Contemporary

Management Gareth R. Jones

Second Edition Texas A&M University

Jennifer M. George
Texas A&M University

Charles W. L. Hill
University of Washington

©The McGraw-Hill Companies, Inc., 2000

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Managers
and Managing
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Management Key Concepts

• Organizations: People working together and
coordinating their actions to achieve specific
goals.
• Goal: A desired future condition that the
organization seeks to achieve.
• Management: The process of using
organizational resources to achieve the
organization’s goals by...
• Planning, Organizing, Leading, and Controlling
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Additional Key Concepts

• Resources are organizational assets and
include:
• People,
• Machinery,
• Raw materials,
• Information, skills,
• Financial capital.

• Managers are the people responsible for

supervising the use of an organization’s
resources to meet its goals.
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Achieving High Performance

• Organizations must provide a good or service
desired by its customers.
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Organizational Performance
• Measures how efficiently and effectively
managers use resources to satisfy customers
and achieve goals.
• Efficiency: A measure of how well resources are
used to achieve a goal.
• Effectiveness: A measure of the appropriateness
of the goals chosen (are these the right goals?),
and the degree to which they are achieved.
 1-7

Managerial Functions
• Henri Fayol was the first to describe the four
managerial functions when he was the CEO of
a large mining company in the later 1800’s.
• Fayol noted managers at all levels, operating in
a for profit or not for profit organization, must
perform each of the functions of:
Planning,
organizing,
leading,
controlling.
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Four Functions of
Figure 1.2
Management
Planning
Choose Goals

Controlling Organizing
Monitor & measure Working together

Leading
Coordinate
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Planning
Planning is the process used by managers to
identify and select appropriate goals and
courses of action for an organization.
3 steps to good planning :
1. Which goals should be pursued?
2. How should the goal be attained?
3. How should resources be allocated?
• The planning function determines how
effective and efficient the organization is and
determines the strategy of the organization.
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Organizing
• In organizing, managers create the structure of
working relationships between organizational
members that best allows them to work together
and achieve goals.
• Managers will group people into departments
according to the tasks performed.
• Managers will also lay out lines of authority and
responsibility for members.
• An organizational structure is the outcome of
organizing. This structure coordinates and
motivates employees so that they work together to
achieve goals.
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Leading
• In leading, managers determine direction,
state a clear vision for employees to follow,
and help employees understand the role they
play in attaining goals.
• Leadership involves a manager using power,
influence, vision, persuasion, and
communication skills.
• The outcome of the leading function is a high
level of motivation and commitment from
employees to the organization.
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Controlling
• In controlling, managers evaluate how well the
organization is achieving its goals and takes
corrective action to improve performance.
• Managers will monitor individuals, departments,
and the organization to determine if desired
performance has been reached.
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Management Levels
• Organizations often have 3 levels of managers:
First-line Managers: responsible for day-to-day
operation.
Middle Managers: Supervise first-line managers.
They are also responsible to find the best way to
use departmental resources to achieve goals.
Top Managers: Responsible for the performance of
all departments and have cross-departmental
responsibility. They establish organizational goals
and monitor middle managers.
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Three Levels of Management

Top
Managers
Middle
Managers

First-line Managers

Non-management
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Restructuring
• Top Management have sought methods to
restructure their organizations and save
costs.
• Downsizing: eliminate jobs at all levels of
management.
• Can lead to higher efficiency.
• Often results in low morale and customer
complaints about service.
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Management Trends
• Empowerment: expand the tasks and
responsibilities of workers.
• Supervisors might be empowered to make some
resource allocation decisions.
• Self-managed teams: give a group of
employees responsibility for supervising
their own actions.
• The team can monitor its members and the
quality of the work performed.
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Managerial Roles
• Described by Mintzberg.
• A role is a set of specific tasks a person performs
because of the position they hold.
• Roles are directed inside as well as outside the
organization.
• There are 3 broad role categories:
1. Interpersonal
2. Informational
3. Decisional
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Interpersonal Roles
• Roles managers assume to coordinate and
interact with employees and provide direction
to the organization.
• Figurehead role: symbolizes the organization and
what it is trying to achieve.
• Leader role: train, counsel, mentor and encourage
high employee performance.
• Liaison role: link and coordinate people inside and
outside the organization to help achieve goals.
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Informational Roles
• Associated with the tasks needed to obtain
and transmit information for management of
the organization.
• Monitor role: analyzes information from both
the internal and external environment.
• Disseminator role: manager transmits
information to influence attitudes and behavior
of employees.
• Spokesperson role: use of information to
positively influence the way people in and out of
the organization respond to it.
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Decisional Roles
• Associated with the methods managers use to
plan strategy and utilize resources to achieve
goals.
• Entrepreneur role: deciding upon new projects or
programs to initiate and invest.
• Disturbance handler role: assume responsibility for
handling an unexpected event or crisis.
• Resource allocator role: assign resources between
functions and divisions, set budgets of lower managers.
• Negotiator role: seeks to negotiate solutions between
other managers, unions, customers, or shareholders.
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Managerial Skills
There are three skill sets that managers need
to perform effectively.
1. Conceptual skills: the ability to analyze and
diagnose a situation and find the cause and effect.
2. Human skills: the ability to understand, alter, lead,
and control people’s behavior.
3. Technical skills: the job-specific knowledge
required to perform a task. Common examples
include marketing, accounting, and manufacturing.
All three skills are enhanced through formal
training, reading, and practice.
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Skill Type Needed by Manager

