Chapter 1: Introducing Management
GMS Notes
What are the challenges of working in the new economy?
Talent
People and their talents – what they know, what they learn, and what they do with it – are the ultimate foundations of organizational performance. Intellectual capital is the collective brainpower or shared knowledge of a workforce than can be used to create value (Intellectual Capital = Competency x Commitment). A knowledge worker is someone whose mind is a critical asset to employers and adds to the intellectual capital of the organization.
Diversity
Workforce diversity is the composition of a workforce in terms of differences among people whether it be their gender, age, race, ethnicity, religion, sexual orientation or able-bodiedness. Prejudice, or the holding of negative opinions and attitudes to a diversified population, sets the stage for diversity bias. A subtle form of discrimination is called the glass ceiling effect – an invisible barrier or “ceiling” that prevents minorities from rising above a certain level of organizational responsibility.
Globalization
Globalization is the worldwide interdependence of resource flows, product markets, and business competition that characterizes our new economy. It is a process in which improvements of technology combine with the deregulation of markets to bring out flows of people, goods, services and money.
Technology
The forces of globalization ride on the foundation of the Internet and the growth of communication technologies. Bar codes, automatic tellers, email, blogs, text messaging, online media and social networks are some of the technologies driving the world.
Ethics
Ethics is a code of moral principles that sets standards of what is “good” and “right” as opposed to “bad” and “wrong.”
Careers
The Shamrock Organization is an analogy to discuss career patterns characteristic of the new economy. The three leaves of the shamrock structure include full time core workers, independent contractors and part time temporaries. A portfolio worker is someone who always has the skills needed to readily shift jobs or even careers.
What are organizations like in the new workplace?
An organization is a collection of people working together to achieve a common purpose. All organizations share a broad purpose-providing goods or services of value to customers and clients. Organizations are open systems, meaning it transforms resource inputs from the environment into product outputs. Productivity measures the quantity and quality of outputs relative to the cost of inputs. Performance effectiveness is an output measure of task or goal accomplishment (eg. meeting a daily target). Performance efficiency in an input measure of the resource costs associated with goal accomplishment.
Talent
People and their talents – what they know, what they learn, and what they do with it – are the ultimate foundations of organizational performance. Intellectual capital is the collective brainpower or shared knowledge of a workforce than can be used to create value (Intellectual Capital = Competency x Commitment). A knowledge worker is someone whose mind is a critical asset to employers and adds to the intellectual capital of the organization.
Diversity
Workforce diversity is the composition of a workforce in terms of differences among people whether it be their gender, age, race, ethnicity, religion, sexual orientation or able-bodiedness. Prejudice, or the holding of negative opinions and attitudes to a diversified population, sets the stage for diversity bias. A subtle form of discrimination is called the glass ceiling effect – an invisible barrier or “ceiling” that prevents minorities from rising above a certain level of organizational responsibility.
Globalization
Globalization is the worldwide interdependence of resource flows, product markets, and business competition that characterizes our new economy. It is a process in which improvements of technology combine with the deregulation of markets to bring out flows of people, goods, services and money.
Technology
The forces of globalization ride on the foundation of the Internet and the growth of communication technologies. Bar codes, automatic tellers, email, blogs, text messaging, online media and social networks are some of the technologies driving the world.
Ethics
Ethics is a code of moral principles that sets standards of what is “good” and “right” as opposed to “bad” and “wrong.”
Careers
The Shamrock Organization is an analogy to discuss career patterns characteristic of the new economy. The three leaves of the shamrock structure include full time core workers, independent contractors and part time temporaries. A portfolio worker is someone who always has the skills needed to readily shift jobs or even careers.
What are organizations like in the new workplace?
An organization is a collection of people working together to achieve a common purpose. All organizations share a broad purpose-providing goods or services of value to customers and clients. Organizations are open systems, meaning it transforms resource inputs from the environment into product outputs. Productivity measures the quantity and quality of outputs relative to the cost of inputs. Performance effectiveness is an output measure of task or goal accomplishment (eg. meeting a daily target). Performance efficiency in an input measure of the resource costs associated with goal accomplishment.
What is the makeup of the external environment of organizations and how is an organization linked to its
environment?
The general environment of organizations consists of all external conditions that set the context for managerial decision-making. Forces that keep an organization in existence and help make important decisions include economic (growth, unemployment rate), legal-political (laws, political trends), technological (Internet access, IT systems), socio-cultural (population demographics, education system) and natural environment conditions (recycling infrastructure, “green” values).
