Tuesday
had been paid. Chinese companies with bonds listed on mainland stock exchanges are
typically only expected to post announcements to the bourses if obligations aren’t met.
Evergrande has missed initial interest payment deadlines on several dollar bonds since last
month, with some notes offering a 30-day grace period before default.
Bloomberg Oct 21st
Evergrande shares earlier plunged as much as 14% after the company said it ended
discussions to sell a stake in its property-management arm. REDD reported that the cash-
strapped firm secured an extension of more than three months on a $260 million bond
issued by Jumbo Fortune and guaranteed by the developer.
9 December 2021
Evergrande: China property giant misses debt deadline

March 21, 2022

Trading in China Evergrande shares, onshore bonds halted pending announcement

June 22, 2022

China Evergrande Handed Delisting Deadline by HK Exchange
Hong Kong Stock Exchange has warned China Evergrande it must remedy the issues that led to its trading suspension by September
2023 or face possible delisting, the company advised this week

August 1, 2022
Evergrande has failed to deliver the debt restructuring plan it promised

Sept 26, 2022

Evergrande crisis: receivers put Hong Kong trophy headquarters building on market as lenders run out of patience

Oct 13, 2022

China property price crash: Developer defaults leave nationwide house costs falling amid a widening economic slowdown
ORGANISATIONAL FORMS: FUNCTIONAL
DIVISIONAL ORGANIZATION
MATRICIAL ORGANIZATION MODEL
LINE VERSUS STAFF FUNCTIONS
THE POWER
OF TEAM
WORK
 WHY IS
TEAMWORK • Teamwork motivates unity in the workplace
• Teamwork offers differing perspectives and feedback
SO • Teamwork provides improved efficiency and productivity
IMPORTANT? • Teamwork provides great learning opportunities
• Teamwork promotes workplace synergy
 • Working with other people does not mean that you are working as a team.

• “A team is a group of two or more people who interdependently seek to meet a

common purpose, in order to meet their own and their organization’s goals.

WHAT IS AN • To build a strong team, trust is essential = “positive expectations regarding the
intentions, attitudes and behaviors of others towards oneself in situations that may
imply some uncertainty or ambiguity.” Trust might be based on Estimation,
EFFECTIVE Information, Identification

TEAM ? • Facilitator : Teamwork also requires the ability of facilitation.

• “Because they have special skills of facilitation, they manage the process. They
understand the process. Any team who manages and pays close attention to work
will significantly improve the team’s performance” (Wujec, 2010).

• “Teamwork is (…) the fuel that allows common people to attain uncommon results.”
(Andrew Carnegie)
 ATTRACTING TALENT & HIRING
How can a company generate potential candidates?
• Be attractive for potential candidates (employer branding)
Workplace image / ranking / websites /
• Attractive company culture
• Communicate to all potential candidates of the on going search
• Internal promotion versus external search

Selection must
• make use of the correct selection tools
• respect legal standards
• never create false expectations
• Poorly defined position / responsibilities is a cause for failure (role clarity)
• Hiring committee in place?
GOOGLE HIRING
COMITTEE
• All suitable candidates must be passed along to
a hiring committee for review.
• The hiring committees at Google are usually
made up of leaders in the specific organization
doing the hiring. Members serve on the
committee for three to six months before being
rotated out of the committee. However, the
individual hiring manager is not part of the
committee.
• Minus = slow down the hiring process
• Positive = objective and long term oriented
 WHAT IS THE
GLOBAL COST
OF • Direct costs of actual search
• Time invested by other employees to accomodate the new
HIRING A NEW comer in his new role ( “onboarding”)
• Non (fully) productive time in the first month(s)
EMPLOYEE? • Build customer / supplier relation
• Cost of hiring the wrong person !
Discussion nº1 : WE MUST HIRE THIS GUY!
• Company B has waited as long as posible to hire the additional engineer they needed
and now they are under pressure because they must deliver that Project before the end
of next year. So they must hire the new engineer. By the way it is so difficult to find the
right person to fill that position…
• Alice who is the Technical Manager is in charge of the hiring process because she will be
the boss of that new recruit and she knows how bad she needs a new person. After
receiving a number of candidates and she finally retained one who can do the job.
• When Alice and her boss Eduardo meet the candidate for the last interview Eduardo has
doubt that this candidate is going fit in the company culture but he must admit that he
would be able to perform his job and he has the qualifications.
When the candidate leaves the room after finishing the interview, Alice and Eduardo look
at each other and Eduardo start speaking...
TURNOVER
 ATTRACT, SELECT … ONBOARD!
According to consulting firm BCG, onboarding ranks #2 (after recruiting)
with the second highest business impact of all of the 22 HR practices

