Professional Documents
Culture Documents
ES27 Notes PDF
ES27 Notes PDF
TOPIC 0: MANAGEMENT
Management Skills:
Conceptual skills – cognitive ability to see the organization as a whole
Human skills – ability to work with other people
Technical skills – understanding of and proficiency in the performance of specific tasks
Management Types:
Vertical Differences - hierarchical level
o Top managers - top of the hierarchy and are responsible for the entire organization
o Middle managers - work at middle levels of the organization and are responsible for
business units and major departments
o Project manager - responsible for a temporary work; involves participation of people
from various functions of the organization
o First-line managers - directly responsible for the production of goods and services; first
or second level of management
Manager Activities:
Adventures in Multitasking
Life on Speed Dial
Manager Roles
Interim managers - managers who are not affiliated with a specific organization but work on a
project-by- project basis
The external organizational environment includes all elements existing outside the boundary of
the organization that have the potential to affect the organization.
The organization’s external environment can be further conceptualized as having two layers:
general and task environments
general environment - outer layer that is widely dispersed and affects organizations indirectly
international - represents events originating in foreign countries
technological - includes scientific and technological advancements in a specific industry
sociocultural - represents the demographic characteristics as well as the norms, customs,
and values of the general population
economic - represents the general economic health of the country or region in which the
organization operates
legal-political - includes government regulations at the local, state, and federal levels
natural - includes all elements that occur naturally on earth
task environment - closer to the organization and includes the sectors that conduct day-to-day
transactions with the organization
Customers - people and organizations in the environment that acquire goods or services
Competitors - organizations in the same industry that provides to same set of customers
Suppliers - provide the raw materials the organization uses
labor market - people in the environment who can be hired to work
Interorganizational partnerships
o reduce boundaries and increase collaboration with other organizations
Corporate Culture
culture - set of key values, beliefs, understandings, and norms shared in an organization
Adaptive cultures - managers are concerned about customers and internal people
Unadaptive cultures - managers are concerned about themselves (discouraging values)
Types of cultures:
o adaptability culture - ability to interpret and translate signals from the environment
o achievement culture - values competitiveness; willing to work hard to achieve results
o involvement culture - focus on the needs and participation of employees
o consistency culture - values and rewards a methodical, rational way of doing things
high-performance culture
o based on a solid organizational mission or purpose
o embodies adaptive values that guide decisions and business practices
o encourages individual employee ownership and the organization’s backbone
Social forces - aspects of a culture that guide and influence relationships among people
Political forces - influence of political and legal institutions on people and organizations
Economic forces - availability, production, and distribution of resources
14 principles of management
Division of work Centralization
Authority & responsibility Scalar chain
Discipline Order
Unity of command Equity
Unity of direction Stability of tenure
Subordination of individual to general interest Initiative
Remuneration Esprit de corps
Unity of command - Each subordinate receives orders from one and only one superior
Division of work - Managerial work and technical work are amenable to specialization to produce more
and better work
Unity of direction - Similar activities in an organization should be grouped together under one manager
Scalar chain - A chain of authority extends from the top to the bottom of the organization
human resources perspective – jobs should be designed to allow workers to use their potential
o Abraham Maslow - hierarchy of needs: physiological, safety, belongingness, esteem,
self-actualization needs
o Douglas McGregor - Theory X and Theory Y
Management science perspective (applied mathematics, statistics, and other quantitative techniques)
3 Subsets:
Operations research - mathematical model building and other applications
Operations management - physical production of goods or services
Information technology - management information systems; software programs
total quality management - managing the total organization to deliver quality to customers
o W. Edwards Deming - father of the quality movement
o Employee involvement - companywide participation in quality control
o focus on the customer - find out what customers want
o Benchmarking - companies find out how others do something and try to imitate it
o continuous improvement - implementation of improvements in areas of the organization
Ethics - code of moral principles and values that governs the behaviors of a person with respect
to what is right or wrong
Three domains of human action:
o domain of codified law - values and standards are written into the legal system
o domain of free choice - the law has no say; organization enjoys complete freedom
o domain of ethics - no specific laws; have standards of conduct
ethical dilemma - arises in a situation concerning right or wrong when values are in conflict
