technical shits The sits neces: Managerial Skills sar to accomplish or understand So ne comnberg core In addition to fuliling numerous roles, managers aso need a number of sperific in an organization skills if they are to succeed. The most fundamental management skills are techni- Managements an important par of ary organization, regards of size or mision. Like Davis combines his business acumen with techrical skis ashe reaches out to a wide aray of ferent kinds of organizations and offer his services asa web site designe. Hee for instance, he is demonstrating the new website he designed forthe bum Coment in London. Davis has ‘become quite successful by focusing on ders kinds of eligous, ic, and soil ergantzations cal, interpersonal, conceptual, diagnos- tic, communication, decision-making, and time-management skill.!° Technical Skills Technical skills are the skills necessary to accomplish or understand the specific kind of work being done in an organization. Techni- cal skills are especially important for first-line managers. These managers spend much of their time training sub- ordinates and answering questions about work-related problems. They ‘must know how to perform the tasks assigned to those they supervise if they are to be effective managers. Horst Schulze, CEO of Ritz-Carlton, got his start washing dishes and waiting tables at hotels in Germany. Over the next several years he also worked as a bell- hop, a front desk clerk, and a concierge. ‘These experiences gave him keen insight into the inner workings of @ quality hotel operation, insights he has used to take Ritz-Carlton to the top of its industry”personal Skills~ Managers spend considerable time interacting with people inside and outside the organization. For obvious reasons, then, the manager ‘needs Interpersonal skills—the ability to communicate with, understand, and vate both individuals and groups. As a manager climbs the organizational Jade, she must be able to get along with subordinates, peers, and those at higher Is of the organization. Because of the multitude of roles managers must fulfill, ‘manager must also be able to work with suppliers, customers, investors, and 5 outside of the organization. Although some managers have succeeded with ‘interpersonal skills, a manager who has good interpersonal skis is likely to be successful. When A. G. Lafley was recently appointed CEO of Procter & ble, observers were quick to praise him for his strong interpersonal skills. As colleague put it, ‘A. G. has a reputation for both people skills and strat=gic ra nceptual Skills Conceptual skills depend on the manager’ ability thinkin abstract. Managers need the mental capacity to understand the overall work- ‘Vings of the organization and its environment, to grasp how all the parts of the “Jorganization fit together, and to view the organization in a holistic manner. This “allows them to think strategically, to see the “big picture,” and to make broad-based | decisions that serve the overall organization. “Diagnostic Skitls Successful managers also possess diagnostic skills, or skills that enable a manager to visualize the most appropriate response to a situation. A physician diagnoses a patient’ illness by analyzing symptoms and determin- ing their probable cause. Similarly, a manager can diagnose and analyze a prob- Jem in the organization by studying its symptoms and then developing a solution. When the original owners of Starbucks failed to make a success of the business, Howard Schultz took over and reoriented the business away from mail order and moved it into retail coffee outlets. His diagnostic skills enabled him to understand both why-the current business model was not working and how to construct a better one. Communication Skills Communication skills refer to the managers abilities both to effectively convey ideas and information to others and to effectively receive {ideas and information from others. These skills enable a manager to transmit ideas to subordinates 50 that they know what is expected, to coordinate work with peers and colleagues so that they work well together properiy, and to keep higher-level ‘managers informed about what is going on. In addition, they help the manager listen to what others say and to understand the real meaning behind letters, reports, and other written communication, Decision-Making Skills Effective managers also have good decision-making skill. Decision-making skills refer to 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. No manager makes the right decision all the time. However, effective managers make good decisions mast CHAPTER 1 | Managingand the Managers job 21. Interpersonal sills The ably to ‘communicate with, understand, and ‘etivate both incivicuals and groups conceptual sis The managers blty to think in the abstract agnostic sklle The manager's bli o visualize the most appro priate response to a situetion ‘communication sills The man- ager’ abies both to effectively convey ideas and information to others and to effectively receive eas and information from others ‘decision making shits The man- ‘ager’ ability to corecty recognize ‘and define problems and opportunt- ties and to then select an appropr ate course of ation to save problems and cacitalze on opportunities22 paREL | Am Introduction 11 Management Of the time. And. when they do make a bad decision, they usually recognize their inistake quickly and then make good