FUNDAMENTALS OF MANAGEMENT

Chapter 2:
The Management Environment

2008 Prentice Hall, Inc.

All rights reserved.
 Learning Outcomes
After reading this chapter, I will be able to:
1. Describe the three waves in modern social history
and their implications for organizations.
2. Explain the importance of viewing management
from a global perspective.
3. Identify the ways in which technology is changing
the managers job.
4. Describe the difference between an e-business, e-
commerce, and an e-organization.
5. Define social responsibility and ethics.

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 Learning Outcomes (contd)
After reading this chapter, I will be able to:
6. Explain what is meant by the term entrepreneurship
and identify the components of the entrepreneurial
venture.
7. Describe the management implications of a
diversified workforce.
8. Identify which work/life concepts are affecting
employees.
9. Explain why many corporations have downsized.
10. Describe the key variables for creating a customer-
responsive culture.
Copyright 2005 Prentice Hall, Inc. All rights reserved. 23
 Learning Outcomes (contd)
After reading this chapter, I will be able to:
11. Explain why companies focus on quality and
continuous improvement.

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 The Changing Economy
Agriculture
Until the late nineteenth century, all economies were
agrarian.
Industrialization
From the late 1800s until the 1960s, most developed
countries moved from agrarian societies to industrial
societies.
Information
Information technology is transforming society from
its manufacturing focus to one of service.

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 The Changing Economy
Old Economy New Economy

National borders limit competition National borders no longer define an

Technology reinforces rigid organizations operating boundaries
hierarchies and limits access to Technological change makes
information information more accessible
Job opportunities are for blue- Job opportunities are for knowledge
collar industrial workers workers
Population is relatively Population is characterized by
homogeneous cultural diversity
Business is estranged from its Business accepts its social
environment responsibilities
Economy is driven by large Economy is driven by small
corporations entrepreneurial firms
Customers get what business Customer needs drive business
chooses to give them Exhibit 2.1

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 A Global Marketplace
Global village
The concept of a boundaryless world; the production
and marketing of goods and services worldwide.
Borderless organization
A management structure in which internal
arrangements that impose artificial geographic
barriers are broken down

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 Global Competition
Multinational corporations (MNCs)
Companies that maintain significant operations in two or more
countries simultaneously but are based in one home country.

Transnational corporation (TNC)

A company that maintains significant operations in more than
one country simultaneously and decentralizes decision making in
each operation to the local country.

Strategic alliances
A domestic firm and a foreign firm share the cost of developing
products or building production facilities in a foreign country.

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 Stages of Going Global

Exhibit 2.3

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 Globalizations Effect On Managers
Parochialism
A narrow focus in which one sees things solely
through ones own view and from ones own
perspective
Hofstedes framework for assessing cultures:
Power distance
Individualism versus collectivism
Quantity of life versus quality of life
Uncertainty avoidance
Long-term versus short-term orientation

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 Global Leadership and Organizational
Behavior Effectiveness (GLOBE)
An ongoing cross-cultural Cultural Dimensions
investigation of leadership Assertiveness
and national culture Future orientation
Confirms and extends Gender differentiation
Hofstedes earlier work on Uncertainty avoidance
national cultural dimensions
and leadership. Power distance
Individualism/Collectivism
Also found that the strength
of cultural dimensions In-group collectivism
appear to be changing. Performance orientation
Humane orientation

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 GLOBE Highlights

Source: M. Javidan and R. J. House, Cultural Acumen for the Global Manager: Exhibit 2.4
Lessons from Project GLOBE, Organizational Dynamics, Spring 2001, pp. 289305.
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 GLOBE Highlights

Source: M. Javidan and R. J. House, Cultural Acumen for the Global Manager: Exhibit 2.4 (contd)
Lessons from Project GLOBE, Organizational Dynamics, Spring 2001, pp. 289305.
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 Emphasis on Technology
Technology
Any equipment, tools, or operating methods that are
designed to make work more efficient
Information Technology (IT)
Benefits of IT
Costsavings (e.g., inventory control)
Freedom from fixed locations for operations

Challenges
Increased worker skill requirements
A leveling of the the competitive playing field that
increases competition

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 Internet Business Terms
E-commerce
Any computer transaction that occurs when data are
processed and transmitted over the Internet
E-organization
The applications of e-business concepts offered to
stakeholders.
E-business
The full breadth of activities included in a successful
Internet-based enterprise

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 What Defines
an E-Business?

Exhibit 2.5

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 In What Ways Does Technology Alter A
Managers Job?
Effectiveness and efficiency
Managers have access to more complete and
accurate information than before, enabling them to
function as better managers.
Place
Telecommuting: the linking of a workers computer
and modem with those of co-workers and
management at an office.

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 Societys Expectations of Business
Social responsibility
A firms obligation, beyond that required by the law
and economics, to pursue long-term goals that are
beneficial to society.
Social obligation
The obligation of a business to meet its economic and
legal responsibilities and no more.
Social responsiveness
The ability of a firm to adapt to changing societal
conditions.

