Management

Horizontal integration

A company grows by combining with competitors

Theory Y

Assumes that, given challenge and freedom, workers are motivated to achieve self-esteem and to demonstrate their competence and creativity. Employees will seek responsibility under the right conditions

Organizational culture

Clan culture: feels like family but not always very effective Adhocracy: doing many innovative projects Hierarchy: culture of structure, control coordination, formalization, efficiency Market oriented culture: results oriented, achievement, competition Quadrants are not paradoxes, they complete each other

open systems approach

Parts must work together in order to reach firm's goals. dynamically interact to their environments by taking in inputs and transforming them into outputs that are distributed into their environments

Strong vs. weak cultures

Strong culture ◦Organization's core values are both intensely held and widely shared ◦Consistent messages about what's important ◦Employees can tell stories about company history/heroes ◦Strong connection between shared values and behaviors ◦Drawbacks: barrier to change, places emphasis on conformity, mergers can fail due to cultural incompatibility Weak Culture ◦Values limited to a few people → the top management ◦Culture sends contradictory messages about what's important ◦Employees have little knowledge of company history or heroes ◦Employees have little identification with culture ◦Little connection between shared values and behaviors

Framing bias

Systematic reversals of preference when the same problem is presented in different way →strategic issue diagnosing ▪Framing as threat = loss →risky decisions ▪Framing as gain = opportunity →less risky decisions

Top vs middle vs low managers

Top: 50% conceptual, 35% human, 25% technical Middle: 33% conceptual, 33% human, 33% technical Low: 25% conceptual, 35% human, 50% technical

Goal setting theory

What leads to motivation? - Set specific goals (Even difficult goals are accepted) - External or self-generated feedback - Participation in setting-goals BUT - Wanting it (make it public) - Rather for simple and know tasks - Typical for western culture In practice - Set specific and difficult goals - Promote goal commitment o Must be fair, obtainable and reasonable o Let employees set goals themselves o Give tools and resources o Promote self-efficacy • Give support and feedback

Diversification

When a company combines with other companies in different, but related industries ▪Eg. Google owns Youtube, Nest, Doubleclick

Dynamic capabilities

You are able to constantly adapt and keep looking for different resources and different competitive advantages in company

Cognitive Intelligence (IQ)

abilities such as logic, reason, reading, writing, analyzing and prioritizing

Business level strategies (porter)

be aware of being stuck in the middle → you have to choose -you go for differentiation OR low cost → cannot do both

Internal attribution

behavior is believed to be under the personal control of the individual → someone's own fault

Contrast effect

evaluation of a person's characteristics that is affected by comparisons with other people recently encountered who rank higher or lower on the same characteristics ex: place in an interview

External Environment

extent to which managers have knowledge of, and predict change in their organization's external environment is affected by: o Complexity of the environment (Simple - Complex) o Degree of change in environmental components (Dynamic - Stable)

The Halo Effect

first impressions last → specific positive traits will positively influence the overall evaluation of a person

Green Management

o A form of management in which managers consider the impact of their organization on the natural environment. o Techniques to go green: -Life Cycle Assessment = determines the environmental impacts of products, processes or services, through production, usage, and disposal -The Global 100

Loss aversion

people can't stand losing Value function: psychologically/satisfactionally losses are twice as powerful as gains →people prefer avoiding and cutting losses than acquiring gain

Confirmation bias

tendency to interpret or/and search for information in a way that confirms one's preconceptions ex: if we believe there is no wrongdoing, we will see no wrongdoing

External attribution

the person is forced into the behavior by outside events/causes

false consensus effect

the tendency to believe that other people think the same way as we do

Hindsight bias

the tendency to believe, after learning an outcome, that one would have foreseen it. "I knew it all along" ex: Ashley Revell betting everything he owned on red in Vegas

Self-fulfilling prophecy

→ Phygmalioneffect = higher expectations lead to increase in performance

Groupshift

- groups often take positions of greater risk

Contemporary theories

Cognitive evaluation theory Goal setting theory (Locke) Reinforcement theory (Skinner) Equity theory (Adams) Expectancy theory (Vroom)

Gain frame

Given a certain choice, we would rather get assured than win but also risk possibility to get nothing →no risky choice, not gamble and stay with secure choice

McClelland's Theory of needs / Three-needs theory

Needs can be measured in TAT = Thematic Apperception Test Need for achievement Need for affiliation Need for power

Differentiation

Division of labor- the degree to which activities in an organization are separated into different jobs

Efficiency vs Effectiveness

Efficiency= doing things right →getting the most output for the least inputs Effectiveness= doing the right things →attaining organizational goals (success)

Asch Experiment

virtual perception test of length of a line -people were set in a rule and asked which line corresponded →however other contestants were actors and answered purposely wrong →real contestants began to doubt themselves and conform and answer the wrong answer just because the other people did

Intercultural differences (Global management)

◦Multinational Corporation (MNC) : Maintains operations in multiple countries ◦Multi-domestic Corporation: Is a MNC that decentralizes management and other decisions to the local country o Eg.BP oil company with HQ in London ◦Global company : Is a MNC that centralizes management and other decisions in home country ◦Transnational Corporation (Borderless organization): Is a MNC → eliminated structural divisions that impose artificial geographic barriers and is organized along business lines that reflect a geocentric attitude

Blue Ocean Strategy (BOS)

◦metaphor: lot of companies are in red ocean → compete in same things, they do not differentiate ◦ however you can go to the blue ocean (no sharks) ◦key of blue ocean strategy: think of someone who is starting a new company again, you must think how you can be different and at the same time how you can lower cost (different from Porter)

How can we know if companies are involved in CSR?