decisions to recover with as litle eost on lamage to their organization as possible Time-Management Skills Finally, eflecive managers usually have good time- tiovemanagement skis The tatagement skills, Time-management skills refer to the manager’ ability to prio. Cowonettoentiatd ascent work, to work efficient. and to delogate appropriately. As already noted, SAREE Lin iaeee | nanasers fice mary Gitrent rispaise te challenges. I is too easy for a manager Te fed down doing work that can easily be postponed or delegated to others.!? When this happens, unfortunately, more pressing and higher-priority work may get neglected Jeff Bezos, CEO of Amazon.com, schedules al his meetingson three days a Week; but insists on keeping the other two days clear so that he can pursue his own ‘eas and maintain the flexibility to interact with his employees informally List and define the basic ‘managerial skits that Contribute to success. ‘How might the various ‘managerial skils relate to itferent managerial roles?108 pART2 | TheFnvironmental Contet of Management there are disparate views on how a firm can legitimately pursue and should then, ‘use those profits. Some companies aggressively seek to maximize their profit, ‘grow at any cost, and focus on nothing but what is best for the company. Others, like some of those mentioned above, take a much different approach to business and actively work for the betterment of society, even when it means less profit for the owners. Most businesses, however, adopt a position somewhere between these extremes. Decisions about which of these approaches to take are, in turn, affected ‘by managerial ethies and social responsibility This chapter explores the basic issues of ethics and social responsibilty in™= detail. We first look at individual ethics and their organizational context and then, note several emerging ethical issues in organizations today. Next, we expand our discussion to the more general subject of social responsibility. After we explore the relationships between businesses and the government regarding socially responsi- ble behavior, we examine the activities organizations sometimes undertake to be more socially responsible. Bs ‘everywhere need to earn profits in order to remain in existence. But Individual Ethics in Organizations lthles An Individuals persona! beliefs about whether 8 behavior, ‘action, or decislon is ight or wrong. ‘ethical behavior Behavior that con, {forms to generally accepted social ‘unethical behavlor Behavior that {6088 not conform to generally ‘accepted social noms. We define ethics as an individuals personal beliefs about whether a behavior, _ action, or decision is right or wrong. Note that we define ethics in the context of the individual—people have ethics; organizations do not. Likewise, what consti- ‘tutes ethical behavior varies from one person to another. For example, one person who finds a qwenty-dollar bill on the floor of an empty room believes that itis okay to keep it, whereas another feels compelled to turn it in to the Iost-and-found defartment. Further, although ethical behavior is in the eye of the beholder, it usually refers to behavior that conforms to generally accepted, social norms. Unethical behavior, then, is behavior that does not conform to generally accepted social norms. ‘A society generally adopts formal laws that reflect the prevailing ethical stan- dards—the social norms—of its citizens. For example, because most people con- sider theft to be unethical, laws have been passed to make such beliaviors illegal and to prescribe ways of punishing those who do steal: But, although laws attempt to be clear and unambiguous, their application and interpretation still lead to eth ical ambiguities. For example, virtually everyone would agree that forcing employ- fees to work excessive hours, especially for no extra compensation, is unethical ‘Accordingly, laws have been established to define work and pay standards. But applying the law to organizational settings can still result in ambiguous situations, which can be interpreted in different ways. An individual's ethics are determined by a combination of factors. People start to form ethical standards as children, in response to their perceptions of their par- cents’ and other adults’ behaviors and in response to the behaviors they are allowed to choose. As children grow and enter school, they are also influenced by peers with whom they interact every day. Dozens of important individual events shapeCHAPTERS | The fthicaland Soctal Environment 108 people’ lives and conteibute to their ethical Te Catine Str is constnty ke aoe of the bs compare war iefs and behavior as they grow into adult- ithe United saeco eee i is ; tribute to *BMRER teas the fms employes. er ean the company alsa enpless Oe ste ites ee ieee njrcnmantarcenes cana ese a 2 Sing forts employes and was tine that sconpenseton ar tenets pple who place financial gain and personal paages we the tet tends. And ol erp tom no parse en ement at the top of ther list of prori- down ae wested as ews, , for example, will opt personal codes of that promote the pursuit of wealth, Thus may be ruthless in efforts to gain these regardless of the costs to others. In ast, people who clearly establish their Managerial ethics are the standards of behav- r that guide individual managers in their k.? Although ethics can affect managerial in any number of ways, three areas of