o moral agent - individual who must make an ethical choice
corporate social responsibility – obligation to make choices and take actions that will
contribute to the organization
stakeholder - group that has a stake in the organization’s performance
bottom of the pyramid concept - corporations can alleviate poverty and make profits by selling
to the world’s poorest people
Sustainability - economic development that generates wealth and meets the needs of the
current generation while saving the environment
Ethical leadership - managers are honest and trustworthy, fair, and behave ethically
code of ethics - formal statement of the company’s values concerning ethics & social issues
o Principle-based statements - affect corporate culture; define fundamental values
corporate credos - general statements of principle
o Policy-based statements - outline the procedures to be used in specific ethical situations
Ethical structures - various systems, positions, and programs a company can undertake
ethics committee - group of executives appointed to oversee company ethics
chief ethics officer - company executive who oversees ethics and legal compliance
ethics hotline - allows employees to report questionable behavior; seek guidance
Ethics training - programs to help employees deal with ethical questions and values
whistle-blowing - Employee disclosure of illegal, immoral, or illegitimate practices
goal - desired future state that the organization attempts to realize; specify future ends
plan - blueprint for goal achievement; specify today’s means
planning - determining the organization’s goals and defining the means for achieving them
Strategic goals - official goals; broad statements describing where the organization wants to be
in the future
Strategic plans - define the action steps by which the company intends to attain strategic goals
Tactical goals - results that major divisions and departments within the organization intend to
achieve
Tactical plans - designed to help execute the major strategic plans
Operational goals - measurable results expected from departments, work groups, and
individuals
Operational plans - developed at the lower levels of the organization to specify action steps
Operational Planning
Criteria for Effective Goals
Management by objectives (MBO) - managers and employees define goals for every
department, project, and person and use them to monitor subsequent performance
o Four major activities:
Set goals
Develop action plans
Review progress
Appraise overall performance
Single-use plans - achieve a set of goals that are not likely to be repeated in the future
Standing plans - ongoing plans that provide guidance for tasks that occur repeatedly
Forecasting
Qualitative Forecasting - based on intuitive/judgmental evaluation; used when data are scarce
o Jury of Executive Opinion
o Delphi Method
o Sales Force Composite
o Users’ Expectation
o Choice of Method
Quantitative Forecasting - statistical technique for making projections; uses numerical facts
o Simple Moving Average
o Weighted Moving Average
o Exponential Smoothing
Technological Forecasting - planning be done according to the best estimate of the technology
o Robert E. Shannon – author of “Engineering Management”
o Marvin Cetron – founder and president of Forecasting International
normative technological forecasting - one works backward from the future to the present; a
process designed to achieve the goal is developed
exploratory technological forecast - uses Delphi method; begins with present state and
extrapolates into the future
Types of Decision
Programmed decisions - situations that have occurred often enough to enable decision rules
Nonprogrammed decisions - situations that are unique, poorly defined and largely unstructured
Game Theory - where the future states of nature and their probabilities are replaced by the
decisions of a competitor
TOPIC 6: ORGANIZING
Work Specialization - degree to which organizational tasks are subdivided into separate jobs
Chain of Command - unbroken line of authority that links all persons in an organization
o scalar principle - defined line of authority in the organization that includes all employees
o Authority - formal and legitimate right of a manager to make decisions, issue orders
Authority is vested in organizational positions, not people
Authority is accepted by subordinates
Authority flows down the vertical hierarchy
o Line authority - people have formal authority to direct and control immediate subordinates
o Staff authority – form of authority granted to staff specialists in their area of expertise
Departmentalization - basis for grouping positions into departments and departments into the total
organization
Five approaches to structural design:
o Vertical Functional Approach - grouping of positions into departments based on similar
skills, expertise, and resource use
o Team Approach
cross-functional teams - group of employees from various functional
departments that meet as a team and resolve mutual problems
permanent teams - group of employees who are permanently assigned to solve
problems
team-based structure - the entire organization is made up of horizontal teams
that coordinate their work and work directly with customers
o Virtual Network Approach - the firm subcontracts most of its major functions to separate
companies and coordinates their activities from a small headquarters organization
modular approach - a manufacturing company uses outside suppliers to provide
entire chunks of a product which are then assembled into a final product
Implementing Change
Need for Change
o performance gap - disparity between existing and desired performance levels
Resistance to Change
o Self-Interest
o Lack of Understanding and Trust
o Uncertainty
o Different Assessments and Goals