◦via social accounting: ◦reports, GRI reporting, ISO certificates ◦Global Compact member ◦Fairtrade and other labels (in general audits) ◦Memberships (Fair labor organization,..) ◦FTSE scores

LMX Theory (Leader Member Exchange)

(Leader member exchange) It is a relationship-based approach to leadership that focuses on the two-way relationship between leaders and followers. Leaders create "in-groups and out-groups" In-group members (vs out-group members) - close to leader in attitude or personality - have more of the leaders attention - get special privileges - lower turnover and greater satisfaction

*Factors influencing the strength of culture*

(SCARS) ◦Size of the organization ◦Clarity of cultural values and beliefs: not many subcultures ◦Age of the organization ◦Rate of employee turnover ◦Strength of the original culture

Anchoring bias

- A cognitive bias that describes the common human tendency to rely too heavily, or anchor, on one trait or piece of information when making decision. - Our mind gives a disproportionate amount of emphasis on the first offer which is important to know when negotiating

BCG Matrix (growth-share matrix)

- A means of evaluating strategic business units on the basis of (1) their business growth rates and (2) their share of the market ◦ Stars: High market share/High anticipated growth rate → good investment opportunities ◦Cash Cows: High market share/Low anticipated growth rate → managers should milk cash cows for as much as they can ◦Question Marks: Low market share/High anticipated growth rate ◦Dogs: Low market share/Low anticipated growth rate → should be sold off/ liquidated

Decision making styles

- Analytical: long term, flexible, - Conceptual: intuition, indecisive - Directive: autocratic, short term, closely analyze - Behavioral: love interacting with people, avoid conflict o Advantages of group decision making ->Generates more and complete knowledge -> Increase diversity of thought -> Increases acceptance of a solution o Disadvantages -> Conformity -> One dominant coalition -> Time consuming -> Group think: being pressured by wanting to belong to the majority

Internal environment: organizational culture

◦A system of shared meaning held by members that distinguishes the organization from other organizations

Management of small businesses

◦Less hierarchy ◦Less specialization ◦Less resources for things outside the core ◦Entrepreneurship

Total quality management (TQM)

- TQM is an integrative philosophy of management for continuously improving the quality of products and processes - TQM capitalizes on the involvement of management, workforce, suppliers, and even customers, in order to meet or exceed customer expectations - The culture of the company should aim at developing employees ability to work together to improve quality - Ex: Thought that americans would only buy american made things Wrong, americans bought quality over nationality (i.e honda, toyota)

Human relations model (One of the four different management models)

- Teamwork, participation, attention to employees concerns - Means: cohesion, morale - Internal focus + flexibility - Clan culture: extended family, mentoring, nurturing, coaching - Simple organizations - family firms

Pigeonholing

- every professional has its department to take care of - For me - not for me -> categorizing - Not innovative

Visionary leadership

- leadership that creates a positive image of the future that motivates organizational members and provides direction for future planning and goal setting

Managing stakeholders

1)Identify the organization's external/internal stakeholders → stakeholder mapping 2) Determine the particular interests and concerns of the stakeholders 3) Decide how critical each stakeholder is to the organization 4) Determine how to manage each individual stakeholder relationship

What do managers do?

4 management functions: POLC P: Planning- setting goals and maintaining them O: Organizing- assign responsibility for task management L: Leading- Use leadership to motivate employees C: Controlling - Monitor activities and make corrections

Human resources perspective: Maslow

Motivation by job design = the way in which employees can be internally motivated by changing their job/work environment Lower-order needs: needs that are satisfied externally: physiological and safety needs Higher-order needs: needs that are satisfied internally: social, esteem and self-actualization needs Once one need is fulfilled, people will strive for the next

Classical perspective

Scientific management ◦Theories are developed on basis of scientific methods ◦Fredrick Taylor (1856-1915) ◦His aim was efficiency (people will avoid work if they can) ◦Taylorism = organization is well oiled machine with aim on productivity and efficiency → breaks every tasks into small and simple segments that can be easily analyzed and taught.

Reinforcement theory

Reinforcement Providing a reward for a desired behavior Removing an unpleasant consequence when the desired behavior occurs § Punishment • Applying an undesirable condition to eliminate an undesirable behavior § Extinction • Withholding reinforcement of a behavior to cause its cessation § Reinforcement works better than punishment

Attribution bias towards yourself

Self-serving bias: taking quick credit for successes and blaming outside factors for failures, interpret ambiguous information in their favor ▪Eg.Failing exam is teachers fault ◦When things go good →because of internal attributions ◦When things go bad →because of external attributions

Staff vs. Line Functions

Staff function managers help out line functions managers - Staff: support the line people (people working behind the scenes) -Line: people that touch/make the product (on the line)

Ethnocentrism

The belief that one's native country, culture, language and habits are superior to all others ◦Eg.Some home country people are put in key positions and are more highly rewarded

CSR (social economic view)

Caroll's Pyramid ◦4 responsibilities: ◦Economic: The foundation of CSR, for a business to be useful in society it needs to be profitable. ◦Legal: A business needs to fulfill its responsibilities to the law. ◦Ethical: A business goes beyond what the law requires and does what is right and fair → good working conditions, avoid harm.. ◦Philanthropic: A business gives back to society, is a good corporate citizen → donations to charity..

Pygmalion effect

Closely related to the self-fulfilling prophecy; the two terms are even considered synonymous in some circles; it is a type of self-fulfilling prophecy where if you think something will happen, you may unconsciously make it happen through your actions or inaction. It occurs in the workplace when a manager raises his or her expectations for the performance of workers, and this actually results in an increase in worker performance.