Managers must be concerned with economic conditions in the general environment, particularly those that influence customer spending, resource supplies and investment capital. They must also understand the legal- political conditions, as represented by existing and proposed laws and regulations, government policies, and the philosophy and objectives of political parties. Internet censorship is the deliberate blockage and denial of public access to information posted on the Internet. Also, not only should managers stay abreast of the latest technologies for their work applications, they must also be aware of their work implications. The socio-cultural conditions of a society or region take meaning as norms, customs, and social values on such matters such as ethics, human rights, gender roles and lifestyles. They also include environmental trends in education and related social institutions as well as demographic patterns. Lastly, when it comes to natural environment conditions, there are public concerns for global warming, carbon emissions, and protection of the natural environment. Sustainable businesses are firms that operate in ways that both meet the needs of customers and protect or advance the well-being of our natural environment. Sustainable innovation creates new products and production methods that have reduced environmental impact.
The specific environment consists of the actual organizations, groups and people with whom an organization interacts and conducts business. Members of the specific environment are called stakeholders. Value creation is an analysis of the extent to which the organization is creating value for and satisfying the needs of its multiple stakeholders.
A competitive advantage refers to something that an organization does extremely well, a core competency that clearly sets it apart from other competitors thus giving it an advantage over others in the marketplace. Competitive advantage is linked with strategic positioning – helping one’s firm or organization do different things or the same things in different ways from one’s major competitors. As mangers pursue competitive advantage, decision making is often complicated by uncertainty. Environmental uncertainty means that there is a lack of complete information regarding what exists and what development occurs.
Organizational effectiveness is sustainable high performance in using resources to accomplish a mission and/or objective. The system resource approach looks at the input side and defines organizational effectiveness in terms of success in acquiring needed resources from the environment. The internal process approach looks at the transformation process and defines organizational effectiveness. The goal approach looks at the output side and defines organizational effectiveness in terms of how to measure achievement of key operating objectives. The strategic constituencies approach looks at the external environment and defines organizational effectiveness in terms of the organization’s impact on stakeholders.
Who are managers and what do they do?
A manager is a person who supports, activates, supervises and is responsible for the work of others. They are responsible for not just their own work but for the overall performance accomplishments of a team, work group, department or sometimes, the entire organization.
The general environment of organizations consists of all external conditions that set the context for managerial decision-making. Forces that keep an organization in existence and help make important decisions include economic (growth, unemployment rate), legal-political (laws, political trends), technological (Internet access, IT systems), socio-cultural (population demographics, education system) and natural environment conditions (recycling infrastructure, “green” values).
Managers must be concerned with economic conditions in the general environment, particularly those that influence customer spending, resource supplies and investment capital. They must also understand the legal- political conditions, as represented by existing and proposed laws and regulations, government policies, and the philosophy and objectives of political parties. Internet censorship is the deliberate blockage and denial of public access to information posted on the Internet. Also, not only should managers stay abreast of the latest technologies for their work applications, they must also be aware of their work implications. The socio-cultural conditions of a society or region take meaning as norms, customs, and social values on such matters such as ethics, human rights, gender roles and lifestyles. They also include environmental trends in education and related social institutions as well as demographic patterns. Lastly, when it comes to natural environment conditions, there are public concerns for global warming, carbon emissions, and protection of the natural environment. Sustainable businesses are firms that operate in ways that both meet the needs of customers and protect or advance the well-being of our natural environment. Sustainable innovation creates new products and production methods that have reduced environmental impact.
The specific environment consists of the actual organizations, groups and people with whom an organization interacts and conducts business. Members of the specific environment are called stakeholders. Value creation is an analysis of the extent to which the organization is creating value for and satisfying the needs of its multiple stakeholders.
A competitive advantage refers to something that an organization does extremely well, a core competency that clearly sets it apart from other competitors thus giving it an advantage over others in the marketplace. Competitive advantage is linked with strategic positioning – helping one’s firm or organization do different things or the same things in different ways from one’s major competitors. As mangers pursue competitive advantage, decision making is often complicated by uncertainty. Environmental uncertainty means that there is a lack of complete information regarding what exists and what development occurs.
Organizational effectiveness is sustainable high performance in using resources to accomplish a mission and/or objective. The system resource approach looks at the input side and defines organizational effectiveness in terms of success in acquiring needed resources from the environment. The internal process approach looks at the transformation process and defines organizational effectiveness. The goal approach looks at the output side and defines organizational effectiveness in terms of how to measure achievement of key operating objectives. The strategic constituencies approach looks at the external environment and defines organizational effectiveness in terms of the organization’s impact on stakeholders.
Who are managers and what do they do?
A manager is a person who supports, activates, supervises and is responsible for the work of others. They are responsible for not just their own work but for the overall performance accomplishments of a team, work group, department or sometimes, the entire organization.
3 Levels of Managers: Top managers are responsible for the performance of an organization as a whole or for
one of its larger parts (CEO, Pres., Vice Pres.). Middle managers report to top managers, and they are in
charge of relatively large departments or divisions consisting of several smaller units (division manager, plant
manager). A team leader or a supervisor is examples first line managers who are in charge of a small work
group composed of nonmanagerial workers.