Force-Field Analysis - process of determining which forces drive and which resist change
o Driving forces - problems or opportunities that provide motivation for change
o Restraining forces - various barriers to change
Implementation Tactics
o Communication and Education - used when information about the change is needed
o Participation - involves users and potential resisters in designing the change
o Negotiation - uses formal bargaining to win acceptance and approval
o Coercion - managers use formal power to force employees to change
o Top Management Support - symbolizes to all employees that change is important
Managing Diversity
Diversity - all the ways in which people differ
Managing diversity - creating a climate in which the potential advantages of diversity are
maximized while the potential disadvantages are minimized
Ethnocentrism - belief that one’s own group and subculture are inherently superior to others
o Monoculture - culture that accepts only one way of doing things
o Ethnorelativism - belief that groups and subcultures are inherently equal
o Pluralism - an organization accommodates several subcultures
ATTITUDES
attitude - evaluation that predisposes a person to act in a certain way
Components of Attitudes
o cognitive component - beliefs, opinions, and information the person has
o affective component - person’s emotions or feelings about the object
o behavioral component - person’s intention to behave toward the object
PERCEPTION
Perception - cognitive process people use to make sense out of the environment by selecting,
organizing, and interpreting information
The Perception Process:
o observing information (sensory data)
o screening the information and selecting what to process
o organizing the selected data into patterns for interpretation
Perceptual Selectivity - individuals screen and select the various stimuli that vie for their attention
o primacy and recency
Perceptual Distortions - errors in perceptual judgment that arise from inaccuracies in any part of
the perceptual process
o stereotyping - tendency to assign an individual to a group or broad category
o halo effect overall impression of a person or situation based on one characteristic
o Projection - tendency of perceivers to see their own personal traits in other people
o Perceptual defense - tendency of perceivers to protect themselves against ideas, objects,
or people that are threatening
fundamental attribution error - underestimate the influence of external factors and overestimate
the influence of internal factors
self-serving bias - overestimate the contribution of internal factors to one’s successes and
overestimate the contribution of external factors to one’s failures
PERSONALITY AND BEHAVIOR
personality - set of characteristics that underlie a relatively stable pattern of behavior in response
to ideas, objects, or people in the environment
Personality Traits
o Big Five personality factors
Extroversion
Agreeableness
Conscientiousness
Emotional stability
Openness to experience
Emotional Intelligence
o Self-awareness - being aware of what you are feeling
o Self-management - control disruptive or harmful emotions and balance one’s moods
o Social awareness - understand others and practice empathy
o Relationship management - connect to others, build positive relationships
Personal Power
o Expert Power - power resulting from a person’s special knowledge or skill regarding the
tasks being performed
o Referent Power - comes from an individual’s personal characteristics that command
others’ identification, respect, and admiration
LEADERSHIP AS SERVICE
Servant Leadership
o Servant leaders - fulfillment of their subordinates’ goals and needs and for the
realization of the larger purpose or mission of their organization
TOPIC 8: CONTROLLING
The Balanced Scorecard - comprehensive management control system that balances traditional
financial measures with operational measures relating to a company’s critical success factors
o Financial performance
o Customer service
o Business process
o Potential for learning and growth
FINANCIAL CONTROL
Financial Statements - provide the basic information used for financial control
o balance sheet - shows the firm’s financial position with respect to assets and liabilities at
a specific point in time
Assets - what the company owns; current assets and fixed assets
Liabilities - the firm’s debts; current debt and long-term debt
Owners’ equity - difference between assets and liabilities
o income statement - summarizes the firm’s financial performance for a given time
interval; sometimes called a profit-and-loss statement
Financial Analysis
o Liquidity Ratios - indicates an organization’s ability to meet its current debt obligations
o Activity Ratios - measures internal performance with respect to key activities defined by
management
o Profitability Ratios - state profits relative to a source of profits, such as sales or assets
o Leverage Ratios
Leverage - funding activities with borrowed money
Application to Budgeting
o responsibility center - organizational unit under the supervision of a single person who
is responsible for its activity
TOTAL QUALITY MANAGEMENT - an organization-wide effort to infuse quality into every activity
through continuous improvement
TQM Techniques
o Quality Circles - group of 6 to 12 volunteer employees who meet regularly to discuss
and solve problems affecting the quality of their work
Supply Chain Management - managing the sequence of suppliers and purchasers covering all
stages of processing
o arm’s-length approach - organization spreads purchases among many suppliers and
encourages them to compete with one another
o partnership approach - cultivating intimate relationships with selected suppliers and
collaborating closely to coordinate tasks that benefit both parties