Intensity of ethical dilemma

Consensus of wrong: how much agreement is there that this action is wrong? Probability of harm: how likely is it that this action will cause harm Immediacy of consequences: will harm be felt immediately? Proximity to victims: how close are the potential victims? concentration of effect: how concentrated is the effect of the action on the victim? Greatness of harm: how many people will be harmed

Corporate Strategy

Corporate strategy = An organizational strategy that determines what businesses a company is in or wants to be in, and what it wants to do with those businesses

Renewal strategy

Corporate strategy designed to address declining performance - Retrenchment strategy = a short-run renewal strategy used for minor performance problems - Turnaround strategy = for more serious problems where drastic actions need to be taken

Stability strategy

Corporate strategy in which an organization continues to do what it is currently doing

Changing a culture

Culture is not easy to change!!! Especially strong cultures!!! Factors that ease changing a culture: ◦dramatic crisis ◦turn over in leadership ◦young and small organizations ◦weak culture How to change? •You have to change the management because it lays at the basis of culture •Use Star Model from Galbraith from top to bottom and apply how you are going to change each step

Structural Dimensions

Division of labor: Work specialization or division of labor is the degree to which activities in the organization are subdivided into separate jobs. - specialization (horizontal differentiation) - hierarchy (vertical differentiation) - profesionalism Coordination: add definition - centralization/ decentralization - formalization - Socialization - Control vs mutual agreement

Dominant Culture and subcultures

Dominant culture → expresses the core values that are shared by a majority of the organization's members Subcultures ◦develop in large organizations to reflect common problems, situations or experiences of members (also top management) ◦Mirror the dominant culture but may add or modify the core values

Resource Imitability

Easy to imitate: Cash, commodities Can or cannot be imitated: Capacity, economies of scale Difficult to imitate: Brand loyalty, favorable cost position, employee satisfaction, reputation for fairness Cannot be imitated: Patents, unique location, unique assets

What do we learn from these older theories

Extrinsic motivation: - People look for pay, job security and security - Individuals engage in behaviors merely because of the objective consequences that might attract, like tangible rewards or praise Intrinsic motivation: - People have social needs - Some people seek personal growth - Individuals engage in behaviors they perceive as inherently interesting, gratifying, fulfilling and enjoyable

The Globe Studies (finish later)

GLOBE = Global Leadership and Organization Behavior Effectiveness ( +4 other dimensions) -in-group collectivism -Perfomanceorientation -Gender differentiation -humane orientation

New Diversity

Generation Y (millennials) ◦Want to work, but don't want work to be their life ◦Changing careers fast ◦Don't like too stay too long on one project ◦Multi-taskers ◦Less likely to respond to the traditional command-and-control management ◦Technically savvy ◦Challenge status quo ◦Question their superiors ◦Work-life balance ◦High value on self fulfillment Generation Z ◦Technological savvy and driven ◦Entrepreneurial and creative ◦Persuasive ◦Face to face communication ◦Intrinsic motivated ◦Cosmopolitan ◦Digital ◦Have been pampered

Exam question! Your company is hoping to build a new oversees plant. You could save about 5 million Euros by not installing standard pollution control required in Europe. The plant will employ many local workers in a poor country. Your research shows that pollutants from the factory could damage the local fishing industry. Yet building the factory with the pollution control equipment will likely make the plant too expensive to build. What is the appropriate course of action?

If you build: advantages for company (more profit), poor people (work and income), economic development of the region, disadvantages for fisher population If you don't build: advantages: for fisher population, disadvantages: company (less profit), poor people (no work and income), no economic development of the region

Stage of moral development (Kohlberg, 1976)

Individual stages of moral development Pre-conventional: o Follow rules to avoid punishment o Acts in own interest o Leadership style: autocratic o Employee behavior: task accomplishment Conventional: o Lives up to others expectations o Upholds law o Leadership style: guiding o Employee behavior: team oriented Post-conventional o Follows self-principles of justice and right o Seeks creative solutions to ethical dilemmas o Balances concern for individuals & concern for common good o Leadership style: transforming or servant leadership o Employee behavior: empowered employees, full participation

Four I's (Transformational leadership)

Inspirational motivation Providing vision and sense of mission, instills pride, gains respect and trust Supported by communication skills that make the vision understandable, precise, powerful and engaging Idealized influence Leaders must be credible, are role models Intellectual stimulation Promotes intelligence, rationality and creativity Challenge assumptions to look at old problems in new ways and even to challenge the view of the leader Individualized consideration Gives personal attention, treats each employee individually, coaches, advises Increases self-efficacy

Strategic Issue Diagnosing (SID)

Interpretations of threat or opportunity and their influence on strategic decisions The threat label: Implies lower control → lead attention on internal actions; greater risk will be taken in response to threats as opposed to opportunities. ◦The opportunity label: Should lead to external oriented actions; Less risk will be taken, except for opportunities in a turbulent environment

Skills managers need

Katz: good manager has 3 skills ◦Conceptual skills: think in abstract terms, concepts and theories: has to do with cognitive intelligence. ◦Human skills: empathy ◦Technical skills: knowledge about your sector

Management vs. Leadership

Leadership= the ability to influence a group toward the achievement of goals Management= use of authority inherent in designated formal rank to obtain compliance from organizational members

*How organizations go international*

Lowest: exporting then: global outsourcing then: licensing next: franchising and joint venture next: acquisitions highest: Greenfield venture

Social Accounting

Measuring the social and environmental costs and benefits of various actions from a business to particular interest groups within and to society ◦GRI : Global Reporting Initiative standards ◦ISO; International Organization for Standardization ◦United Nations Global Compact (UNGC)

high context culture vs. low context culture

High context culture ◦Establish social trust first ◦Value personal relations and goodwill ◦Agreement by general trust ◦Negotiations slow and ritualistic ◦Polychromic time ◦Intimate personal space -Eg.China, Korea, Japan Low context culture ◦Go down to business first ◦Value expertise and performance ◦Agreement by legal contract ◦Negotiation as efficient as possible ◦Monochromic time ◦Personal/social space ◦Eg.German, Swiss, Scandinavian

Decision making models

Homo economicus: searching for the best value maximizing choice ◦In reality → disadvantages Satisficing = selecting the first alternative that is good enough → stick effect

Schein: model of organizational culture "onion"

◦Basic assumptions (inner layer) ◦Norms and values (middle layer) ◦Espoused: stated or desired cultural elements → a written or stated tone that the CEO or president hope to instill ◦Enacted: the actual values that the culture represents -Artifacts and products (outer layer) ◦Artifacts and Products: (what you see) Material, buildings, slogans, stories/myths, clothing, ceremonies.. ◦Problem: 3 layers do not correspond