Figure 1.5 Level
Top
Managers

Middle
Managers

Line
Managers

Conceptual Human Technical

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Management Challenges
• Increasing number of global organizations.
• Building competitive advantage through
superior efficiency, quality, innovation, and
responsiveness.
• Increasing performance while remaining
ethical managers.
• Managing an increasingly diverse work force.
• Using new technologies.
The Manager as a
Person
 chapter two

The Evolution of
Management Thought

McGraw-Hill/Irwin
Contemporary Management, 5/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
The Evolution of Management Theory

Figure 2.1
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Job Specialization and the Division
of Labor
Adam Smith (18th century economist)
• Observed that firms manufactured pins in one of two different
ways:
- Craft-style—each worker did all steps.
- Production—each worker specialized in one step.

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Question?
What is the process by which a division of labor
occurs as different workers specialize in specific
tasks over time?
A. Job Diversification
B. Job Sterilization
C. Job Specification
D. Job Specialization

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Job Specialization and
the Division of Labor
• Job Specialization
• process by which a division of labor occurs as different
workers specialize in specific tasks over time

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Job Specialization and
the Division of Labor
• Workers who specialized became much more
skilled at their specific tasks
• Increasing job specialization increases efficiency and
leads to higher organizational performance

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F.W. Taylor and Scientific
Management
Scientific Management
The systematic study of the relationships
between people and tasks for the purpose
of redesigning the work process to
increase efficiency.

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Four Principles of Scientific
Management
1) Study the way workers perform their tasks,
gather all the informal job knowledge that
workers possess and experiment with ways of
improving how tasks are performed
• Time-and-motion study

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Four Principles of Scientific
Management
2) Codify the new methods
of performing tasks into
written rules and
standard operating
procedures

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Four Principles of Scientific
Management
3) Carefully select workers who possess
skills and abilities that match the needs
of the task, and train them to perform
the task according to the established
rules and procedures

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Four Principles of Scientific
Management
4) Establish a fair or acceptable level of
performance for a task, and then
develop a pay system that provides a
reward for performance above the
acceptable level

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Problems with Scientific
Management
• Managers frequently implemented only the
increased output side of Taylor’s plan.
• Workers did not share in the increased output.
• Specialized jobs became very boring, dull.
• Workers ended up distrusting the Scientific Management
method.
• Workers could purposely “under-perform.”
• Management responded with increased use of machines
and conveyors belts.

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The Gilbreths
1. Break up and analyze every individual action
necessary to perform a particular task into each
of its component actions
2. Find better ways to perform each component
action

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The Gilbreths
3. Reorganize each of the component actions so
that the action as a whole could be performed
more efficiently-at less cost in time and effort

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Administrative Management Theory
• Administrative Management
• The study of how to create
an organizational structure
that leads to high efficiency
and effectiveness.

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Administrative Management Theory
Max Weber
• Developed the principles of bureaucracy as a formal
system of organization and administration designed to
ensure efficiency and effectiveness.

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 Weber’s
Weber’s
Principles
Principles of
of
Bureaucracy
Bureaucracy

Figure 2.2
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Weber’s Principles of Bureaucracy
1) A manager’s formal authority derives from the
position he holds in the organization.
2) People should occupy positions because of their
performance, not because of their social
standing or personal contacts.

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Weber’s Principles of Bureaucracy
3) The extent of each position’s formal authority
and task responsibilities and it’s relationship to
other positions should be clearly specified.
4) Authority can be exercised effectively when
positions are arranged hierarchically, so
employees know whom to report to and who
reports to them.

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Weber’s Principles of Bureaucracy
5) Managers must create a well-defined system of
rules, standard operating procedures,
and norms so they
can effectively
control behavior .

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Rules, SOPs and Norms
• Rules – formal written instructions that specify actions
to be taken under different circumstances to achieve
specific goals
• Standard Operating Procedures (SOPs) – specific sets
of written instructions about how to perform a certain
aspect of a task
• Norms – unwritten, informal codes of conduct that
prescribe how people should act in particular situations

2-87
Fayol’s Principles of Management
• Division of Labor: allows for job specialization.
• jobs can have too much specialization leading to poor
quality and worker dissatisfaction.
• Authority and Responsibility
• both formal and informal authority resulting from special
expertise.
• Unity of Command
• Employees should have only one boss.

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Fayol’s Principles of
Management
• Line of Authority
• A clear chain of command from top to bottom of the
firm.
• Centralization
• The degree to which authority rests at the top of the
organization.
• Unity of Direction
• A single plan of action to guide the organization.

2-89
Fayol’s Principles of
Management
• Equity - The provision of justice and the fair and
impartial treatment of all employees.
• Order - The arrangement of employees where they
will be of the most value to the organization and to
provide career opportunities.
• Initiative - The fostering of creativity and innovation
by encouraging employees to act on their own.

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Fayol’s Principles of
Management
• Discipline
• Obedient, applied, respectful employees are necessary
for the organization to function.
• Remuneration of Personnel
• An equitable uniform payment system that motivates
contributes to organizational success.

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Fayol’s Principles of
Management
• Stability of Tenure of Personnel
• Long-term employment is important for the development
of skills that improve the organization’s performance.
• Subordination of Individual Interest to the Common
Interest
• The interest of the organization takes precedence over that
of the individual employee.

