Management Midterm 2

Advantages of Delegation

1) Allows you to accomplish more than you would be able to do on your own 2) Saves time 3) Allows you to devote more energy to important higher-level activities 4) Helps managers develop effective subordinates 5) Provides subordinates with a sense that they are important Delegation done well benefits the organization as well as the people

Most Leadership Developmental Experiences Have 3 Components

1) Assessment Assessment includes information that gives you an understanding of where you are now, what your strengths are, your current levels of performance and leadership effectiveness, and your primary development needs. 2) Challenge We all think and behave in habitual, comfortable ways. This is natural and perhaps sufficient to survive. But you've probably heard people say how important it can be to get out of your comfort zone—to tackle situations that require new skills and abilities, that are confusing or ambiguous, or that you simply would rather not deal with. Sometimes the challenge comes from lack of experience; other times, it requires changing old habits. 3) Support When others send the message that your efforts to learn and grow are valued. Without support, challenging developmental experiences can be overwhelming. With support, it is easier to handle the struggle, stay on course, open up to learning, and actually learn from experiences.

5 Sources of Power

1) Authority 2) Control over rewards 3) Control over punishments 4) Appealing personal characteristics 5) Expertise

Advantages of Small Companies

1) Big organizations can find it hard to manage relationships with customers and among its own units 2) Big companies struggle as consumers demand a greater diversity of high-quality, customized products supported by excellent service. 3) Larger companies also are more difficult to coordinate and control. 4) Nimble small firms frequently outmaneuver big bureaucracies

What Do The Best Leaders Do?

1) Challenge the process. They challenge conventional beliefs and practices, and they create constructive change. 2) Inspire a shared vision. They appeal to people's values and motivate them to care about an important mission. 3) Enable others to act. They give people access to information and give them the power to perform to their full potential. 4) Model the way. They don't just tell people what to do—they are living examples of the ideals they believe in. 5) Encourage the heart. They show appreciation, provide rewards, and use various approaches to motivate people in positive ways.

6 Entrepreneurial Personality Traits

1) Commitment and determination: Successful entrepreneurs are decisive, tenacious, disciplined, willing to sacrifice, and able to immerse themselves in their enterprises. Entrepreneurial passion can play an important role in all of these things. 2) Leadership: They are self-starters, team builders, superior learners, and teachers. Communicating a vision for the future of the company—an essential component of leadership that you'll learn more about in Chapter 12—clearly has an impact on venture growth. 3) Opportunity obsession: They have an intimate knowledge of customers' needs, are market driven, and are obsessed with value creation and enhancement. 4) Tolerance of risk, ambiguity, and uncertainty: They are calculated risk takers and risk managers, tolerant of stress, and able to resolve problems. 5) Creativity, self-reliance, and ability to adapt: They are open-minded, restless with the status quo, able to learn quickly, highly adaptable, creative, skilled at conceptualizing, and attentive to details. 6) Motivation to excel: They have a strong results orientation, set high but realistic goals, have a strong drive to achieve, know their own weaknesses and strengths, and focus on what can be done rather than on the reasons things can't be done.

Pressures for Local Responsiveness

1) Consumer tastes and preferences differ significantly among countries. Products/marketing have to be customized. 2) There are differences in traditional practices among countries 3) What people like to eat locally 4) Economic and political demands of host-country governments

Types of Coordination

1) Coordination by Standardization: Establishing common routines and procedures that apply uniformly to everyone. -Formalization = rules and regulations governing how people in the organization interact. -When the situation requires flexibility, standardization may not work well. 2) Coordination by Plan: Interdependent units are required to meet deadlines and objectives that contribute to a common goal. -Does not require the same high degree of stability that standardization does. 3) Coordination by Mutual Adjustment: Units interact with one another to make accommodations to achieve flexible coordination -Simplest and most flexible approach is to have interdependent parties talk to one another -Times more time and may not result in clear mutual understanding

Deming's 14 Points of Quality

1) Create constancy of purpose—strive for long-term improvement rather than short-term profit. 2) Adopt the new philosophy—don't tolerate delays and mistakes. 3) Cease dependence on mass inspection—build quality into the process on the front end. 4) End the practice of awarding business on price tag alone—build long-term relationships. 5) Improve constantly and forever the system of production and service—at each stage. 6) Institute training and retraining—continually update methods and thinking. 7) Institute leadership—provide the resources needed for effectiveness. 8) Drive out fear—people must believe it is safe to report problems or ask for help. 9) Break down barriers among departments—promote teamwork. 10) Eliminate slogans, exhortations, and arbitrary targets—supply methods, not buzzwords. 11) Eliminate numerical quotas—they are contrary to the idea of continuous improvement. 12) Remove barriers to pride in workmanship—allow autonomy and spontaneity. 13) Institute a vigorous program of education and retraining—people are assets, not commodities. 14) Take action to accomplish the transformation—provide a structure that enables quality.

Steps in the delegation process

1) Define the goal 2) Select a person who is capable of performing the task 3) Ask for subordinate's views about suggest approaches 4) Give the person authority, time, and resources to carry out the task successfully 5) Work together and communicate periodically about the assignment

Horizontal Processes: from simplest to most complex

1) Direct contact (mutual adjustment) among managers who share a problem. In a university, for example, a residence hall adviser might call a meeting to resolve differences between feuding students. 2) Liaison roles, or specialized jobs to handle communications between two departments. A fraternity representative is a liaison between the fraternity and the interfraternity council, the university, or the local community. 3) Task forces, or groups of representatives from different departments, brought together temporarily to solve a common problem. For example, students, faculty, and administrators may be members of a task force charged with bringing distinguished speakers to campus. 4) Permanent interdepartmental decision-making groups. An executive council made up of department heads might meet regularly to make decisions affecting a college of engineering or liberal arts. 5) Product, program, or project managers who direct interdisciplinary groups with a common task to perform. In a college of business administration, a faculty administrator might head an executive education program of professors from several disciplines. 6) Matrix organizations, composed of dual relationships in which some managers report to two bosses. Your instructors, for example, may report to department heads in their respective disciplines and to a director of undergraduate or graduate programs.

Differentiation is created through

1) Division of Labor: the assignment of different tasks to different people or groups 2) Specialization: a process in which different individuals and units perform different tasks

Trait Approach: Personal Attributes That Aid Leader Effectiveness

1) Drive. Drive refers to a set of characteristics that reflect a high level of effort. Drive includes high need for achievement, constant striving for improvement, ambition, energy, tenacity (persistence in the face of obstacles), and initiative. In several countries, the achievement needs of top executives were shown to relate to the growth rates of their organizations. But the need to achieve can be a drawback if leaders focus on personal achievement and get so personally involved with the work that they do not delegate enough work to others. 2) Leadership motivation. Great leaders have more than drive; they want to lead. In this regard, it helps to be extroverted—extroversion is related to both leader emergence and leader effectiveness. However—and this is a huge point—introverts have great strengths that can contribute to effective leadership, and extroversion can backfire. For example, the assertiveness of extroverted leaders can quash the contributions of group members. Extroverts sometimes should adopt a more reserved, quiet style. If you consider yourself to be introverted, as so many of us do, you might want to heed the words of Mahatma Gandhi: "In a gentle way, you can shake the world." 3) Integrity. Integrity is the correspondence between actions and words. Honesty and credibility, in addition to being desirable characteristics in their own right, are especially important for leaders because these traits inspire trust in others. 4) Self-confidence. Self-confidence is important for a number of reasons. The leadership role is challenging, and setbacks are inevitable. Self-confidence allows a leader to overcome obstacles, make decisions despite uncertainty, and instill confidence in others. Of course you don't want to overdo this; arrogance and cockiness have triggered more than one leader's downfall. 5) Knowledge of the business. Effective leaders have a high level of knowledge about their industries, companies, and technical matters. Leaders must be able to interpret vast quantities of information. Advanced degrees are useful in a career, but ultimately less important than acquired expertise in matters relevant to the organization.

Factors that influence success and failure

1) Economic environment -Money 2) Various management-related hazards 3) Initial public stock offerings (IPOS) -Sale to the public, for the first time, of federally registered and underwritten shares of stock in the company

5 Basic Ways to Expand Overseas

1) Exporting 2) Licensing 3) Franchising 4) Entering into a joint venture with a host-country company 5) Setting up a wholly owned subsidiary in the host country

3 Basic Approaches to Departmentalization

1) Functional Departmentalization around specialized activities such as production, marketing, and human resources 2) Divisional Departmentalization that groups units around products, customers, or geographic regions. 3) Matrix An organization composed of dual reporting relationships in which some employees report to two superiors - a functional manager and a divisional manager

Global Strategies

1) Global: Views the world as a single market. Operations are controlled centrally from the corporate office. (One company culture) -High pressure for global integration -Low pressure for local responsiveness 2) Transnational: Specialized facilities permit local responsiveness. Complex coordination mechanisms provide global integration. (No national home) -High pressure for global integration -High pressure for local responsiveness 3) International: Uses existing capabilities to expand into foreign markets (Import/Export) -Low pressure for global integration -Low pressure for local responsiveness 4) Multinational Several subsidiaries operating as stand-alone business units in multiple countries (Own entities) -Low pressure for global integration -High pressure for local responsiveness

Nonfinancial Resources

1) Legitimacy 2) Networks 3) Top Management Teams 4) Advisory Boards 5) Partners

Entrepreneurship

1) Occurs when an enterprising individual pursues a lucrative opportunity. 2) To be an entrepreneur is to initiate and build an organization rather than being only a passive part of one. 3) The entrepreneurial process involves discovering, evaluating, and capitalizing on opportunities to create new and future goods and services.

Conditions that support lean manufacturing

1) People are broadly trained rather than specialized. 2) Communication is informal and horizontal among line workers. 3) Equipment is general-purpose. 4) Work is organized in teams, or cells, that produce a group of similar products. 5) Supplier relationships are long-term and cooperative. 6) Product development is concurrent, not sequential, and is done by cross-functional teams.

Offshoring Concerns

1) People think that high-paying jobs are being lost to low-cost countries overseas. -However, this is likely due to innovation not offshoring 2) Wage stagnation in industries where offshoring is common because workers in those areas compete with their lower-wage counterparts abroad -However, wages, energy costs, and other expenses in some other countries have started to rise, reducing benefits of offshoring -Automation reduces labor costs making it less necessary to move jobs overseas -Also, managers who offshore to save on wages are often surprised by increasing wage rates and the added costs of travel, training, supply chain disruption, quality control, language barriers, and the resistance of some customers who prefer to deal with local personnel.

Two Strategies for Coping with High Uncertainty and Heavy Information Demands

1) Reducing the Need for Information: a) create slack resources - extra resources on which organizations can rely in a pinch or b) create self-contained tasks - changing from a functional organization to a product or project organization and giving each unit the resources it needs to perform its task. 2) Increasing Information Processing Capability: managers can invest in information systems or engage in better knowledge managements/create horizontal relationships

Advantages of Big Companies

1) Size creates scale economies—that is, lower costs per unit of production. 2) Size can offer specific advantages such as lower operating costs, greater purchasing power, and easier access to capital. 3) Creates economies of scope: Economies in which materials and processes employed in one product can be used to make other, related products.

2 Approaches to Simulating Internal Entrepreneurial Activity

1) Skunkworks: A project team designated to produce a new, innovative product 2) Bootlegging: Informal work on projects, other than those officially assigned, of employees' own choosing and initiative.

Types of Technology Configurations

1) Small Batch -Technologies that produce goods and services in low volume. -In a small batch organization, structure tends to be organic: not a lot of rules and formal procedures, and (often) decentralized decision making. People engage heavily in mutual adjustment. 2) Large Batch -Technologies that produce goods and services in high volume. -With large batch technology, structure tends to be more mechanistic: more rules and formal procedures, more centralized decision making, and higher spans of control. 3) Continuous Process -A process that is highly automated and has a continuous production flow. -Continuous process technology requires less monitoring and supervision, so structure can be more organic: fewer rules and regulations and more informal communication.

Behavioral Approach: 3 Categories of Leadership Behavior

1) Task Performance Actions taken to ensure that the work group or organization reaches its goals. 2) Group Maintenance Actions taken to ensure the satisfaction of group members, develop and maintain harmonious work relationships, and preserve the social stability of the group. 3) Employee Participation in Decision Making Leader behaviors that managers perform in involving their employees in making decisions.

The Strategic Triangle

1) The Company 2) The Competition 3) The Customer

5 Key Components to a Good Business Plan

1) The People 2) The Opportunity 3) The Competition 4) The Context 5) Risk and Reward

Entrepreneurs start their own firms because of

1) The challenge 2) The profit potential 3) The enormous satisfaction they hope lie ahead 4) They see their progress or ideas blocked at big corporations

Quality Initiatives

1) Total Quality Management (TQM): An integrative approach to management that supports the attainment of customer satisfaction through a wide variety of tools and techniques that result in high-quality goods and services. At six sigma, a product or process is defect-free 99.99966 percent of the time. 2) Six Sigma A method of systematically analyzing work processes to identify and eliminate virtually all causes of defects, standardizing the processes to reach the lowest practicable level of any cause of customer dissatisfaction. 3) ISO 9001 Standards A series of quality standards developed by a committee working under the International Organization for Standardization to improve total quality in all businesses for the benefit of producers and consumers.

3 Traditional Approaches to Studying Leadership

1) Trait Approach A leadership perspective that attempts to determine the personal characteristics that great leaders share. 2) Behavioral Approach A leadership perspective that attempts to identify what good leaders do—that is, what behaviors they exhibit. 3) Situational Approach

5 Successful Business Models in the E-Commerce Market

1) Transaction Fee Model: Charging fees for goods and services 2) Advertising Support Model: Charging fees to advertise on a site 3) Intermediary Model: Charging fees to bring buyers and sellers together 4) Affiliate Model: Charging fees to direct site visitors to other companies' sites 5) Subscription Model: Charging fees for site visits

Pressures for Global Integration

1) Universal customer needs 2) Necessity to reduce costs 3) The presence of competitors with a global strategy.

Reasons Why Visions Fail

1) Vision reflects leader's personal needs 2) Vision ignores stakeholders' needs 3) Vision becomes outdated

Behaviors of Effective Followers

1) Volunteering to handle tasks or help accomplish goals. 2) Accepting assignments in a willing manner. 3) Exhibiting loyalty to the group. 4) Voicing differences of opinion, but supporting the group's decisions. 5) Offering suggestions. 6) Maintaining a positive attitude, even in confusing or trying times. 7) Working effectively as a team member.

Common Management Challenges

1) You might not enjoy it 2) Survival is difficult 3) Growth Creates New Challenges 4) It's Hard to Delegate 5) Misuse of Funds 6) Poor Controls 7) Mortality and Succession

Network Organization

A collection of independent, mostly single-function firms that collaborate to produce a good or service. Network organizations are flexible arrangements among designers, suppliers, producers, distributors, and customers where each firm is able to pursue its own distinctive competence plus work effectively with other members of the network

Level 5 Leadership

A combination of strong professional will (determination) and humility that builds enduring greatness.

Inpatriate

A foreign national brought in to work at the parent company Basic Issues: Meetings: Americans tend to have specific views about the purpose of meetings and how much time should be spent. International workers may have different preconceptions page about the nature and length of meetings, and managers should make sure foreign nationals are comfortable with the American approach. Work(aholic) schedules: Workers from other countries can work long hours, but in countries with strong labor organizations they often get many more weeks of vacation than American workers. Europeans in particular may balk at working on weekends. Matters such as these are most helpfully raised and addressed at the beginning of the work assignment. E-mail: Not everyone loves e-mail and texting; whether a cultural or an individual preference, many refer to communicate face to face. Particularly when potential language difficulties exist, managers should avoid relying on e-mail for important matters at least at the outset. Fast-trackers: Although U.S. companies may put a young MBA graduate on the fast track to upper management, most other cultures still see no substitute for the wisdom gained through experience. This is something U.S. managers working abroad should bear in mind. Feedback: Everyone likes praise, but excessive positive feedback is more prevalent in the United States than in other cultures—a useful fact for (1) American expats receiving performance reviews overseas, and (2) U.S. managers when they give reviews to foreign nationals.

Business Plan

A formal planning step that focuses on the entire venture and describes all the elements involved in starting it. The Business Plan: 1) helps determine the viability of your enterprise, 2) guides you as you plan and organize, and 3) helps you obtain financing. It is read by potential investors, suppliers, customers, and others.

Strategic Alliance

A formal relationship created among independent organizations with the purpose of joint pursuit of mutual goals. Companies form strategic alliances to develop new technologies, enter new markets, and reduce manufacturing costs Criteria: 1) Relationship: Both partners work hard on developing a positive working relationship. 2) Metrics: The partners measure how they're going to succeed, not just the end result. 3) Differences: The partners embrace differences in one another. 4) Control: Both partners encourage collaborative behavior with less emphasis on formal systems and structures. 5) Management: The partners manage their internal stakeholders who are involved in the alliance.

12 LO 1: Discuss what it means to be a leader

A leader is one who influences others to attain goals. Leaders orchestrate change, set direction, and motivate people to overcome obstacles and move the organization toward its ideal future.

Intergroup Leader

A leader who leads collaborative performance between groups or organizations.

Transformational Leadership

A leader who motivates people to transcend their personal interests for the good of the group.

Servant-Leader

A leader who serves others' needs while strengthening the organization.

Laissez-Faire Style Leadership

A leadership philosophy characterized by an absence of managerial decision making.

Hersey and Blanchard's Situational Theory

A life-cycle theory of leadership postulating that a manager should consider an employee's psychological and job maturity before deciding whether task performance or maintenance behaviors are more important. Job Maturity: The level of the employee's skills and technical knowledge relative to the task being performed. Psychological Maturity: An employee's self-confidence and self-respect.

Vision

A mental image of a possible and desirable future state of the organization. 1) a vision is necessary for effective leadership 2) a manager or team can develop a vision for any job, work unit, or organization 3) many people, including managers who do not develop into effective leaders, do not develop a clear vision—instead they focus on performing or surviving on a day-by-day basis. If a vision conveys an ideal, it communicates a standard of excellence and a clear choice of positive values. If the vision is also unique, it communicates and inspires pride in being different from other organizations. The choice of language is important; the words should imply a combination of realism and optimism, an action orientation, and resolution and confidence that the vision will be attained.

Customer Relationship Management (CRM)

A multifaceted process focusing on creating two-way exchanges with customers to foster intimate knowledge of their needs, wants, and buying patterns. World-class companies know that the trade-off mentality no longer applies.

Broker

A person who assembles and coordinates participants in a network The role of managers changes in a network from supervising direct reports to more like that of a broker Broker/Managers aid in network integration and coordination

Charismatic Leaders

A person who is dominant, self-confident, convinced of the moral righteousness of his or her beliefs, and able to arouse a sense of excitement and adventure in followers.

The Vroom Model of Leadership

A situational model that focuses on the participative dimension of leadership. The Vroom model operates as a decision tree in which you answer a series of questions one at a time, choosing high or low for each; the specifics are not important here. Eventually you reach 1 of 14 possible endpoints. For each endpoint, the model states which of five decision styles is most appropriate.

Authentic Leadership

A style in which the leader is true to himself or herself while leading.

Path-Goal Theory

A theory that concerns how leaders influence subordinates' perceptions of their work goals and the paths they follow toward attainment of those goals. The key situational factors in path-goal theory are 1) personal characteristics of followers and 2) environmental pressures and demands with which followers must cope to attain their work goals. These factors determine which leadership behaviors are most appropriate. The four pertinent leadership behaviors are as follows: 1) Directive leadership a form of task performance-oriented behavior. 2) Supportive leadership a form of group maintenance-oriented behavior. 3) Participative leadership or decision style. 4) Achievement-oriented leadership or behaviors geared toward motivating people, such as setting challenging goals and rewarding good performance. Path-goal theory offers many more propositions. In general, the theory suggests that the functions of the leader are to: 1) make the path to work goals easier to travel by providing coaching and direction, 2) reduce frustrating barriers to goal attainment, and 3) increase opportunities for personal satisfaction by increasing payoffs to people for achieving performance goals.

High-Involvement Organization

A type of organization in which top management ensures that there is consensus about the direction in which the business is heading. Participative management is a good way to create competitive advantage. The organizational form is relatively flat and decentralized, built around a customer or product (good or service). Employee involvement is particularly powerful when the environment changes rapidly, work is creative, complex activities require coordination and commitment, and firms need major breakthroughs in innovation and speed.

Advantages and Disadvantages of Functional Departmentalization

Advantages: 1) Economies of scale can be realized. When people with smaller skills are grouped, the unit can purchase more efficient equipment and make larger, discounted purchases. 2) People have greater opportunity for specialized training and in-depth skill development 3) Performance standards are better maintained. People with similar training and interests may develop a shared concern for high performance. 4) Technical specialists are relatively free of administrative work. 5) Environmental monitoring is more effective. Each functional group is more closely attuned to developments in its own field and therefore can adapt more readily. 6) Decision making and lines of communication are simple and clearly understood Disadvantages 1) People may care more about their own function than about the company as a whole 2) Their attention to functional tasks may make them lose focus on overall product quality and customer satisfaction 3) Managers develop functional expertise but do not acquire knowledge of the other areas of the business. They become specialists but not generalists 4) Between functions, conflicts arise, and communication and coordination fall off. Functional structure is most appropriate in simple, stable environments

Advantages and Disadvantages of The Matrix Form

Advantages: 1) Linkage of employees at all levels and in all functions to the company's goals and strategy. 2) More information shared across functions. 3) Communication fostered—especially valuable for complex assignments where different groups depend on each other. 4) Greater responsiveness to customers from bringing together information about customer needs and organizational capabilities. 5) Creative ideas from cross-functional work. 6) Loyalty to the organization as a whole rather than to a function or division. Disadvantages 1) Unclear responsibilities and competing priorities. 2) Violation of the unity-of-command principle. 3) Accountability difficult to define. 4) Lower employee engagement. 5) Possible conflict and stress for employees who must manage a dual reporting role. 6) Additional time required for meetings and other communications to coordinate work. 7) Extensive collaboration needed but not always easy to reward. Violates unity-of-command principle: a structure in which each worker reports to one boss, who in turn reports to one boss

Advantages and Disadvantages of The Divisional Organization

Advantages: 1) Product managers focus on a particular product line. They have clear bottom-line responsibility with measurable impact on the larger organization. Also, managers can compare and contrast the performance of different divisions. 2) Product managers have significant autonomy and control. They are more empowered to make decisions and often control needed resources. 3) Product managers are strategic. They develop long-term design, forecasting, and marketing strategies for their product line. 4) Product managers receive broader training. They develop a broad set of skills, which they need because they will be assessed on bottom-line performance. Disadvantages 1) Difficult to coordinate across product lines 2) Managers may not acquire the depth of functional expertise that comes from working in the functional structure 3) Duplicating functions in every product division is expensive 4) Decision making is decentralized so top managers can lose some control over decisions made in the divisions

North American Free Trade Agreement (NAFTA)

An economic pact that combined the economies of the United States, Canada, and Mexico into one of the world's largest trading blocs.

Franchising

An entrepreneurial alliance between a franchisor (an innovator who has created at least one successful store and wants to grow) and a franchisee (a partner who manages a new store of the same type in a new location).

A Learning Organization

An organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights. Activities: 1) Engaging in disciplined thinking and paying attention to details, so decisions are based on data and evidence rather than guesswork and assumptions. 2) Searching constantly for new knowledge and ways to apply it—looking for broader horizons and opportunities, not just quick fixes for current problems. 3) Valuing and rewarding people who expand their knowledge and skills in areas that benefit the organization. 4) Reviewing successes and failures carefully to find lessons and develop deeper understanding. 5) Benchmarking—identifying and implementing the best business practices of other organizations, stealing ideas shamelessly (that's a metaphor, nothing illegal!). 6) Sharing ideas throughout the organization via reports, information systems, informal discussions, site visits, education, training, and mentoring of less experienced employees by more experienced ones.

Ambidextrous Organization

An organization that is simultaneously good at exploitation and exploration.

Transnational Model: Pros and Cons

An organizational model characterized by centralizing certain functions in locations that best achieve cost economies; basing other functions in the company's national subsidiaries to facilitate greater local responsiveness; and fostering communication among subsidiaries to permit transfer of technological expertise and skills. Advantages: -Enables managers to think globally but act locally -Companies can find locations with optimal balance of needed skills and relatively low costs -Fosters communications among subsidiaries -The ability to integrate the efforts of subsidiaries -Creates a global network of personal contacts

Global Model: Pros and Cons

An organizational model consisting of a company's overseas subsidiaries and characterized by centralized decision making and tight control by the parent company over most aspects of worldwide operations; typically adopted by organizations that base their global competitive strategy on cost considerations. Advantage: -Spread fixed costs of investments over worldwide scales Disadvantage: -Requires great deal of coordination, with significant management and paperwork costs. -May be less responsive to consumer tastes and demands in different countries -May result in a product that fails to satisfy anyone

Multinational Model: Pros and Cons

An organizational model that consists of the subsidiaries in each country in which a company does business, and provides a great deal of discretion to those subsidiaries to respond to local conditions. Advantage: -Each multinational subsidiary can customize its products and strategies according to the tastes and preferences of local consumers, competitive conditions, and political, legal, and social structures Disadvantage: -Higher manufacturing costs and duplication of effort -Cannot realize scale economies from centralizing manufacturing facilities and offering a standardized product to the global marketplace -Launching coordinated global attacks against competitors is difficult

International Model: Pros and Cons

An organizational model that is composed of a company's overseas subsidiaries and characterized by greater control by the parent company over local product and marketing strategies than is the case in the multinational model. Advantage: -Facilitates the transfer of skills and know-how from the parent company to subsidiaries around the globe. Disadvantage: -It does not provide much latitude for responding to local conditions. -It also does not provide opportunity to achieve a low-cost position via scale economies.

8 LO 2: Summarize how authority operates

Authority is the legitimate right to make decisions and tell other people what to do. It is exercised throughout the hierarchy because bosses have the authority to give orders to subordinates. Through the day-to-day operation of authority, the organization proceeds toward achieving its goals. Owners or stockholders have ultimate authority.

Autocratic Leadership vs Democratic Leadership

Autocratic Leadership A form of leadership in which the leader makes decisions on his or her own and then announces those decisions to the group. Democratic Leadership A form of leadership in which the leader solicits input from subordinates.

8 LO 3: Define the roles of the board of directors and the CEO

Boards of directors report to stockholders. The board of directors controls or advises management, considers the firm's legal and other interests, and protects stockholders' rights. The chief executive officer reports to the board and is accountable for the organization's performance.

Business Incubators and Accelerators

Business Incubators: Protected environments for new, small businesses Business Accelerator: Organization that provides support and advice to help young businesses grow.

Top Management Team

CEOs are increasingly sharing their authority with the top management team or "C-suite"

Centralized vs Decentralized Organization

Centralized Organization: An organization in which high-level executives make most decisions and pass them down to lower levels for implementation Decentralized Organization: An organization in which lower-level managers make important decisions. Delegating responsibility and authority decentralizes decision making. Allows people to take faster action

International Challenges and Opportunities

Challenges: 1) Even as the world's economic output grew, the volume of exports grew much faster. 2) Foreign direct investment (FDI) plays an ever-increasing role in the global economy as companies of all sizes invest overseas. 3) Imports penetrate more deeply into the world's largest economies 4) The growth of world trade, FDI, and imports means that companies around the globe are finding their home markets under attack from foreign competitors 5) The environment is more complex due to the challenges of working in radically different cultures and coordinating globally dispersed operations. 6) The environment is more competitive because of cost-efficient overseas competitors Opportunities: 1) Many formerly protected national markets are open for business 2) The potential for export and for making direct investments overseas is greater today than ever before 3) Trade allows each country to obtain more efficiently what it cannot as easily produce on its own. It lowers prices overall and makes more goods more widely available 4) Raises living standards and may broaden the market for a manager's own products 5) Trade makes new technologies and methods more widely available 6) Collaborating with others on trade creates links between people and cultures that can lead to cooperation in other areas

6 LO 4: Compare the various entry modes organizations use to enter overseas markets.

Companies can enter overseas markets by exporting, licensing, franchising, entering into a joint venture, and setting up a wholly owned subsidiary. Each mode has advantages and disadvantages.

5 Universal Core Values

Compassion, fairness, honesty, responsibility, and respect for others.

Mass Customization Strategies

Computer-Integrated Manufacturing (CIM): The use of computer-aided design and computer-aided manufacturing to sequence and optimize a number of production processes. Flexible Factories: Manufacturing plants that have short production runs, are organized around products, and use decentralized scheduling. Lean Manufacturing: An operation that strives to achieve the highest possible productivity and total quality, cost-effectively, by eliminating unnecessary steps in the production process and continually striving for improvement.

6 LO 7: Identify ways in which cultural differences between countries influence management.

Culture influences our actions and perceptions as well as the actions and perceptions of others. Unfortunately, we often are unaware of how culture influences us, and this can cause problems. Managers must be able to change their behavior to match the needs and customs of people they work with. Hofstede's classic research identified four dimensions of cultural differences; some say those differences are disappearing but this should not be assumed. It is important not to stereotype or overgeneralize, but potential differences deserve attention and mutual accommodation. By recognizing cultural differences and discussing behavioral norms for dealing with them, people can find it easier to work together collaboratively and benefit from the exchange. Legal and ethical issues create particularly important challenge.

8 Principles of ISO 90001

Customer focus—learning and addressing customer needs and expectations. Leadership—establishing a vision and goals, establishing trust, and providing employees with the resources and inspiration to meet goals. Involvement of people—establishing an environment in which employees understand their contribution, engage in problem solving, and acquire and share knowledge. Process approach—defining the tasks needed to carry out each process successfully and assigning responsibility for them. System approach to management—putting processes together into efficient systems that work together effectively. Continual improvement—teaching people how to identify areas for improvement and rewarding them for making improvements. Factual approach to decision making—gathering accurate performance data, sharing the data with employees, and using the data to make decisions. Mutually beneficial supplier relationships—working in a cooperative way with suppliers.

8 LO 5: Explain how to delegate effectively

Delegation—the assignment of tasks and responsibilities—has many potential advantages for the manager, the subordinate, and the organization. But to be effective, the process must be managed carefully. The manager should define the goal, select the person, solicit opinions, provide resources, schedule checkpoints, and discuss progress periodically.

3 Boundary Roles of a Broker

Designer role: a network architect who envisions a set of groups or firms whose collective expertise can focus on a particular good or service. Process engineering role: a network co-operator who lays out the flow of resources and relationships and makes certain that everyone shares common goals, standards, payments, and the like. Nurturing role: a network developer who nurtures and enhances the network (maintains and strengthens the team) to make certain the relationships are healthy and mutually beneficial.

8 LO 1: Explain how differentiation and integration influence an organization's structure.

Differentiation means that organizations have many parts. Specialization means that various individuals and units throughout the organization perform different tasks. The assignment of tasks to different people or groups often is the division of labor. But the specialized tasks in an organization cannot all be performed independently of one another. Coordination links the various tasks to achieve the organization's overall mission. An organization with many specialized tasks and work units is highly differentiated; the more differentiated the organization is, the more integration or coordination is required.

Differentiation & Integration

Differentiation: An aspect of the organization's internal environment created by job specialization and the division of labor Integration: The degree to which differentiated work units work together and coordinate their efforts

Downsizing & Rightsizing

Downsizing: The planned elimination of positions or jobs. Rightsizing: A successful effort to achieve an appropriate size at which the company performs most effectively.

Fielder's Contingency Model

Effectiveness depends on two factors: 1) Personal style of the leader 2) Degree to which the situation gives the leader power, control, and influence over the situation 3 questions are used to analyze the situation: 1) Are leader-member relations good or poor? (To what extent is the leader accepted and supported by group members?) 2) Is the task structured or unstructured? (To what extent do group members know what their goals are and how to accomplish them?) 3) Is the leader's position power strong or weak (high or low)? (To what extent does the leader have the authority to reward and punish?) Fielder Considers Two Leadership Styles: 1) Task-Motivated Leadership: Leadership that places primary emphasis on completing a task. 2) Relationship-Motivated Leadership: Leadership that places primary emphasis on maintaining good interpersonal relationships.

Just In Time Concepts

Elimination of waste. Eliminate all waste of time, people, machinery, space, and materials. Perfect quality. Produce perfect parts and produce products exactly when needed in the exact quantities needed. Reduced cycle times. Reduce setup times for equipment, move parts only short distances (machinery is placed in closer proximity), and eliminate all delays. Employee involvement. The workers make production decisions. Managers and supervisors are coaches. Top management pledges that there will never be layoffs due to employees finding new efficiencies. Value-added manufacturing. Do only those things that add value to the finished product. If it doesn't add value, don't do it. For example, inspection does not add value to the finished product, so make the product correctly the first time so inspection is no longer necessary. Discovery of problems and prevention of recurrence. Foolproofing, or fail-safing, is a key component of JIT. People try to find the weak link in the chain by forcing problem areas to the surface in order to take preventive measures.

Entrepreneur vs Intrapreneurs

Entrepreneur: Individual who establishes a new organization without the benefit of corporate sponsorship. Intrapreneur: New venture creators working inside big companies.

Expatriates vs Host-Country Nationals vs Third-Country Nationals

Expatriates: Parent-company nationals who are sent to work at a foreign subsidiary Host-Country Nationals: Natives of the country where an overseas subsidiary is located Third-Country Nationals: Natives of a country other than the home country or the host country of an overseas subsidiary

Substitutes for Leadership

Factors in the workplace that can exert the same influence on employees as leaders would provide.

9 LO 5: Summarize how firms organize to meet customer requirements.

Firms have embraced principles of continuous improvement, total quality management, and six sigma quality (often combined with lean manufacturing) to respond to customer needs. Baldrige criteria and ISO 9001 standards help firms organize to meet high quality specifications. Extending these, reengineering efforts are directed at completely overhauling processes to provide world-class customer service.

Opportunity Analysis

First step of a business plan A description of the good or service, an assessment of the opportunity, an assessment of the entrepreneur, specification of activities and resources needed to translate your idea into a viable business, and your source(s) of capital. What market need does my idea fill? What personal observations have I experienced or recorded with regard to that market need? What social condition underlies this market need? What market research data can be marshaled to describe this market need? What patents might be available to fulfill this need?What competition exists in this market? How would I describe the behavior of this competition?What does the international market look like? What does the international competition look like? Where is the money to be made in this activity?

Western Europe

Following the widespread devastation of World War II, a handful of European countries initiated a bold experiment to bring unification (and avoid future wars) and economic progress. After the Maastricht Treaty, which formally established the European Union (EU), the euro was adopted as a common currency among 19 member countries. The EU allows most goods, services, capital, and human resources to flow freely across its national borders. These efforts helped the EU emerge as an economic superpower.

Social Capital

Goodwill stemming from your social relationships; a competitive advantage in the form of relationships with other people and the image other people have of you.

12 LO 4: Identify sources of power in organizations

Having power and using it appropriately are essential to effective leadership. Managers at all levels of the organization have five potential sources of power. Legitimate power is the company-granted authority to direct others. Reward power is control over rewards valued by others in the organization. Coercive power is control over punishments that others want to avoid. Referent power consists of personal characteristics that appeal to others, who model their behavior on the leader's and seek the leader's approval. Expert power is expertise or knowledge that can benefit others.

Leader-Member Exchange (LMX) Theory

Highlights the importance of leader behaviors not just toward the group as a whole but toward individuals on a personal basis.

9 LO 4: Explain how a firm can be both big and small.

Historically, large organizations have had important advantages over small organizations. Today small size has advantages, including the ability to act quickly, respond to customer demands, and serve small niches. The ideal firm today combines the advantages of both large and small. It creates many small, flexible units, while corporate levels add value by taking advantage of size and power.

12 LO 6: Describe behaviors that will make you a better leader, and know when situations call for them

Important leader behaviors include task performance behaviors, group maintenance behaviors, and decision making. According to the Vroom model, decision making options include deciding alone, consulting individuals, consulting multiple group members, facilitating a whole-group process, or delegating to others, depending on factors such as the significance of the decision and the importance of followers' commitment. Fiedler's contingency model says that a task-motivated leader is more successful when leader-member relations are good and the task is highly structured, or with an unstructured task but low position power for the leader, or with poor leader-member relations when the task structure and leader's position power are both low. In other situations, a relationship-oriented leader will perform better. Hersey and Blanchard's situational theory says that task performance behaviors become less important as the follower's job maturity and psychological maturity increase. Path-goal theory assesses characteristics of the followers, the leader, and the situation; it then indicates the appropriateness of directive, supportive, participative, or achievement-oriented leadership behaviors.

8 LO 6: Distinguish between centralized and decentralized organization

In centralized organizations, top managers make the most important decisions. In decentralized organizations, many decisions are delegated to lower levels.

6 LO 1: Discuss what integration of the global economy means for companies and their managers.

In recent years, rapid growth has occurred in world trade, foreign direct investment, and imports. One consequence is that companies around the globe are now finding their home markets under attack from international competitors. The global competitive environment is becoming a much tougher place in which to do business. However, companies now have access to markets that previously were denied to them.

Inshoring and Insourcing

Inshoring: Moving work from other countries back to the headquarters country. Work may be done by a domestic provider or in-house. Insourcing: Producing in-house one or more of an organization's goods or services.

7 LO 6: Describe how managers of large companies can foster entrepreneurship.

Intrapreneurs work within established companies to develop new goods or services that allow the corporation to reap the benefits of innovation. To facilitate intrapreneurship, organizations use skunkworks—special project teams designated to develop a new product—and allow bootlegging—informal efforts beyond formal job assignments in which employees pursue their own pet projects. Organizations should select projects carefully, have an ongoing portfolio of projects, and fund them appropriately. Ultimately, a true entrepreneurial orientation in a company comes from encouraging independent action, innovativeness, risk taking, proactive behavior, and competitive aggressiveness.

Asia: Japan, China and India

Japan: Japan and its economic success dominated world attention toward the end of the 20th century, particularly so in the United States. Recently the Japanese economy has slowed, but Japanese companies such as Toyota and Sony are a major source of imported goods. As competitors, they are an important influence on how U.S. managers seek quality and efficiency in their operations. Japanese auto makers have a significant presence in the U.S. China: Today, China claims the headlines. China has the world's largest population and a fast-growing middle class. The country has industrialized rapidly, and surged ahead of Germany to become the world's largest exporter. It also is the number two importer after the United States. China is the largest exporter of goods into the United States, a cause of political concern in the U.S. because of the U.S. trade imbalance with China. More and more, China's growing consumption makes it a highly attractive market. But China continues to have an even greater global impact as an exporting nation. The enormous size of its labor force, combined with low labor costs, has given it a competitive advantage in manufacturing. This has led many U.S. and European managers to relocate operations to China, and to import an increasing number and variety of Chinese products, instead of continuing to do business with local manufacturers. India: India too has become an important player in the global marketplace. The nation is still developing, and its poverty is severe, but its 1.27 billion people (the world's second-largest population), many of them entering the working and professional classes, make India an essential market. For many U.S. companies, India provides online support for computer software, software development, call centers, and other services. In fact, so many companies have set up shop there that the demand for Indian workers with strong technical and English language skills is exceeding the supply.

Transactional Leaders

Leaders who manage through transactions, using their legitimate, reward, and coercive powers to give commands and exchange rewards for services rendered.

Pseudotransformational Leaders

Leaders who talk about positive change but allow their self-interest to take precedence over followers' needs. they talk a good game, but they ignore followers' real needs as their own self-interests (power, prestige, control, wealth, fame) take precedence.

Situational Approach to Leadership

Leadership perspective proposing that universally important traits and behaviors do not exist and that effective leadership behavior varies from situation to situation.

Social Entrepreneurship

Leveraging resources to address social problem

Horizontal Structures: Line Departments vs Staff Departments

Line Departments: Units that deal directly with the organization's primary activities. Line managers have much authority and power in the organization. Staff Departments: Units that support line departments. Provide specialized or professional expertise (research, legal, accounting etc) Conflict often arise between line and staff departments. Line managers might be eager to pursue new products and customers (take more risks for sake of growth). Staff managers might want to constrain these efforts with a focus on functional requirements and procedures (focus more on protecting company from risk). But staff units are progressively focusing less on monitoring and controlling and more on moving towards new roles.

8 LO 9: Describe important integrative mechanisms

Managers can coordinate interdependent units through standardization, plans, and mutual adjustment. Standardization stems from work routines and standard operating procedures. They typically are accompanied by formalized rules. Coordination by plan is more flexible and allows more freedom in how tasks are carried out but keeps interdependent units focused on joint goals and schedules. Mutual adjustment involves feedback and discussions among related parties to accommodate each other's needs. It is the most flexible and simplest to administer, but it is time-consuming. Two general ways to deal with high information loads are to reduce the need for information (for example, through creating slack resources and self-contained units) and processing more information (for example, through investing in information systems and creating horizontal relationships).

How to manage resources:

Managers must do three things: 1) They must accumulate the right resources (such as talented people) by determining what resources they need, acquiring and developing those resources, and eliminating resources that don't provide value. 2) They must combine the resources in ways that give the organization capabilities, such as researching new products or resolving customers' problems. These combinations may involve knowledge sharing and alliances between departments or with other organizations. 3) Managers need to leverage or exploit their resources. They do this by identifying opportunities where their competencies deliver value to customers—say, by creating new products or by delivering existing products better than competitors—and then by coordinating and deploying the resources properly.

Mechanistic Organization vs Organic Structure

Mechanistic Organization: A form of organization that seeks to maximize internal efficiency Organic Structure: An organizational form that emphasizes flexibility Compared with the mechanistic structure, in the organic structure: 1) Jobholders have broader responsibilities, and they change as needs arise. 2) Communication occurs through advice and information rather than through orders and instructions. 3) Decision making and influence are more decentralized and informal. 4) Expertise is highly valued. 5) Jobholders rely more heavily on judgment than on rules. 6) Commitment to the organization's goals is more important than obedience to authority. 7) Employees depend more on one another and relate more informally and personally.

6 LO 5: Explain how companies can staff overseas operations.

Most executives use a combination of expatriates, host-country nationals, and third-country nationals. Expatriates can establish new country operations quickly, transfer the company's culture, and bring in specific technical skills. Host-country nationals have the advantages of being familiar with local customs and culture, costing less, and being viewed more favorably by local governments. Third-country nationals often are used as a compromise in politically touchy situations or when home-country expatriates are not available.

Myths about Entrepreneurship

Myth 1—Entrepreneurs are born, not made. Reality—Adaptive entrepreneurs accumulate the relevant skills, know-how, experiences, and contacts over a period of years. The creative capacity to envision and then pursue an opportunity is earned. Myth 2—Anyone can start a business. Reality—Entrepreneurs who recognize the difference between an idea and an opportunity, and who think big enough, start businesses that have a better chance of succeeding. The easiest part is starting. What is hardest is surviving, sustaining, and building a venture so its founders can realize a harvest. Perhaps only 1 in 10 to 20 new businesses that survive five years or more results in a capital gain for the founders. Myth 3—Entrepreneurs are gamblers. Reality—Successful entrepreneurs take very careful, calculated risks. They try to influence the odds, often by getting others to share risk with them and by avoiding or minimizing risks if they have the choice. Often they slice up the risk into smaller, digestible pieces; only then do they commit the time or resources to determine whether [each] piece will work. Myth 4—Entrepreneurs want the whole show to themselves. Reality—Owning and running the whole show effectively puts a ceiling on growth. It is extremely difficult to grow a higher-potential venture by working single-handedly. Higher-potential entrepreneurs build a team, an organization, and a company. Myth 5—Entrepreneurs are their own bosses and completely independent. Reality—Entrepreneurs have to serve many constituencies, including partners, investors, customers, suppliers, creditors, employees, families, and their communities. Entrepreneurs, however, can make free choices about whether, when, and what they respond to. Myth 6—Entrepreneurs work longer and harder than managers in big companies. Reality—Some do, some do not. Some actually report that they work less. Myth 7—Entrepreneurs experience a great deal of stress and pay a high price. Reality—Being an entrepreneur is stressful. But there is no evidence that it is more so than other highly demanding professional roles, and entrepreneurs find their jobs very satisfying. They have a high sense of accomplishment, are healthier, and are much less likely to retire than those who work for others. Myth 8—If an entrepreneur is talented, success will happen in a year or two. Reality—An old maxim among venture capitalists says a lot: The lemons ripen in two and a half years, but the pearls take seven or eight. Rarely is a new business established solidly in less than three or four years. Myth 9—Entrepreneurs are lone wolves and cannot work with others. Reality—The most successful entrepreneurs are leaders who build great teams and effective relationships working with peers, directors, investors, key customers, key suppliers, and the like.

9 LO 3: Identify strategies and dynamic organizational concepts that can improve an organization's responsiveness.

New and emerging organizational concepts and forms include core capabilities, strategic alliances, learning organizations, and high-involvement organizations.

7 LO 3: Identify common causes of success and failure.

New ventures are inherently risky. The economic environment plays an important role in the success or failure of the business, and the entrepreneur should anticipate and be prepared to adapt in the face of changing economic conditions. How you handle a variety of common management challenges also can mean the difference between success and failure, as can the effectiveness of your planning and your ability to mobilize nonfinancial resources, including other people who can help.

Two major liabilities of start-ups

Newness and Smallness

The Americas

North and South America constitute a mix of industrialized countries, such as Canada and the United States, and growing economies such as Argentina, Brazil, Chile, and Mexico. As in Asia, South American companies rely on innovation and technology, rather than simply cost advantages, to compete in the global marketplace. "Start-Up Chile," a start-up accelerator for immigrants funded by the Chilean government, helps high-potential entrepreneurs launch their start-up companies.

Two Types of Capabilities

Ordinary Capabilities: Capabilities pertaining to basic administrative and operational functions Dynamic Capabilities: Higher-level strategic capabilities (compared with ordinary capabilities) that aid rapid adaptation. Focus less on efficiency and more on innovation.

Social Enterprise

Organization that applies business models and leverages resources in ways that address social problems.

8 LO 7: Summarize ways organizations can be structured

Organizations can be structured on the basis of function, division (product, customers, or geographic), matrix, and network. Each form has advantages and disadvantages.

9 LO 1: Discuss why it is critical for organizations to be responsive.

Organizations have a formal structure to help control what goes on within them. But to survive today, firms need more than control—they need responsiveness. They must act quickly and adapt to fast-changing demands.

9 LO 6: Identify ways that firms organize around different types of technology.

Organizations tend to move from organic structures to mechanistic structures and back to organic structures as they transition from small batch to large batch and continuous process technologies. For flexible manufacturing, organizations pursue mass customization via computer-integrated manufacturing and lean manufacturing. To organize for time-based competition, firms strengthen their logistics operations, consider just-in-time operations, and use concurrent engineering.

Management Challenges

Organizations that encourage intrapreneurship face an obvious risk: the effort can fail. 1) Overcommitment: The most dangerous risk in corporate entrepreneurship is overreliance on a single project. 2) Spread: Organizations also fail when they spread their entrepreneurial efforts over too many projects

Outsourcing and Offshoring

Outsourcing: Contracting with an outside provider to produce one or more of an organization's goods or services Offshoring: Moving work to other countries, typically where wages are lower

12 LO 3: Explain how a good vision helps you be a better leader.

Outstanding leaders have vision. A vision is a mental image of an appealing, attainable future that goes beyond the ordinary and perhaps beyond what others thought possible. The vision provides the direction in which the leader wants the organization to move and inspiration for people to pursue it.

Board of Directors

Owners are the stockholders but they elect a board of directors to oversee the organization 3 major sets of duties: 1) Selecting, assessing, rewarding, and replacing the CEO 2) Determining the firm's strategic direction and reviewing financial performance 3) Ensuring ethical, socially responsible, and legal conduct Inside directors: company's top directors Outside members: executives at other companies

7 LO 1: Describe why people become entrepreneurs and what it takes, personally.

People become entrepreneurs because of the profit potential, the challenge, and the satisfaction they anticipate (and often receive) from participating in the process, and sometimes because they are blocked from more traditional avenues of career advancement. As shown in Exhibit 7.3, successful entrepreneurs are innovators, and they have good knowledge and skills in management, business, and networking. Although there is no single entrepreneurial personality, certain characteristics are helpful: commitment and determination; leadership skills; opportunity obsession; tolerance of risk, ambiguity, and uncertainty; creativity; self-reliance; the ability to adapt; and motivation to excel.

12 LO 2: Summarize what people want and organizations need from their leaders

People want help in achieving their goals, and organizations need leaders at all levels. Exemplary leaders challenge the process, inspire a shared vision, enable others to act, model the way, and encourage the heart.

Legitimacy

People's judgment of a company's acceptance, appropriateness, and desirability, generally stemming from company goals and methods that are consistent with societal values.

CEO

Personally accountable to the board and to the owners for the organization's performance

4 Types of Differences Between Country Cultures Within Multinational Corportions

Power distance: the extent to which a society accepts the fact that power in organizations is distributed unequally. Individualism/collectivism: the extent to which people act on their own or as a part of a group. Uncertainty avoidance: the extent to which people in a society feel threatened by uncertain and ambiguous situations. Masculinity/femininity: the extent to which a society values quantity of life (e.g., accomplishment, money) over quality of life (e.g., compassion, beauty).

Reengineering

Processes including product development, order fulfillment, customer service, inventory management, billing, and production are redesigned from scratch as if the organization were brand new and just starting out. Reengineering often requires a fundamental change in the way the parts of the organization work together.

Pros and Cons of Going Public

Pros: 1) Raising more capital 2) Reducing debt 3) Improving balance sheet 4) Enhancing net worth 5) Pursuing otherwise unaffordable opportunities 6) Improving credibility with customers and other stakeholders Cons: 1) Expense 2) Time 3) Effort 4) Tendency to become more interested in stock price and capital gains than in running the company properly 5) Creation of a long-term relationship with an investment banking firm that won't necessarily be a good one

Responsibility vs Accountability

Responsibility: The assignment of a task that an employee is supposed to carry out Accountability: The expectation that employees will perform a job, take corrective action when necessary, and report upward on the status and quality of their performance Ironically, it is common for people to have more responsibility than authority

Shared Leadership

Rotating leadership, in which people rotate through the leadership role based on which person has the most relevant skills at a particular time.

Factors in deciding whether to offshore:

Should not start out with the assumption that it will be cheaper to do so What competitive advantage do the products offer? If, say, rapid delivery, reliability, and customer contact are paramount, then offshoring is a less attractive option. But if the product is widely available and standardized, like a calculator, and the only competitive advantage is price, the lowest possible production cost is essential and offshoring is beneficial. Is the business in its early stages? If so, offshoring may well be inappropriate because managers need to stay close to the business and its customers to solve problems and make sure everything is going according to plan. When the business is more mature, managers can afford to consider moving some operations overseas. Can production savings be achieved locally? Automation can often achieve significant labor cost savings and eliminate the advantage of moving production abroad. Where automation is not feasible, as with computer call centers, then offshoring becomes more attractive. Can the entire supply chain be improved? As we discussed in Chapter 2, enormous productivity savings are possible when managers develop an efficient supply chain, from suppliers to manufacturing to customers. These improvements permit both lower cost and faster customer service. If the supply chain is already highly efficient or routine, and more savings are needed, then offshoring can achieve efficiencies

Small Business vs Entrepreneurial Venture

Small Business: A business having fewer than 100 employees, independently owned and operated, not dominant in its field, and not characterized by many innovative practices. Entrepreneurial Venture: A new business having growth and high profitability as primary objectives.

8 LO 4: Discuss how span of control affects structure and managerial effectiveness

Span of control is the number of people who report directly to a manager. Narrow spans create tall organizations, and wide spans create flat ones. No single span of control is always appropriate; the optimal span is determined by characteristics of the work, the subordinates, the manager, and the organization.

Organizing for Speed: Time-Based Competition

Strategies aimed at reducing the total time needed to deliver a good or service. 1) Logistics: The movement of the right goods in the right amount to the right place at the right time. 2) Just-in-Time Operations A system that calls for subassemblies and components to be manufactured in very small lots and delivered to the next stage of the production process just as they are needed. 3) Concurrent Engineering A design approach in which all relevant functions cooperate jointly and continually in a maximum effort aimed at producing high-quality products that meet customers' needs.

Lateral Leadership

Style in which colleagues at the same hierarchical level are invited to collaborate and facilitate joint problem solving.

Supervisory Leadership vs Strategic Leadership

Supervisory Leadership: Behavior that provides guidance, support, and corrective feedback for day-to-day activities. Strategic Leadership: Behavior that gives purpose and meaning to organizations, envisioning and creating a positive future.

Entrepreneurship Opportunities

Technological discoveries. Start-ups in biotechnology, microcomputers, artificial intelligence, robotics, and nanotechnology followed technological advances. Johnson & Johnson will collaborate with Google to develop advanced robots to aid in surgeries. Demographic changes. Health care organizations of all kinds have sprung up to serve an aging population, from exercise studios to assisted-living facilities. One business that targets the aging American population is fitness center company Welcyon, which provides senior-friendly low-impact cardio machines, background music at lower volumes, and fitness classes that can be taken while seated. The service assists those who are pressed for time or have difficulty getting around. Lifestyle and taste changes. Start-ups have capitalized on new clothing and music trends, desire for new fast foods, and ever-growing interest in sports. In recent years, more consumers want to help take care of the environment, and more businesses are concerned about showing consumers that they care, too. Economic dislocations, such as booms or failures. Rising oil prices spurred a variety of developments related to alternative energy or energy efficiency. Calamities such as wars and natural disasters. The terrorist attacks of September 2001 spurred concern about security, and entrepreneurs still pursue ideas to help government agencies prevent future attacks. Destructive hurricanes, floods, and tornadoes raised awareness of the importance of emergency preparedness. Government initiatives and rule changes. Deregulation spawned new airlines and trucking companies. Whenever the government changes regulations, tightens energy efficiency requirements, and so forth, opportunities arise for entrepreneurs to think of new ideas for products and processes

Hierarchical Levels & Trend

The authority levels of the organizational pyramid Trend has been to reduce the number of hierarchical levels. Branches with fewer levels tended to have higher operating efficiency than did branches with more. Benefit of hierarchical levels is that chance of promotion motivates employees

7 LO 5: Explain how to increase your chances of success, including good business planning.

The business plan helps you think through your idea thoroughly and determine its viability. It also convinces (or fails to convince) others to participate. The plan describes the venture and its future, provides financial projections, and includes plans for marketing, manufacturing, and other business functions. The plan should describe the people involved in the venture, a full assessment of the opportunity (including customers and competitors), the environmental context (including regulatory and economic issues), and the risk (including future risks and how you intend to deal with them). Successful entrepreneurs also understand how to develop social capital, which enhances legitimacy and helps develop a network of others including customers, talented people, partners, and boards.

6 LO 6: Summarize the skills and knowledge managers need to manage globally.

The causes of failure overseas extend beyond technical capability and include personal and social issues. Important knowledge permeates the chapter, but in particular see Exhibit 6.6.

Africa and the Middle East

The economy of the Middle East is best known for its export of oil. Although oil exploration and drilling take place in many parts of the world, the oil-rich countries of the Middle East supply by far the most oil to the world's buyers, most of it going to buyers in Asia. The main Middle Eastern supplier of U.S. oil imports is Saudi Arabia, with other major suppliers being Canada, Mexico, and Venezuela. Africa has long been seen by managers only as a continent cursed by dire poverty. The continent is still plagued by an epidemic of AIDS, political instability, and ongoing wars. But areas of progress and growth in the middle class in some countries have provided opportunities for businesses willing to learn the needs of the population and make the effort to navigate a challenging environment.

In order for network arrangements to be successful

The firm must choose the right specialty. It must be something (good or service) that the market needs and that the firm is better at providing than other firms. The firm must choose collaborators who are excellent at what they do and that provide complementary strengths. The firm must make certain that all parties fully understand the strategic goals of the partnership. Each party must be able to trust all the others with strategic information and trust that each collaborator will deliver quality products even if the business grows quickly and makes heavy demands.

Key Aspects of the Global Environment

The global economy is becoming more integrated than ever before. Economic Environment: Foreign investment; growth of developing nations; rising wages in developing nations Technological Environment: Internet and wireless technology Legal/Regulatory Environment: Free trade agreements; anticorruption laws Demographics: Aging population in developed nations; growing population worldwide, especially in the developing world Social Issues: Cultural differences; bribery concerns Natural Environment: Intensifying demand for resources, including oil, water, and food; growing desire for sustainable products and operations; increasingly endangered species; climate change

6 LO 2: Describe how the world economy is becoming more integrated than ever before.

The gradual lowering of barriers to free trade is making the world economy more integrated. This means that the modern manager operates in an environment that offers more opportunities but is also more complex and competitive than that faced by the manager of a generation ago

6 LO 3: Define the strategies organizations use to compete in the global marketplace.

The international corporation builds on its existing core capabilities in R&D, marketing, manufacturing, and so on to penetrate overseas markets. A multinational is a more complex form that usually has fully autonomous units operating in multiple countries. Subsidiaries have latitude to address local issues such as consumer preferences, political pressures, and economic trends in their own regions of the world. The global organization pulls control of overseas operations back into the headquarters and approaches the world market as a unified whole to maximize efficiency on a global scale. A transnational attempts to achieve both local responsiveness and global integration by coordinating specialized facilities positioned around the world.

Expert Power

The leader who has expert power has certain expertise or knowledge; people comply because they believe in, can learn from, or can otherwise gain from that expertise.

Reward Power

The leader who has reward power influences others because she controls valued rewards; people comply with the leader's wishes in order to receive those rewards.

Coercive Power

The leader with coercive power has control over punishments; people comply to avoid those punishments.

Legitimate Power

The leader with legitimate power has the right, or the authority, to tell others what to do; employees are obligated to comply with legitimate orders.

Referent Power

The leader with referent power has personal characteristics that appeal to others; people comply because of admiration, personal liking, a desire for approval, or a desire to be like the leader.

8 LO 8: Identify the unique challenges of the matrix organization

The matrix is a complex structure with dual authority relationships. A well-managed matrix enables organizations to adapt to change. But it can also create confusion and interpersonal difficulties. People in all positions in the matrix—top executives, product and function managers, and two-boss employees—must acquire unique survival skills.

Matrix Survival Skills

The need to collaborate effectively is particularly high in the matrix. This can be difficult because people often rotate teams, teammates, and bosses Top Executive: Needs to balance power and emphasis between functions and divisions Product & Functional Managers: Must learn to collaborate and manage their conflicts constructively "Two-Boss" Manager/Employee: Must learn how to respond to two superiors and prioritize multiple demands The key to managing in the matrix is to realize that the matrix is a process

Failure Rate

The number of expatriate managers of an overseas operation who come home early -Considerably higher for American expatriates How to prevent failed global assignments: 1) Structure assignments clearly: Develop clear reporting relationships and job responsibilities. 2) Create clear job objectives. 3) Develop performance measurements based on objectives. 4) Use effective, validated selection and screening criteria (both personal and technical attributes). 5) Prepare expatriates and families for assignments (briefings, training, support). 6) Create a vehicle for ongoing communication with expatriates. 7) Anticipate repatriation to facilitate reentry when they come back home. 8) Consider developing a mentor program that will help monitor and intervene in case of trouble.

Span of Control

The number of subordinates who report directly to an executive or supervisor Can be too narrow or too wide Optimal span of control maximizes effectiveness because it is: 1) Narrow enough enough to permit managers to maintain control over direct reports 2) Not so narrow that it leads to overcontrol and an excessive number of managers who oversee a small number of people 5 is generally considered to be a good number of direct reports

9 LO 2: Describe the qualities of an organic organization structure.

The organic form emphasizes flexibility. Organic organizations are decentralized, informal, and dependent on the judgment and expertise of people with broad responsibilities. The organic form is not a single formal structure but a concept that underlies all the new forms discussed in this chapter.

Integration/Coordination

The procedures that link the various parts of an organization for the purpose of achieving the organization's overall mission

Mass Customization

The production of varied, individually customized products at the low cost of standardized, mass-produced products.

Corporate Governance

The role of a corporation's executive staff and board of directors in ensuring that the firm meets the goals of its stakeholders

Value Chain

The sequence of activities that flow from raw materials to the delivery of a good or service, with additional value created at each step. Research and development focus on innovation and new products. Inbound logistics receive and store raw materials and distribute them to operations. Operations transform the raw materials into final product. Outbound logistics warehouse the product and handle its distribution. Marketing and sales identify customer requirements and get customers to purchase the product. Service offers customer support, such as repair, after the item has been bought. When the total value created—that is, what customers are willing to pay—exceeds the cost of providing the good or service, the result is the profit margin Creating productive collaborations can dramatically improve a company's agility and responsiveness.

Technology

The systematic application of scientific knowledge to a new product, process, or service.

Entrepreneurial Orientation & The 5 Tendencies

The tendency of an organization to identify and capitalize successfully on opportunities to launch new ventures by entering new or established markets with new or existing goods or services. The 5 Tendencies 1) Independent Action -grant individuals and teams the freedom to exercise their creativity, champion promising ideas, and carry them through to completion 2) Innovate -support new ideas, experimentation, and creative processes 3) Take Risks -willingness to commit significant resources, and perhaps borrow heavily, to venture into the unknown 4) Be Proactive -act in anticipation of future problems and opportunities 5) Be Competitively Aggressive -challenge competitors directly and intensely to achieve entry or improve its position

Ethnocentrism

The tendency to judge others by the standards of one's own group or culture, which are seen as superior

Entrepreneurial Strategy Matrix

The upper-left quadrant, high innovation/low risk, depicts ventures of truly novel ideas with little risk. In the upper-right quadrant, high innovation/high risk, novel product ideas are accompanied by high risk because the financial investments are high and the competition is great. