041_MANAJEMEN_Meija_495

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Chapter

1

Management and Its Evolution

McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives

After reading this chapter, you should be able to:

Understand the roles played by individuals, teams,
and managers in carrying out company activities.

Practice the four major functions of management
Recognize the interpersonal, informational, and

decisional roles played by top level managers.
Apply the general skills needed to carry out

managerial responsibilities.
Integrate the major elements from the various

perspectives of management theory.

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The performance of organizations depends to
a large extent on how their resources are
allocated and their ability to adapt to changing
conditions.

Successful organizations know how to
manage people and resources efficiently to
accomplish organizational goals and to keep
those goals in tune with changes in the
external environment.

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Management in the New Millennium

McGraw-Hill  A firm can be efficient by making the
best use of people, money, physical
plant, and technology.

 It is ineffective if its goals do not provide
a sustained competitive advantage.

 A firm with excellent goals would fail if
it hired the wrong people, lost key
contributors, relied on outdated
technology, and made poor investment
decisions.

© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Levels of management

Strategic Managers

Tactical Managers
Operational Managers

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Strategic Managers

The firm’s senior executives with
overall responsibility for the firm.

 Developing the company’s goals

 Focus on long-term issues

 Emphasize the growth and overall
effectiveness of the organization

Concerned primarily with the
interaction between the
organization and its external
environment.

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Tactical Managers

Responsible for translating the
general goals and plans
developed by strategic
managers into specific
objectives and activities.

Shorter time horizon
Coordination of resources

These are middle managers

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Operational Managers

 Lower-level managers who supervise the
operations of the organization.

 Directly involved with non-management
employees
 Implementing the specific plans
developed with tactical managers.
 This is a critical role to the organization.
 Operational managers are the link
between management and non-
management staff

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Management Functions

Planning Organizing

Leading Controlling

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Planning

The management function that
assesses the management
environment to set future objectives
and map out activities necessary to
achieve those objectives.

To be effective, the objectives of
individuals, teams, and
management should be coordinated
to support the firm’s mission.

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Organizing

The management function that
determines how the firm’s human,
financial, physical, informational,
and technical resources are
arranged and coordinated to
perform tasks to achieve desired
goals.

The deployment of resources to
achieve strategic goals.

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Leading

The management function that
energizes people to contribute their
best individually and in cooperation
with other people.

 This involves:

 Clearly communicating organizational goals
 Inspiring and motivating employees
 Providing an example for others to follow
 Guiding others
 Creating conditions that encourage management

of diversity

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McGraw-Hill Controlling

 The management function that
measures performance, compares it
to objectives, implements necessary
changes, and monitors progress.

Many of these issues involve
feedback or identifying potential
problems and taking corrective
action.

© 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Management as a set of roles

Day-to-day management activities are routine,
orderly, and rational.

These include:

Interpersonal roles - communication with superiors,

peers, subordinates, and people from outside the
organization.

Information Roles - obtaining, interpreting, and giving

out information.

Decisional Roles - choosing among competing

alternatives.

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Management as a set of skills

The four basic management functions require a set
of skills to be carried out properly.

Because most managerial tasks are unique,
ambiguous, and situation-specific, there is seldom
one best way to approach them.

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Management as a set of skills

 Four major categories of skills will help you become a good
manager:
 Strategic Skills - the ability to see “the big picture”, focus on

key objectives without getting mired in details, and having a sense
what is happening inside and outside the company.

 Task-Related Skills - the ability to define the best approach to

accomplish personal and organizational objectives. They include
consideration of all resources, including time, organizational
structure, financial resources, and people. They also involve the
ability to prioritize, remain flexible to make necessary changes,
and ensure that value is being created

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Management as a set of skills

 People-Related Skills - getting work done through others and

with others. Include the ability to delegate tasks, share
information, resolve conflicts, be a team player, and work with
people from very different backgrounds

 Self-Awareness Skills - Being aware of your personal

characteristics can help you adapt to others and can help you
understand why you react to them the way you do. These skills
can help you to avoid rushed judgments, appreciate the nuances of
particular situations, size up opportunities, capitalize on your
personal strengths, and avoid situations in which you are likely to
fail.

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Skills for Managerial Success

Strategic Skills Task Skills

 Environmental assessment  Setting and prioritizing
scanning objectives

 Strategy formulation  Developing plan of action and
 Mapping strategic intent and implementation

defining mission  Responding in a flexible
 Strategy implementation manner
 Human resource congruency
 Creating value

 Working through the
organizational structure

 Allocating human resources

 Managing time efficiently

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Skills for Managerial Success (continued)

People Skills Self-Awareness Skills

 Delegating  Personal adaptability
 Influencing  Understanding personal biases
 Motivating  Internal locus of control
 Handling conflict
 Win-win negotiating
 Networking
 Communicating

 Verbal
 Nonverbal
 Listening
 Cross-cultural management
 Heterogeneous teamwork

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The Evolution of Management Thought

Early Management Classical Perspective
Thought

Contemporary Behavioral
Management Perspective
Perspectives

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Early Management Thought

Early ideas about management strategy

 Sun Tzu, The Art of War

Early ideas about leadership

 Nicolò Machiavelli, The Prince

Early ideas about the design and organization of work

 Adam Smith, The Wealth of Nations

 division of labor

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The Operational Perspective

 Scientific Management

 Frederick W. Taylor

 Quantitative Management

 Ford W. Harris

 Quality Management

 Walter A. Shewhart

 Bureaucratic Management

 Max Weber

 Administrative Management

 Henri Fayol

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Taylor’s Four Principles of Scientific
Management

 Scientifically study each part of a task and develop the best
method of performing the task.

 Carefully select workers and train them to perform the task
by using the scientifically developed method.

 Cooperate fully with workers to ensure that they use the
proper method.

 Divide work and responsibility so that management is
responsible for planning work methods using scientific
principles and workers are responsible for executing the
work accordingly.

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Key Characteristics of Weber’s Ideal
Bureaucracy

Specialization of labor
Formal rules and procedures
 Impersonality
Well-defined hierarchy
Career advancement based on merit

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Fayol’s 14 Principles of Management

 Division of work  Centralization
 Authority  Scalar chain
 Discipline  Order
 Unity of command  Equity
 Unity of direction  Stability and tenure
 Subordination of  Initiative
 Esprit de corps
individual interest to the
general interest
 Remuneration

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Behavioral Perspective

The behavioral perspective acknowledges that
psychological and social processes of human behavior
can result in improvements in productivity and work
satisfaction.

 The Hawthorne effect - when a manager shows concern for
employees, their motivation and productivity levels are likely
to improve.

 Human Relations Approach - the relationship between
employees and a supervisor is a vital aspect of management.

 Employee motivation

 Leadership style

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Hawthorne Effect

The discovery that paying special
attention to employees motivates them to
put greater effort into their jobs.

(from the Hawthorne management studies, performed from 1924 –
1932 at Western Electric Company’s plant near Chicago)

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Maslow’s Hierarchy of
Needs

Self-Actualization

Need for Self Esteem

Need for Social Relations
Need for Security
Physical Needs

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McGregor’s Theory X and Theory Y

Leaders and managers who hold Theory X
assumptions believe that employees are inherently lazy
and lack ambition.

A negative perspective on human behavior.

Leaders and managers who hold Theory Y
assumptions believe that most employees do not
dislike work and want to make useful contributions to
the organization.

A positive perspective on human behavior.

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Contemporary Management Perspectives

 Systems Theory
Contingency Theory
The Learning Organization Perspective

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Systems Theory

Views the organization as a system of interrelated
parts that function in a holistic way to achieve a
common purpose.

Systems theory concepts that affect management
thinking:

 Open and closed systems
 Subsystems
 Synergy
 Equifinality

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Contingency Theory

States that there is no ―one best way‖ to manage an
organization.

 Because what works for one organization may not work for
another

 Situational characteristics (contingencies) differ

 Managers need to understand the key contingencies that
determine the most effective management practices in a given

situation

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The Learning Organization

The management approach based on an
organization anticipating change faster than its
counterparts to have an advantage in the market
over its competitors.

 There are two ways organizations can learn:

 Experimental learning
 External learning

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McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Chapter

2

Managing in a
Global Environment

McGraw-Hill © 2004 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives

After reading this chapter, you should be able to:

 Understand the landscape of the global market.
 Develop an awareness for the role of culture in international

management.
 Recognize the major options firms face when they choose a

global strategy and the conditions that make a strategic
choice most appropriate.
 Determine the best mode of entry into foreign markets given
each firm’s unique characteristics.
 Develop effective human resource practices for managing
international subsidiaries.
 Become aware of ethical issues in international operations.

