Principles of Management

BBA- II
Management by Bateman & Snell
 Chapter 1
Managing And Performing
Managing in the New competitive Landscape:
Globalization: Enterprises these days are global with offices and branches spread all over the
globe.
• The change from a local to a global marketplace is gaining momentum and is
irreversible
Technological Change: The Internet’s impact on globalization is only one of the ways that
technology is vitally important in the business world.

Knowledge Management: Practices aimed at discovering and harnessing an

organization’s intellectual resources.
Collaboration across Boundaries: One of the most important processes of knowledge
management is to ensure that people in different parts of the organization collaborate
effectively with one another. This requires productive communications among different
departments, divisions, or other subunits of the organization.

Managing for Competitive Advantage:

Innovation: The introduction of new goods and services.
Quality: The excellence of your product (goods or services).
Service: The speed and dependability with which an organization delivers what customers
want.
Speed: Fast and timely execution, response, and delivery.
Cost competitiveness: Keeping costs low to achieve profits and be able to offer prices that are
attractive to consumers.
Sustainability: The effort to minimize the use and loss of resources, especially those that are
polluting and non-renewable.
Functions of Management:
Management: The process of working with people and resources to accomplish
organizational goals.

Planning: The management function of systematically making decisions about the goals
and activities that an individual, a group, a work unit, or the overall organization will pursue.
Value: The monetary amount associated with how well a job, task, good, or service meets
users’ needs.
Organizing: The management function of assembling and coordinating human, financial,
physical, informational, and other resources needed to achieve goals.

Leading: The management function that involves the manager’s efforts to stimulate high
performance by employees.

Controlling: The management function of monitoring performance and making needed

changes.

Management Level and Skills

top-level managers: Senior executives responsible for the overall management and
effectiveness of the organization.
Top managers are concerned not only with the organization as a whole but also
with the interaction between the organization and its external environment. This
interaction often requires managers to work extensively with outside individuals and
organizations.
The chief executive officer (CEO) is one type of top-level manager found in large
corporations. This individual is the primary strategic manager of the firm and has authority
over everyone else. Others include the chief operating officer (COO), company presidents,
and other members of the top management team. In the 1970s, finance was by far the most
common single function represented in the top management team (TMT). The top team now
typically includes the CEO, COO, chief information (or technology, or knowledge) officer,
and other chiefs in the C-suite, including strategy (or corporate development) and marketing
(or branding). Functional chiefs sometimes have the title of senior vice president (SVP). 49 A
role for the C-suite of the future could well be Chief Sustainability Officer or even Climate
Change Officer.

middle-level managers: Managers located in the middle layers of the organizational

hierarchy, reporting to top level executives.

frontline managers: Lower-level managers who supervise the operational activities of

the organization

Management Skills:
Technical skill: The ability to perform a specialized task involving a particular method or
process.

conceptual and decision skills: Skills pertaining to the ability to identify and resolve
problems for the benefit of the organization and its members.

interpersonal and communication skills: People skills; the ability to lead,

motivate, and communicate effectively with others.

emotional intelligence: The skills of understanding yourself, managing yourself, and

dealing effectively with others.

social capital: Goodwill stemming from your social relationships.

 Chapter 2
The External and Internal Environment
The Chapter starts around with an example of how an efficient management system breeds
the ultimate reward. It exemplifies around Facebook. Due to lower quality of the mobile
application, the share rates went down for Facebook. With the increased quality and greater
advancement, it increased exponentially due to better management.

Figure 1: The External Environment

Open Systems: Organisations that are affected by, and that effect, their environment.
External Environment: All relevant forces outside a firm’s boundaries, such as
competitors, customers, government and the economy.

Competitive Environment: The immediate environment surrounding a firm,

includes suppliers, customers, rivals and the like

Macroenvironment: The general environment, includes government, economic

conditions and other fundamental factors that generally affect all organisations.
➢ The Macroenvironment is usually based on PESTEL
P stands for Political: Influences a government has on one’s business
➢ Primarily includes policy ➢ Foreign Trade
➢ Political stability, instability ➢ Tax policies
➢ Corruption
The fore mentioned factors depict the Effects a government has on the market

E stands for Economic: Effect of Economy on the events of business.

This includes
➢ Economic Growth ➢ Inflation, interest and
➢ Economic Stability unemployment rates
All these factors affect the purchasing power, demand and supply of products within the firm
along with affecting the product pricing.

S stands for Social: This deals with the customs and norms of the customer and the
environment. This includes
➢ Population growth rates ➢ Cultural barriers
➢ Age Distributions ➢ Income levels
These factors help identify target and potential customers.

T stands for Technological: This deals with the effects of technology on the
company i.e. dictating to regulation. Primarily deals with the level of innovation and
activities relating to Research and development.

The second E stands for Environmental: Effects of environment on the

production factor i.e. issues linking to disturbances. It also includes Ecological aspects. Along
with CSR and sustainability.

L stands for Legal: Deals with the legal procedures that an organisation may resort
to.
➢ Discrimination
➢ Antitrust
➢ Copyright
➢ All rights reserved
➢ Trademark

Demographics: Measures of various characteristics of the people who make up groups

or other social units
➢ Managers must consider workforce demographics while formulating human resource
strategies.
➢ Population growth can influence it
➢ Education and skill level of workers is another demographic factor.
Affects of Immigration on demographics:
Managers must consider workforce demographics in formulating their human resources
strategies. Population growth influences the size and composition of the labour force. In the
decade from 2008 to 2018, the U.S. civilian labour force is expected to grow at a rate of 8.2
percent, reaching 166.9 million. 8 This growth is slower than during the previous decade,
partly because young workers—those between the ages of 16 and 24—are declining in
numbers. The fastest-growing age group will be workers who are 55 and older, who are
expected to represent close to one-fourth of the labour force in 2018. What does this mean for
employers? They will need to find ways to retain and fully use the talents of their experienced
workers while competing for relatively scarce entry-level workers. They may find that many
of their older employees are willing to work past the traditional retirement age of 65; one
reason is that research suggests that a lack of pensions and adequate savings will make
retirement unaffordable for many of today’s baby boomers. 9 Eventually, however, declining
participation in work by older persons will require managers to find replacements for these
highly experienced workers.

The Competitive Environment:

The immediate environment surrounding a firm, includes suppliers, customers, government
and the economy.

Competitors:
Firms must identify their competitors. Competitors may include
❖ Small Domestic firms
❖ Strong regional competitors
❖ Big new companies exploring new markets
❖ Overseas firms
❖ Newer entries
Then, they must identify as to how these competitors compete. They may adhere to
❖ Price reductions
❖ Substitutes, monopolistic competition
❖ Advertising campaigns
❖ Product differentiation
Competitors are very direct when an industry growth is very slow. Intense competition causes
an industry to weaken and as a result, the weaker ones get eliminated.

New Entrants
Barriers to entry: Conditions that prevent new companies from entering an industry. These
can be imposed by the government.

Substitutes & Compliments

Technological advancements tend to bring product differentiation. Organisations therefore
may tend to bring their own intra products to gather more loyalty from the customers into the
company.
Organizations are at a disadvantage if they become overly dependant on any powerful
supplier.

Suppliers:
Switching Costs: Fixed costs buyers face when they change suppliers
Supply Chain Management: The managing of the network facilities and people that obtain
materials from outside the organization, transform them into products and take it to
customers.
➢ In this case, internet has lead to a flexible demand and differential demand of the
product therefore leading to a better flexibility of supply chain.
The Ideal Supply Chain: To have the right product available in the right quantity at the right
time and the right place.

Customers:
Final Customers: A customer who purchases products in their finished form.
Intermediate consumer: A consumer who purchases raw materials or wholesale products
before selling them to the final customer.
➢ These are a part of B2B(Business to business) selling
If managers do not understand how the environment affects the organizations or identify
threats than their ability to make decisions and execution of plans is little.

Environmental Analysis
Environmental uncertainty: Managers do not have enough information to understand or
predict the future. The environmental uncertainty takes place due to two factors, Complexity
& Dynamism
Complexity: The complexity of connections within the industry which tends to be
complicated.
Dynamism: Discontinuous change that occurs within the industry.
Environmental uncertainty brings the need for managers to rapidly develop and adapt to new
techniques.

Methods to cope with uncertainty:

Environmental Scanning:
Searching for and sorting through info about the environment. Figuring out “Who are the
current competitors?” The ideal philosophical thinking behind the proposed challenges tend
to bring out competitive intelligence.
Competitive intelligence: Info that helps managers how to compete better.

Scenario Development: A narrative that describes a particular set of future conditions.

Best case scenarios → Middle ground → Worst case scenarios
As a manager you will quite likely be involved in budgeting for your area. You will almost
certainly be asked to list initiatives that you would eliminate in case of an economic down
turn. Effective managers regard the scenarios they develop as living documents, not merely
prepared once and put aside. Instead, they constantly update scenarios to take into account
relevant new factors the emerge.
Forecasting: Method for predicting how variables will change in the future.
Benchmarking: The process of comparing an organization’s practices and technologies with
those of other companies.

Responding to the environment

Changing the environment you are in
Strategic manoeuvring: An organization’s conscious efforts to change the boundaries of its
task environment.
Managers can use several strategic manoeuvres including
➢ Domain Selection: Entering a new market or industry with an existing expertise
➢ Diversification: Investment in a different product, business or geographic area.
➢ Merger: one or more companies combining with another
 ➢ Acquisition: One firm buying another.
➢ Divestiture: A firm selling one or more businesses.
➢ Prospectors: Companies that continually change the boundaries for their task
environment by seeking new products and markets, diversifying and merging or
acquiring new enterprises
➢ Defenders: Companies that stay within a stable product domain as a strategic
manoeuvre.

Influencing Your Environment:

Independent Action: strategies that an organization acting on its own uses to change some
aspects of the current environment.
Cooperative Strategies: Strategies used by two or more organizations working together to
manage the external environment.
Independent Strategies: Strategies that an organization acting on its own uses to change some
aspects of current environment.

Adapting at Boundaries:
Buffering: Creating supplies of excess resources in case of unpredictable needs at either ends
of input & output
Smoothing: Levelling normal fluctuations at the boundaries of the environment.
Empowerment: The process of sharing power with employees thereby enhancing their
confidence in their ability to perform their jobs and their belief that they are influential
contributors to organisation.

Adapting at the core

Flexible processes: Methods for adapting the technical core to changes in the environment.

Choosing response approach

Three general considerations help guide management’s response to the environment. First,
organizations should attempt to change appropriate elements of the environment.
Environmental responses are most useful when aimed at elements of the environment that
• cause the company problems,
• provide it with opportunities
• allow the company to change successfully.
Second, organizations should choose responses that focus on pertinent elements of the
environment. If a company wants to manage its competitive environment better competitive
aggression and pacification are viable options.
Third, companies should choose responses that offer the most benefit at the lowest cost.
Return-on-investment calculations should incorporate short-term financial considerations as
well as long-term impact.
The Internal Environment
Organization culture: The set of important assumptions about the organization and its goals
and practices that members of the company share.
Cultures can be strong or weak; strong cultures can have great influence on how people think
and behave. A strong culture is one in which everyone understands and believes in the firm’s
goals, priorities, and practices. A strong culture can be a real advantage to the organization if
the behaviours it encourages and facilitates are appropriate ones
In contrast, a strong culture that encourages inappropriate behaviours can severely hinder an
organization’s ability to deal effectively with its external environment—particularly if the
environment is undergoing change, as is almost always the case today. A culture that was
suitable and even advantageous in a prior era may become counterproductive in a new
environment.
In contrast to strong cultures, weak cultures have the following characteristics: different
people hold different values, there is confusion about corporate goals, and it is not clear from
one day to the next what principles should guide decisions.