Types of Managers: Line managers are responsible for work that makes a direct contribution to the organization’s outputs. Staff managers use speial technical expertise to advise and support the efforts of line workers. Functional managers have responsibility for a single area such as finance, marketing, production, HR etc. General managers are responsible for activities covering many functional areas. Administrators are the name for managers in nonprofit or public organizations.
Accountability is the requirement of one person to answer to a higher authority for performace results in his or her area of work responsibility. Effective managers successfully help others achieve both high performance and satisfaction in their work. Quality of work life is an indicator of the overall quality of human experiences in the workplace. A high QWL offers fair pay, safe working conditions, opportunities for growth, etc.
The concept of the upside-down pyramid reflects the changing nature of managerial work today. Operating workers are at the top, serving customers, while managers are at the bottom serving them.
What is the management process and how do you learn managerial skills and competencies?
The process of management involves planning, organizing, leading, and controlling the use of resources to accomplish goals. Planning is the process of setting performance objectives and determining what actions should be taken to accomplish them. Organizing is the process of assigning tasks, allocating resources, and coordinating the activities of individuals and groups to implement plans. Leading is the process of arousing people’s enthusiasm to work hard and inspiring their efforts to fulfill plans accomplish objectives. Controlling is the process of measuring work performance, comparing results with objectives and taking corrective action as needed.
A manager’s informational roles involve the giving, receiving and analyzing of information. A manager is a monitor, scanning for information, a disseminator, sharing information, and a spokesperson, acting as official communicator. Through agenda setting, good managers develop action priorities that include goals and plans spanning long term and short term frames.
Networking is the process of creating positive relationships with people who can help advance agendas. Social capital is a capacity to get things done with support and help of others. Learning is a change in behavior that results from experience. Lifelong learning is continuous learning from daily experiences. A skill is the ability to translate knowledge into action that results in desired performance.
ESSENTIAL MANAGERIAL SKILLS
Conceptual skills – the ability to think analytically and achieve integrative problem solving
Human skills – the ability to work well in cooperation with other people (emotional intelligence is the ability to manage ourselves and our relationships effectively)
Technical skills – the ability to apply expertise and perform a special task with proficiency
Managerial Competency – a skill based capability for high performance in a management job (this includes teamwork, communication, self-management, leadership, critical thinking and
Types of Managers: Line managers are responsible for work that makes a direct contribution to the organization’s outputs. Staff managers use speial technical expertise to advise and support the efforts of line workers. Functional managers have responsibility for a single area such as finance, marketing, production, HR etc. General managers are responsible for activities covering many functional areas. Administrators are the name for managers in nonprofit or public organizations.
Accountability is the requirement of one person to answer to a higher authority for performace results in his or her area of work responsibility. Effective managers successfully help others achieve both high performance and satisfaction in their work. Quality of work life is an indicator of the overall quality of human experiences in the workplace. A high QWL offers fair pay, safe working conditions, opportunities for growth, etc.
The concept of the upside-down pyramid reflects the changing nature of managerial work today. Operating workers are at the top, serving customers, while managers are at the bottom serving them.
What is the management process and how do you learn managerial skills and competencies?
The process of management involves planning, organizing, leading, and controlling the use of resources to accomplish goals. Planning is the process of setting performance objectives and determining what actions should be taken to accomplish them. Organizing is the process of assigning tasks, allocating resources, and coordinating the activities of individuals and groups to implement plans. Leading is the process of arousing people’s enthusiasm to work hard and inspiring their efforts to fulfill plans accomplish objectives. Controlling is the process of measuring work performance, comparing results with objectives and taking corrective action as needed.
A manager’s informational roles involve the giving, receiving and analyzing of information. A manager is a monitor, scanning for information, a disseminator, sharing information, and a spokesperson, acting as official communicator. Through agenda setting, good managers develop action priorities that include goals and plans spanning long term and short term frames.
Networking is the process of creating positive relationships with people who can help advance agendas. Social capital is a capacity to get things done with support and help of others. Learning is a change in behavior that results from experience. Lifelong learning is continuous learning from daily experiences. A skill is the ability to translate knowledge into action that results in desired performance.
ESSENTIAL MANAGERIAL SKILLS
Conceptual skills – the ability to think analytically and achieve integrative problem solving
Human skills – the ability to work well in cooperation with other people (emotional intelligence is the ability to manage ourselves and our relationships effectively)
Technical skills – the ability to apply expertise and perform a special task with proficiency
Managerial Competency – a skill based capability for high performance in a management job (this includes teamwork, communication, self-management, leadership, critical thinking and
professionalism)
Chapter Two: Management Learning (Past to Present)
GMS Notes
CLASSICAL MANAGEMENT APPROACHES (assumption: people are rational)
Henri Fayol had five “rules” of management, which close resemble the four modern functions of management (planning, organizing, leading, controlling). These five “rules” include:
1. Foresight – to complete a plan of action for the future
2. Organization – to provide resources to implement the plan
3. Command – to lead, select and evaluate workers to get the best work toward the plan
4. Coordination – to fit diverse efforts together and ensure information is shared and problems solved
5. Control – to make sure things happen according to plan and to take necessary corrective action
Bureaucratic Organization is a rational and efficient form of organization founded on logic, order, and legitimate authority.