concern for managers are shown in 41 ‘an Organization Treats Its Employees One important atea ‘ofmanagerial managerial ethies Standards of thics is the treatment of employees by the organization. This area includes areas ehovor that eid cual man- as hiring and fring, wages and working conditions, and employee privacy and 5 la thei work ct. For example, both ethical and legal guidelines suggest that hiring and bring tisions should be based solely on an individual’ ability to perform the job. A nager who discriminates against Aftican-Americans in hiring is exhibiting both and illegal behavior. But consider the case of a manager who does not nate in general, ut occasionally hires a close friend or relative when other ts might be just as qualified. Although these hiring decisions may not be they may be objectionable on ethical grounds. and working conditions, although tightly regulated, are also areas for tal controversy. For example, a manager paying an employee less than he serves, simply because the manager knows the employee cannot afford to quit or Bak losing his job by complaining, might be considered unethical. Finally, most Dbservers would also agree that an organization is obligated to protect the privacy Pf its employees. A manager's spreading a rumor that an employee has AIDS or is an affair with a coworker is generally seen as an unethical breach of privacy, the manner in which an organization responds to and addresses issues Sciated with semua harassment involves employee privacy and related rights, Employees Treat the Organization Numerous ethical issues stem from ‘employees treat the organization, especially in regard to conflicts of inter- , secrecy and confidentiality, and honesty. A conflict of interest occurs when @expense accounts, In recent years, new issues regarding such behaviors as personal Internet workhave also become more pervasive. Another disturbing trend is that more ers are calling in sick simply to get extra time off In one recent survey, for i ‘between 2001 and 2002 the number of workers who reported taking more time off personal needs increased by 21 percent. And, in that same study, 20 percent o surveyed indicated that they try to take more vacation days than they are entitledee CHAPTERS | The Ethical and Social Env Although most employeesare inherently honest, organizations must nevertheless be vigilant to avoid problems from such behaviors. How Employees and the Organization Treat Other Economic Agents ‘Managerial ethics also come into play in the relationship between the firm and its employees with other economic agents. As listed previously in Figure 4.1, the pri- mary agents of interest include 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, bargaining and negotiation, and other business relationships. For example, businesses in the pharmaceuticals industry have been under grow- ing fire because of the rapid escalation of the prices they charge for many of their ‘drugs. These firms counter that they need to invest more heavily in research and development programs to develop new drugs and that higher prices are needed to cover these costs. The key in situations like this, then, is to find the right balance between reasonable pricing and price gouging. And, as in so many other questions involving ethics, there are significant differences of opinion.S Another area of con- cem in recent years involves financial reporting by various e-commerce firms. Because of the complexities inherent in valuing the assets and revenues of these Jirms, some of them have been very aggressive in presenting their financial position ina highly positive light. And, in at least a few cases, some firms have substantially overstated their earnings projections to entice more investment. Moreover, some of today’s accounting scandals in traditional firins have stemmed from similarly ques- tionable practices.® ‘Additional complexities faced by many firms today are the variations in ethical business practices in different countries. In some countries, bribes and side pay- ments are a normal and customary part of doing business. However, U.S. laws forbid these practices, even if a firm’ rivals from other countries are paying them. For example, a U.S. power-generating company once lost a $320 million contract in the Middle East because government officials demanded a $3 bribe. A Japanese firm paid the bribe and won the contract. Enron once had a big project in India cancelled because nesly elected officials demanded bribes. Although these kinds of cases are illegal under U.S. law, other situations are more ambiguous. In China, for example, local journalists expect their cab fare to be paid if they are to cover a business- sponsored news conference. In Indonesia, the normal tithe for a foreigner to get driver's license is over a year, but it can be “expedited” for an extra $100. And, in Romania, building inspectors routinely expect a “tip” fora favorable review.” ay120 panr2 | The Environmental Context of Management | Social Responsibility and Organizations nizations themselves do not have ethics, but do relate to their environment in ways that often involve ethical dilemmas and decisions. These situations are genera referred to within the context of the organization’ social responsibility. Specifically, ‘octal nsponsibilty The set of ob social responsibility is the set of obligations an organization has to protect ‘tions an organization has to pro- enhance the societal context in which it functions. 