Diagnosing Culture
A strong culture integrates the following measures. These help one to know about the
prevailing culture in a company
• Corporate mission statements and official goals are a starting point because they will
tell you the firm’s desired public image
• Business practices can be observed. How a company responds to problems, makes
strategic decisions, and treats employees and customers tells a lot about what top
management really values.
• Symbols, rites, and ceremonies give further clues about culture.
• The stories people tell carry a lot of information about the company’s culture. Every
company has its myths, legends, and true stories about important past decisions and
actions that convey the company’s main values.
In general, cultures can be categorized according to whether they emphasize flexibility or
control and whether their focus is internal or external to the organization.
Group culture: A group culture is internally oriented and flexible. It tends to be based on the
values and norms associated with affiliation. An organizational member’s compliance with
organizational directives flows from trust, tradition, and long-term commitment.
Hierarchical culture: The hierarchical culture is internally oriented by more focus on control
and stability
Rational culture: The rational culture is externally oriented and focused on control. Its
primary objectives are productivity, planning, and efficiency.
Adhocracy: The adhocracy is externally oriented and flexible. This culture type emphasizes
change in which growth, resource acquisition, and innovation are stressed.
Organizational Climate
The patterns of attitudes and behaviour that shape people’s experience of an organization.
 Chapter 3
Managerial Decision Making
• The best managers make decisions constantly
• Problems a manager faces while making the decision.
o Lack of time assurance
o Getting involved is risky
▪ Tackling a problem but failing to do so in the future can hurt a
managers track record
o Since problems can be risky, it is easier to get busy with less demanding
activities and rather procrastinate.

Characteristics of Managerial decisions

Programmed decision
Decisions encountered and made before, having objectively correct answers, and solvable by
using rules, policies and numeral computations. These are relatively proven and related
mostly to the past experiences. However, managers often face

None programmed decisions:

New, novel, complex decisions having no answers.

Uncertainty & Risk

• Certainty: The state that exists when decision makers have accurate and
comprehensive information
• Uncertainty: The state that exists when decision makers have insufficient information.
• Risk: The state that exists when the probability of success is less than a hundred
percent.

An example of the greatest business decision of all time

Henry ford had seen that demand for Model T was rising but due to exhausting work ethic
needed, the employees were leaving their jobs. He therefore doubled the wages, reduced
work time, hired more, it sent costs through the roofs but brought in maximum profit as
productivity increased.

The Phases of decision making

1. Identifying & diagnosing the
problem
2. Generate alternative solutions
3. Evaluate alternatives
4. Make choice
5. Implement the decision
6. Evaluate the decision

Identifying the problem

Detect the problem via comparing current
performances with
➢ Past performance
➢ The current performance of the
organization
➢ Future expected plans via forecasting.
On often occasions, alternatives are way
more than what the managers realise.

Generating alternative solutions:

Readymade solutions: Ideas that have been
seen and tried before
Custom made solution: New, creative
solutions, designed specifically for the
problem.

Evaluating Alternatives:
Determining the value & adequacy of your
alternative.
➢ Contingency Plans: Alternative courses of action that can be implemented based on
how the future unfolds.
The process of considering multiple scenarios raises important “what if” questions for
decision makers and highlights the need for preparedness and contingency plans.
Making the choice
Maximising: A decision realising the best possible outcome

➢ Realises the great positive consequences and fewer negatives. Maximising results in
the greatest benefit at the lowest cost.
Satisficing: Choosing an option that is acceptable although necessarily the best or perfect.
Search for alternative stops after you find one that is feasible.
Optimizing: Achieve the best possible balance among several goals.

Implementing the decision:

➢ Determine how things will look when the decision is fully operational
➢ Chronologically order, perhaps with the help of a flow diagram, the steps necessary to
achieve a fully operational decision.
➢ List the resources and activities required to implement each step.
➢ Estimate time needed for each step.
➢ Assign responsibility for each step to specific individuals.

Evaluating the decision

➢ How well the decision works
Negative feedback means
➢ Implementation will require more time, resources, effort
➢ The decision was a bad one

The Best Decision:

Vigilance: A process in which a decision maker carefully executes all stages of decision
making.

Barriers to effective decision making

Psychological Biases
Decision makers are far from objective in the way they gather, evaluate, and apply
information in making their choices. People have biases that interfere with objective
rationality.
➢ Illusion of control: People’s belief that they can influence events even when they have
no control over what will happen.
➢ Framing effects: A decision bias influenced by the way in which a problem or
decision alternative is phrased or presented.
➢ Discounting the future: A bias weighing short term costs and benefits more heavily
than long term costs & benefits.
➢ Time pressures: Adhering to short term decisions leading to a low quality solution for
the solution is not well thought of and correspond to. Not too slow neither too fast.
ONLY MODERATE
 ➢ Bragging: Managers may end up bragging and being over confident over their
precious victories and experiences that they may end up overestimating.
➢ Social Realities: In slow moving firms, interpersonal factors decrease decision making
effectiveness.
o Important managerial decisions are marked by conflict among interested
parties.

Decision Making in groups

Decision making in groups

Potential advantages
➢ Large pool of information
➢ More perspectives and approaches
➢ Intellectual simulations
➢ People understand all the decisions
➢ People are committed to the decision

Potential Disadvantages
➢ One person dominates
➢ Conformity issues
➢ Satisficing
➢ Group think: A phenomenon that occurs in decision making when group members
avoid displacement as they strive for consensus.
➢ Goal displacement: A decision making group loses sight of its original group and a
new less important goal emerges.
o Attempts at rational decision making turn into heated debates and arguments.
Managing Group Decision Making
Leads to
➢ Appropriate leadership style. It should avoid the disadvantages of group making.
➢ The constructive use of disagreement & conflict
➢ Enhancement of creativity

Leadership Style:
Should avoid the disadvantages of group making.

Constructive Conflicts:
Plussing: Criticism brought with an idea for improvement.
The most constructive type of conflict is the
• Cognitive Conflict: Issue based differences in perspectives or judgement.
• Affective Conflict: Emotional disagreement directed towards others.
Can lead to anger bitterness, goal displacement and lower quality decisions.

Devil’s Advocate:
A person who has the job of criticising ideas to ensure that their downsides are fully
explored. An alternate for it is dialectic which is a structured debate comprising two
conflicting courses of action.

Dialectic:
A structured debate comprising of two opposite actions of conflict.

Encouraging Creativity
Readymade solutions might not be available therefore custom made are required. For custom
made, creativity is needed.
How to make people creative
• Don’t punish creative failures
• Avoid extreme time pressure
• Give an environment conducive of growth
• Give creative efforts and recognition

Brainstorming: A technique used to generate as many ideas as possible to solve a

problem

Organizational decision making

To understand decision making in organizations, a manager must consider
• the constraints decision makers face
• organizational decision processes
• decision making during a crisis.
Constraints facing a decision maker
They face various constraints—financial, legal, market, human, and organizational—that
inhibit certain actions. Capital or product markets may make an expensive new venture
impossible. Legal restrictions may constrain the kinds of international business activities in
which a firm can participate.

Organizational Decision Processes

Bounded Rationality Model

A less than perfect form of rationality in which decision makers cannot be perfectly rational
because decisions are complex.
➢ Imperfect, incomplete information about alternatives and consequences
➢ The problems one faces are quite complex.
➢ Human beings simply cannot process information fully to which they are exposed.
➢ There is not enough time to process all relevant information fully.

Incremental Model: Model of organizational decision making in which groups with

differing preferences use power and negotiation to influence decisions.
➢ Effective managers pay close attention to the group process, they manage it carefully.
You just have to read the pros and cons to decision making.

Coalitional model: Model of organizational decision making in which groups with

differing preferences use power and negotiation to influence decisions.
➢ The decision process becomes political as groups of individuals band together and try
collectively to influence the decision. Two or more coalitions form, each representing
a different preference, and each tries to use power and negotiations to sway the
decision.

Garbage can model: Model of organizational decision making depicting a chaotic

process and seemingly random decisions.
➢ This situation occurs because some problems are so complex that they are not well
understood and because decision makers move in and out of the decision process
because they have so many other things to attend to as well. This model implies that
some decisions are chaotic and almost random.
Decision making in crises
➢ An effective plan for crisis management (CM) should include the following elements:
Strategic actions such as integrating CM into strategic planning and official policies.
➢ Technical and structural actions such as creating a CM team and dedicating a budget
to CM.
➢ Evaluation and diagnostic actions such as conducting audits of threats and liabilities
and establishing tracking systems for early warning signals.
➢ Communication actions such as providing training for dealing with the media local
communities, and police and government officials.
➢ Psychological and cultural actions such as showing a strong top management
commitment to CM and providing training and psychological support services
regarding the human and emotional impacts of crises.
 Chapter 4
Planning & Strategic Management

Decision making steps and formal planning

The Basic Planning Process

Situational Analysis: A process planners use within time and resource constraints to
gather, interpret and summarise all info relevant to planning issue under consideration.
➢ Requires planners to allocate, measure and interpret all info relevant to planning.

Alternate goals and Planning: Based on the predictions in step one, alternates must
be made ready to be implemented.
➢ A target or end that management desires to reach.
To be effective, certain qualities are needed in a manager. These qualities are summed up
through SMART decision making capacities where
➢ S for Specific: When goals are precise, describing particular behaviours and outcomes,
employees can more easily determine whether they are working toward the goals.
 ➢ M for measurable: As much as possible, each goal should quantify the desired results
so there is no doubt whether it has been achieved
➢ A for attainable:
➢ R for relevant: Each goal should contribute to the organization’s overall mission
➢ T for time bound: Effective goals specify a target date for completion.
Plans: Actions or means a manager intends to implement to achieve goals

Goal: A target or end that management desires to reach.

Goal and plan evaluation: Evaluating advantages, disadvantages, potential effect and
action plan of each goal and plan.

Goal and plan selection: Selecting the most feasible goal after evaluating.
Implement: A narrative that describes a particular set of future conditions.
➢ Successful implementation requires a plan to be linked to other systems in the
organization.
Goal achievement must be linked to properly provided incentives.
Scenario: A narrative that describes a particular set of future conditions.

Monitor & Control: Evaluating performance of the project to goals and plans. The
control systems to measure the performance allow them to take correct action.

Strategic Planning
A set of procedures for making decisions about the organization’s long term goals and
strategies.
Strategic goals: Major targets or results relating to the organization’s long term survival,
value and growth. Top level managers provide goals that are effective, efficient, increasing
market share, quantity, quality of output, improving profitability, productivity
Strategy: A pattern of actions and resource allocations designed to achieve the organization'

Tactical and Operational Planning:

Hierarchy of goals and planning

Tactical Planning: A set of procedures for translating broad strategic goals and plans into
specific goals and plans that are relevant to a distinct portion of organization.
Operational Planning: The process of identifying the specific procedures and process required
at lower level of organization.
➢ In the hierarchical note, decisions flow from top level to bottom ad gets to a shorter
time period.
Strategy Map: Provides a tool managers can use to communicate their strategic goals and
enable members to organise at every level to understand the parts they will play in helping
them.

Strategy map

Four key assets

• Skill of the people and their ability to understand, to be able to grow and learn
• The effectiveness of its internal processes.
• The ability to deliver value to customers
• Ability to grow its financial assets.

Strategic Management:
A process that involves managers from all parts of the organization in the formation and
implementation of strategic goals and strategies.
➢ Integrates strategic planning and management into a single process.
Strategic management has six basic steps.
➢ Establishment of mission, vision and goals.
➢ Analysis of external opportunities and threats
➢ Analysis of internal strengths and weaknesses
 ➢ SWOT analysis
➢ Strategy implementation
➢ Strategic control

Strategy management plan

Step 1: Establishment of mission, vision and goals

Mission: An organization’s basic purpose and scope of operation.
➢ The mission describes the organization as it currently operates.
Strategic vision: The long term direction and strategic intent of company.
➢ It points to the future and provides a perspective on where the organization is heading.
The leadership support and the emotional attachment to a cause i.e. mission plays a
vital role
Where leadership is string, statements of visions and goals clarify the organization’s
purpose to key constituencies outside organizations.