Advantages of bureaucratic organization:
- clear division of labour (jobs are well defined)
- clear hierarchy of authority (each position has well defined responsibilities and authorities)
- formal rules and procedures (written guidelines direct behavior and decisions in jobs)
- impersonality (rules/procedures are impartially and uniformly applied, no one gets preferential treatment) - careers based on merit (will have a job that best suits your abilities, competencies, etc.)
Possible disadvantages include:
- excess paperwork or “red tape”
- slowness in handling problems
- rigid in the face of shifting needs
- employee apathy (people feeling that they can’t change anything) - resistance to change
BEHAVIOURAL MANAGEMENT APPROACHES
In the 1920’s, there was a great emphasis on the human side of the workplace.
CLASSICAL MANAGEMENT APPROACHES (assumption: people are rational)
-
Scientific Management (Frederick Taylor)
-
Administrative Principles (Henri Fayol)
-
Bureaucratic Organization (Max Weber)
-
Develop rules of motion, standardized work implements and proper working conditions for each job
(motion study – the science of reducing a task to its basic physical motions)
-
Carefully select workers with the right abilities for the job
-
Carefully train workers and provide proper incentives
-
Support workers by carefully planning their work and removing obstacles
Henri Fayol had five “rules” of management, which close resemble the four modern functions of management (planning, organizing, leading, controlling). These five “rules” include:
1. Foresight – to complete a plan of action for the future
2. Organization – to provide resources to implement the plan
3. Command – to lead, select and evaluate workers to get the best work toward the plan
4. Coordination – to fit diverse efforts together and ensure information is shared and problems solved
5. Control – to make sure things happen according to plan and to take necessary corrective action
Bureaucratic Organization is a rational and efficient form of organization founded on logic, order, and legitimate authority.
Advantages of bureaucratic organization:
- clear division of labour (jobs are well defined)
- clear hierarchy of authority (each position has well defined responsibilities and authorities)
- formal rules and procedures (written guidelines direct behavior and decisions in jobs)
- impersonality (rules/procedures are impartially and uniformly applied, no one gets preferential treatment) - careers based on merit (will have a job that best suits your abilities, competencies, etc.)
Possible disadvantages include:
- excess paperwork or “red tape”
- slowness in handling problems
- rigid in the face of shifting needs
- employee apathy (people feeling that they can’t change anything) - resistance to change
BEHAVIOURAL MANAGEMENT APPROACHES
In the 1920’s, there was a great emphasis on the human side of the workplace.
Mary Parker Follett was part of an important transition from classical thinking to behavioural management.
She believes that managers and workers should work together without one party dominating the other. She
emphasized group and human cooperation; both are which are still highly relevant in today’s management
styles. She also believed that making every employee an owner in a business would create feelings of
collective responsibility.
Hawthorne effect – the tendency of people singled out for special attention to perform as expected
Human relations movement – suggests that managers using good human relations will achieve productivity
Organizational behaviour – the study of individuals and groups in an organization
Maslow’s Theory of Needs
Abraham Maslow, a psychologist, created a theory regarding people’s needs. He defines a need as a physiological or psychological deficiency that a person wants to satisfy. According to Maslow, people try to satisfy the five needs in sequence.
Hawthorne effect – the tendency of people singled out for special attention to perform as expected
Human relations movement – suggests that managers using good human relations will achieve productivity
Organizational behaviour – the study of individuals and groups in an organization
Maslow’s Theory of Needs
Abraham Maslow, a psychologist, created a theory regarding people’s needs. He defines a need as a physiological or psychological deficiency that a person wants to satisfy. According to Maslow, people try to satisfy the five needs in sequence.
Douglas McGregor had two theories regarding managerial assumptions. Theory X assumes people dislike
work, lack ambition, act irresponsibly and refer to be led. Theory Y assumes people are willing to work, like
responsibility and are self-directed and creative.
Chris Argyris believes that classical management approaches are inconsistent with mature adult personality. Argyris believes that managers who treat people positively and as responsible adults will achieve the highest productivity. He advises managers to expand job responsibilities, allow more task variety and adjust supervisory styles to allow more participation and promote better HR relations.
MODERN MANAGEMENT FOUNDATIONS
Management science and operations research use quantitative analysis and applied mathematics to solve
problems. Operations management is the study of how organizations produce goods and services.
Chris Argyris believes that classical management approaches are inconsistent with mature adult personality. Argyris believes that managers who treat people positively and as responsible adults will achieve the highest productivity. He advises managers to expand job responsibilities, allow more task variety and adjust supervisory styles to allow more participation and promote better HR relations.
MODERN MANAGEMENT FOUNDATIONS
Management science and operations research use quantitative analysis and applied mathematics to solve
problems. Operations management is the study of how organizations produce goods and services.