1. -d enhance the societal _ context in which functions Areas of Social Responsibility organtzational stakeholder Person Organizations may exercise social responsibility toward their stakeholders, toward cor oxparization who is decty the natural environment, and toward general social welfare. Some organizations attected bythe pracioes ofan acknowledge their responsibilities in all three areas and strive diligently to mee cremation and nas a sake in" each of them, whereas others emphasize only one or two areas of social responsi- oe bility. And a few acknowledge no social responsibilty at all. Figure 4.3 Organizational Stakeholders In Chapter_ ‘Organizational Stakeholders ‘Ai ortanizatons havea variety of stakeholders who ate cect ateced by the 5 ve desert stank orebrrmnri ot com ‘organization and who have a stake in ts performance. These ae people and organizations to whom an organization should be responsible. external environment that directly affect the ‘way to describe these same elements is from the perspective of organizational stakehol zation and have a stake in its performance. “Major stakeholders are depicted in Figure 43. tomers, employees, and investors. They select other stakeholders that are particu: i larly relevant or important to the organi J FmbbeyeSs tion and attempt to address their needs and LE expectations as well. Organizations that are responsible 10 their customers strive to treat them fairly ‘and honestly. They also seek to charge fait prices, to honor warranties, co meet delivery commitments, and to stand behind the quality of the products they sell. Companies that have established excellent reputations in this area include LLBean, Lands’ End, Dell Computer, and Johnson & Johnson.cuarrens | Thezthical and Social Environment 424 Organizations that are socially responsible in their deal- Respect rte nul enone is fy pat of sol espons+ ings with employees teat their workers an make them a iy os Shao rate le Ravn partof the team, and respect their dignity and basic human Sct. Ne onan helps tac ames nna how oe needs Organizations such as3M Company Hoeseht AG, SAS Stn um eran hema Institue, and Southwest Airtnes have all established strong reputations in this area. Tn addition, they go to great lengths to find, hie, rain, and promote qualified minorities. ‘To maintain a: socially responsible. stance toward investors, managers should follow proper accounting proce- dures, provide appropriate information to shareholders about the financial performance of the firm, and manage the organization to protect shareholder rights and invest- ments. Moreover, they should be accurate and candid in their assessment of future growth and profitability, and avoid even the appearance of improprieties involving such sensitive areas as insider trading, stock price manipulation, and the withholding of financial data The Natural Environment Asecond critical area of social responsibility relates to the natural environment. Not long ago, many organizations indiscriminately dumped sewage, ‘waste products from production, and trash into streams and rivers, into the air, and on vacant land. When Shell Oil first ‘explored the Amazon River Basin for potential drilling sites in the late 1880s, its crews ripped down trees and left a trail of ‘garbage in their wake. Now, however, many laws regulate the disposal of waste materials. In many instances, companies themselves have become more socially responsible in their release of pollutants and general treatment of the environ- ment. For example, when Shell launched its most recent exploratory expedition into another area of the Amazon Basin, the group included a biologist to oversee environmen- tal protection and an anthropologist to help the team inter- act more effectively with native tribes.!® Still, much remains to be done. Companies need to develop economically fea- sible ways to avoid contributing to acid rain, global warming, and depletion of the ozone layer, and to develop alternative methods of handling sewage, hazardous wastes, and ordinary garbage.” Procter & Gamble, for example, is an industry leader in using recycled materials for containers. Hyatt Corporation established a ew company to help recycle waste products from its hotels. Monsanto is launch- ing an entire new product line aimed at improving the environment with geneti- cally engineered crops.'” Ford has also announced its intention to create a new brand to develop and market low-pollution and electrically powered vehicles!" The Internet is also seen as having the potential to play an important role in resource conservation, as many e-commerce businesses and transactions are re ‘energy costs and pollution.” re122 panr2 | The Bwvironmental Context of Management Maintaining te deteate balance ‘between econamie development and ‘emironmenta rotation seems tobe never-ending batt. These workers ‘ae fitting to clean up a beach threatened by anol spl before too much damage Is done. An ol barge leaked about 14,000 gains of ail Into Buzards Bay near Cape Cod before the leak could be plugged. And 25 alnays seems tobe the cae, iia ‘on as to who wil pay the cass ofthe clean-up wil most Bly tke years to sete. Companies also need to develop safety policies that cut down on accidents with potentially disastrous environ- ‘mental results. When one of Ashland Oil's storage tanks ruptured