Step 2: Analysis of External Opportunities and Threats

Success of this step is mainly based upon the successful evaluation of macro and competitive
environment.
Stakeholders: Groups and individuals who affect and are affected by the achievement of the
organization’s mission, goals and strategies.
➢ Buyers, suppliers, competitors, government and regulatory agencies, unions and
employee groups.
A critical task in environmental analysis is forecasting future trends. To have a precise
judgement, it is necessary to be having a better technique to be judging complex situations.
Judgement is susceptible to bias and manager should use subjective judgements as inputs to
quantitative models.
➢ To spot and identify opportunities out of threats is the key element in the process.
Step 3: Analysis of Internal Strengths & Weaknesses
Internal analysis of the key strengths and weaknesses present within the system. The internal
analysis gives strategic decision makers an inventory of organization’s existing functions,
skills and resources.
➢ An effective analysis provides a clearer understanding of how a company can
compete through its own resources.
➢ If the resource can create customer value i.e. increasing benefits customers derive
from work, the resource leads to a competitive advantage.

Resources and Core capabilities

Resources and core capabilities

➢ Resources are of advantage if they are rare and equally dividable to all competitors
➢ Resources that are difficult to imitate, they provide a source of competitive advantage.
➢ Well organised resources tend to bring competitive edge to organization.
➢ If resources are RARE, INMITABLE AND ORGANISED, they are a company’s
➢ core capability.: A unique skill or knowledge an organization possesses that gives it
an edge over other competitors.
Benchmarking: To assess and improve performance, companies use benchmarking i.e., the
process of assessing how well one company’s basic functions and skills compare to those of
another company or set of opportunities.
o Internal Benchmarking: Within the company’s resources
o External Benchmarking: Apart from the company’s resources.
The objective of benchmarking is to understand the best steps another company takes and
tries to embed into your own system.
Step 4: SWOT analysis and Strategy Formulation
A Comparison of strengths, weaknesses, opportunities and threats that help execute and
formulate a strategy.
o Helps managers summarise the relevant, important facts from their external and
internal analysis.
o The managers than formulate strategies based on relevant and important facts from
their external and internal analysis
o They tend to capitalise on the strengths, weaknesses and advantages an organization’s
available resources provides.
o The more the uncertainty exists in the external environment, the more the strategy
needs to focus on building internal capabilities through practices such as knowledge
sharing and continuous process improvement.

Corporate Strategy: The set of business, markets or industries in which organization

competes and the distribution of resources among those entities.
➢ Concentration Strategy: A strategy employed by an organization that operates a single
business and competes a single industry.
o This is followed by industries who have narrow range of competencies.

Summary of corporate strategies

Vertical integration: The acquisition or development of new businesses that produce parts or
components of the organization’s product.
Concentric Diversification: A strategy used to add new businesses that produce related
products or are involved in related markets and activities.
➢ Implies moving into businesses unrelated to the company’s core.
➢ These are often used to avoid and minimize risks due to fluctuations in one industry.
Conglomerate diversification: A strategy used to add new businesses that produce unrelated
products or are involved in unrelated markets and activities.
 Figure 2: The BCG matrix

TRENDS IN COPORATE STRATEGY:

Business Strategy: The major actions by which a business competes in a particular industry or
market
Low cost strategy: A strategy an organization uses to build competitive advantage by being
efficient and offering a standard, no frills product.
Differentiation Strategy: A strategy an organization uses to build competitive advantage by
being unique in its industry or market segment along one or more dimensions.

➢ Based on high quality product, excellent marketing and distribution or superior

service.
➢ Functional Strategy: Strategies implemented by each functional are of the
organization to support the organization’s business strategy.

Step 5: Strategy Implementation

Effective implementation is the key
❖ Define strategic tasks: Helping employers understand how they can contribute to the
organization
❖ Assess organization capabilities: Evaluate the organization’s ability to implement the
strategic tasks
❖ Develop an implementation agenda
❖ Create an implementation plan.

Step 6: Strategic Control

A system designed to support managers in evaluating the organizations process regarding its
strategy and when discrepancies exist, taking corrective action.
Strategic control system: A system designed to support managers in evaluating the
organization’s progress regarding its strategy and, when discrepancies exist, taking corrective
action
 Chapter 5
Ethics, Corporate Responsibility and Sustainability
This chapter
❖ Explores the ways of applying ethics
o The system of rules that governs ordering of values.
Organizations have a responsibility to meet social obligations beyond earning profits within
legal and ethical constraints.

Process for ethical decision making

Personal Issues: Unfavourable and unintended biases, li, unlike thing. Personal
dilemma’s come into play.
Ethics tend to identify both the rules that should govern people’s behaviour and the “goods”
that are worth seeking.
➢ Ethical decisions are guided by the underlying values of an individual.
o Values: Principles of conduct such as care, honesty, promise, excellence and
loyalty.
There are ethical systems but first
The Ethical Issue: Situation, problem or opportunity in which an individual must choose
among several actions that must be evaluated as morally right or wrong.
Business Ethics: The moral principles and standards that guide behaviour in the world of
business.
Moral Philosophy: Principles, rules and values people use in deciding what is right or wrong.
The Ethical Systems
Universalism: All people should upload certain values that society needs to function for
example honesty.
CAUX Principles: Ethical principles established by international executives based in Caux,
Switzerland, in collaboration with business leaders from Japan, Europe & United States.
➢ Kyosei: Living and working together for the common good, allowing co-operation
and mutual prosperity to co-exist with healthy and fair competitors.
➢ Human dignity: Concerns the values of each person as an end, not a means to the
fulfilment of other’s say.
Egoism: An ethical system defining acceptable behaviour as that which maximises
consequences for the individual. In short, it means doing the right thing.
Utilitarianism: An ethical system stating that the greatest good for the greatest number should
be the over riding concern of decision makers.
Relativism: Philosophy that bases ethical behaviour on the opinions and behaviours of
relevant other people.
Virtue Ethics: Classification of people based on the level of moral judgement.
➢ Implies what is moral is what a morally correct person deems correct.
Kohlberg’s model of cognitive moral development:
Perspective that what is moral comes from what a mature person with :good moral” character
would deem right.
➢ Identifies judgement into categories based on their level of moral judgement.
o Preconventional Stage: Making decisions based on rewards, punishment and
immediate self interest
o Conventional Stage: Conform to the expectations of ethical behaviour held by
groups or institutions such as society, family or peers.
o Principled Stage: Seeing beyond authority, laws and norms and follow self-
chosen ethical principles.

Pyramid of global CSR

The Ethics Environment:
Ethical Environment: In an organization, the processes by which decisions are evaluated and
made on the basis of right & wrong.
Sarbanes- Oxley Act: An act passed into law by congress in 2002 to establish strict
accounting and repenting rules to make senior managers more accountable and to improve
and maintain investor confidence.
Ethical climate: In an organization, the processes by which decisions are evaluated and made
on the basis of right and wrong.

Danger Signs:
Deals with what leads to unethical behaviour
1. Excessive emphasis on short-term revenues over longer-term considerations
2. Failure to establish a written code of ethics
3. A desire for simple, quick-fix solutions to ethical problems
4. An unwillingness to take an ethical stand that may impose financial costs
5. Consideration of ethics solely as a legal issue or a public relations tool
6. Lack of clear procedures for handling ethical problems
7. Responding to the demands of shareholders at the expense of other constituencies
Ethical Leader: One who is both moral person and a moral manager influencing others to
behave ethically.
Corporate Ethical Standards: A certain set of standards that needs to be picked up in order to
get responses done.
Ethics Code: A set of statements that need to be implemented on in order to change a
company’s climate for the better and truly encourage ethical behaviour.
To make an ethics code effective, do the following:
(1) Involve those who have to live with it in writing the statement;
(2) focus on real-life situations that employees can relate to
(3) keep it short and simple, so it is easy to understand and remember
(4) write about values and shared beliefs that are important and that people can really believe
in;
(5) set the tone at the top, having executives talk about and live up to the statement

Ethics Programs: Corporate Ethics programs which include formal ethic codes that
articulate the company’s expectations rehearsing ethics and ethics committees.
Ethics programs can range from compliance-based to integrity-based
Compliance-based ethics programs: Company mechanisms typically designed by corporate
counsel to prevent, detect, and punish legal violations.
➢ Designed by corporate counsel to prevent, detect, and punish legal violations.
Program elements include establishing and communicating legal standards and
procedures, assigning high-level managers to oversee compliance, auditing and
monitoring compliance, reporting criminal misconduct, punishing wrongdoers, and
taking steps to prevent offenses in the future.
➢ Such programs should reduce illegal behaviour and help a company stay out of court
Integrity-based ethics programs: Company mechanisms designed to instil in people a
personal responsibility for ethical behaviour.
➢ Go beyond the mere avoidance of illegality; they are concerned with the law but also
with instilling in people a personal responsibility for ethical behaviour. With such a
program, companies and people govern themselves through a set of guiding principles
that they embrace.

Ethical Decision Making:

Requires moral awareness such as moral judgement and moral character.
Courage: to take proper moral decision and to implement them requires one to have sheer
courage and determination to pull it off. Behaving ethically requires not only moral
awareness and moral judgement but also moral character, including the courage to take
consistent actions with your ethical decisions. Courage plays a very important role in moral
awareness.

Corporate Social Responsibility:

An obligation towards the society assumed by business.
➢ Takes into account the stakeholder’s expectations and often considers the triple
bottom line of economic, social and environmental performance.
Social responsibilities can be classified into
Economic responsibilities: To produce goods and services that society wants at a price that
perpetuates the business and satisfies its obligations to investors.
Legal Responsibilities: To obey local, state, federal, and relevant international laws.
Ethical responsibilities: Meeting other social expectations, not written as law.

Philanthropic responsibilities: Additional behaviours and activities that society finds desirable
and that the values of the business support
The natural Environment and Sustainability
1. The Risk Society
2. Ecocentric Management: Its goal is the creation of sustainable economic
development and improvement of quality of life worldwide for all organizational
stakeholders.
➢ sustainable growth: Economic growth and development that meet present needs
without harming the needs of future generations.
➢ Life-cycle analysis (LCA): A process of analysing all inputs and outputs, through the
entire cradle-to-grave life of a product, to determine total environmental impact.
➢ carbon footprint: The output of carbon dioxide and other greenhouse gases.
 Chapter 6
International management
The global economy matters precisely because our customers, employees and suppliers could
be located in any part of the world.
As the world’s economic output has grown, the volume of exports has also grown.
A consequence of increased global integrating that foreign direct investment is playing an
ever increasing role in the global economy as companies of all sizes invest overseas.

The Role of outsourcing and offshoring:

Outsourcing: Contracting with an outside provider to produce one or more of an
organization’s goods or services.
Offshoring: Moving work to other countries.
➢ The problem that comes from offshoring is that it takes away from the genuine
contenders to low cost countries.
➢ Offshoring increases efficiency, frees funds for expansion to low cost countries.
➢ One less positive effect of offshoring has been wage stagnation in industries where
offshoring is common because workers in those areas compete with their lower wage
counterparts abroad.

The Global Environment:

European Unification: Unification is creating a more competitive Europe.
➢ The economic difficulties have brought down the costs of investing.
➢ A competitive and regulatory environment clearly presents new challenges to
managers and their employees.
Asia, China and India: The oil production is a reason why managers everywhere must consider
their long range planning.
➢ The investment of managerial activities in China relates to Its consumption
➢ Lower wage rates led to many managers to relocate to China or to import an
increasing number and variety of Chinese products as they were cheap.
o Threats to China involve political instability and the countries looking to
restrict Chinese dominance.
➢ Effect of India: India has an essential market due to a large labour supply and major
companies expanding their training programs.
The Americas:
NAFTA
An economic pact that combined economies of US, Canada and Mexico into one of
the largest trading blocs.
 Industries that have benefitted in the short run include capital goods suppliers,
manufacturers of consumer durables, grain producers.
NAFTA invested in CEMEX.