BOP

◦Bottom of the pyramid = the largest and poorest socio-economic group, those who live on less than $2.50 a day

Main current trends

◦Globalization ◦Multidomestic ◦Outsourcing ◦Climate change ◦Diversity, Generation Y ◦CSR ◦Social networking

Attribution theory (Weiner)

◦How we develop explanations about why do people act as they act -Eg.why was he late, why did he not perform good at his job, why did he fail/succeed ◦Attributions = cognitive evaluations attempting to explain why things happen, why people behave a certain way

Bounded rationality

◦Managers are limited by their ability to process information → why? ◦Perception (different from reality) ◦Sense making = giving meaning (notice, interpret, enactment) ◦Emotion (active when taking important decisions. First emotion, then logic) ◦Bias: we convince ourselves.. ◦Satisficing: we are quickly satisfied ◦We have no time

Resource Based View

◦The firm is essentially a pool of resources and capabilities. These resources and capabilities are the primary determinants of its strategy and performance, not the markets (industry) they serve ◦Two premises - Resource heterogeneity: resources within a company (people, capital, knowledge, skills..) differ between companies and hence, are determinants for performance and hence for strategy, not the industry → internal factors - Resource immobility: Not all resources can be brought or copied

Unified corporate culture (Welch)

◦Unified organizational culture = corporate culture of an international company is uniform across borders, deep rooted values of different people from different cultures potentially still exist ◦Eg.IKEA, McDonalds, Body Shop

Peer pressure

◦Wanting to belong to the group, being accepted →we are social beings and want to be accepted, even if it involves acting unethically ◦Effects: causes people to change their perception of reality →conformity = adapting your ideas to the group, even knowing they are wrong

Overconfidence bias

◦ego gets in the way ◦high percentages of people think they are better drivers, most honest and fair minded especially when discussing issues or problems that are outside their area ◦results: people thinking they are ethical, which leads to making decisions without serious reflections that result in significant ethical implications

SWOT analysis

a planning tool used to analyze an organization's strengths, weaknesses, opportunities, and threats

Concentration strategy

a strategic approach where a business focuses on a single market or product → An organization grows using concentration focuses on its primary line of business and increases the number of products offering or markets served in this primary business.

Value Chain Analysis

a systematic way of examining all of the activities a firm performs and determining how they interact to form a source of competitive advantage. Analyze to reduce costs or increase differentiation

Fiedler Model (Contingency theory of leadership)

o Leaders have a certain style (task or relationship motivated) o Style does not easily change o For a certain situation (degree of control) there is a best style o Or change situation in order to fit style or change leader o Contingency variables - Leader-member relations - confidence, respect (good/poor) - Task structure - formalized and structured jobs (high/low) - Leader influence - punish, reward (strong/weak)

Different cultural icebergs

you can only see the external manifestation of a culture, however the culture's core values are hidden inside

Escalation of commitment

you want something but you have already done so much effort for that thing, you cannot stand losing ◦Sunk/retrospective cost = a cost that has already been incurred and cannot be recovered →money, time, reputation

Transactional leaders

Leaders who lead primarily by using social exchanges (or transactions) Approaches followers with an eye to exchanging one thing for another Pursues a cost benefit Essentially these leaders are able to keep followers motivated for the short-term by offering rewards and punishments

First generation management

- Strict rules - Hierarchy structure: people just do what you tell them to do - Internally focused - Theory X

Theory X

- Assumes that workers are basically lazy, error-prone, and extrinsically motivated by money and, thus, should be directed from above. - Employees have little ambition, wish to avoid responsibility and want security - Employees must be coerced, controlled and threatened with punishment by managements

Differences between charismatic leadership and transformation leadership

- Biggest difference is intellectual stimulation - A person with charisma is able to capture people's attention effortlessly, which goes a long way towards creating unity in a group. On the other hand, without transformational leadership skills, that person could lead the group in the wrong direction. - In short, charismatic leaders use their charming personalities to build loyalty and devotion among their followers, while transformational leaders rely on a collective vision to build trust and reach a goal.

How to enlarge span of control?

- By decreasing need for direct supervision - Standardization and formalization of tasks (similar and less complex) - Empowerment - training - Sophistication of the organization's information system - Strength of the organization's culture - But! Supervision is often key in motivation - In some industries delayering might be dangerous

Principles of Taylor

- Detailed instruction and supervision - Specialization: replace rule-of-thumb work methods with methods based on a scientific study of tasks. Select, train and develop each employee instead of leaving them - Standardization/formalization of methods: provide detailed instruction and supervision of each worker -- -- Separation of thinking and doing: Divide work so that managers apply scientific management principles and workers perform the tasks

direction, intensity, persistence

- Direction: efforts are channeled toward organizational goals - Intensity: the amount of effort put forth to meet the goal - Persistence: how long the effort is maintained

Types of corporate strategies

- Growth strategy - Concentration - Vertical integration - Horizontal integration - Diversification - Stability strategy - Renewal strategy

Third generation management

- Learning from past experiences - Learn how to function in network - Flexibility - Theory Y

Second generation management

- Listen more to the customer - Not all people are the same → need to study behaviors

Open systems model (One of the four different management models)

- Perceives organizations as units that interact with their external environment rather than being closed and independent units. - Adaptation, creativity, innovation -> client centricity - Means: flexibility, readiness - Flexibility + External focus - Adhocracy: dynamic, entrepreneurial, risk taking, innovation - Adhocracy/network organizations - IT companies (Google) - Critique: less innovative than market cultures

*Heuristics*

- Problem solving via practical methods, information processing shortcuts when judging others simple, efficient rules which people often use to make decisions. - Mental shortcuts which result in a cognitive bias

Two factor theory (motivation -hygiene theory) (Herzberg)

- Reasons to feel bad about your job (hygiene factors) -> extrinsic Reasons to feel good about your job (motivation factors) -> intrinsic In practice: - Possibility to motivate people with motivators related with the content of the task being performed - Extrinsic factors do not motivate per se -> eliminate dissatisfiers E.g.: salary increases -> short duration motivational effect