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Fayol’s Principles of Management
Esprit de corps
• Comradeship, shared enthusiasm foster
devotion to the common cause
(organization).

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Discussion Question?
Which of the following is the most important aspect
of Fayol’s principles of management?
A. Division of Labor
B. Unity of Command
C. Remuneration of Personnel
D. Esprit de corps

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Behavioral Management Theory
Behavioral Management
• The study of how managers should personally behave to
motivate employees and encourage them to perform at
high levels and be committed to the achievement of
organizational goals.

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Behavioral Management
Mary Parker Follett
• Concerned that Taylor ignored the human
side of the organization
• Suggested workers help in analyzing
their jobs
• If workers have relevant knowledge of
the task, then they should control the
task

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The Hawthorne Studies
Studies of how characteristics of the work setting
affected worker fatigue and performance at the
Hawthorne Works of the Western Electric Company
from 1924-1932.

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The Hawthorne Studies
• Worker productivity was measured at
various levels of light illumination.
• Researchers found that regardless of
whether the light levels were raised or
lowered, worker productivity increased.

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The Hawthorne Studies
Human Relations Implications
• Hawthorne effect — workers’ attitudes toward their
managers affect the level of workers’ performance

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The Hawthorne Studies
• Human relations movement – advocates that
supervisors be behaviorally trained to manage
subordinates in ways that elicit their cooperation
and increase their productivity

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The Hawthorne Studies
Implications
• Behavior of managers and workers in the work
setting is as important in explaining the level of
performance as the technical aspects of the task

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The Hawthorne Studies
• Demonstrated the importance of understanding
how the feelings, thoughts, and behavior of work-
group members and managers affect performance

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‘Hawthorne Effect in modern workplaces.
• Listening is important
• The Hawthorne effect established that the productivity of
employees increased dramatically when they felt they were
being heard. It’s important to appreciate ideas.
• People are mainly motivated not by economic factors but
emotional factors, such as a feeling of being involved and
receiving attention. It is important for employees to feel that
their concerns are being heard and that they are
contributing to a common purpose.
Hawthorne Effect in modern
workplaces.
• Observation over vigilance(Good job) Paying attention to what
employees are doing brings in some wonderful results.
• Right people in the right group.
• God of small things(motivation don’t need to be in the form of ‘big’
things. Sometimes, small changes work wonders in improving
productivity)

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Hawthorne Effect in modern
workplaces.
• Gender diversity.
• Women are increasingly entering male-dominated professions.
However, they are often made to feel unwanted by male peers, which
leads to low productivity. Employers need to be observant and bring
in small changes to make the environment more conducive. The
individual attention and the normal human nature to feel ‘chosen’ will
distort the results

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Question?
What theory assumes the average worker is lazy,
dislikes work and will do as little as possible?
A. Theory X
B. Theory Y
C. Theory Z
D. Theory QZ

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Theory X and Theory Y
Douglas McGregor proposed the two different sets of
assumptions about workers.
• Theory X assumes the average worker is lazy, dislikes
work and will do as little as possible.
• Workers have little ambition and wish to avoid responsibility
• Managers must closely supervise and control through reward
and punishment.

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Theory X and Theory Y
• Theory Y assumes workers are not lazy,
want to do a good job and the job itself
will determine if the worker likes the
work.
• Managers should allow workers greater
latitude, and create an organization to
stimulate the workers.

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Theory X vs. Theory Y

Figure 2.3
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Management Science Theory
• Contemporary approach to management that
focuses on the use of rigorous quantitative
techniques to help managers make maximum use
of
organizational resources to produce goods and
services.

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Management Science Theory
• Quantitative management — utilizes
linear and nonlinear programming,
modeling, simulation, queuing theory and
chaos theory.
• Operations management —techniques
used to analyze any aspect of the
organization’s production system.

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Management Science Theory
• Total Quality Management (TQM) —
focuses on analyzing input, conversion,
and output activities to increase product
quality.
• Management Information Systems (MIS)
— provides information vital for effective
decision making.

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Organizational Environment Theory
Organizational Environment –

The set of forces and conditions that operate

beyond an organization’s boundaries but affect a
manager’s ability to acquire and utilize resources

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The Open-Systems View
Open System
• A system that takes resources for its
external environment and transforms
them into goods and services that are
then sent back to that environment where
they are bought by customers.

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Figure 2.4

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The Open-Systems View
• Inputs: the acquisition of external resources to produce
goods and services
• Conversion: transforms the inputs into outputs of
finished goods and services.
• Output: the release of finished goods and services to its
external environment.

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Closed System
• A self-contained system that is not affected by
changes in its external environment.
• Likely to experience entropy and lose its ability to
control itself

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Systems
• Synergy – the performance gains that result from
the combined actions of individuals and
departments
• Possible only in
an organized system

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Contingency Theory
• “There is no one best way to organize”
• The idea that the organizational structures and
control systems manager choose depend on—are
contingent on—characteristics of the external
environment in which the organization operates.

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Contingency Theory

Figure 2.5
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Type of Structure
Mechanistic Structure
• Authority is centralized at the top.
• Emphasis is on strict discipline and order
• Employees are closely monitored and
managed.
• Can be very efficient in a stable environment.

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Type of Structure
Organic Structure
• Authority is decentralized throughout the
organization.
• Departments are encouraged to take a
cross-departmental or functional
perspective
• Works best when environment is unstable
and rapidly changing

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Movie Example?