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The Changing Pattern of International Business

Changing world output and world trade
picture

The U.S. no longer dominates the world economy

Large U.S. multinationals no longer dominate
international business

The centrally planned communist economies that
made up roughly half the world suddenly become
accessible to Western businesses

The global economy has become more knowledge-
intensive

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The Changing Pattern of International Business

(continued)

 Lowered trade barriers

 General Agreement on Tariffs and Trade
(GATT)

 World Trade Organization (WTO)

 Integrated Economic Markets

 The European Union (EU)

 The North American Free Trade Act
(NAFTA)

 The Association of Southeast Asian Nations
(ASEAN)

 The Asia Pacific Economic Cooperation

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The Changing Pattern of International Business

(continued)

Global consumer preferences

 Tastes and preferences are converging
 Presence of mass media, exposure to

goods from various countries, and
standardized products

Globalized production

 Cost efficiency

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Example of Globalized Production

Of the $20,000 sticker price of a General Motors
Automobile LeMans:

 $6,000 goes to South Korea, where the car was assembled

 $3,000 goes to Japan for sophisticated high-tech parts
(engines, transaxles, electronics)

 $800 goes to Taiwan, Singapore, and Japan for small
parts

 $500 goes to Great Britain for advertising and marketing
services

 $1,000 goes to Ireland for data processing

 $7,600 goes to GM and its external professional firms in
the United States

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The Changing Pattern of International Business

(continued)

Technological innovations

 Advances in communications, information
processing, and transportation technology

 Fiber optics, wireless technology, the Internet
and World Wide Web, and satellite technology

Management across cultures

 Adaptation to business strategies, structures,
operational policies, and human resource
programs

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Major Factors Affecting International Business

General business environment

Legal system

 Common law
 Civil law
 Muslim law

Economic environment

Cultural environment

 Culture shock

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Dimensions of Culture

Power Distance

Individualism

Uncertainty Avoidance

Long-term/ Short-term Masculinity / Femininity
Orientation
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Entry Strategy and Strategic Alliances

Four key decisions of a firm contemplating foreign
expansion:

 Which countries to enter
 When to enter
 Scale of involvement
 How to enter

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Choosing Foreign Countries

The appeal of a particular country is likely to be greater
when:
 The size of the domestic market is large

 The present wealth of consumers in that market is high and
projected to grow in the future

 The needed resources are readily available

 The firm’s product offerings are suitable to a particular
market

 A positive business environment exists

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When to Enter Foreign Countries
and Scale of Involvement

 When to Enter

 First-mover advantages
 Pioneering costs

Scale of Involvement

 Lowest if the firm simply decides to export its products to the
foreign location

 Highest if the firm decides to have a wholly owned
subsidiary in the foreign country

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Modes of Entry

Exporting Turnkey Project

Licensing
Franchising

Wholly Owned Joint Venture
Subsidiary
Strategic Alliance
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Advantages and Disadvantages of
Various Modes of Entry Choices

Mode of Entry Advantages Disadvantages

Exporting Economies of scale No low cost sales
Lower foreign expenses High transportation costs
Potential tariffs

Turnkey Project Access to closed markets Competition from local client
Loss of competitive advantage

Licensing Quick expansion Loss of competitive advantage
Lower expenses and risks
Lower political risk Limited ability to use profits in one country to
increase competition in another country

Franchising Quick expansion Loss of competitive advantage
Lower development costs and risks
Lower political risk Potential quality control problems

Limited ability to use profits in one country to
increase competition in another country

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Advantages and Disadvantages of Various
Modes of Entry Choices (continued)

Mode of Entry Advantages Disadvantages

Joint Venture Knowledge of local markets Potential for conflict of interest
Lower development costs and risk Loss of competitive advantage
Access to closed markets

Strategic Alliance Access to closed markets Loss of competitive advantage

Pooled resources increase partner’s Potential overestimation of partner’s
capabilities capabilities

Complementary skills & assets

Wholly Owned Maximum control over proprietary Large capital outlay
Subsidiary knowledge/ technology Lack of local knowledge
Increased risk
Greater strategic flexibility

Efficiencies of global production system

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