The contingency approach

- There is no one universally applicable set of management principles (rules) by which to manage organizations ◦Variables Organization size: as size increases, so do the problems of coordination Routineness of task technology: require specific organizational structures, leadership styles and control systems that differ from those required by customized or non-routine technologies External environment / environmental uncertainty: what works best in a stable and predictable environment may be totally inappropriate in a rapidly changing and unpredictable environment Individual difference: individuals differ in terms of their desire for growth, autonomy, tolerance of ambiguity and expectations - A contingency is the unexpected, or things that are out of your control. ... A business with no contingency strategy risks being crippled by major events because they are unprepared to adapt to rapidly changing conditions. Managers should be able to predict the uncertain

Frank & Lillian Gilbreth

- Use of motion pictures - Design and use of proper tools and body movements - Bricklaying experiments - Taylorism

Charismatic Leadership

- a leadership style in which extremely self-confident leaders inspire unusual dedication to themselves by relying upon their strong personalities and charm - Inspire a shared vision - Communicates high expectations, uses symbols, important purposes in simple ways, uses emotional language, images - Willing to take personal risks - Enable others to act: teamwork and cooperation - Encourage the heart: sensitive to needs of the followers and rewarding them - Charismatic leaders → are born but can also be trained -Best used when: environment is uncertain and stressful (eg. crisis, change, start up of business) - Most closely associated with upper level executives Ex: Steve Jobs Potential dark side § Use organizational resources for personal benefit § Remake companies in the leader's image § Allow self-interest and personal goals to override organizational goals § No critic: surrounded by "yes" people § Many of these leaders can be psychopaths, narcissistic and self-centered

(De)centralization

-> Centralization: The degree to which decision making is concentrated at upper levels in the organization - organizations in which top managers make all the decisions and lower-level employees simply carry out those orders -> Vertical Decentralization: Organizations in which decision making is pushed down to lower level managers who are closest to the action -> Horizontal Decentralization: Power is dispersed out of the line of hierarchy and given to rather non-managers such as analysts, support specialists and team members (more human development ppl) -> More centralization o Environment is stable o Lower-level managers are not as capable or experienced at making decisions as upper-level managers o Lower-level managers don't want to take part in decisions o Organization is facing a crisis or the risk of failure o Company is large o Effective implementation of company strategies depends on mangers retaining say over what happens -> More decentralization o Environment is complex, uncertain o Lower-level managers are capable to take decisions o Lower-level managers want a voice in decisions o Corporate culture is open allowing managers to have a say in what happens o Company is geographically dispersed o Effective implementation of company strategies depends on managers having involvement and flexibility to make decisions

Framing

-How facts are (re)framed →produces different answer from the same respondent -Organizational culture can be an important frame (profit, market share..) ◦Examples of how facts are framed : ◦Adding a discount price ◦95% fat free VS contains 5% fat

Transformational leadership

-Leaders who stimulate and inspire (transform) followers to achieve extraordinary outcomes - These leaders connect with their followers and raise their level of motivation and morality for the good of the organization and beyond - The followers feel trust, admiration and respect for the leader so are willing to work harder than expected

How to solve an ethical dilemma

1. Utilitarian Approach: ◦Bentham and Stuart ◦Moral behaviors should produce the greatest good for the greatest number → the best for most 2. Moral rights approach: ◦Kant ◦Moral decisions are those that best maintains the rights of those affected ◦The right of free speech, free conscience, life and safety, fair trial (due process) etc. 3.Fairness/Justice approach ◦Aristotle ◦Decisions must be based on standards of equity, fairness and impartiality → Individuals who are similar in ways relevant to decisions should be treated equal ◦No discrimination, no favoritism → men and women should receive same pay for same job ◦Different treatment is possible based on objective characteristics 4. Individualism approach ◦Acts are moral when they promote the individual's best long-term interests (not the same as egoism) ◦Self-direction is the highest good ◦Individualism → leads to honesty and integrity as people learn to accommodate to each other in their long term self-interest → leads to behavior that fits standards of behavior people want for themselves 5. The common good approach ◦Plato, Aristoteles, Cicero, Rawls ◦People are part of society and common goals and values must be served → certain general conditions that are equally to everyone's advantage ◦For the society to thrive, we need to safeguard the sustainability of our community for the good of all, including our weakest and most vulnerable members ◦Aims: Peace between nations, public safety, no pollution, fair justice

Factors that determine ethical and unethical behavior

1. Your stage of moral development (pre-conventional, conventional, post-conventional) 2. Individual characteristics (basic convictions about right and wrong) 3. Issue Intensity (magnitude of harm) 4. Structural variables (Organizational characteristics guide and influence individual ethics such as performance appraisal systems, reward allocation systems and behaviors of managers) 5. Organizational culture (Is it ethical? Is it strong?) *ethical standards are not universal

Growth strategy

A corporate strategy that's used when an organization wants to expand the number of markets served or products offered, either through its current business(es) or through new business(es)

Job characteristic model (JCM)

A framework for analyzing and designing jobs that identify five primary core job dimensions, their interrelationships, and their impact on outcomes → framework for managers to design more intrinsically motivating jobs o Skill variety - different activities and various skills o Task identity - complete a whole piece of work o Task significance - impact on other peoples' lives o Autonomy - discretion in use of time and procedures o Feedback - receive clear performance reports

Stakeholder Theory

A theory that holds that social responsibility is paying attention to the interest of every affected stakeholder in every aspect of a firm's operation Stakeholder = anyone in an organization, any group or individual who can affect or is affected by the achievement of the organizations objectives

7s model of McKinsey

A tool that analyzes firm's organizational design by looking at 7 key internal elements: strategy, structure, systems, shared values, style, staff and skills, in order to identify if they are effectively aligned and allow organization to achieve its objectives. 3 hard factors •Systems •Strategy •Structure 4 Soft factors •Shared values •Style •Skills •Staff