Pressures for Global integration

Products that serve universal needs require little adaptation across national markets, thus
global integration is facilitated.
➢ Competitive pressures to reduce costs may cause managers to seek to integrate
manufacturing globally.
➢ The presence of competitors engaged in global strategic co ordination is another
facilitator that creates pressures for global integration.

Pressures for Local Responsiveness:

➢ Managers must be knowing of their company’s adaptability to different needs in
different locations.
➢ Strong pressures for local responsiveness emerge when consumer tastes and
preferences differ.
➢ Customized to accommodate changes in traditional practices.

Choosing a global strategy

Managers can choose four approaches to international competition, depending on their

company’s position on the integrative responses.
The INTERNATIONAL Model:
An organizational model that is composed of a company’s overseas subsidiaries and
characterised by greater control by the parent company over the research function and local
product and marketing strategies than is the case of multinational model.
➢ Using your core capabilities to expand into the global market
Advantage
Facilitates the transfer of the skill and know how from the parent company to
subsidiaries around the globe.
Emphasizes on general management skills
The Multinational Model
Global efficiency is not needed but adapting to local conditions offers advantage. It is an
organizational model that consists of subsidiaries in each country in which a company does
business and provide a great deal of discretion to those subsidiaries to respond to local
conditions
Due to autonomy, each multinational subsidiary can customize its products and strategies
according to the tastes and preferences.
Advantage: Greater differentiation and integration into culture.
Disadvantage: Higher costs and duplicating effort.
Global Model: An organizational model consisting of company’s overseas subsidiaries and
characterized by centralized decision making and tight control by the parent company over
most aspects of worldwide operations; typically adopted by organizations that base their
global competitive strategy on cost considerations.
➢ To market a standardized product and to manufacture it in a limited number of places
where the mix of costs and skills is favourable.
Advantages: Hitting economies of scale
Disadvantages: Less responsive to consumer taste and demands in different countries.

Transnational Model: An organizational model characterized by centralizing certain functions

in locations that best achieve cost economies; basing other functions in the company’s
national subsidiaries to facilitate greater local responsiveness and fostering communications
among subsidiaries to permit transfer of technological skill and expertise.
➢ In short, thinking globally but acting locally.
➢ The model integrates getting know how, local responsiveness and cost economies.
➢ To achieve cost economies, companies must base global scale production plants for
labour intensive products in low wage countries

The Entry Modes

Exporting: Provides scale economies by avoiding the cost of manufacturing in other
countries.
➢ Is consistent with a pure global strategy
Disadvantages
➢ Can incur loss if the exports are made to countries with lower cost capacity.
➢ High transportation costs can make it uneconomical for a bulk of products.
➢ Host countries can impose tariff barriers.
Licensing: An arrangement by which a license in other country buys the rights to manufacture
a company’s product in its own country for a negotiated fee.
Disadvantage
Licensing may lead to loss of core capabilities for others getting to know.
Franchising: A feature of servicing companies. The company sells limited rights in exchange
for a sum of money.
➢ Has to be in strict conformity with people of the parent company.
Joint Venture: Joining hands with another company.
➢ Benefits the companies with the knowledge flowing from both the sides
➢ Sharing of costs and risks with the local partner
Disadvantages
➢ Risking losing core capabilities to the other company
➢ Companies may find themselves at odds with one another.
➢ There can be conflicts over who wishes to control.
Wholly owned Subsidiaries: an independent company owned by the parent corporation
➢ When a company’s competitive advantage is based on technology, a wholly owned
subsidiary normally is the preferred entry mode because it reduces the risk of losing
control over the technology.
➢ Wholly owned subsidiaries are thus the preferred mode of entry in the semiconductor,
electronics, and pharmaceutical industries.
Disadvantages:
A wholly owned subsidiary gives a company tight control over operations in other
countries, which is necessary if the company chooses to pursue a global strategy.
Establishing a global manufacturing system requires world headquarters to have a high
degree of control over the operations of national affiliates. Unlike licensees or joint
venture partners, wholly owned subsidiaries usually accept centrally determined decisions
about how to produce, how much to produce, and how to price output for transfer among
operations.
➢ They also tend to be expensive to set up.
Managing across the Borders
When establishing operations overseas, headquarters executives have a choice among
sending expatriates (individuals from the parent country), using host-country nationals
(natives of the host country), and deploying third-country nationals
Expatriates: Parent-company nationals who are sent to work at a foreign subsidiary

Host-country nationals: Natives of the country where an overseas subsidiary is located.

Third-country nationals: Natives of a country other than the home country or the host country
of an overseas subsidiary.
Skills of the global manager
failure rate: The number of expatriate managers of an overseas operation who come home
early.
➢ Reasons of failure
o Lack of technical capabilities, personal and social issues, family issues and
employee dissatisfaction.
For the expatriate: adjustment requires flexibility, emotional stability, empathy for the
culture, communication skills, resourcefulness, initiative, diplomatic skills.
Understanding Cultural Issues
Ethnocentrism: Most managers act out of the tendency to judge others by the standards of
one’s group or culture, which are seen as superior.
➢ Such tendencies may be totally unconscious
Culture Shock: The disorientation and stress associated with being in a foreign environment
Geert Hofstede has identified four dimensions along which managers in multi-dimensional
organizations tend to view cultural differences.
➢ Power distance: the extent to which a society accepts the fact that power in
organizations is distributed unequally.
➢ Individualism/collectivism: the extent to which people act on their own or as a part of a
group.
➢ Uncertainty avoidance: the extent to which people in a society feel threatened by
uncertain and ambiguous situations.
➢ Masculinity/femininity: the extent to which a society values quantity of life (e.g.,
accomplishment, money) over quality of life
Cross cultural management involves the effective management of inpatriates.
Inpatriate: A foreign national brought in to work at the parent company
➢ May be skilled, talented yet may get ignored because of biases and the sense of
investment in their own expatriates.
 Chapter 7
Entrepreneurship
Entrepreneurship: The pursuit of lucrative opportunities by enterprising individuals.
Small business: A business having fewer than 100 employees, independently owned and
operated, not dominant in its field, and not characterized by many innovative practices.
Small-business owners tend not to manage particularly aggressively, and they expect normal,
moderate sales, profits, and growth. In contrast, an
Entrepreneurial venture: A new business having growth and high profitability as primary
objectives.

Myths about Entrepreneurship:

Entrepreneurs generate new ideas and turn them into business ventures. 14 But
entrepreneurship is not simple, and it is frequently misunderstood.

An Entrepreneur vs an Intrapreneur
Entrepreneur: Individual who establishes a new organization without the benefit of
corporate sponsorship.

Intrapreneurs: New venture creators working inside big companies.

Why become an Entrepreneur
Entrepreneurs start their own firms because of the challenge, the profit potential, and the
enormous satisfaction they hope lie ahead. People starting their own businesses are seeking a
better quality of life than they might have at big companies. They want to feel independence
and feeling of being part of the action. They feel tremendous satisfaction in building
something from nothing, seeing it succeed, and watching the market embrace their ideas and
products.
What does it take to succeed?
Successful entrepreneurs are innovators who also have good knowledge and skills in
management, business, and networking. 24 In contrast, inventors may be highly creative but
often lack the skills to turn their ideas into a successful business. Manager–administrators
may be great at ensuring efficient operations but aren’t necessarily innovators. Promoters
have a different set of marketing and selling skills—useful for entrepreneurs, but those skills
can be hired, whereas innovativeness and business management skills remain the essential
combination for successful entrepreneurs.
What Business should one start?
The Idea: Many entrepreneurs and observers say that in contemplating your business, you
must start with a great idea. A great product, a viable market, and good timing. are essential
ingredients in any recipe for success.
The Opportunity: Entrepreneurs spot, create, and exploit opportunities in a variety of ways.
Entrepreneurial companies can explore domains that big companies avoid and introduce
goods or services that capture the market because they are simpler, cheaper, more accessible,
or more convenient.
Franchising: An entrepreneurial alliance between a franchisor (an innovator who has created
at least one successful store and wants to grow) and a franchisee (a partner who manages a
new store of the same type in a new location).
• One important type of opportunity is the franchise
• People often assume that buying a franchise is less risky than starting a business from
scratch, but the evidence is mixed.
If you are contemplating a franchise, consider its market presence (local, regional, or
national), market share and profit margins, national programs for marketing and purchasing,
the nature of the business, including required training and degree of field support, terms of
the license capital required, and franchise fees and royalties.

The Internet: five successful business models have proven successful in the e-commerce
market: transaction fee, advertising support, intermediary, affiliate, and subscription models
transaction fee model: Charging fees for goods and services.
advertising support model: Charging fees to advertise on a site.
intermediary model: Charging fees to bring buyers and sellers together.

affiliate model: Charging fees to direct site visitors to other companies’ sites.
subscription model: Charging fees for site visits.

Social Entrepreneurship: Leveraging resources to address social problems.

Social enterprise: Organization that engages in social entrepreneurship.

What does it require to be a good Entrepreneur

1. Commitment and determination: Successful entrepreneurs are decisive, tenacious,
disciplined, willing to sacrifice, and able to immerse themselves in their enterprises.
Entrepreneurial passion can play an important role in all of these things.
2. Leadership: They are self-starters, team builders, superior learners, and teachers.
Communicating a vision for the future of the company
3. Opportunity obsession: They have an intimate knowledge of customers’ needs, are
market driven, and are obsessed with value creation and enhancement.
4. Tolerance of risk, ambiguity, and uncertainty: They are calculated risk takers and risk
managers, tolerant of stress, and able to resolve problems.
5. Creativity, self-reliance, and ability to adapt: They are open-minded, restless with the
status quo, able to learn quickly, highly adaptable, creative, skilled at conceptualizing,
and attentive to details.
6. Motivation to excel: They have a clear results orientation, set high but realistic goals,
have a strong drive to achieve, know their own weaknesses and strengths, and focus
on what can be done rather than on the reasons things can’t be done.
Business incubators: Protected environments for new, small businesses.
Business accelerator: An organization that assists young firms in achieving faster and
sustainable growth as they move into the next phase of their development.
Common Management Challenges
• One might not enjoy it
• Survival is difficult
• Growth creates new challenges
• It is hard to delegate
• Misuse of funds
• Poor controls
• Morality and Succession

Initial public offering (IPO): Sale to the public, for the first time, of federally registered and
underwritten shares of stock in the company.
 Chapter 8
Organisational Structure
The chapter focuses on vertical and horizontal dimensions of an organisation’s structure.
Deals with
• Principles of differentiation & Integration
• Vertical Structure, issues of authority, delegation and hierarchy plus decentralization
• The horizontal structure: which includes functional, divisional and matrix forms
The organisational management is divided in itself amongst a structure which disperses the
responsibilities of the short listed management
➢ The fore mentioned phenomenon is depicted through an organisation chart.

Organisational chart: The reporting structure and division of labour in an

organisation.

In the chart above

➢ The boxes represent different works
➢ The titles in the boxes represent work one by each unit
➢ Reporting and authority relations are indicated by solid lines showing superior
subordinate connections.
➢ Levels of management are indicated by the number of horizontal layers in chart.

Differentiation
➢ An aspect of organisation’s internal environment created by job specialization and
division of labour
➢ Working on different kinds of tasks using different skills and work methods
Division of labour

➢ The assignment of different tasks to different people or groups

Specialization

➢ A process in which different individuals and units perform different tasks

Organisations in complex, dynamic environments developed a higher degree of
differentiation. Companies in simple, stable environments developed low levels of
differentiation. Companies in intermediate environment had intermediate differentiation,

Integration.
➢ The degree to which differentiated work units work together and coordinate their
efforts
➢ Putting back differentiated unites back together so that work is coordinated into
overall product
Coordination:

➢ The procedures that link the various parts of an organisation for the purpose of
achieving the organisation’s overall mission
➢ Inter dependence of different units on each other for it would be difficult to handle at
certain occasions shall units work independently.