Contingency thinking – tries to match management practices with situational demands
Total quality management – managing with an organization-wide commitment to continuous improvement,
product quality and customer needs
Knowledge management – the process of using intellectual capital for competitive advantage
Chapter 3: Global Dimensions of Management GMS Notes
Globalization – the process of growing interdependence among elements of the global economy
Global management – involves managing operations in more than one country
Global manager – one who is culturally aware and informed of international affairs
Global business – conducts commercial transactions across national borders
Why companies go global? Reasons include greater profits, more customers, access to suppliers, lower labour costs and easier access to financial resources (capital).
KNOW FIGURE 3.1!
MARKET ENTRY STRATEGIES
A common first step into international business is global sourcing – the process of purchasing materials, manufacturing components or business services from around the world. A second form of international business is importing – selling locally made products in foreign markets. The opposite of importing is exporting – buying foreign made products and selling them in domestic markets. A third form of international business is the licensing agreement, where foreign firms pay a fee for rights to make or sell another company’s products in a specified region. Franchising is a form of licensing in which the foreign firms buy the rights to use another’s name and operating methods in its home country.
DIRECT INVESTMENT STRATEGIES
Firms may decide to make substantial investments in operations in foreign countries. Such foreign direct investment, or FDI, involves setting up, buying all, or buying part of a business in another country. The term insourcing describes job creation through foreign direct investment. When foreign firms do invest in a new country, a common way to start is a joint venture. A joint venture operates in a foreign country through co- ownership by foreign and local partners. A global strategic alliance is a partnership in which foreign and domestic firms share resources and knowledge for mutual gains. A foreign subsidiary is a local operation completely owned and controlled by a foreign firm. These subsidiaries are set up by greenfield investments, where an entirely new operation in a foreign country is built.
Political risk – the potential loss in value of a foreign investment due to instability and political changes in the host country
Tariffs – taxes governments levy on imports
Protectionism – a call for tariffs and favourable treatments to protect domestic firms from foreign competition
NAFTA – links Canada, US and Mexico in an economic alliance. It is a trade zone with limited barriers.
European Union – a political and economic alliance of European countries
Total quality management – managing with an organization-wide commitment to continuous improvement,
product quality and customer needs
Knowledge management – the process of using intellectual capital for competitive advantage
Chapter 3: Global Dimensions of Management GMS Notes
Globalization – the process of growing interdependence among elements of the global economy
Global management – involves managing operations in more than one country
Global manager – one who is culturally aware and informed of international affairs
Global business – conducts commercial transactions across national borders
Why companies go global? Reasons include greater profits, more customers, access to suppliers, lower labour costs and easier access to financial resources (capital).
KNOW FIGURE 3.1!
MARKET ENTRY STRATEGIES
A common first step into international business is global sourcing – the process of purchasing materials, manufacturing components or business services from around the world. A second form of international business is importing – selling locally made products in foreign markets. The opposite of importing is exporting – buying foreign made products and selling them in domestic markets. A third form of international business is the licensing agreement, where foreign firms pay a fee for rights to make or sell another company’s products in a specified region. Franchising is a form of licensing in which the foreign firms buy the rights to use another’s name and operating methods in its home country.
DIRECT INVESTMENT STRATEGIES
Firms may decide to make substantial investments in operations in foreign countries. Such foreign direct investment, or FDI, involves setting up, buying all, or buying part of a business in another country. The term insourcing describes job creation through foreign direct investment. When foreign firms do invest in a new country, a common way to start is a joint venture. A joint venture operates in a foreign country through co- ownership by foreign and local partners. A global strategic alliance is a partnership in which foreign and domestic firms share resources and knowledge for mutual gains. A foreign subsidiary is a local operation completely owned and controlled by a foreign firm. These subsidiaries are set up by greenfield investments, where an entirely new operation in a foreign country is built.
Political risk – the potential loss in value of a foreign investment due to instability and political changes in the host country
Tariffs – taxes governments levy on imports
Protectionism – a call for tariffs and favourable treatments to protect domestic firms from foreign competition
NAFTA – links Canada, US and Mexico in an economic alliance. It is a trade zone with limited barriers.
European Union – a political and economic alliance of European countries
GLOBAL BUSINESSES
Global corporations, also known as multinational corporations or “MNCs”, are business firms with extensive international operations in many foreign countries (eg. Walmart, Toyota and BMW). A transnational corporation is an MNC that operates worldwide on a borderless basis.
KNOW FIGURE 3.2!