Bureaucracy : Max Weber

Aim: to stop corruption and nepotism (= unfair use of power to get jobs/benefits for your friends/family) ◦An organization made up of many departments and divisions that are administered by lots of people ◦Division of labor: jobs broken down into simple, routine and well-defined tasks ◦Today! Where: government, hospitals, multinationals, universities.. ◦Drawbacks: humans treated as machines, client doesn't come first, hierarchy overload ◦Perrowparadox = self-destructive effect → the efficient organization centralizes in order to decentralize

Goals of strategy - Competitive advantage

An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition. There can be many types/origins/ways how you get competitive advantages including the firm's cost structure, product offerings, distribution network and customer support ◦What company does →competitive advantage ◦How company does it →resource based view

Boston Consulting group matrix

An analysis method of a firm's product portfolio regarding its market share and market growth Dogs: low ROI, low growth, should be sold off Question marks: low ROI, high growth, have potential Cash cows: high ROI, low growth, profitable, can be "milked" without too much cost Stars: high ROI, high growth, big profit with big investments

Environment

Environment o Low uncertainty: cars, cans o Low moderate uncertainty: universities, audit firms o High moderate uncertainty: fashion, music, toys, film o High uncertainty: ICT, aerospace, telco

Formalization/standardization vs. Socialization

Formalization: more about the number of written rules, policies, procedures, and so on. Commonly initiated in an attempt to rationalize the decision-making process. Socialization: Unwritten rules and values (changes from culture to culture)

Contextual Dimensions/ contingency factors

How strategy, environment, technology and size lead to company performance by using either the traditional vertical structure or a flexible horizontal structure Size o Number of employees, turnover o Big -> Centralization, formalization, top down, many layers, specialization, control, standardization... o Small -> Flexible, decentralization (vertical and horizontal), delayering, mutual agreement, less formalization, less specialization Environment o Low uncertainty: cars, cans o Low moderate uncertainty: universities, audit firms o High moderate uncertainty: fashion, music, toys, film o High uncertainty: ICT, aerospace, telco Strategy o Innovation - Differentiation strategy (high uncertainty) o Production - Low cost strategy (low uncertainty) o Structure follows strategy (Chandler 1962) -> Organization is the means through which strategy is realized o Alternative view: The organization sets the context for strategy -> The organization and administrative heritage constrain strategic choice -> Competencies are embedded in the organization -> Few companies are able to transform themselves to another business o Holistic view!

Value

Important and lasting beliefs or ideals shared by the members of an organization ◦A firm's choice of goals is influenced by its values ◦Innovative: Apple ◦Sustainability: The Bodyshop ◦Happiness: Walt Disney ◦Great taste: El Bulli ◦Integrity, commitment..

VRIN/O Framework

In order to offer a competitive advantage, resources and capabilities should be; - Valuable - Rare - Imperfectly imitable - Non-substitutable - Organization

General administrative theory: Henri Fayol

POCCC - focused on the managers not the workers like Taylor did ◦ planning, organizing, commanding, coordinating and controlling Aim: order and efficiency ◦Unity of command= all subordinates in an organization should report and listen to one boss → hierarchical structure ◦Unity of direction = all members involved in the same activities must work toward a common goal and share the same objective ◦Scalar chain= information should flow from the highest supervisors to the lowest rank → line of authority and horizontal linkages ◦Remuneration= reward for employment in the form of pay, salary, wage, benefits

Representativeness bias

People judge the probability or frequency of a hypothesis by considering how much the hypothesis resembles available data. People frequently make the mistake of believing that two similar things or events are more closely correlated than they actually are One of the things you want to think about is that you want to judge things strictly as they are statistically or logically, rather than as they merely appear ◦Example Shy and tidy person →hypothesis is that he is a librarian

Old motivation theories based on needs (Maslow)

People value needs differently Same needs but different ways to satisfy them

Hawthorne effect

People will modify their behavior simply because they are being observed Study 1: Ladies still hard-working despite the conditions. Received special attention Study 2: the Gentlemen -> Men maintained same mediocre pace. Men developed informal rules such as "don't work harder". Subcultures develop group norms

availability bias

Phenomenon in which people predict the frequency of an event, or a proportion within a population, based on how easily an examples can be brought to mind Ex: media coverage of terrorist attacks in certain countries may cause you to believe it is more dangerous than it actually is

How is culture transmitted?

Stories - provide explanations/legitimacy Rituals - reinforce key values Material symbols - convey importance Language - identify and segregate members

How decisions are made depends on ....

Structured problems ◦The straight forward problems which can be determined and solved by repeating examination and testing on the problems Unstructured problems ◦Problems that are new or unusual and for which information is ambiguous or incomplete → require custom-made solutions, are more strategical ◦Non-programmed decisions = decisions that are unique and nonrecurring → generate unique responses

Modern trends :System approach (1960)

System approach = you may publish something but you get a consequence: feedback/reaction from people, sometimes unintended. Interdependant nature of internal and external factors ◦Eg.: people trying to avoid traffic jams but drive through residential areas instead System defined= a set of interrelated and interdependent parts arranged in a manner that produces a unified whole ◦Closed systems = are not influenced by and do not interact with their environment (all system input and output is internal)

Porter's 5 Forces

The 5 competitive forces that shape strategy: *Rivalry among competitors; *Threat of new entrants; *Threat of substitute products; *Bargaining power of buyers; *Bargaining power of suppliers;

Leadership is culturally bound

o France: more bureaucratic view on leaders, task oriented, autocratic o Nordic: leaders are interpersonal, enthusiastic, informal, inspirational o Germany: independent, autonomous, unique o Latin: visionary, team oriented and status conscious o US: obsession with leadership, the sky is the limit