The Vertical Structure

Authority in Organisations: The legitimate right to make decisions and tell other
people what to do. Authority in organisation is not always position dependant. People with
particular expertise can carry out certain aspects of the job.
The use of authority is the key. Authority lies in the position of the person and not the person
itself or the name.

Board of Directors: Stake holders elect a panel who are directly involved in managing
the organisation. The three major tasks of the board are as follows
➢ Electing, assessing, rewarding and perhaps replacing the CEO.
➢ Determining the firm’s strategic direction and reviewing financial performance.
➢ Ensuring ethical, socially responsible and legal conduct.
The top executives are divided into two classes
➢ Insiders ➢ Outsiders
The trend has shifted away towards incorporating more of outsiders due to them providing a
different dimension to the situations ahead. One reason was them being more objective about
what the company could do during difficult times.
Chief Executive Officer:
➢ The Chief Authority
➢ Personally accountable to the owners and organisation’s performance.

Top Management Team:

CEO’s share their authority with other key members of top management team. Top
management team members include the CEO, President, COO and CFO. All of them are
involved in key decision making processes.

Hierarchical Levels: The authority levels of organisational pyramid.

Corporate Governance: The role of a corporation’s executive staff and board of directors in
ensuring that the firm’s activities meet the goals of the firm and the stakeholders.
➢ In recent years due to scandals, public confidence in corporate governance has eroded
significantly.
The top management team is also called the top broad level of organisation

Second Broad Level of Organisation:

Middle Management: In charge of plants or departments.
Lowest level of management: Office managers, sales managers. Management and
workers. This is the operational level of organisation.

Span of Control
There is a common concept that fewer layers help more in terms of overall performance. It
can help greater integration, lower costs, lower need for unity, strong, supervisor.
Span of Control: The number of subordinates who report directly to an executive or
supervisor. Indirectly, it can be said, as the number of people a manager has under him with
the responsibility to manage them.
➢ Narrow Spans build an efficient reporting system.
➢ Wider spans create s flat organisation with less reporting tools.
Pros of Narrow Span of Control: Narrow enough to permit a greater reporting.
Cons of Narrow span of control: Greater number of managers creating a conflict of
interest.
Dependant factors for span of control :
➢ The work is clearly defined and unambiguous
➢ Highly trained sub ordinates.
➢ Manager’s capability
➢ Similar jobs
➢ Sub ordinates preferring autonomy to close supervisory control.
Delegation: The assignment of new or additional responsibilities to sub ordinates.
➢ Getting work done through others.

Responsibility, Authority and Accountability:

Responsibility: The assignment of task that an employee is supposed to carry out.
Accountability: The expectation that employees will perform a jab and take corrective
action when necessary and report upward on the status and quality of the performance.
➢ Effective delegation lowers a manager’s efforts and leads to effective results.
➢ Allows a manager to accomplish more than what they can actually achieve.
➢ Imparts a part of the skill and makes other delegate responsiveness.

How should managers Delegate?

I. Define the goal succinctly
II. Select the person for the task
III. Solicit the sub ordinate’s view about suggested approaches
IV. Give the sub ordinate the authority, time and resources to perform
V. Schedule checkpoints for reviewing process.
VI. Follow through be discussing progress at appropriate intervals

Decentralization:
Decision making at relatively lower levels
➢ Can be described as decision making by people who are more likely to be affected by
it.

The Horizontal Structure

Line Department: Units that deal with the organisation’s primary goods and services.
Staff Department: Units that support line departments.
Departmentalization: Subdividing an organisation into smaller subunits
➢ Functional
➢ Divisional
➢ Matrix

The Functional Organisation:

Departmentalization around specialized activities such as production, marketing and HR.
➢ Realization of economies of scale
➢ Effective monitoring of environment
➢ Maintenance of performance standards
➢ Learning
 Divisional Organisation
Departmentalization that group units around products, customers or geographic regions.
➢ Relates to division of work force into specific numbers which is followed by an
allotment of departments.
➢ Labours being divided into groups of three, all three work for operations, the
difference is the approach to which the task is taken to.
➢ In short, separate departments for each other.
Product Division: All functions that can contribute to a given product are organised under
one manager.
➢ Information is managed easily
➢ People have full time commitment to a particular product line
➢ Task responsibilities are very clear
➢ People receive broader training.
Customer and Geographic divisions : Helping a company make more responsive based
on demographic terms and customer priorities.

Matrix Organisation
An organisation composed of dual reporting relationships in which some employees report to
two superiors, a functional manager and a divisional manager.
➢ Functional and divisional forms overlap each other.
➢ Dual line of command.

Pros and Cons:

➢ Violation of unity of command principle.
o A structure in which each worker reports to one boss who in turn reports to
another boss.
Reporting to two bosses can create confusion with in the employees therefore leading to a
difficult situation.
Advantages:
➢ Linkage of employees at all levels and in functions to the company’s goals and
strategy
➢ More info shared across functions
➢ Greater responsiveness
➢ Creative ideas from cross functional work.
Disadvantages:
➢ Unclear responsibilities and competing priorities.
➢ Violation of unity of command principle
➢ Accountability difficult to define
The Network Organization
The collection of independent mostly single function firms that collaborate on a good or
service.
➢ A network between the different stake holders where each firm is able to pursue its
own distinctive competence yet work effectively with other members of the network.

Dynamic network
Temporary arrangements among partners that can be assembled and reassembled to adopt to
the environment.
Successful networks offer flexibility, innovation, quick responses to threats and opportunities
and reduced costs and risks.
Designer roles: The broker serves as a network architect who envisions a set of groups or
firms whose collective expertise could be focused on a particular good or service.
Process engineering role: The broker serves as a network co-operator who takes the
initiative to lay out the flow of resources and relationships and makes certain that everyone
shares the same goal.
Nurturing role: The broker serves as a network developer who nurtures and enhances the
network to make certain that relationships are healthy.

Organisational Integration
The greater the differentiation, it requires more of an integration.
Coordination by standardization:
Standardization : Establishing common routines and procedures that apply uniformly to
everyone
Formalization : The presence of rules and regulations governing how people in an
organization interacts.
Co Ordination by plan:
Inter dependant units are required to meet deadlines and objectives that contribute to a
common goal.
Co Ordination by Mutual Adjustment:
Units interact with one another to make accommodations to achieve flexible coordination.
Co Ordination & Communication
Option 1: Reducing the need for info
➢ Create slack resources
➢ Create self-contained tasks
Option 2: Increasing info- processing capabilities
➢ More employees, more processors
 Chapter 9
Organizational Agility
Deals with the response structures within an organization and how it can be improved and
affected

The Responsive Organization

The formal structure is put in place to control people, decisions, and actions

Mechanistic organization: A form of organization that seeks to maximize

internal efficiency.
The mechanistic structure was not the only option therefore

Organic structure: An organizational form that emphasizes flexibility.

The organic structure can be described as follows:
1. Jobholders have broader responsibilities that change as the need arises.
2. Communication occurs through advice and information rather than through orders and
instructions.
3. Decision making and influence are more decentralized and informal.
4. Expertise is highly valued.
5. Jobholders rely more heavily on judgment than on rules.
6. Obedience to authority is less important than commitment to the organization’s goals.
7. Employees depend more on one another and relate more informally and personally.
• People in organic organizations work more as teammates than as subordinates
who take orders from the boss, thus breaking away from the traditional
bureaucratic form.
• The more organic a firm is, the more responsive it will be to changing competitive
demands and market realities.

Strategy and Organizational Agility

Organizing around core capabilities:

Managers who want to strengthen their firms’ competitiveness via core capabilities need to
focus on several related issues:
• Identify existing core capabilities.
• Acquire or build core capabilities that will be important for the future.
• Keep investing in capabilities so that the firm remains world class and better than
competitors.
• Extend capabilities to find new applications and opportunities for the markets of
tomorrow
The resources must be managed in such a way that they tend to provide the owner an
advantage over his competitors.
➢ First, they must accumulate the right resources (such as talented people) by
determining what resources they need, acquiring and developing those resources, and
eliminating resources that don’t provide value.
➢ Next, they combine the resources in ways that give the organization capabilities, such
as researching new products or resolving problems for customers. These combinations
may involve knowledge sharing and alliances between departments or with other
organizations.
➢ Finally, managers need to leverage or exploit their resources. They do this by
identifying the opportunities where their competencies deliver value to customers—
say, by creating new products or by delivering existing products better than
competitors—and then by coordinating and deploying the employees and other
resources needed to respond to those opportunities.

Strategic Alliance
A formal relationship created among independent organizations with the purpose of joint
pursuit of mutual.
In a strategic alliance, individual organizations share administrative authority, form social
links, and accept joint ownership. They occur between companies and their competitors,
governments, and universities.
Such partnering often crosses national and cultural boundaries. Companies form strategic
alliances to develop new technologies, enter new markets, and reduce manufacturing costs.
Not only can alliances enable companies to move ahead faster and more efficiently, but they
also are sometimes the only practical way to bring together the variety of specialists needed
for operating in today’s complex and fast-changing environment. Rather than hiring experts
who understand the technology and market segments for each new product, companies can
form alliances with partners that already have those experts on board.

The Learning Organization

An organization skilled at creating, acquiring, and transferring knowledge and at modifying
its behaviour to reflect new knowledge and insights.
Such organizations are skilled at solving problems, experimenting with new approaches,
learning from their own experiences, learning from other organizations, and spreading
knowledge quickly and efficiently.
1. Engaging in disciplined thinking and paying attention to details, so decisions are
based on data and evidence, not guesswork and assumptions
2. Searching constantly for new knowledge and ways to apply it, looking for broader
horizons and opportunities, not just quick fixes for current problems
3. Valuing and rewarding individuals who expand their knowledge and skill in areas that
benefit the organization
4. Reviewing successes and failures carefully to find lessons and deeper understanding
 5. Benchmarking—that is, identifying and implementing the best business practices of
other organizations, stealing ideas shamelessly
6. Sharing ideas throughout the organization via reports, information systems, informal
discussions, site visits, education, training, and mentoring of less experienced
employees by more experienced ones
The High Involvement Organization
A type of organization in which top management ensures that there is consensus about the
direction in which the business is heading.
➢ Top management ensures that there is a consensus about the direction in which the
business is heading.
• The leader seeks input from his or her top management team and from lower levels of
the company.
• Task forces, study groups, and other techniques are used to foster participation in
decisions that affect the entire organization.
• Fundamental to the high-involvement organization is continual feedback to
participants regarding how they are doing compared with the competition and how
effectively they are meeting the strategic agenda.
Participative management is becoming increasingly popular as a way to create competitive
advantage.
Organizational Size & Agility
Large organizations are typically less organic and more bureaucratic. To cope with
complexity, large companies tend to become more bureaucratic. Rules, procedures, and
paperwork are introduced.
Thus with size comes greater complexity, and complexity brings a need for increased control.
In response, organizations adopt bureaucratic strategies of control.

The Case for Big

Size creates scale economies —that is, lower costs per unit of production. And size can offer
specific
advantages such as lower operating costs, greater purchasing power, and easier access to
capital.
Size also creates economies of scope; materials and processes employed in one product can
be used to make related products. With such advantages, huge companies with lots of money
may be the best at taking on large foreign rivals in huge global markets.
Economies of scope: Economies in which materials and processes employed in one product
can be used to make related products.
The Case for Small
A huge, complex organization can find it hard to manage relationships with customers and
among its own units. Bureaucracy can run rampant. Too much success can breed
complacency, and the resulting inertia hinders change.
Also, once a company has captured a big share of the market, future growth is complicated
because winning over more customers requires costlier efforts or a fresh approach.
Larger companies also are more difficult to coordinate and control. Although size may
enhance efficiency by spreading fixed costs over more units, it also may create administrative
difficulties that inhibit efficient performance.