several years ago, spilling more than 500,000 gal- Jons of diesel fuel into Pennsylvania's Monongahela River, the company moved quickly to clean up the spill but was stil indicted for violating U.S. environmental laws." After the Exxon oil tanker Valdez spilled millions of gallons of oil off the coast of Alaska, the firm adopted new and more stringent procedures to keep another disaster from hap- ening. General Social Welfare Some people believe that, in addition to eating constituents and the environment responsibly, business organizations also should’promote the general welfare of society. Examples include making contributions to charities, philanthropic organizations, and not-for-profit foundations and associations; supporting museums, symphonies, and public radio and television: and taking a role in improving public health and education. ‘Some people also believe that organizations should act even more broadly to correct the political inequities that exist in the world. For example, these observers would argue that ‘businesses should not conduct operations in countries with record of human rights violations. Thus they stand in opposition to companies’ doing business in China and Vietnam. Arguments For and Against Social Responsibility On the surface, there seems to be little disagreement about the need for organiza- tions to be socially responsible. In truth, though, those who oppose broad interpre- tations of social responsibility use several convincing arguments? Some of the ‘more salient arguments on both sides of this contemporary debate are summarized in Figure 4.4 and further explained in the following sections. Arguments For Social Responsibility People who argue in favor of social responsibility claim that, because organizations create many of the problems that need to be addressed, such as air and water pollution and resource depletion, they should play a major role in solving them. They also argue that, because corporations are legally defined entities with most of the same privileges as private citizens, busi- nesses should not ry to avoid their obligations as citizens. Advocates of social respon- sibility point out that, whereas governmental organizations have stretched their budgets to the limi, many large businesses often have surplus revenues that could be used to help solve social problems. For example, IBM routinely donates surplus com- puters to schools, and many restaurants give leftover food to homeless shelters.eee CHAPTERS | The Ethical and Social Environment 123 ‘Arguments For Social Responsibility ‘Arguments Against Social Responsibility guments For and Against Social Responsibility le many people want everyone to see social responsiblity as desable aim, thre ae in fact several strong arguments that can be used both "and against social responsibilty. Hence, organizations andthe manages should caretuly assess their own values, belts, and proiies when which stance and approach to take regarding socal responsibilty, Although each of the arguments just summarized is a distinct justification for responsible behaviors on the part of organizations, another more general sson for social responsibility is profit itself, For example, organizations that make -clear and visible contributions to society can achieve an enhanced reputation and ner greater market share for their products. Although claims of socially respon- activities can haunt a company ifthey are exaggerated or untrue, they can also ‘work to the benefit of both the organization and society ifthe advertised benefits ‘rue and accurate. | Arguments Against Social Responsibility Some people, however, including | the famous economist Milton Friedman, argue that widening the interpretation of " social responsibility will undermine the U.S. economy by detracting from the basic rission of business: to earn profits for owners. For example, money that Chevron | oF General Electric contributes to social causes or charities is money that could “otherwise be distributed to owners as a dividend. A few years ago, shareholders of Ben & Jerry's Homemade Holdings expressed outrage when the firm refused to accept a lucrative exporting deal to Japan simply because the Japanese distributor “did not have a strong social agenda. Another objection to deepening the social responsiblity of businesses points out that corporations already wield enormous power and that their124 PART 2 ‘The Environmental Context of Management social programs gives them even more power. Still another argument against social responsitiity focuses on the potential for conflicts of interest. Suppose, for exam ple, that ofe manager is in charge of deciding which local social program or char ity wil receive a large grant from her business. The local civic opera company (@ not-for-profit organization that relies on contributions for its existence) might offer her front-row tickets for the upcoming season in exchange for her support. Ifo is her favorite form of music, she might be tempted to direct the money toward the Jocal company, when it might actually be needed more in other areas."