ETHICAL CHALLENGES FOR GLOBAL MANAGERS
Corruption – involves illegal practices to further one’s business interests (high in Iraq, Haiti, Sudan)
Child labour – full time employment of children for work otherwise done by adults
Sweatshops – employ workers at very low wages for long hours and in poor working conditions
Sustainable development – meets the needs of the present without hurting future generations
CULTURE AND GLOBAL DIVERSITY
Culture – shared set of beliefs, values and patterns of behaviour common to a group of people
Culture shock – the confusion and discomfort a person experiences when in an unfamiliar culture
Ethnocentrism – the tendency to consider one’s culture superior to others
Cultural intelligence – the ability to accept and adapt to new cultures
Stages in adapting to a new culture
1. Confusion – first contacts with the new culture leave you anxious, uncomfortable
2. Small victories – continued interactions bring you some successes
3. The Honeymoon – a time of cultural immersion with local ways viewed positively
4. Irritation and anger – when the “negatives” overwhelm the “positives”
5. Reality – able to enjoy the new culture while accommodating less desirable elements
Low context cultures – emphasize communication via spoken or written words
High context cultures – rely on nonverbal and situational cues as well as on spoken or written words
Monochronic culture – people tend to do one thing at a time
Polychronic culture – time is used to accomplish many things at once
Proxemics – how people use space to communicate
KNOW FIGURE 3.3!
Hofstede’s dimensions of natural culture
1. Power distance – the degree to which a society accepts unequal distribution of power
2. Individualism-collectivism – the degree to which a society emphasizes individuals and their self interests
3. Uncertainty avoidance - the degree to which a society tolerates risk and uncertainty
4. Masculinity-femininity – the degree to which a society values assertiveness and materialism
5. Time orientation – the degree to which a society emphasizes short term or long term goals
Comparative management – studies how management practices differ among countries and cultures
Global corporations, also known as multinational corporations or “MNCs”, are business firms with extensive international operations in many foreign countries (eg. Walmart, Toyota and BMW). A transnational corporation is an MNC that operates worldwide on a borderless basis.
KNOW FIGURE 3.2!
ETHICAL CHALLENGES FOR GLOBAL MANAGERS
Corruption – involves illegal practices to further one’s business interests (high in Iraq, Haiti, Sudan)
Child labour – full time employment of children for work otherwise done by adults
Sweatshops – employ workers at very low wages for long hours and in poor working conditions
Sustainable development – meets the needs of the present without hurting future generations
CULTURE AND GLOBAL DIVERSITY
Culture – shared set of beliefs, values and patterns of behaviour common to a group of people
Culture shock – the confusion and discomfort a person experiences when in an unfamiliar culture
Ethnocentrism – the tendency to consider one’s culture superior to others
Cultural intelligence – the ability to accept and adapt to new cultures
Stages in adapting to a new culture
1. Confusion – first contacts with the new culture leave you anxious, uncomfortable
2. Small victories – continued interactions bring you some successes
3. The Honeymoon – a time of cultural immersion with local ways viewed positively
4. Irritation and anger – when the “negatives” overwhelm the “positives”
5. Reality – able to enjoy the new culture while accommodating less desirable elements
Low context cultures – emphasize communication via spoken or written words
High context cultures – rely on nonverbal and situational cues as well as on spoken or written words
Monochronic culture – people tend to do one thing at a time
Polychronic culture – time is used to accomplish many things at once
Proxemics – how people use space to communicate
KNOW FIGURE 3.3!
Hofstede’s dimensions of natural culture
1. Power distance – the degree to which a society accepts unequal distribution of power
2. Individualism-collectivism – the degree to which a society emphasizes individuals and their self interests
3. Uncertainty avoidance - the degree to which a society tolerates risk and uncertainty
4. Masculinity-femininity – the degree to which a society values assertiveness and materialism
5. Time orientation – the degree to which a society emphasizes short term or long term goals
Comparative management – studies how management practices differ among countries and cultures
Managers with ethnocentric attitudes believe the best approaches are found at home and tightly control
foreign operations. Managers with polycentric attitudes respect local knowledge and allow foreign operations
to run with substantial freedom. Managers with geocentric attitudes are high in cultural intelligence and take
a collaborative approach to global management practices.
Chapter Five: Entrepreneurship and Small Business Management GMS Notes
Entrepreneurship – risk-taking behaviour that results in new opportunities
Entrepreneur – one who is willing to pursue opportunities in situations others view as problems or threats
- they are born with these traits (“nature” views)
- they learn these traits (“nurture” views)
Entrepreneurs have several distinguished characteristics. They include (1) internal locus of control, (2) high energy level, (3) high need for achievement, (4) tolerance for ambiguity, (5) self-confidence, (6) passion and action orientation, (7) self-reliance and desire for independence, and (8) flexibility.
Chapter Five: Entrepreneurship and Small Business Management GMS Notes
Entrepreneurship – risk-taking behaviour that results in new opportunities
Entrepreneur – one who is willing to pursue opportunities in situations others view as problems or threats
- they are born with these traits (“nature” views)
- they learn these traits (“nurture” views)
Entrepreneurs have several distinguished characteristics. They include (1) internal locus of control, (2) high energy level, (3) high need for achievement, (4) tolerance for ambiguity, (5) self-confidence, (6) passion and action orientation, (7) self-reliance and desire for independence, and (8) flexibility.