Being Big and Small

The challenge is to be both big and small to capitalize on the advantages of each.
To avoid problems of growth and size, they decentralize decision making and organize
around small, adaptive, team-based work units.

Downsizing: The planned elimination of positions or jobs.

As large companies attempt to regain the responsiveness of small companies, they often face
the dilemma of downsizing. Common approaches to downsizing include eliminating
functions, hierarchical levels, or even whole units. Another growing trend has been to replace
full-time employees with less expensive part-time or temporary workers.

Rightsizing: A successful effort to achieve an appropriate size at which the company

performs most effectively.
Done appropriately, with inefficient layers eliminated and resources focused more on adding
customer value than on wasteful internal processes, downsizing can indeed lead to a more
agile, flexible, and responsive firm. In that case, downsizing can be called rightsizing —
arrival at the size at which the company performs most effectively. But even under the best
circumstances, downsizing can be traumatic for an organization and its employees.
Practices that may help minimize the ease and maximise the effect of downsizing
• Use downsizing only as a last resort, when other methods of improving performance
by innovating or changing procedures have been exhausted.
• Choose positions to be eliminated by engaging in careful analysis and strategic
thinking.
• Train people to cope with the new situation.
• Identify and protect talented people.
• Give special attention and help to those who have lost their jobs.
• Communicate constantly with people about the process and invite ideas for alternative
ways to operate more efficiently.
• Identify how the organization will operate more effectively in the future and
emphasize this positive future and the remaining employees’ new roles in attaining it.
Survivor’s Syndrome: Loss of productivity and morale in employees who remain after a
downsizing.
Employees who survive the downsizing process may suffer from loss of productivity and
effectiveness. Reasons being they struggle with heavier workloads; wonder who will be next
to go; try to figure out how to survive; lose commitment to the company and faith in their
bosses; and become narrow-minded, self-absorbed, and risk-averse. As a consequence,
morale and productivity usually drop.

Customers and Response Organization

Customer Relationship Management:

A multifaceted process focusing on creating two-way exchanges with customers to foster
intimate knowledge of their needs, wants, and buying patterns.
Adding customer value to the organization now is a source of competitive advantage. A
deeper way to understand how organizations can add customer value to their products has
been provided by Michael Porter, who popularized the concept of the value chain.

Value Chain: The sequence of activities that flow from raw materials to the delivery of a
good or service, with additional value created at each step.
The following steps add value chain to the products of a firm
• Research and development focus on innovation and new products.
• Inbound logistics receive and store raw materials and distribute them to operations.
• Operations transform the raw materials into final product.
• Outbound logistics warehouse the product and handle its distribution.
• Marketing and sales identify customer requirements and get customers to purchase the
product.
• Service offers customer support, such as repair, after the item has been bought.
One of the most effective ways to leverage an organization’s value chain is to bring together
elements of the chain to collaborate to add customer value and build competitive advantage.
For example, long-term relationships can be established with suppliers to encourage
investment in new technologies and practices that speed product development and
turnaround.

Quality Initiatives:
Total Quality Management: An integrative approach to management that supports
the attainment of customer satisfaction through a wide variety of tools and techniques that
result in high-quality goods and services.
Deming’s “14 points” of quality emphasized a holistic approach to management that demands
intimate understanding of the process—the delicate interaction of materials, machines, and
people that determines productivity, quality, and competitive advantage:
 1. Create constancy of purpose—strive for long-term improvement rather than short-
term profit.
2. Adopt the new philosophy—don’t tolerate delays and mistakes.
3. Cease dependence on mass inspection—build quality into the process on the front
end.
4. End the practice of awarding business on price tag alone—build long-term
relationships.
5. Improve constantly and forever the system of production and service—at each stage.
6. Institute training and retraining—continually update methods and thinking.
7. Institute leadership—provide the resources needed for effectiveness.
8. Drive out fear—people must believe it is safe to report problems or ask for help.
9. Break down barriers among departments—promote teamwork.
10. Eliminate slogans, exhortations, and arbitrary targets—supply methods, not
buzzwords.
11. Eliminate numerical quotas—they are contrary to the idea of continuous
improvement.
12. Remove barriers to pride in workmanship—allow autonomy and spontaneity.
13. Institute a vigorous program of education and retraining—people are assets, not
commodities.
14. Take action to accomplish the transformation—provide a structure that enables
quality.
One of the most important contributors to total quality management has been the introduction
of statistical tools to analyse the causes of product defects, in an approach called six sigma
quality

Six Sigma Quality: A method of systematically analysing work processes to identify and
eliminate virtually all causes of defects, standardizing the processes to reach the lowest
practicable level of any cause of customer dissatisfaction.

ISO 9001: A series of quality standards developed by a committee working under the
International Organization for Standardization to improve total quality in all businesses for
the benefit of producers and consumers.
1. Customer focus —learning and addressing customer needs and expectations.
2. Leadership —establishing a vision and goals, establishing trust, and providing
employees with the resources and inspiration to meet goals.
3. Involvement of people —establishing an environment in which employees understand
their contribution, engage in problem solving, and acquire and share knowledge.
4. Process approach —defining the tasks needed to carry out each process successfully
and assigning responsibility for them.
5. System approach to management —putting processes together into efficient systems
that work together effectively.
6. Continual improvement —teaching people how to identify areas for improvement and
rewarding them for making improvements.
7. Factual approach to decision making —gathering accurate performance data, sharing
the data with employees, and using the data to make decisions.
 8. Mutually beneficial supplier relationships —working in a cooperative way with
suppliers.
Reengineering: Completely overhauling operations within an organization to bring about a
change and adjust to the competitive demand.

Technology and Organizational Agility

Technology: The systematic application of scientific knowledge to a new product,
process, or service.
Types of technology configurations:
three basic technologies characterize how work is done: small batch, large batch, and
continuous process technologies. These three classifications are equally useful for describing
either service or manufacturing technologies.
Small Batch technologies: That produce goods and services in low volume.
In a small batch organization, structure tends to be very organic. There tend not to be a lot of
rules and formal procedures, and decision making tends to be decentralized. The emphasis is
on mutual adjustment among people.
Large Batch Technologies: Technologies that produce goods and services in high volume.
With a large batch technology, structure tends to be more mechanistic. There tend to be more
rules and formal procedures, and decision making tends to be centralized with higher spans of
control. Communication tends to be more formal in companies where hierarchical authority is
more prominent.
Continuous process: A process that is highly automated and has a continuous production
flow.
With continuous process technology, structure can return to a more organic form because less
monitoring and supervision are needed. Communication tends to be more informal in
companies where fewer rules and regulations are established.
Mass customization: The production of varied, individually customized products at the low
cost of standardized, mass-produced products.
Computer Integrated Manufacturing: The use of computer-aided design and computer-aided
manufacturing to sequence and optimize a number of production processes.
Two major elements are computer aided design and computer-aided manufacturing, which
share data needed for product design, testing, manufacturing, and quality control.
Flexible Factories: Manufacturing plants that have short production runs, are organized
around products, and use decentralized scheduling.
Lean Manufacturing: An operation that strives to achieve the highest possible productivity
and total quality, cost-effectively, by eliminating unnecessary steps in the production process
and continually striving for improvement.
Organising for Speed
Time Based Competition: Strategies aimed at reducing the total time needed to deliver a good
or service.
TBC has several key organizational elements: logistics, just-in-time (JIT), and concurrent
engineering. JIT production systems reduce the time to manufacture products. Logistics
speed the delivery of products to customers. Both are essential steps toward bringing products
to customers in the shortest time possible. In today’s world, speed is essential.
Logistics: The movement of the right goods in the right amount to the right place at the right
time
One technological advance that is helping some companies improve logistics efficiency and
speed is the use of radio frequency identification (RFID) tags. When manufacturers label
their products with RFID tags, automated readers can easily track where each product is in
the distribution system, including which particular items are selling in each store. Best Buy
has had great success with RFID tagging; stores using the system are seeing sales increases as
employees more efficiently keep track of which products need to be restocked and where they
are located.
Just in Time Operations: A system that calls for subassemblies and components to be
manufactured in very small lots and delivered to the next stage of the production process just
as they are needed.
Just-in-time is a companywide philosophy oriented toward eliminating waste throughout all
operations and improving materials throughout. In this way, excess inventory is eliminated
and costs are reduced. The ultimate goal of JIT is to serve the customer better by providing
higher levels of quality and service.
Contrast this approach with traditional production methods, which require extremely costly
warehousing of inventory and parts, uncertain production runs, considerable waste, no
customizing capability, and lengthy delivery times.
JIT represents a number of key production and organizational concepts, including
the following:
• Elimination of waste. Eliminate all waste from the production process, including
waste of time, people, machinery, space, and materials.
• Perfect quality. Produce perfect parts even when lot sizes are reduced, and produce
the product exactly when it is needed in the exact quantities that are needed.
• Reduced cycle times. Accomplish the entire manufacturing process more rapidly.
Reduce setup times for equipment, move parts only short distances (machinery is
placed in closer proximity), and eliminate all delays. The goal is to reduce action to
the time spent working on the parts. For most manufacturers today, the percentage of
time parts are worked on is about 5 percent of the total production time. JIT seeks to
eliminate the other 95 percent—that is, to reduce to zero the time spent not working
on the parts.
• Employee involvement. In JIT, employee involvement is central to success. The
workers are responsible for production decisions. Managers and supervisors are
 coaches. Top management pledges that there will never be layoffs due to improved
productivity.
• Value-added manufacturing. Do only those things (actions, work, etc.) that add value
to the finished product. If it doesn’t add value, don’t do it. For example, inspection
does not add value to the finished product, so make the product correctly the first time
and inspection will not be necessary.
• Discovery of problems and prevention of recurrence. Fool proofing, or fail-safing, is a
key component of JIT. To prevent problems from arising, their cause(s) must be
known and acted on. Thus, in JIT operations, people try to find the weak link in the
chain by forcing problem areas to the surface so that preventive measures may be
determined and implemented.

Limits of JIT
It’s not the most efficient choice when the costs of delivery exceed the costs of storage. And
if suppliers have any problems fulfilling orders, the whole system breaks down. JIT requires
close ties with suppliers, so finding replacements can be difficult.

Concurrent engineering: A design approach in which all relevant functions cooperate

jointly and continually in a maximum effort aimed at producing high-quality products that
meet customers’ needs
 Chapter 12
Leadership
Good leaders
➢ Challenge the process
➢ Inspire a shared vision
➢ Enable others to act
➢ Model the way
➢ Encourage

Supervisory Leadership: Behaviour that provides guidance, support and corrective

feedback.

Strategic Leadership: Behaviour that gives purpose and meaning to organisations,

envisioning and creating a positive future.
What Do I want from my leaders?
➢ Organisations want people to be leaders at all levels to help create and implement
strategies.
➢ The Best Leaders
o Challenge the process: They challenge conventional beliefs and practices
o Inspire others
o Enable people to act
o Channel the method and way
o Encourage the heart: i.e. show appreciation to people, provide rewards and
motivate others.

Vision: A mental image of a possible and desirable future state of the organisation
➢ Brings up the potential that needs to be brought out and displayed to others
If vision conveys an ideal: Communicates a standard of excellence and a clear choice of
positive values.
If vision is unique: IT inspires difference
A vision
➢ Is necessary for effective leadership
➢ A development of vision for a team tells one what it wants
There can be a lack of direction without vision. Vision guides a man towards purpose.
An inappropriate vision:
➢ May reflect personal needs
➢ Ignore stakeholder’s needs
➢ Show lack of circumstances in the situation
 Good leaders tend to have flexible visions and not overly invested in status quo.

Leading & Managing

Effective managers are not necessarily true leaders. The ability to lead effectively, will set
up excellent managers apart.