How ? pre-boarding, welcoming, coaching, …

The traditional goal of simply having people “signed up” and enrolled
needs to shift towards one of WOWing new hires and providing them
with the information and the support that they need to be productive
as soon as possible (Dr. John Sullivan)
 1ST DAY AT
“Onboarding your employees isn't just about skills training. Learn how Zappos immerses new hires into
our culture and creates connections during our 4-week New Hire Training program”

Note: Zappo´s new employees are offered $2,000 to quit after the first week of training if they decide the
job isn’t for them.
 MOTIVATION
MASLOW HIERACHY OF NEEDS PYRAMID (1943)
MOTIVATION: HERTZBERG 2 FACTORS THEORY
(1959)

1. Hygiene factors are needed to make sure

that an employee is not dissatisfied.
2. Motivation factors are needed for
ensuring employee's satisfaction and
employee’s motivation for higher
performance.

Mere presence of hygiene factors does not

guarantee motivation, and presence of
motivation factors in the absence of hygiene
factors also does not work.
MAC CLELLAND THEORY OF NEEDS (1960´S)
McClelland affirms that we all have three motivating drivers, and it does not depend on our gender
or age. One of these drives will be dominant in our behaviour. The dominant drive depends on our
life experiences.

The three motivators are:

• Achievement: a need to accomplish and demonstrate own competence People with a high need
for achievement prefer tasks that provide for personal responsibility and results based on their
own efforts. They also prefer quick acknowledgement of their progress.
• Affiliation: a need for love, belonging and social acceptance People with a high need for affiliation
are motivated by being liked and accepted by others. They tend to participate in social gatherings
and may be uncomfortable with conflict.
• Power: a need for control own work or the work of others People with a high need for power
desire situations in which they exercise power and influence over others. They aspire for
positions with status and authority and tend to be more concerned about their level of influence
than about effective work performance.
 VROOM THEORY OF EXPECTANCY
Victor Vroom stated that people will be highly productive and
motivated if two conditions are met:
1) people believe it is likely that their efforts will lead to successful
results and
2) those people also believe they will be rewarded for their success.

People will be motivated to exert a high level of effort when they

believe there are relationships between the efforts they put forth, the
performance they achieve, and the outcomes/ rewards they receive.
 MAC GREGOR THEORY X AND Y (1960)
• Douglas McGregor formulated two distinct views of human being based on
participation of workers. The first is basically negative, labelled as Theory X,
and the other is basically positive, labelled as Theory Y. Both kinds of
people exist. Based on their nature they need to be managed accordingly.

• Theory X: The traditional view of the work force holds that workers are
inherently lazy, self-centred, and lacking ambition. Therefore, an
appropriate management style is strong, top-down control.

• Theory Y: This view postulates that workers are inherently motivated and
eager to accept responsibility. An appropriate management style is to
focus on creating a productive work environment coupled with positive
rewards and reinforcement.
 THEORY Z
(Abraham H. Maslow 1969 in Journal of Transpersonal Psychology / William Ouchi 1981)

• INCREASING
LOYALTY : THE
JAPANESE MODEL
• JOB FOR LIFE
• WELL BEING OF
EMPLOYEES
MOTIVATIONAL JOB DESIGN
JOB REDESIGN
(Hackmann & Suttle 1977)
 EMPLOYEES PARTICIPATION
• Motivational factor
• Direct participation in decision making process
• Representative participation
TRAINING AND PERSONNAL DEVELOPMENT
Direct benefits
• Performance

Indirect Benefits
• Motivation
• Retention
 ASSESSING PERFORMANCE
“Appreciation or recognition for a job well done” is a top motivational factor

Who is assessed by whom, when and according to which criteria ?