Necessity-based entrepreneurship – takes place because other employment options don’t exist
Small business – has fewer than 100 employees, is independently owned and operated, and does not dominate its industry
- employs 5 million workers, about 48 percent of the Canadian workforce
Franchise – a form of business where one business owner sells to another the right to operate the same business in another location
Family business – owned and controlled by members of a family
Family business feud – occurs when family members have major disagreements over how the business should
be run
Succession Plan – describes how the leadership transition and related financial matters will be handled
Succession problem – is the issue of who will run the business when the current head leaves
Small businesses often fail for a number of reasons including (1) lack of experience, (2) poor financial control, (3) bad or no strategy, (4) ethical failure, (5) insufficient commitment, (6) poor leadership, (7) growing too fast, and (8) lack of expertise.
New Venture Creation
Small business – has fewer than 100 employees, is independently owned and operated, and does not dominate its industry
- employs 5 million workers, about 48 percent of the Canadian workforce
Franchise – a form of business where one business owner sells to another the right to operate the same business in another location
Family business – owned and controlled by members of a family
Family business feud – occurs when family members have major disagreements over how the business should
be run
Succession Plan – describes how the leadership transition and related financial matters will be handled
Succession problem – is the issue of who will run the business when the current head leaves
Small businesses often fail for a number of reasons including (1) lack of experience, (2) poor financial control, (3) bad or no strategy, (4) ethical failure, (5) insufficient commitment, (6) poor leadership, (7) growing too fast, and (8) lack of expertise.
New Venture Creation
First mover advantage – comes from being first to exploit a niche or enter a market
Stages in the Life Cycle of an Entrepreneurial Firm
Business plan – describes the direction for a new business and the financing needed to operate it
- the plan describes the details needed to obtain start-up financing and operate a new business
- every business plan should have an executive summary, cover certain business fundamentals, be well organized with headings, easy to read, and no longer than 20 pages
Choosing the form of ownership
Sole proprietorship – a form of business where an individual pursues a profit
Partnership – a form of business where two or more people agree to contribute resources to start and operate a business together
Corporation – a legal entity that exists separately from its owners
Limited liability Corporation – a hybrid business form combining advantages of the sole proprietorship,
partnership, and corporation
Financing the New Venture
Debt financing – involves borrowing money that must be repaid over time with interest
Equity financing – involves exchanging ownership shares for outside investment monies
Venture Capitalists – make large investments in new venture s in return for an equity stake in the business
Initial public offering (IPO) – an initial selling of shares of stock to the public at large
Angel investor – a wealthy individual willing to invest in a new venture in return for equity in a new venture
Chapter 6: Planning Processes and Techniques GMS 200 Notes
Planning – the process of setting objectives and determining how to accomplish them Objective – specific results that one wishes to achieve
Plan – a statement of intended means for accomplishing objectives
The Planning Process
- the plan describes the details needed to obtain start-up financing and operate a new business
- every business plan should have an executive summary, cover certain business fundamentals, be well organized with headings, easy to read, and no longer than 20 pages
Choosing the form of ownership
Sole proprietorship – a form of business where an individual pursues a profit
Partnership – a form of business where two or more people agree to contribute resources to start and operate a business together
Corporation – a legal entity that exists separately from its owners
Limited liability Corporation – a hybrid business form combining advantages of the sole proprietorship,
partnership, and corporation
Financing the New Venture
Debt financing – involves borrowing money that must be repaid over time with interest
Equity financing – involves exchanging ownership shares for outside investment monies
Venture Capitalists – make large investments in new venture s in return for an equity stake in the business
Initial public offering (IPO) – an initial selling of shares of stock to the public at large
Angel investor – a wealthy individual willing to invest in a new venture in return for equity in a new venture
Chapter 6: Planning Processes and Techniques GMS 200 Notes
Planning – the process of setting objectives and determining how to accomplish them Objective – specific results that one wishes to achieve
Plan – a statement of intended means for accomplishing objectives
The Planning Process
1. Define your objectives
2. Determine where you stand/current position
3. Develop premises regarding future conditions (anticipate the future) 4. Analyze alternatives to make a plan
5. Implement plan and evaluate results
Planning improves focus, flexibility, coordination, control. Complacency trap – being carried along by the flow of events
Canadian Elliot Jacques suggested that people vary in their capability to think with different time horizons. He believed that most people work comfortably with only 3 month time spans, a small group works well within a 1 year span and rarely do people work with a 20 year time frame in mind.