* Finally critics argue that organizations lack the expertise to understand how to assess and make decisions about worthy social programs. How can a company truly know, they ask, which cause or program is most deserving of its support or ‘money might best be spent? For example, ExxonMobil makes substantial contribu: tions to help save the Bengal tiger, an endangered species that happens also serve as the firm's corporate symbol. ExxonMobil gives most of the money to sup por breeding programs in zo0s and to help educate people about the tiger. Conservationists criticize the firm and its activities, arguing that the money might tbe better spent instead on eliminating poaching, the illegal trade of tiger fur, ‘the destruction of the tiger's natural habitat.” organizational Approaches to Social Responsibility As we have seen, some, people advocate @ larger social role for organizations, and others argue that the: tole is already too large. Not surprisingly, organizations themselves adopt a range of positions on social responsibility, As Figure 4.5 illustrates, the fo ‘tances that an ofganization can take concerning its obligations to society fall along a continuum ranging from the lowest to the highest degree of socially responsible practices. j718 — parte | The Controlling Process : | Information and the Manager (Organizations rely on information that needs to be accurate, timely, complete, and relevant. Consider, for example, ‘Samedaycom, an internet frm based In Souter Calfomia, Samesaycom handles imentry and delivery for @ rostr of wob businesses inthe Los /Angples area. The fm prides isl on tng shipments to customers as ‘ose to “now” as possible. But in order 1 co this, these Semedaycom divers ‘must have information that tls ther racy what needs tobe devered, where, when, and in what sequence. s the opening vignette clearly demonstrates, information and commut technology continues to evolve at an almost breathtaking pace. And) ih today’s businesses rely on information management in ways that 0 have been foreseen as recently as just a decade ago. Managers now turn to technology as an integral part of organizational resources and as a means ofc ducting everyday business. Every major firmis business activities—such as d ing services, ensuring product delivery and cash flow, evaluating employees creating advertising—are linked to information systems. Effective info management requires a commitment of resources to establish, mai ‘upgrade as new technologies emerge. ‘This chapter is about advances made by organizations doing this. Wed role and importance of information to managers, the characteristics of mation, and information management as control, and we identify the basic bi blocks of information systems. We discuss the general and specific dete information technology needs. We then discuss the primary types of nology used in organizations and describe how this technology is managed. Information has always been an integral part of every manager's job. Tt tance, however, and therefore the need to manage it, continue to gro lip. To appreciate this trend, we need to understand the role of inform:coarren2e | Managing information and Information Technology 719 ‘manager’ job, characteristics of useful information, and the nature of information “management as control. The Role of Information in the Manager's Job {n Chapters 1 and 18 we highlighted the role of communication in the manager's ob. Given that information is a vital part of communication, it follows that man- gement and information are closely related. Indeed, itis possible to conceptual- fize management itself as a series of steps involving the reception, processing, and. jssemination of information. As illustrated in Figure 22.1, the manager is con- tantly bombarded with data and information (the difference between the two is Suppose that Bob Henderson is an operations manager for a large manufacturing ‘During the course of a normal day, Bob receives many different pieces of infor- from formal and informal conversations and meetings, telephone calls, observation, e-mails, letters, reports, memos, the Internet, and trade publi- tions. He gets a report from a subordinate that explains exactly how to solve a problem, so he calls the subordinate and tells him to put the solution into immediately: He scans a copy of a report prepared for another manager, sees at it has no relevance to him, and discards it. He sees a Wall Street Journal article summary of yesterday's production report, but because he knows he not need to analyze it for another week, he stores it. He observes a worker doing ‘incorrectly and realizes thatthe incorrect method is associated with a mysteri- quality problem that someone told him about last week 3 "A Key part of information-processing activity is differentiating between data ‘information. Data are raw figures and facts reflecting a single aspect of realty. data Rew figures and fact ree. facts that a plant has 35 machines, that each machine is capable of producing '%é® singe aspect of reality Figure 22.1 ‘Managers as Information Processors Managers who receive information and ata must decide what to do with. ‘Some is stored for possible ater use, ‘and othe information s combined to form new information, Subsequent, some i used immediate, some is passed on to others, and some is ds- caved.720 vaRte | The Controlling Process Manages at Ben & Jerry rely hesiy ‘on information to make Sure that they have the right flavors of ce ream in the ight locations a the right time. But to be of value, of couse, the informa ‘on has tobe accurate, ted, com- plete, and relevant. Ate al fa ‘exstomer wants to buy a carton of (Chey Garcia at ter local market todays in Ben &Jenys best interests ‘that he store has