Managing:
➢ Includes planning, setting and budgeting
➢ Structuring the organization, staffing and monitoring

Leadership
➢ Setting the direction for the firm
➢ Inspiring people to attain the vision
➢ Keeping people focused to the ideal culture.
➢ Successful leaders tend to play into the longer run to enlist the team into scoring
collective wins that result from working together to a shared vision.
Effective leaders & followers distinguish themselves from ineffective ones by enthusiasm
& Commitment.

Power & Leadership:

Sources of Power:
Legitimate power: The right to tell others what to do
Reward Power: Influencing the others because of controls over valued rewards.
Coercive Power: Control over punishments, people comply to avoid these punishments.
Referent Power: People comply due to the persona and charisma of leader.
Expert Power: Power due to expertise and experience.

Approaches to understanding Leadership

Trait Approach: A leadership perspective that attempts to determine the personal
characteristics, the great leaders share.
Traits leading to leader effectiveness
Drive: Characteristic that indicates strive and reflect a high level of effort
➢ Motivated by high need for achievement, strive to improve, ambition, energy and
tenacity
➢ Leadership motivation: The motivation to lead
➢ Integrity: Correspondence between action and words
➢ Self confidence
➢ Knowledge of business: Effective leaders have a high level of knowledge about
industries and technical matters.
The ability to perceive the needs and goals of others and to adjust one’s personal
leadership approach accordingly.

Behaviour Approach: A perspective that attempts to identify that what good leaders do –
i.e. what behaviour they exhibit.
Categories receiving attention are
➢ Task performance: Actions taken to ensure that the work group or organisation
reaches its goals
➢ Group maintenance behaviours: Actions taken to ensure satisfaction of group
members, develop and maintain harmonious work relationships and preserve the
social stability of the group.
➢ Group maintenance is often regarded as supportive leadership.

Leader member exchange theory:

Highlights the importance of leader behaviours and not just towards the group as a whole but
towards individuals on a personal basis.

Figure 3: The leadership grid

Participation decision making:
Leader behaviours indicating the extent to which others are involved in making decisions.
Autocratic Leadership: Decision making and then announced to the group
Democratic leadership: Input considered from others and then the decision is made.
➢ Democratic styles, appealing though they may seem, are not always appropriate.
When speed is the essence, democratic decision making may be slow or people would
want decisiveness from the leader. Whether, a decision made be autocratic or
democratic depends upon the characteristics of the leaders, followers and the
situation.
Effective managers are also more exhibiting of relationship oriented management,
demonstrating trust, confidence, friendly, considerate, appreciative, keeping people informed.
Lasser- fiare model: A leadership philosophy characterised by the absence of managerial
decision making.

Situational Approaches to Leadership

Situational approach: Leadership perspective proposing that universally important traits
and behaviours do not exist and that effective leadership behaviour varies from situation to
situation.
➢ This pertains to the fact that leaders should first analyse situation and then tell or
commit.

Vroom Model of Leadership: A situational model that focuses on the participative

dimension of leadership
➢ Assess the situation before implementing the best leadership style.
Figure 4: Vroom model of leadership
Friedler’s contingency model:
Situational approach to leadership postulating that effectiveness depends on the personal style
of the leader and the degree to which the situation gives leader power, control and influence
over the situation

Task motivated Leadership: Leadership that places primary emphasis on completing a

task.

Relationship motivated Leadership: Leadership that places primary emphasis on

maintaining good interpersonal relationships.
Hersey and Blanchard’s situational theory: A life cycle theory of leadership postulating that a
manager should consider an employee’s psychological and job maturity before deciding
whether task performance or maintenance behaviours are important.
➢ .Job Maturity: The level of employee’s skills and technical knowledge
➢ Psychological Maturity : An employee’s self-confidence and self-respect.
Performance based leadership is inversely related to maturity of followers.

Path Goal Theory:

A theory that concerns how leaders influence sub ordinates’ perception of their work goals
and paths they follow towards attainment of those goals.
Four pertinent leadership behaviours are as follows
I. Directive leadership: a form of task oriented behaviours
II. Supportive leadership: A form of maintenance oriented behaviour
III. Participative leadership: Decision style
IV. Achievement oriented leadership : Behaviours geared towards motivating people.
Characteristics of Followers:
1. Authoritarianism: the degree to which individual respect, admire and defer to
authority
2. Locus of control: The degree to which individuals see the environment as responsive
to their own behaviour.
a. Internal locus of control: What happens to people because of own doing
b. External locus of control: What happens to people is because of external faith
and luck

Substitutes for leadership: Factors in the workplace that can exert the same
influence on employees as leaders would provide
Contemporary perspectives on leadership:
Charismatic Leadership: A person who is dominant, self-confident, convinced of moral
righteousness of his or her beliefs and able to arouse a sense of excitement and adventure in
followers.

Transformational Leaders: Leaders who motivate people to transcend their personal

interests for the good of the group.
Transformational Leaders:
➢ Additional Strategies
o Having a goal/vision
o Communicate the vision
o Gain trust
o Positive self-regard
➢ Generate excitement
o Charisma
o Give followers attention
o Stimulate intellectually
The transformational style moves beyond the rather vague Transactional leadership.

Transactional Leadership:
Leadership which manages through transactions, using their legitimate reward and coercive
power to give commands and exchange rewards for services received.
Level Five Leadership:
A combination of strong professional will and humility that builds enduring greatness
Authentic Leadership:
The style in which the leader is true to himself while leading
➢ Honesty
➢ Genuineness
➢ Integrity
➢ Reliability and trustworthiness
Pseudo transformational Leaders:
Leaders who talk about positive change but allow their self interest to take precedence over
their follower’s needs.
 Chapter 14
Teamwork
“Teams can enhance speed and be powerful forced for innovations, creativity and change.”

Types of Teams
Work Teams: Teams that make or for things such as manufacture, assemble, sell or
provide service.

Project & Development Teams: Teams that work on long term projects but disband
once the work is complete.

Parallel Teams: Teams that operate separately from the regular work structure and exist
temporarily.
• Integration of members from different jobs, trying to impose solutions or solve
problems for example special forces, task forces.

Management Teams: Teams that co-ordinate and provide direction to the sub units under
the jurisdiction and integrate among sub units.
• Responsible for the entire and overall performance of the business unit.

Transnational Teams: Work groups composed of multinational members whose

activities span multiple countries.
• Multicultural
• Geographically Dispersed
• Psychologically distinct.

Virtual Teams: Teams that are physically dispersed and communicate electronically more
than face to face.
Teaming: A strategy of teamwork on the fly with many temporary changing teams.

Self-Managed Teams
Traditional Work groups: Groups that have no managerial responsibility
Self-Managed Teams: Autonomous work groups in which workers are trained to do all
or most of the jobs in a unit and make decisions previously made by front line managers.
• More productive
• Lower Costs
• Better Customers
• Provide Better Quality

Autonomous Work Groups: Groups that control decisions about and execution of a
complete range of tasks. Part of an entire product or a part of the production process.
Self-Designing Teams: Teams with the responsibility of autonomous work groups and
control over hiring, firing and deciding what task the members perform. These are low cost,
productive, quality and customer satisfaction providers.
Groups maybe a collection of a people who might be working in the same area but not
the come together in order to achieve a task.

Teams: A small number of people with complementary skills who are committed to a
common purpose, set of performance goals and approaches for which they hold themselves
accountable.

The Group Process

A rigid structure through which one has to go in order for a group to transform into a team.

Stages of Group Development

Forming: Laying ground rules for what is acceptable.
Storming: Hostilities and conflicts arise
Norming: Group members agreeing on shared goals.
Performing: Challenging energies into its task
Explaining these, one can say that the forming stage reflects optimism within the group. The
ambitions of what needs to be achieved. The ambition is dealt with the realities which then
present adversities. It then goes onto separate or unite people and the team than refocuses and
sets its priorities which is the norming stage. Going forth and achieving the set vision, is the
performing stage.

There will be periods which are critical to a team. The Teaming challenges include
➢ Emphasizing the purpose
➢ Build Psychological failures
➢ Embracing the failure
➢ Putting the conflict to work.

WHY DO GROUPS FAIL?

➢ LACK OF TRAINING
➢ LACK OF EMPOWERMENT

BUILDING EFFECTIVE TEAMS

➢ Focusing on measures which meets the desired outputs or exceeds the standards of
quantity and quality
➢ Team Members realise the satisfaction of personal needs
➢ Remain committed
Motivating Team work:
Accountability to one other, rather than just the boss, is an essence of good team work.
Two key terms need to be taken care of
Social Loafing: Working less hard and being less productive when in a group.
Social Facilitation Effect: Working harder when in a group than in alone.
Norms: Shared beliefs about how people should think and behave.
Roles: Different sets of expectations for how different individuals should behave.
Sets of Roles which are necessary to keep the team together are mentioned below:
Task Specialist Roles: Roles requiring stronger job-related skills and abilities.
➢ Move the team towards accomplishments of objectives.
Task Maintenance roles: Roles that develop and maintain team harmony.
➢ Boost the morale, give support, provide humour as well.

Cohesiveness: The degree to which a group is attractive to its members. Members are
motivated to remain in the group and members influence one another.
Importance of Cohesiveness
➢ Members communicate and get along well for it creates a bond and a sense of longing
in between the two.
➢ Cohesiveness promotes quality performance. The productivity increases in a cohesive
group.
Building Cohesiveness
➢ Recruit members with similar attitudes, values & backgrounds
➢ Maintain high entrance and socialization standards.
➢ Keep the team small and make them feel important
➢ Help the team succeed and publicize its success.
➢ Be a participative leader. Keep low number of autocratic decisions and be genuine.
Lead with participation.
➢ Present a challenge from outside. Try getting members to gel into the systems
➢ Tie rewards to team performance. Recognize and celebrate achievements &
accomplishments. The team will be more cohesive as a result.
Managing Conflicts
Avoidance: Reaction to conflict that involves ignoring problems by doing nothing at all or
deemphasizing the disagreement.

Accommodation: A style of dealing with the conflict involving co-operation on behalf of

the other part but not being assertive of one’s own interests.

Compromise: A style of dealing with conflict involving moderate attention to both parties’
concerns.

Competing: A style of dealing with conflicts involving strong focus on one’s own goals
and little or no concern for another person’s goals.

Collaboration: A style of dealing with conflict emphasizing both co operation and

assertiveness to both parties’ satisfaction.

Superordinate goals: Higher level goals taking priority over specific individual or group
goals.

Mediator: A third party who intervenes to help others manage their conflicts.
 Chapter 15
Communication
The transmission of information and measuring from one party to another through the use of
shared symbols.
Sender → Encode → Receive → Decode

One-way communication: A process in which info flows in from one direction – from
the sender to the receiver with no feedback.

Two-way communication: A process in which info flows in two direction, the receiver
provides feedback and the sender is respective to the feedback.

Communication pitfalls:
Perpetual and filter processes are the main causes of misconceptions.

Perception: The process of receiving and interpreting information.

Filtering: A process of withholding, distorting or ignoring information.
Steps to effective communication:
➢ Ensure that receivers attend to the messages being sent.
➢ Consider other’s frame of mind
➢ Take concrete steps to minimize perpetual errors.
➢ Send consistent messages.

Oral and Written Channels

Oral Channels:
Pros
➢ Direct
➢ Intermediate
➢ Understandable
Cons
➢ Regret( Once spoken cannot be retrieved)
➢ No permanent record.

Written Channels:
Pros
➢ Messages can be received several times
➢ Permanent records
➢ More time to analyse messages
Cons
➢ Lack of control over perception.

Electronic Media
Advantages
➢ Efficiency in delivering
➢ Quick
➢ Cost Effective
➢ Higher quality discussions
➢ Anonymity
Disadvantages
➢ Difficulty in solving complex problems
➢ No face to face or verbal communication
➢ Less suitable for confidential information.
➢ Possibility of leaks
➢ Technological complications
➢ Negative misinterpretations.

Virtual Office: A mobile office in which people can work anywhere as long as they have
the tools to communicate with customers & colleagues.