Assesment must be:

• Practical
• Valid
• Reliable
• Differentiated

… difficult to avoid subjective biais !

 MANAGEMENT BY OBJECTIVES
(Peter Drucker 1954)

Targets must be SMART !

• Specific
• Measurable
• Assignable
• Realistic
• Time-bound

Limitation of MBO: context´s impact on results

 FINANCIAL COMPENSATION
How much ? The compensation structure
• Internal balance
• External competitiveness

How ?
• Direct vs. indirect
• Fixed vs. variable

Which type ?
• Seniority
• Performance related salary increase
• Bonuses / Profit sharing / Shares & options
Discussion nº 2: BONUSES
• This January the 23thrd and Elisa S. (the CEO of Company A) has just
received the final results of the previous year. Global results are under
the Budget but still a little bit higher than the previous year and really
good when you consider the overall industry.
• Elisa will have to decide this week on bonuses for her 4 top executives
for Sales who have all contributed a lot with their hard work but the
results / profits of each of the 4 areas have been different (they have
different geographical markets, different competition, different
oportunities etc…)
What options does she have & what would you suggest ?
 PROMOTING PEOPLE
• Career perspectives is a great motivational factor
• Strong incentive
• Peter principle “rise to the level of incompetence”
Discussion nº 3: PROMOTING FROM INSIDE
• John is a great service technician. He has been doing a great work at customers
since he started with us 4 years ago. He is reliable and honest but seems a Little
shy in appearance. There are another 2 junior service technicians in the team.
• Mark is the Area Sales Manager of the area to which John reports and has just
been promoted to Global Sales Manager. During all those years Mark relied on
John for the technical service in the area and was always satisfied. Now he needs
to appoint a replacement for his former position of Area Sales Manager.
• When he started with the company Mark used to be a service technician (doing
exacty John´s job) and he was succesfull as Area Sales Manager so he feels
nobody shall be more qualified that John who knows the company, the products,
the machines and the customers ? Besides that he owes him.
What shall Mark do ? What can happen ? What are John´s posible reactions ?
Discussion nº 4: I WILL GIVE HIM A NEW CHANCE
• Mark has now been for 3 years Global Sales Manager and he enjoys the position.
But he is worried that John whom he promoted to succeed him from technical
service into his former position of Area Sales Manager has not succeeded and
taken up his new role as fully as expected.
• John has not been able to build a strong relationship as a salesman at various
level of the customers and maybe because of his lack of self confidence he seems
unable to make convicing presentations although Mark has tried repeatedly to
help him with that. Truth is that Mark had such a great relation with all those
customers that it might be difficult for John to do it as well
• Today again an incident involving a customer contacting Mark directly (“because
it is easier like that“ ) reminds Mark that he must deal with that issue because it
starts to be a problem.
Just before dinner Mark decides: “Tomorrow I will talk to John and tell him that
he must change and be more open and self conscious “
 COLLECTIVE BARGAINING
Employees and management representatives
Conditions of employment are periodically negotiated
Highly technical HR / legal knowledge
National culture differences (Germany)
Dispute resolution mechanism
COMMUNICATION
INTERNAL COMMUNICATION
COMMUNICATION
TYPES

• Verbal
• Written
• Non verbal

• Formal
• Informal

• Individual
• Group
 NON EFFECTIVE COMMUNICATION
• Filters
• Selective perception
• Too much information
• Emotion
• Language
• Ansiety
CHANGE MANAGEMENT
CHANGE IMPACT ON EMPLOYEE
EMOTIONS AND MOOD
 EMOTIONAL INTELLIGENCE (1995 Goleman)
“Anybody can become angry – that is easy, but to be angry with the
right person and to the right degree and at the right time and for the
right purpose, and in the right way – that is not within everybody’s
power and is not easy.” Aristotle.
 CONCLUSION
1. It is the people, stupid!
2. Manager are people manager
3. Conduct business ethically
4. Align
• Mission
• Values
• Culture
• Strategy
• HR