Horizontal specialization

o Horizontal specialization: organizational process whereby a single management function is divided among one or more subordinates. Usually occurs because growth in an organization requires additional management, coordination and control. -> Group jobs according to function -> Efficient, in-depth specialization, easy to coordinate -> Group jobs according to product - Product specialization, expert manager, close to customer -> Group jobs according to client - customers needs are met by specialists -> Group jobs according to region - specialization in local market -> Concerns: Double functions, limited view of goals, poor communication -> Matrix - Group jobs around a product but working together with the same segments of the other products - Good communication between projects, allows personal flexibility - Concerns: Too many meetings, unclear roles and responsibilities, too many people to refer to -> Outsourcing: an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally - Lightweight structure and flexibility - Concerns: Loss of control due to numerous partners -> Too much specialization - Results in boredom, fatigue, stress, poor quality - Too much departmentalization leads to disintegration

Geert Hofstede's 5 dimensions of national culture

o Individualism vs. Collectivism • People look at their own interests • People expect the group to protect them o High power distance vs. Low power distance Great respect for those in authority, accept power difference Bosses aren't unapproachable, play down inequalities o High uncertainty avoidance vs. Low uncertainty avoidance Threatened with ambiguity and high level of anxiety Comfortable with risk, tolerant of different opinions o Achievement vs. Nurturing Values: assertiveness, acquiring goods and money, competitive Values: relationship, concern for others o Long-term orientation vs. Short-term orientation People look to the future, value thrift and persistence People value tradition and past

How to analyze/look at an organizational culture (7 dimensions)

o Innovation and risk taking: degree to which the employees are encouraged to be innovative and risk taking o Attention to detail: degree to which the employees are expected to exhibit precision and attention to detail o Outcome orientation: degree to which managers focus on results rather than how to achieve them o People orientation: degree to which management decision take into account the effect on people within the organization o Team orientation: degree to which work is organized around teams rather than individuals o Aggressiveness: degree to which employees are aggressive and competitive rather than cooperative o Stability: degree to which organizational decisions and actions emphasize maintaining the status quo

Vertical differentiation

o Lines of hierarchy -> Chain of Command - The continuous line of authority that extends from upper levels of an organization to the lowest levels of the organization and clarifies who reports to whom -> Width of span - The number of employees who can be effectively and efficiently directly supervised by a manager - Affected by: Skills and abilities of the managers, employee characteristics, characteristics of the work being done (complexity of tasks, similarity of tasks, amount of control needed), Physical proximity of subordinates -> Disadvantages of too many layers - Bad communication - Slows down decision making - High bureaucratic costs - Parkinson's law - the adage that "work expands so as to fill the time available for its completion". It is sometimes applied to the growth of bureaucracy in an organization.

Rivalry among competitors

o Low concentration (number and size of competitors)(The lower the concentration, the higher the internal rivalry ) o Slow industry growth (The slower the industry growth, the higher the internal rivalry ) o Low switching costs to switch brands (The lower the cost for switching brands, the higher the internal rivalry) o Excess capacity (the more excess capacity, the stronger internal rivalry) o Product differentiation (The less differentiation, the stronger the internal rivalry ) o High exit barriers that keep unprofitable firms from leaving the industry (high supply) (The higher exit barriers, the stronger the internal rivalry ) o Perishable products (strong internal rivalry) o Economies of scale = cost per unit of output decreasing with increasing scale (strong internal rivalry) o Industries where fixed costs are high v.a.v. variable costs (strong internal rivalry)

CSR (classical/minimalistic view)

o Milton Friedman: management's responsibility is making profit in the interest of one stakeholder (shareholder) o There is one and only social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engage in open and free competition, without deception or fraud o Compliance with the law is sufficient

Equity Theory (Adams)

o Model of motivation that explains how people strive for fairness o Employees expect a fair return for what they contribute to their job o Motivation is based on the assessment of one's ratio of outcomes for inputs compared to others o how do we react if someone has more or less than us? - Change inputs (slack off) - Change outcomes (increase output) - Distort/change perceptions of self/others - Choose a different referent person - Leave the field (quit the job)

Rational Goal Model (One of the four different management models)

o Outcome, excellence, goal attainment -> market share o Means: goal setting, planning, evaluation o External focus + control o Market oriented culture: results oriented, achievement, competition o Division organization - Procter & Gamble

Triple Bottom Line

o Recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth ◦Profit = Represented in income statement ◦Planet = How business activities impact environment ◦People = Measures the extent to which a business is socially responsible

Ethical Leadership

o Reputation as - Moral person, honest, trustworthy, integrity - Genuine concern for others - Approachable - Fair and principled o Moral manager - Creates a strong ethical message influencing subordinates' thoughts and behavior - Role model - Ethical goals - Ethical rewards/punishment o Would lead to - Ethical behavior of followers - Ethical climate/culture Ethical managers have a better chance of being promoted

Hersey and Blanchard Situational Leadership Theory Model

o Right leadership style is contingent with the level of followers' readiness o Leaders should change their style to fit followers' degree of readiness o Train leaders to fit their style to their follower

Internal processes model (machine) (One of the four different management models)

o Stability, predictability, order o Means: information management, control o Internal focus + control o Hierarchy: culture of structure, control coordination, formalization, efficiency o Machine organizations - manufacturing plants

Path Goal Model

o Subordinates will be motivated if they think they are capable at handling their work o Leader's job is to assist subordinates into reaching those goals

Cognitive evaluation theory

o Suggests that events affect motivation through the individual's perception of the events as controlling behavior or providing information Extrinsic + intrinsic -> do they add up? o External events can impact intrinsic motivation Some extrinsic rewards (pay, deadlines) tend to reduce intrinsic motivation o Other extrinsic rewards (positive feedback, trophies) tend to intensify intrinsic motivation o Depends whether the event/reward promote or not greater perceived competence (self-efficacy)

*Corporate Governance*

o The framework of rules and practices by which a board of directors ensures accountability, integrity, fairness, and transparency in a company's relationship with its all stakeholders. → especially needs of shareholders are served → o Agency theory (think of Taylor) = explains relationship between shareholders and agents (company's executives), agents want to know if management is using company well. o Modern view: stewardship theory = managers, if left on their own, will act as responsible stewards of the assets they control → CG would help management set up good strategies o The perceived quality of a company's corporate governance can influence its share price o Reputation, trust in company (other investors, customers) o Less uncalculated risk, so long term continuity of the firm o If management has more than 20% of the stock, they become greedy o But when management possesses stock, they're more engaged