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 Arguments for Social Responsibility
Public expectations Balance of responsibility
and power
Long-run profits
Stockholder interests
Ethical obligation
Possession of resources
Public image
Superiority of prevention
Better environment
over cures
Discouragement of further
government regulation

Source: Adapted from R. J. Monsen Jr., The Social Attitudes of Management,

in J. M. McGuire, ed. Contemporary Management: Issues and Views (Upper
Saddle River, NJ: Prentice Hall, 1974), p. 616: and K. Davis and W. Frederick,
Business and Society: Management, Public Policy, Ethics, 5th ed. (New York: Exhibit 2.6
McGraw-Hill, 1984), pp. 2841.
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 Arguments against Social Responsibility
Violation of profit maximization
Dilution of purpose
Costs
Too much power
Lack of skills
Lack of accountability
Lack of broad public support

Source: Adapted from R. J. Monsen Jr., The Social Attitudes of Management,

in J. M. McGuire, ed. Contemporary Management: Issues and Views (Upper
Saddle River, NJ: Prentice Hall, 1974), p. 616: and K. Davis and W. Frederick,
Business and Society: Management, Public Policy, Ethics, 5th ed. (New York: Exhibit 2.6 (contd)
McGraw-Hill, 1984), pp. 2841.
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 Ethics and Business
Ethics
A set of rules or principles that defines right and
wrong conduct
Code of ethics
A formal document that states an organizations
primary values and the ethical rules it expects
managers and operatives to follow

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 Three Views of Ethics
Utilitarian view of ethics
Making decisions solely on the basis of their
outcomes or consequences.
Rights view of ethics
Respecting and protecting individual liberties and
privileges
Theory of justice view of ethics
Fairly and impartially imposing and enforcing rules.

Source: G. F. Cavanaugh, D. J. Moberg, and M. Valasquez, The Ethics of Exhibit 2.7

Organizational Politics. Academy of Management Journal (June 1981): 36374.
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 What Is Entrepreneurship?
Entrepreneurship
The process of initiating a business venture,
organizing the necessary resources, and assuming
the risks and rewards
Steps in the entrepreneurial process
Exploring the entrepreneurial context.
Identifying opportunities and competitive advantages
Starting the venture.
Managing the venture

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 What Do Entrepreneurs Do?
No two entrepreneurs are exactly alike
They are creating something new, something
different.
Theyre searching for change, responding to it, and
exploiting it.
Intrapreneur
A persons within an organization who demonstrates
entrepreneurial characteristicshas confidence in his
or her abilities, is willing to seize opportunities for
change, and expects surprises and capitalizes on
them.

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 Diversity and the Workforce of 2010
Increasing workforce diversity
More variation in the background of organizational
members in terms of gender, race, age, sexual
orientation, and ethnicity
Characteristics of the future workforce
More heterogeneous/diverse
Increasingly older
More multicultural
Diversity will require more managerial sensitivity
to individual differences.

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 Mars Incorporated Diversity Philosophy
Distinctive voices working together within a common
culture is one of the ways we have described how we do
business at Mars. We believe that the success of our business
can be enhanced by having a workforce made up of associates
from many different backgrounds, much as our society and
consumer base consist of a wide variety of individuals. We
value the talents and contributions of our diverse workforce in
reaching toward our future and in playing responsible
leadership roles.

Exhibit 2.8
Source: www.mars.com/other_policies/diversity.as
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 Labor Supply and Demand Adjustments
Downsizing
An activity in an organization designed to create a
more efficient operation through extensive layoffs
Rightsizing
Linking staffing levels to organizational goals
Outsourcing
An organizations use of outside firms for providing
necessary products and services

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 Flexible Workforces
Core employees
The small group of full-time employees of an
organization who provide some essential job tasks for
the organization
Contingent workforce
Part-time, temporary, and contract workers who are
available for hire on an as-needed basis

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 Contingent Workers
Part-time employees
Work fewer than 40 hours a week
Are a good source of staffing for peak hours.
May be involved in job sharing
Temporary employees
Are generally employed during peak periods
Can fill in for employees for an extended period of time
Create a fixed labor cost during a specified period
Contract workers
Are hired by organizations to work on specific projects.
Are paid when the firm receives particular deliverables.
Are a labor cost that is fixed by contract
Exhibit 2.9

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 Is There a Pending Labor Shortage in
the United States?
2010 U.S. Labor Shortage
Fewer available workers
Retiring baby boomers
Immigration restrictions
Implication for managers
More sophisticated recruitment
and retention strategies

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 Making a Companys Culture More
Customer-responsive
Actions that create employees with the competence,
ability, and willingness to solve customer problems as
they arise:
Selection: hiring the right personalities and attitudes
Training: developing the customer-focus employees
Organizing: creating customer-friendly controls
Empowerment: independence in relating to customers
Leadership: commitment to the customer-focus vision
Evaluation: performance measured by behaviors
Rewards: contingent on outstanding customer service
Copyright 2005 Prentice Hall, Inc. All rights reserved. 231
 Shaping a
Customer-
Responsive
Culture

Exhibit 2.10

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 Increased Concern for Quality
Continuous improvement
Organizational commitment to constantly improving
the quality of a product or service
JosephJuran
W. Edwards Deming

Kaizen: the Japanese term for an organization

committed to continuous improvement
Work process engineering
Radical or quantum change in an organization

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 Components of Continuous Improvement
1. Intense focus on the customer.
2. Concern for continuous improvement.
3. Improvement in the quality of everything the
organization does.
4. Accurate measurement.
5. Empowerment of employees.

Exhibit 2.11

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 Web Links
Visit the Robbins/DeCenzo companion Website
At www.prenhall.com/robbins for this chapters
Internet resources, including chapter quiz and
student PowerPoints.
Diversity Perspectives
Log onto www.prenhall.com/onekey and imagine the
possible perceptions of the workers and the new
division manager toward each other.

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 Web Links (contd)
Enhancing Your Skill in Ethical Decision Making
Now you can assume the role of a Boeing manager in
a hypothetical scenario involving ethical challenges.
Log onto www.prenhall.com/onekey and enhance
your skill in ethical decision making!

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 Video Case Application
Conducting Business Ethically and Responsibly:
Patagonia

Insert Video Link Here

(Size to this window)

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