Strategic Plan – identifies long term directions for the organization
Vision – clarifies the purpose of the organization and expresses what it hopes to be in the future
Tactical Plan – helps implement all or parts of a strategic plan
Functional Plans – indicate how different operations within the organization will help advance the overall strategy
Operational Plans – identifies short term activities to implement strategic plan
Policy – standing plan communicates broad guidelines for decisions and actions
Procedure/rule – precisely describes actions that are to be taken in specific situations
Budget – a plan that commits resources to projects or activities
Zero based budget – allocates resources as if each budget was brand new
Forecasting – attempts to predict the future
Contingency planning – identifies alternative courses of action to take when things go wrong
Scenario planning – identifies alternative future scenarios and make plans to deal with each
Benchmarking – uses external and internal comparisons to plan for future improvements
Best practices – things people and organizations do that lead to superior performance
SMART GOALS – Specific, Measureable, Attainable, Referred to, Timely
Hierarchy of goals/objectives – lower level objectives are means to accomplishing higher level ones Management by objectives – process of joint objective setting between superior and subordinates Improvement objectives – describe intentions for specific performance improvements
Participatory planning – includes the persons who will be affected by plans and/or who will implement them
Strategic constituencies analysis – assesses interests of stakeholders and how well the organization is
responding to them
2. Determine where you stand/current position
3. Develop premises regarding future conditions (anticipate the future) 4. Analyze alternatives to make a plan
5. Implement plan and evaluate results
Planning improves focus, flexibility, coordination, control. Complacency trap – being carried along by the flow of events
Canadian Elliot Jacques suggested that people vary in their capability to think with different time horizons. He believed that most people work comfortably with only 3 month time spans, a small group works well within a 1 year span and rarely do people work with a 20 year time frame in mind.
Strategic Plan – identifies long term directions for the organization
Vision – clarifies the purpose of the organization and expresses what it hopes to be in the future
Tactical Plan – helps implement all or parts of a strategic plan
Functional Plans – indicate how different operations within the organization will help advance the overall strategy
Operational Plans – identifies short term activities to implement strategic plan
Policy – standing plan communicates broad guidelines for decisions and actions
Procedure/rule – precisely describes actions that are to be taken in specific situations
Budget – a plan that commits resources to projects or activities
Zero based budget – allocates resources as if each budget was brand new
Forecasting – attempts to predict the future
Contingency planning – identifies alternative courses of action to take when things go wrong
Scenario planning – identifies alternative future scenarios and make plans to deal with each
Benchmarking – uses external and internal comparisons to plan for future improvements
Best practices – things people and organizations do that lead to superior performance
SMART GOALS – Specific, Measureable, Attainable, Referred to, Timely
Hierarchy of goals/objectives – lower level objectives are means to accomplishing higher level ones Management by objectives – process of joint objective setting between superior and subordinates Improvement objectives – describe intentions for specific performance improvements
Participatory planning – includes the persons who will be affected by plans and/or who will implement them
Chapter 7: Strategy and Strategic Management
GMS Notes
Competitive advantage – the ability to do something so well that one outperforms competitors
- typical sources of competitive advantage include cost and quality, knowledge and
speed, barriers to entry and financial resources
Sustainable competitive advantage – ability to outperform rivals in ways that are difficult or costly to imitate
Strategy – a comprehensive plan guiding resource allocation to achieve long term organization goals
Strategic intent – focuses and applies organizational energies on a unifying and compelling goal
There are three levels of strategy: corporate, business and functional
Corporate strategy – sets long term direction for the total enterprise (ex. growth and diversification strategies, restructuring strategies, global strategies, e-business strategies, cooperative strategies)
Business strategy – identifies how a division or strategic business unit will compete in its domain
Functional strategy – guides activities within one specific area of operations (supports business strategies)
Strategic management – process of creating and implementing strategies
Strategic Analysis – process of analyzing the organization, the environment, and the organization’s competitive position and current strategies
Strategy formulation – the process of creating strategies to guide the allocation of resources
Strategy implementation – process of putting strategies into action
Mission statement– expression of the organization’s reason for existence in society
Stakeholders – individuals and groups directly affected by the organization and its strategic accomplishments
Competitive advantage – the ability to do something so well that one outperforms competitors
- typical sources of competitive advantage include cost and quality, knowledge and
speed, barriers to entry and financial resources
Sustainable competitive advantage – ability to outperform rivals in ways that are difficult or costly to imitate
Strategy – a comprehensive plan guiding resource allocation to achieve long term organization goals
Strategic intent – focuses and applies organizational energies on a unifying and compelling goal
There are three levels of strategy: corporate, business and functional
Corporate strategy – sets long term direction for the total enterprise (ex. growth and diversification strategies, restructuring strategies, global strategies, e-business strategies, cooperative strategies)
Business strategy – identifies how a division or strategic business unit will compete in its domain
Functional strategy – guides activities within one specific area of operations (supports business strategies)
Strategic management – process of creating and implementing strategies
Strategic Analysis – process of analyzing the organization, the environment, and the organization’s competitive position and current strategies
Strategy formulation – the process of creating strategies to guide the allocation of resources
Strategy implementation – process of putting strategies into action
Mission statement– expression of the organization’s reason for existence in society
Stakeholders – individuals and groups directly affected by the organization and its strategic accomplishments