How are the workers

viewed in Metropolis?
How do the workers
feel about going to
work each day?

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Key Basic Functions of
management
DEFINITION OF MANAGEMENT
Management
• "is a distinct process consisting of planning, organizing, activating and
controlling to determine and accomplish the objectives by the use of
people and resources."- G.R. Terry “
• To manage is to forecast and plan, to organise, to command, to co-
ordinate and to control." - Henry Fayol “
• Management is simply the process of decision making and control
over the action of human beings for the express purpose of attaining
pre-determined goals." - Stanley Vance
5 FUNCTIONS OF MANAGEMENT
• Koontz and O'Donnell explained five functions of management.
They have become widely accepted functions of management
everywhere. They are
• Planning
• Organizing
• staffing
• directing and
• controlling.
 Planning
• is deciding in advance
• what to do,
• how to do
•  why to do
• where to do and
•  who will be responsible for doing is planning.
• Definition "Planning bridges the gap from where we are to where we
want to go. It makes it possible for things to occur which would not
otherwise happen" - Koontz and O'Donnel.
Importance of Planning Plannin
g
• provides directions
• Planning reduces the risks of uncertainty
• Planning reduces overlapping and wasteful activities
• Planning promotes innovative ideas
• Planning facilitates decision making
• Planning establishes standards for controlling
Features of planning

• Planning focuses on achieving objectives

• Planning is a primary function of management
• Planning is pervasive
• Planning is continuous
• Planning is futuristic
• Planning involves decision making
• Planning is a mental exercise
 PLANNING PROCESS
Developing promises
 Identifying alternative courses of action
 Evaluating alternative courses
Selecting an alternative
Implement the plan
 ORGANIZING
Division of work into functions and sub-functions,
grouping of activities that are closely related in their nature,
 assigning of duties and responsibilities to the employees
finally delegation of authority and power to each employees
Organization is the process of identifying and grouping of the
works to be performed, defining and delegating responsibility
and authority and establishing relationships for the purpose of
enabling people to work most efficiently". - Louis A. Allen
Definition
Importance of Organizing
• helps Organizations to reap the benefit of specialization.
• provides for Optimum utilization of resources.
• helps in Effective administration. 
• channels for Expansion and growth.
• achieves co-ordination among different departments.
• creates scope for new change.
Organizing Process

• identification and division of work which shall be done in accordance with the plans that are
determined previously.
• Departmentation: once the work of identifying and dividing the work has been done those
are similar are to be grouped.
• Linking departments: When the process of departmentation was completed, linking of
departments has to be done so that those departments operate in a co-ordinated manner
which gives a shape to overall organization structure.
• Assigning Duties: On completion of departmentation process assigning duties i.e. defining
authority and responsibility to the employees on the basis of their skills and capabilities has to
be done, which in consequence magnifies efficiency with regard to their work.
• Defining hierarchal structure: Each employee should also know from whom he has to take
orders and to whom he is accountable/responsible.
 DIRECTING

• Directing is nothing but guiding and leading the people in an

organization. It is not just giving instructions by a superior to the sub-
ordinates but also is a process of supervising, guiding and motivating
the latter to achieve the organizational goals. "Activating deals with
the steps a manager takes to get sub- ordinates and others to carry
out plans". - Newman and Warren. Definition
Importance of Directing
• Direction initiates actions to get the desired results in an organisation.
• Direction attempts to get maximum out of employees by identifying
their capabilities.
• Direction is essential to keep the elements like Supervision,
Motivation, Leadership and Communication effective.
• It ensures that every employee work for organisational goals.
• Coping up with the changes in the Organisation is possible through
effective direction.
• Stability and balance can be achieved through directing.
 STAFFING
• In the simplest terms, staffing in management is ‘putting people to jobs’.
• "Staffing is the function by which managers build an organisation
through the recruitment, selection, and development of individuals as
capable employees" - McFarland Definition
Importance of Staffing 
• Filling the Organisational positions
• Developing competencies to challenges 
• Retaining personnel - professionalism 
• Optimum utilisation of the human resources
Staffing Process
• Analyzing Manpower requirements: It is making an analysis of work and estimating the
manpower requirement to accomplish the same.
• Recruitment: It is identifying and attracting capable applicants for employment. it ends
with the submission of applications by the aspirants.
• Selection: It is choosing the fit candidates from the applications received in the process
of recruitment.
• Placement: This may be on probation and on successfully completion of the same the
candidate may be offered permanent employment.
• Training and Development: It is concerned with imparting and developing specific skills
for a particular purpose.
• Performance Appraisal: Systematic evaluation of personnel by superiors or others
familiar with their performance so as to rank employees to ascertain their eligibility for
promotions.
 CONTROLLING
• It is the process that ensures whether the resources are obtained and
used efficiently in achieving the organizational objectives
• "Controlling is determining what is being accomplished
• that is, evaluating performance and, if necessary, applying corrective
measures so that performance takes place according to plans".
- Terry and Franklin. Definition
CHAP:5
• Managing in the domestic and global environment requires
understanding and adapting to the unique challenges and
opportunities that arise in each context.
• While domestic management focuses on operations within a single
country,
• global management involves dealing with the complexities of
operating in multiple countries and diverse cultural settings.
Business environment
Dimensions of business
environment
The Global
Environment
Global Organizations
• Organizations that operate and compete not only
domestically, but also globally