Media Richness: This is the degree to which a communication channel conveys

information.

The richest media:

➢ Allows lots of descriptive language
➢ More of a personal genre than technological
➢ Sends different types of cues.
➢ Provides feedback cues.
An organisation should consider the richest media for communication purposes.

Improving communication sending skills:

Improve Sender Skills: Slant your messages for different audiences.
Presentation and persuasion skills: Simple and informative stories to back your claims
Writing Skills: Logical thinking, clear thinking, revise your drafts.
Improving Receiver Skills:
➢ Listening
o Reflection: Process by which a person starts what he or she believes in what
the other says.
➢ Reading
o Observing
 Keys to Effective Listening
➢ Find your area of interest
➢ Judge content, not delivery
➢ Hold your fire
➢ Listen for ideas
➢ Be flexible
➢ Resist distraction
➢ Exercise your mind
➢ Keep your mind open
➢ Capitalise on thought speed
➢ Work at listening skills.

Organisational Communication
Downward Communication: Information that flows from higher to lower levels in an
organization’s hierarchy
Problems:
➢ Lack of adequate information
➢ Information overload
➢ Filtering
o Most of the info is lost due to filtering
Coaching: Dialogue with a goal of helping another be more effective and achieve his/ her full
potential.
Downward Communication in difficult times:
In difficult times, managers think that conveying adversity down to the employees will lead
to discontent. However, doing so and not doing so has its own pros and cons. It can lead to
dishonesty, lack of worth, lack of care and other serious negative implications. LACK OF
COMMUNICATION can be highly dangerous. Without such communication, it can lead
them to undermine the corporate strategy and performance.

Open Book Management: Practice of sharing with employees at all the levels of the
organization’s vital information which was previously meant only for the management is also
shared with others.
➢ Includes keeping aware the employees of everything that goes by. It can be
controversial considering proxies in the group.

Upward Communication:
Information that flows from lower level to higher level in the organization’s hierarchy.
➢ Gets a know how and an accurate picture of the sub-ordinate’s work
➢ Facilitates downward communication as well leading to a two way communication.
Disadvantages
➢ Employees may not share everything to look competent, avoid punishment, lack of
trust.

Horizontal Communication:
Information moving between people moving on the same hierarchial level.
➢ All on same level
➢ Helps solve conflicts
➢ Provides social and emotional support
 Chapter 16
Managerial Control
Control: Any process that directs activities of individuals towards the achievement of goals.
The Conjoined twins of management
➢ Control
➢ Management

Broad Strategies for Control

Bureaucratic Control: The use of rules and regulations and authority to guide
performance.

Market control: Control based on the use of pricing mechanisms and economic info to
regulate activities,

Clan Control: Control based on norms, values, shared gals and trust among group
members.

Bureaucratic Control

➢ Setting performance standards

➢ Comparing performance against standards
➢ Measuring performance
➢ Taking actions to correct problems.

Setting performance standards:

Expected performance for a given set of goals. Performance standards are delivered from job
requirements, answering customer complaints.
Measuring Performance:
Comparing performance with the standards
Principle of exemption: A managerial principle sating that control is enhanced by
concentrating on the exceptions to or significant deviations from the expected result or
standard.
Taking Action to correct problems and Reinforcement: After trying corrective actions most of
the organisations resort to
After Action Review: A frank and open minded discussion of four basic
questions aimed at continuous improvements

Approaches to Bureaucratic Control:

➢ Feedforward Control
➢ Concurrent Control
➢ Feedback Control

Feedforward Control: The control process used before operations beginning, including
policies, procedures and rules designed to ensure that planned activities are carried out
properly.
➢ These include strategies designed to control the results primarily

Concurrent Control: The control process used while plans are being carried out,
including directing, monitoring and fine tuning activities as performed.
➢ Strategies conducted while program is in process.

Feedback Control: Control process that focuses on the use of info about previous results
to correct deviations from the acceptable standards.
➢ Process which takes place once the effort has been done.
Role of Six Sigma: Sigma number indicates deviation or defect. Greater sigma, lower defect or
variation. This is based on intense statistical analysis.

Management Audits:
An evaluation of the effectiveness and efficiency of various systems within an organization.
➢ External Audit: An evaluation conducted by one organization, such as a CPA firm or
another.
o Investigates other organizations for a possible merger or acquisition.
 o Determines the soundness of the company that will be used as a major
supplier.
o Discovers the strengths and weaknesses of a competitor a maintain or better
exploit the competitive advantage.
o These provide essential feedback control when they identify legal and ethical
lapses that could harm an organization
➢ Internal Audit: A periodic assessment of a company’s own planning, organising,
leading and controlling processes.
Management auditors compile a list of desired qualifications and weigh each qualification.
The most undesirable practices uncovered are performance of unnecessary work, duplication
of work, poor inventory control, uneconomical use of equipment and machines.

Sustainability audits and triple bottom line:

Audits to monitor that how stakeholders are protecting the environment.
➢ Budgeting Control: Commonly used method of managerial control.
o Budgeting: The process of investigating what is being done and comparing the
results with the correspondent budget data to verify accomplishment or
remedy differences.
o Types of Budget
• Sales Budget: Usually data for sales budget include forecast of sales by
month, sales are and product.
• Production Budget: Types and capacities of machines, economic
quantities to produce, availability of materials.
• Cost Budget
➢ Accounting Audits: Procedures used to verify accounting reports and statements.
o Activity based costing: A method of accounting designed to identify streams of
activity and then to allocate costs across particular business processes
according to the amount of time employees devote to particular activities.
➢ Financial Controls
o Balance Sheet: A report that shows the financial picture of a company at a
given time and itemizes assets, liabilities and owner’s equity.
o Current Ratio: A liquidity ratio that indicates the extent to which short-term
assets can decline and still be adequate to pay short term liabilities.
o Debt-equity ratio: A leverage ratio that indicates the company’s ability to meet
its long term financial obligation.
▪ Leverage ratio: Relative amount of funds in the business supplied by
creditors and shareholders.
o Profitability ratios: Ability to generate revenues.
o ROI (Return of investment): Ratio of capital used to rate if return from
capital.
Management Myopia: Focusing on short term earnings and profits at the expense of
longer term strategic obligation.
➢ The downside Bureaucratic Control:
o Rigid Bureaucratic Behaviour: Control Systems prompting employees to stay
out of trouble by following rules.
➢ Tactical Behaviour: Tactics aimed at beating the system. Falsifying demands and
reports in order to resist against the system.
Why people resist to control systems:
➢ Increases accuracy of performance data
➢ Control systems may be seen as invasion of privacy leading to lawsuits and cause low
morals
➢ Control systems change expertise and power structure.
➢ Control systems can change the social structure of an organization.

Market Control at Corporate Level:

Relates to the amount of profit or loss made. Ensures business unit performance is in line
with corporate objectives.

Market Control at business unit level:

Transfer Price: Price charges by one unit for a good or service provided to another unit
within the organization.

Clan Control: Managers are discovering that control systems based solely on bureaucratic
and market mechanisms are insufficient for directing today’s workforce.
 ➢ Employees’ jobs have changed: The nature of work is evolving. Employees
working with computers, for example, have more variability in their jobs, and much
of their work is intellectual and therefore invisible. Because of this, there is no one
best way to perform a task, and programming or standardizing jobs becomes
extremely difficult. Close supervision is also unrealistic because it is nearly
impossible to supervise activities such as reasoning and problem solving.

➢ The nature of management has changed. The role of managers is evolving,

too. Managers used to know more about the job than employees did. Today it is
typical for employees to know more about their jobs than anyone else does. We refer
to this as the shift from touch labour to knowledge work. When real expertise in
organizations exists at the very lowest levels, hierarchical control becomes
impractical.

➢ The employment relationship has changed. The social contract at work is

being renegotiated. It used to be that employees were most concerned about issues
such as pay, job security, and the hours of work. Today, however, more and more
employees want to be more fully engaged in their work, taking part in decision
making, devising solutions to unique problems, and receiving assignments that are
challenging and involving. They want to use their brains.

For these three reasons, the concept of empowerment not only has become more popular in
organizations but has become a necessary aspect of a manager’s repertoire of control.
 Chapter 17
Managing Technology & Innovation
Technology: Systematic application of scientific knowledge to a new product, process or
service.
Innovation: A change in method or technology; a positive, useful departure from previous
ways of doing things.
➢ Product Innovation: Change in output.
➢ Process Innovation: Change in the process of producing concerned outputs.
➢ Business model innovation: The change in the relative approaches to a business.
Effect at any element of company’s business model.

Technology Life Cycle

A predictable pattern followed by a tech innovation from its inception and development to
market saturation and replacement.
Consider the needs → Gather resources → Experiment → Result.
Technology Leadership
The following are the advantages and disadvantages of technology leadership.

Technology Followership

MEASURING CURRENT TECHNOLOGIES :

➢ Technology audit: Process of clarifying the key technologies on which an organisation
depends.
EXTERNAL TECH TRENDS :
➢ Scanning: What is being done and what can be done
➢ Benchmarking

Key Factors to consider in technology decisions

➢ Anticipated market receptiveness: Assess external demand for technology.
➢ Technological feasibility: Evaluate technical barriers to progress.
➢ Economic viability: Examine any cost consideration and forecast profitability.
➢ Competence development: Determine whether current capabilities are sufficient.
➢ Organizational Sustainability: Assess the fit with culture and managerial systems
o How well the technology fits into the culture of organisation
Sourcing & Acquiring New Technologies:
Make or buy decision: The question an organization asks itself about whether to acquire new
tech from an outside source or develop itself.
Internal development: Provides sole proprietorship. May require excess funding or capital
process.
Purchase: Purchase the technology than creating.
Created Development: No resources, no time, no will to develop, then just rent on contract
from outside sources.
Licensing: License the product for a fee.
Tech trading: Developing advanced techs requires high costs. Therefore tech trading with
other companies to save money.
Research Partnerships & Joint Ventures: To pursue specific new tech development jointly
research partnerships are oriented majorly.

Acquisition of an Owner of the Technology

Technology and Managerial Roles:

Chief Information Officer: Executive in charge of information technology strategy &
development.
➢ Has a senior position t corporate level with broad, integrative responsibilities.
➢ Manage the organisation’s information technology group.
Technology Innovator: A person who develops a new technology or has the key skills to
install and operate technology.
➢ Has technical skill but no management. Therefore we have a
Product Champion: A person who promotes a new technology throughout the organization
in an effort to obtain acceptance and support for it. Usually needs sponsorships
Executive Champion: An executive who supports a new technology and protects the product
champion of the information.
➢ Facilitating the requirements of the product champ.

Unleashing Creativity:
An organization that has an organizational culture promoting innovation.

3M’s rules for an innovative culture

➢ Set goals for innovation: By corporate decree, 25 – 30 % of annual sales must come
from new products that are five years old or newer.
➢ Commit to R&D: 3M invests in R&D at almost double the rate of the average U. S
company
➢ Inspire Intrapreneurship
➢ Facilitate, don’t obstruct
➢ Focus on the customer
➢ Tolerate failure

Bureaucracy Busting: Bureaucracy is an enemy of innovation. Organizations may

follow the same structure, rote on rock and stone, not allowing new stuff. Organizations
which tend to be rigid and flexible can lead chaos, but are necessary genres for observing the
changes and deriving innovations.
Implementing Development Projects:
Development Project: A focused organizational effort to create a new product or process
via technological advances. Abilities derived from it can be used as a source of competitive
advantage.

Technology, Job Design & Human Resource:

Innovation demands changes in the way jobs are designed.
Sociotechnical systems: An approach to job design that attempts to redesign tasks to optimize
operation of a new tech while preserving employees’ interpersonal relationships and other
human aspects of work.
Optimizes the social and technical efficiency of work: The entire human resource process,
money pay, skill, allocation of job/ needs to be in accordance with the demanded change