Some of Mintzberg's rules

o The older an organization, the more formalized its behavior o Large organization = elaborated structure = formalized behavior o Structure reflects 'the age of industry' o Fashions favors the structure of the day, even when inappropriate o The more dynamic an organization's environment, the more organic its structure o The more hostility in its environment (crisis) drives any organization to centralize

Expectancy Theory

o The theory that motivation will be high when workers believe that high levels of effort lead to high performance and high performance leads to the attainment of desired outcomes. o Align rewards to what people value o Keep promises towards employees o Install a clear and approved appraisal system - Critiques o Does the organization know what the employee values o There is no universal principal that shows what motivates people o Effort and performance: people must be able o Research has shown that few individuals perceive a high correlation between effort and reward

Code of Conduct

o The way things get done around here o Influences atmosphere o Influences the kind of decisions taken o Influences management style - empowerment or autocratic o Influences how people deal with each other

Authentic Leadership

o These leaders are self-aware in what they believe in and value, and act on those values openly o They have a sense for purpose -> internalized moral perspective o Followers see them as ethical o Use ethical means to get followers to achieve their goals (also ethical) o Have self-discipline -> don't abuse power to attain goals o Create trust, communicate openly, soften the leader boundary around them and are therefore willing to help others o Develops over time

How are cultures created and sustained?

o Ultimate source of an organization's culture is its founders o Clear vision and unconstrained by previous visions o Hire and keep employees who think like them o Also industry and national culture plays a role o This culture is sustained by socializing (Formal -> written values, training) (Informal Stories -> top management examples, leadership styles) reward systems, leadership and structure

*Individual characteristics*

o Values • Basic convictions about right or wrong o Personality • Ego strength: a personality measure of 'the strength of a person's convictions', self discipline, taking accountability • Locus of control: a personality attribute that measures the degree to which people believe to control their own life -> Internal: belief that you control your destiny -> External: belief that what happens to you is luck/chance

Mission vs. Vision

oVision = mental image of a possible and desired future of the firm - What should the firm become on long term? - It is short and powerful o Mission = identity kit of the firm - Differentiates the firm from its competitors - Why do we exists? License to operate -What are we going to sell/produce? - More specific, down to earth *More missions than visions

Endowment effect

once we get something, we adjust our level of ownership → this becomes the baseline for judging gains of losses Ex: my tea kettle cost 35 euros, but if someone offered me 45 euros for it, I would say no

Emotional Intelligence (EQ)

the ability to recognize, understand and manage our own emotions and the emotions of others → broader than empathy ◦EQ can be learned ◦4 qualities of emotional intelligence ◦ Self-awareness = the ability to read one's emotions and recognize their impact while using gut feelings to guide decisions ◦ Self-management = involves controlling one's emotions and impulses and adapting to changing circumstances, controlling emotions ◦ Social awareness and empathy = the ability to sense, understand and react to others' emotions while comprehending social networks ◦ Relationship management = the ability to inspire, influence and develop others while managing conflict

Bargaining power of buyers

• Your consumers o Force prices down o Demand better quality o Play suppliers off against each other • Depends on o Which buyers o Buyers' price sensitivity o Can your buyer easily refuse the deal

Bargaining power of suppliers

• Your suppliers o Force prices up o Deliver less quality • Suppliers are powerful o Have a quasi monopoly o Very specialized products o High switching cost for buyers

Different barriers

◦Barrier to change: Culture is slow to change, even in a dynamic environment ◦Barrier to diversity: Managers want employees that accept the values of the firm ; Strong cultures put pressure to conform ◦Barrier to acquisitions and mergers : Most mergers fail due to cultural incompatibility

Why business ethics matter ?

◦ Moral case ◦ Business case Visible costs: government fines and penalties, civil penalties Internal administrative costs: legal and investigative costs incurred by the company, cost of remedial education and ethics training, cost of taking corrective actions Intangible or less visible costs: customer defections, loss of reputation, loss of employee morale, higher employee turnover, higher degrees of employee cynismetc. (look at the downfall of Enron and Lehman)

Rare

◦ Not possessed by (many) other firms ◦ This does not imply that "common resources" are not important ◦ Resources that can only be acquired by one or very few companies are considered rare ◦ However, a firm should not neglect the resources that are valuable but common (not rare). Losing valuable resources and capabilities would hurt an organization because they are essential for staying in the market (eg.ICT) ◦ Tickets to heaven = resources that can help you to get a sustainable advantages ◦ Tickets to ride = need this to do work

Valuable (relevance)

◦ Relevant to success in industry ◦ Enabling to improve efficiency and effectiveness ◦ Differentiation ◦ And/or lower costs ◦ Most important condition ◦ Questions to ask

Imperfectly imitable (non transferable/non replicable)

→ Sustainable competitive advantage ◦ Due to historical conditions: Whisky with salty lake, founders Apple → unique culture ◦ Due to causal ambiguity: link between resources (capabilities, processes) and the competitive advantage is difficult to understand (even for own management) hence difficult to copy → not clear so it is not easy to imitate for other companies ◦ Due to socially complexity: organizational culture, reputation, relations between managers

Loss frame

→individuals dislike losses more than an equivalent gain, they are more willing to take risks, in order to avoid a loss →risky choice, will choose to gamble

Vertical integration

▪Backward vertical integration = the organization becomes its own supplier and can control its inputs ▪Forward vertical integration = the organization becomes its own distributor and is able to control its outputs

Attribution bias towards others

▪The tendency to underestimate the influence of external factors and overestimate that of internal factors when judging others ▪Eg. Is culture dependent → Individualistic VS collectivist cultures

Ethical dilemma

◦Actions/decisions of one person/organization will disadvantage others Examples of ethical dilemmas : ◦Use company's car for private purposes ◦Bringing home work stuff for private use ◦Building a factory employing local people but damaging local fish industry ◦Privacy issues VS safety in the workplace