an ample supply Information Data presented in & way or form that has meaning Information technology (IT) Refers to the resources used by an organ Zatlon to mange information that ‘eds in order to cary out its mis ‘on ‘sccurate information Provides 2 valid and ole reflection of realty ‘units is 30,000 per day, and that workers sufficiently skilled to run the machines make $20 an hour are data. Information is data presented in a way or form has meaning? Thus combining and summarizing the fo pieces of data given above provides information: The pla hhas excess capacity and is therefore incurring unnecess costs. Information has meaning to a manager and pro vvides a basis for action. The plant manager might use information and decide to sell four machines (perhap keeping one as a backup) and transfer five operators to other jobs. ‘Arelated term is information technology, oF IT. ‘mation technology refers to the resources used by am ‘organization to manage information that it needs in ord to carry out its mission. IT may consist of computers, c puter networks, telephones, fax machines, and oth pieces of hardware. In addition, IT invalves software facilitates the system’ ability to manage information in ‘way that is useful for managers.? 4 ‘The grocery industry uses data, information, and information technology. automate inventory and checkout facilities. The average Kroger store, for examp carries over 21,000 items. Computerized scanning machines at the checkout, ters can provide daly sales figures for any product. These numbers alone are and have little meaning in their pure form. But information is created from th data by another computerized system. Using this IT system, managers can id how any given product or product line is selling in any number of stores over ‘meaningful period of time. Characteristics of Useful Information {snot useful? In general, information is useful ifit is accurate, timely, complete, af relevant. Indeed, part ofthe reason for the current lack of confidence in b that stakeholders have Jong assumed that the accounting information that bus nesses provided was “true.” But myriad scandals and controversies have shown accounting procedures and reporting formats can vary to make things look m better than they actually are:* Accurate For information to be of real value to a manager, it must be information, Accuracy means that the information must provide a valid an able reflection of reality. A Japanese construction company once bought info tion from a consulting firm about a possible building site in London, The Japa ‘were told that the land, which would be sold in a sealed-bid auction, would at bids of close to $250 million. They were also told that the land currently held a building that could easily be demolished. Thus the Japanese bid $255 millioi which ended up being $90 million more than the next-highest bid. And, to« few days later the British govern- declared the building historic, preempting ay thought of demoli fgied on information that was less than accurate. Information also needs to be timely, ess does not necessarily mean speedines: only that information needs to be avail. time for appropriate managerial action, at constitutes timeliness isa function of the sit facing the manager. When Marriott was ing information for a new hotel project, gers allowed themselves a six-month period a collection. They felt this would give them portunity to do a good job of getting the Epation they needed while not delaying things tion and accounting system can provide a Biger today with last night’ occupancy level at Information must tell a complete cHapreR22 | Managing information and Information Technology 724. mn. Clearly, the Japanese Marriott's computerized Jato tefl toa manager It isles than complete lnformation, the man. Brealenougs in infomation technol Fe ean Oster pice of telly Rr empl may: erates eae eee a at lek that houe-bran! products ere nie pote tans © be Mahe ee ae Sing continues to lok for ways to ‘move more data over corocatenet- Ny they gave house brands a ‘reat deal of shelf space and centered promotional wots faster and at lover cost He poeeres mages became more sophisticated in under- aan ‘Deon. however they realized that national brands were actualy. pes ton thee oe Profitable over time because they sold many more units than house brands pape! Epbspappaicon - age" Petiod of ime. Hence, although a store might sell 10 cane OF Kroger Se mnie ean Petit has snagged ‘such major clits 2s Chemorifexaco Fas with @ profit of50 cents percan (total profit of $5), it woaar also sell15 and Netwoek Apps, $5 of Sarbucks coffee with a profit of $1 per bag (total prof ©f$10). With complete information Proves the so tacd Stn 32 beter ob of selecting te tightinke manage wan dae var ne” he and Starbucks coffee to display and promote. aera snvormation must be relevant if isto be useful to managers information, like timely information, is defined according tothe needs and relerant information information soca amicular manager. Operations managers need information a aerate to managers in their de me managers need information on hiring needs POtSuarckeurstances er nen ma ae, ane matketing managers need information on sales projections Palode’ nesde a fathers information about local regulations, customs, andra timely information Availabe in time {or appropriate managerial action iven country isnot really relevant until the decision ig