• Uncertain and
unpredictable

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Global Environment
• Set of forces and conditions in the world outside
the organization’s boundaries that affect the way it
operates and shape its behavior
• Changes over time
• Presents managers with opportunities and threats

6-155
 Global Task Environment
Figure 4.2

Suppliers

Forces yielding
Competitors Opportunities Distributors
and threats

Customers
 Suppliers & Distributors
• Managers buy products from global suppliers or make
items abroad and supply themselves.
• Key is to keep quality high and costs low.
• Global outsourcing: firms buy inputs from throughout
the world.
• GM might build engines in Mexico, transmissions in Korea,
and seats in the U.S.
• Finished goods become global products.
• Distributors: each country often has a unique system of
distribution.
• Managers must identify all the issues.
 Customers & Competitors
• Formerly distinct national markets are merging into a
huge global market.
• True for both consumer and business goods.
• Creates large opportunities.
• Still, managers often must customize products to fit
the culture.
• Global competitors present new threats.
• Increases competition abroad as well as at home.
 Forces in the Global General
Figure 4.3 Environment
Political &
Legal Systems

Forces yielding Economic

Sociocultural
Opportunities
System system
and threats
 Political-Legal Forces
• Results from diverse and changing nature of each
countries’ political system.
• Representative democracies: such as the U.S., Britain,
Canada.
• Citizens elect leaders who make decisions for electorate.
• Well defined legal system and economic freedom.
• Totalitarian regimes: a single political party or person
monopolize power in a country.
• Typically do not recognize or permit opposition.
• Most safeguards found in a democracy do not exist.
• Examples include Iran, Iraq, and China.
• These are difficult to do business with given the lack of
economic freedom.
• Further, human rights issues also cause managers to
avoid dealing with these countries.
 Economic Systems
• Free market economy: production of goods and services
is in private ownership.
• Production is dictated by supply and demand.
• Command economy: decisions on what to produce, how
much, done by the government.
• Mixed economy: certain economic sectors controlled by
private business, others are government controlled.
• Many mixed countries are moving toward a free enterprise
system.
 Recent Trends
• Current shift away from totalitarian dictators toward
democratic regimes.
• Very dramatic example seen in the collapse of the former
Soviet Republic.
• Also very pronounced in Latin America and Africa.
• With this shift, has come a strong movement toward
free market systems.
• This provides great opportunities to business managers on a
global level.
• Many businesses are investing millions in former totalitarian
countries to seize these opportunities.
 Sociocultural Forces
• National culture: includes the values, norms,
knowledge, beliefs, and other practices that unite
a country.
• Values: abstract ideas about what a society
believes to be good, desirable and beautiful.
• Provides attitudes for democracy, truth, appropriate
roles for men, and women , love, sex, marriage, etc.
• Usually not static but very slow to change.
• Norms: social rules prescribing behavior in a given
situation.
• Folkways: routine social conventions including dress
codes and manners.
• Mores: Norms that are central to functioning of society.
much more significant that folkways.
• More examples include theft, adultery, and are often
enacted into law.
• Norms vary from country to country.
 Hofstede’s Model of National
Culture
Individualism Collectivism

Low Power High Power

Distance Distance

Achievement Nurturing
Figure 4.5

Oriented Oriented

Low Uncertainty High Uncertainty

Avoidance Avoidance

Short Term Long Term

Orientation Orientation
 Individualism v. Collectivism
• Individualism: world view that values individual
freedom and self-expression.
• Usually has a strong belief in personal rights and need to be
judged by achievements.
• Collectivism: world view that values the group over the
individual.
• Widespread in Communism.
• Prevalent in Japan as well.
• Managers must understand how their workers relate to
this issue.
 Power Distance
• A society’s acceptance of differences in the well being
of citizens due to differences in heritage, and physical
and intellectual capabilities.
• In high power distance societies, the gap between rich and
poor gets very wide.
• In low power distance societies, any gap between rich and
poor is reduced by taxation and welfare programs.
• Most western cultures (U.S., Germany, United Kingdom) have
relatively low power distance and high individualism.
• Many economically poor countries such as Panama, Malaysia have
high power distance and low individualism.
 Achievement vs Nurture
• Achievement oriented societies value assertiveness,
performance, success.
• The society is results-oriented.
• Nurturing-oriented value quality of life, personal
relationships, service.
• The U. S. and Japan are achievement-oriented while
Sweden, Denmark are more nurturing-oriented.
 Uncertainty Avoidance
Societies and people differ on their willingness to take on
risk.
• Low uncertainty avoidance (U.S., Hong Kong), value
diversity, and tolerate differences.
• Tolerate a wide range of opinions and beliefs.
• High uncertainty avoidance (Japan and France) are
more rigid and do not tolerate people acting differently.
• High conformity to norms is expected.
 Long Term Outlook

• Long-term outlook is based on values of saving, and

persistence.
• Taiwan and Hong Kong are cultures that are long -term in
outlook.
• Short-term outlook seeks the maintenance of personal
stability or happiness right now.
• France and the U. S. are examples of this approach.
 International Expansion
• Importing and Exporting: the least complex method of
expansion.
• Exporting: firm makes products and sells abroad.
• Importing: firm sells products made abroad.
• Licensing: firm allows foreign organization to make and
distribute goods for a fee.
• Helps the home firm since it does not have to set up a complete
production and distribution network.
• Franchising: company sells a foreign organization the
rights to use brand name and know-how in return for
payment and profit percentage.
 International Options
• Strategic Alliances: managers pool resources with a
foreign firm and both organizations share the rewards
and risks.
• Allows firm to maintain control which is a problem with
exporting, licensing, and franchising.
• Wholly-owned foreign subsidiary: firm invests in
production operations in a foreign country.
• Many Japanese auto firms have done this in the U.S.
• This is very expensive but can yield high returns.
 International Expansion
Figure 4.6

Wholly-
Importing Licensing Joint Ventures owned For.
Exporting Franchising Strat. Alliances Subsidiary

Low High
Level of Foreign involvement and investment
needed by a global organization
Process of Globalization
• Globalization
• Set of specific and general forces that work together to integrate and connect
economic, political, and social systems across countries, cultures, or
geographical regions
• Result is that nations and peoples become increasingly interdependent

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Process of Globalization
• Four principal forms of capital that flow between countries are:
• Human capital
• Financial capital
• Resource capital
• Political capital

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Declining Barriers to Trade and
Investment
Tariff
• A tax that government imposes on imported or, occasionally,
exported goods.
• Intended to protect domestic industry and jobs from foreign
competition
• Other countries usually retaliate their own tariffs, actions that
eventually reduce the overall amount of trade and impedes
economic growth.
• GATT and the Rise of Free Trade
• Free-Trade Doctrine
• The idea that if each country specializes in the production of the
goods and services that it can produce most efficiently, this will
make the best use of global resources

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Declining Barriers of Distance and
Culture
• Distance
• Markets were essentially closed because of the slowness
of communications over long distances.
• Culture
• Language barriers and cultural practices made managing
overseas businesses difficult
• Changes in Distance and Communication
• Improvement in transportation technology and fast,
secure communications have greatly reduced the barriers
of physical and cultural distances.

6-179
Globalisation

Globalisation
could involve
all these
things!
 chapter six

Organizational Control
and Change

McGraw-Hill/Irwin
Contemporary Management, 5/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Organizational Control
• Organizational Control
• Managers monitor and regulate how efficiently and
effectively an organization and its members are
performing the activities necessary to achieve
organizational goals

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Organizational Control
Managers must monitor and evaluate:
• Is the firm efficiently converting inputs into outputs?
• Are units of inputs and outputs measured
accurately?
• Is product quality improving?
• Is the firm’s quality competitive with other firms?
• Are employees responsive to customers?
• Are customers satisfied with the services offered?
• Are our managers innovative in outlook?
• Does the control system encourage risk-taking?

11-184
Control Systems
• Control Systems
• Formal, target-setting, monitoring, evaluation and
feedback systems that provide managers with
information about whether the organization’s strategy
and structure are working efficiently and effectively.

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Control Systems
• A good control system should:
• be flexible so managers can respond as needed.
• provide accurate information about the organization.
• provide information in a timely manner.

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Discussion Question?
Which is the most important type of control?
A. Feedforward
B. Feedback
C. Concurrent
D. Accounting

11-187
Three Types of Control

Figure 11.1 11-188

Types of Control
• Feedforward Controls
• Used to anticipate problems before they arise so that
problems do not occur later during the conversion
process
• Giving stringent product specifications to suppliers in
advance
• IT can be used to keep in contact with suppliers and to
monitor their progress

11-189
Types of Control
• Concurrent Controls
• Give managers immediate feedback on how efficiently inputs are being
transformed into outputs
• Allows managers to correct problems as they arise

11-190
Types of Control
• Feedback Controls
• Used to provide information at the output stage about
customers’ reactions to goods and services so that
corrective action can be taken if necessary

11-191
Control Process Steps

Figure 11.2 11-192

The Control Process
1. Establish standards of performance, goals, or
targets against which performance is to be
evaluated.
• Managers at each organizational level need to set
their own standards.

11-193
The Control Process
2. Measure actual performance
• Managers can measure outputs resulting from
worker behavior or they can measure the behavior
themselves.
• The more non-routine the task, the harder it is to measure
behavior or outputs

11-194
The Control Process
3. Compare actual performance against chosen
standards of performance
• Managers evaluate whether – and to what extent –
performance deviates from the standards of
performance
chosen in step 1

11-195
The Control Process
4. Evaluate result and initiate corrective action if the standard is not
being achieved
• If managers decide that the level of performance is unacceptable, they
must try to change the way work activities are performed to solve the
problem

11-196
Three Organizational Control Systems

Figure 11.3 11-197

Question?
Which ratio measures how well managers have protected
organizational resources to be able to meet short-term obligations?
A. Profit ratios
B. Leverage ratios
C. Liquidity ratios
D. Operating ratios

11-198
Financial Measures of Performance
• Profit Ratios –
• measure how efficiently managers are using the
organization’s resources to generate profits
• Return on Investment (ROI) –
• most commonly used financial performance measure
• organization’s net income before taxes divided by its total
assets

11-199
Financial Measures of Performance
• Operating margin
• calculated by dividing a companies operating profit by sales revenue
• Provides managers with information about how efficiently an organization is
utilizing its resources

11-200
Financial Measures of Performance
• Liquidity ratios
• measure how well managers have protected organizational resources to be
able to meet short-term obligations
• Leverage ratios
• measure the degree to which managers use debt or equity to finance ongoing
operations

11-201
Financial Measures of Performance
• Activity ratios
• provide measures of how well
managers are creating value from
organizational assets

11-202
Output Control
• Organizational Goals
• Each division within the firm is given specific goals that
must be met in order to attain overall organizational
goals.
• Goals should be set appropriately so that managers are
motivated to accomplish them

11-203
Organization-Wide Goal Setting

Figure 11.4 11-204

Output Control
• Operating Budgets
• Blueprint that states how managers intend to use
organizational resources to achieve organizational goals
efficiently.

11-205
Effective Output Control
1. Objective financial measures
2. Challenging goals and performance standards
3. Appropriate operating budgets

11-206
Problems with Output Control
• Managers must create output standards that
motivate at all levels
• Should not cause managers to behave in
inappropriate ways to achieve organizational goals

11-207
Behavior Control
• Direct supervision
• managers who actively monitor and observe the behavior
of their subordinates
• Teach subordinates appropriate behaviors
• Intervene to take corrective action
• Most immediate and potent form of behavioral control
• Can be an effective way of motivating employees

11-208
Problems with Direct Supervision
• Very expensive because a manager can personally manage only a
relatively small number of subordinates effectively
• Can demotivate subordinates if they feel that they are under such
close scrutiny that they are not free to make their own decisions

11-209
Management by Objectives
• Management by Objectives (MBO)
• formal system of evaluating subordinates for their ability to achieve specific
organizational goals or performance standards and to
meet operating
budgets

11-210
Management by Objectives
1. Specific goals and objectives are established at each level of the
organization
2. Managers and their subordinates together determine the
subordinates’ goals
3. Managers and their subordinates periodically review the
subordinates’ progress toward meeting goals

11-211
Question?
Which type of control is exerted on individuals in an organization by
shared values, norms, standards of behavior, and expectations?
A. Bureaucratic control
B. Clan control
C. Revolutionary control
D. Evolutionary control

11-212
Bureaucratic Control
• Bureaucratic Control
• Control through a system of rules and standard
operating procedures (SOPs) that shapes and regulates
the behavior of divisions, functions, and individuals.

11-213
Bureaucratic Control
• Problems with Bureaucratic Control
• Rules easier to make than than discarding them, leading
to bureaucratic “red tape” and slowing organizational
reaction times to problems.
• Firms become too standardized and lose flexibility to
learn, to create new ideas, and solve to new problems.

11-214
Clan Control
• Clan Control
• The control exerted on individuals and groups in an
organization by shared values, norms, standards of
behavior, and expectations.

11-215
Organization Change
Movement of an organization away from its present
state and toward some desired future state to
increase its efficiency and effectiveness

11-216
Organizational Change

11-217
Lewin’s Force-Field Theory of
Change

Figure 11.6 11-218

Lewin’s Force-Field Theory of
Change
• There are a wide variety of forces arising from the way an
organization operates, from its structure, culture, and control systems
that make organizations resistant to change

11-219
Lewin’s Force-Field Theory of
Change
• To get an organization to change, managers must find a way to
increase the forces for change, reduce resistance to change, or do
both simultaneously

11-220
Evolutionary and Revolutionary
Change
• Evolutionary change
• gradual, incremental, and narrowly focused
• constant attempt to improve, adapt, and adjust strategy and structure
incrementally to accommodate changes in the environment

11-221
Evolutionary and Revolutionary
Change
• Revolutionary change
• Rapid, dramatic, and broadly focused
• Involves a bold attempt to quickly find ways to be effective
• Likely to result in a radical shift in ways of doing things, new goals, and a new
structure for the organization

11-222
Steps in the Organizational Change Process

Figure 11.7
11-223
Implementing the Change
• Top Down Change
• A fast, revolutionary approach to change in which top managers identify what
needs to be changed and then move quickly to implement the changes
throughout the organization.

11-224
Implementing the Change
• Bottom-up change
• A gradual or evolutionary approach to change in which managers at all levels
work together to develop a detailed plan for change.

11-225
Evaluating the Change
• Benchmarking
• The process of comparing one company’s performance on specific dimensions
with the performance of other, high-performing organizations.

11-226
Movie Example: Gung Ho

How do the employees of Assan

Motors react to changes from
the new Japanese management?

11-227
 chapter seven

Managing Conflict, Politics,

and Negotiation

McGraw-Hill/Irwin
Contemporary Management, 5/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Question?
What is the discord that arises when goals of different individuals are
incompatible?
A. Disagreement
B. Incongruity
C. Discrepancy
D. Conflict

17-230
Conflict management
• Managing in the domestic and global environment requires
understanding and adapting to the unique challenges and
opportunities that arise in each context. While domestic management
focuses on operations within a single country, global management
involves dealing with the complexities of operating in multiple
countries and diverse cultural settings. Here are some key
considerations for

17-231
Organizational Conflict
• Organizational Conflict
• The discord that arises when goals, interests or values of
different individuals or groups are
incompatible
and those people
block or thwart
each other’s efforts
to achieve their
objectives.

17-232
Organizational Conflict
• Organizational Conflict
• Conflict is inevitable given the wide range of goals for
the different stakeholder in the organization.

17-233
The Effect of Conflict on Organization
Performance

Figure 17.1 17-234

Types of Conflict

Figure 17.2 17-235

Question?
What is conflict between two or more teams?
A. Interpersonal Conflict
B. Intragroup Conflict
C. Intergroup Conflict
D. Interorganizational Conflict

17-236
Types of Conflict
• Interpersonal Conflict
• Conflict between individuals due to differences in their
goals or values.
• Intragroup Conflict
• Conflict within a
group or team.

17-237
Types of Conflict
• Intergroup Conflict
• Conflict between two or more teams, groups or
departments.
• Managers play a key role in resolution of this conflict
• Interorganizational Conflict
• Conflict that arises across organizations.

17-238
Sources of Conflict

Figure 17.3
17-239
Sources of Conflict
• Different Goals and Time Horizons
• Different groups have differing goals and focus.
• Overlapping Authority
• Two or more managers claim authority for the same
activities which leads to conflict between the managers
and workers.

17-240
Sources of Conflict
• Task Interdependencies
• One member of a group or a group fails to finish a task
that another member or group depends on, causing the
waiting worker or group to fall behind.
• Different Evaluation or Reward Systems
• A group is rewarded for achieving a goal, but another
interdependent group is rewarded for achieving a goal
that conflicts with the first group.

17-241
Sources of Conflict
• Scarce Resources
• Managers can come into conflict over the allocation of
scare resources.
• Status Inconsistencies
• Some individuals and groups have a higher
organizational status than others, leading
to conflict with lower status groups.

17-242
Conflict Management Strategies
• Functional Conflict Resolution
• Handling conflict by compromise or collaboration
between parties.

17-243
Conflict Management Strategies
• Compromise
• each party is concerned about their goal accomplishment
and is willing to engage in give-and-take exchange to
reach a reasonable solution.
• Collaboration
• parties try to handle the conflict without making
concessions by coming up with a new way to resolve their
differences that leaves them both better off.

17-244
Conflict Management Strategies
• Accommodation
• one party simply gives in to the other party
• Avoidance
• two parties try to ignore the problem and do nothing to
resolve the disagreement

17-245
Conflict Management Strategies
• Competition
• each party tries to maximize its own gain and has little
interest in understanding the other’s position

17-246
Strategies Focused on Individuals
• Increasing awareness of the sources of conflict
• Increasing diversity awareness and skills
• Practicing job rotation
• Using permanent transfers or dismissals when
necessary

17-247
Strategies Focused on the Whole
Organization
• Changing an
organization’s structure
or culture
• Altering the source of
conflict

17-248
Negotiation
• Negotiation
• Parties to a conflict try to come up with a solution
acceptable to themselves by considering various alternative
ways to allocate resources to each other

17-249
Negotiation
• Third-party negotiator
• an impartial individual with expertise in handling
conflicts
• helps parties in conflict reach an acceptable solution

17-250
Third-party Negotiators
• Mediators
• facilitates negotiations but no authority to impose a
solution
• Arbitrator
• can impose what he thinks is a fair solution to a conflict
that both parties are obligated to abide by

17-251
Distributive Negotiation
• Distributive negotiation
• Parties perceive that they have a “fixed pie” of resources that they need to
divide
• Take a competitive adversarial stance
• See no need to interact in the future
• Do not care if their interpersonal relationship is damaged by their competitive
negotiation

17-252
Integrative Bargaining
• Integrative bargaining
• Parties perceive that they might be able to increase the resource pie by trying
to come up with a creative solution to the conflict
• View the conflict as a win-win situation in which both parties can gain
• Handled through collaboration or compromise

17-253
Discussion Question
What is the most important strategy for encouraging integrative
bargaining?
A. Focusing on the problem, not the people
B. Focusing on interests, not demands
C. Creating new options for joint gain
D. Focusing on what is fair

17-254
Strategies to Encourage
Integrative Bargaining
• Emphasizing superordinate goals
• goals that both parties agree to regardless of the source of their conflict
• Focusing on the problem, not the people
• Focusing on interests, not demands
• Creating new options for joint gain
• Focusing on what is fair

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Organizational Politics
• Organizational Politics
• The activities managers engage in to increase their
power and to use power effectively to achieve their
goals or overcome resistance or opposition.

17-256
Organizational Politics
• Political strategies
• Specific tactics used to increase power and use it
effectively to influence and gain the support of other
people while overcoming resistance

17-257
The Importance of Organizational
Politics
• Politics
• Can be viewed negatively when managers act in self-
interested ways for their own benefit.
• Is also a positive force that can bring about needed
change when political activity allows a manager to gain
support for needed changes that will advance the
organization.

17-258
 Political
Strategies
for
Increasing
Power

Figure 17.4 17-259

Political Strategies for Gaining and
Maintaining Power
Strategies
Controlling Uncertainty Reduce uncertainty for others in the firm

Being Irreplaceable Develop valuable special knowledge or

skills

Being in a Central Have decision-making control over the

Position firm’s crucial activities and resources

Generating Resources Hire skilled people or find financing when

it is needed

Building Alliances Develop mutually beneficial relations

with others inside and outside the
organization

17-260
 Political
Strategies
for
Exercising
Power

Figure 17.5 17-261

Strategies for Exercising Power
Strategies
Relying on Objective Providing impartial information causes
Information others to feel the manager’s course of
action is correct.

Bringing in an Outside Using an expert’s opinion to lend

Expert credibility to manager’s proposal

Controlling the Agenda Influencing those issues included (and

those dropped) from the decision
process.

Making Everyone a Making sure that everyone whose

Winner support is needed benefits personally
from providing that support.

17-262
Movie Example: Jaws
• How does Chief Brody handle
the conflict of closing the
beaches with the townspeople?

17-263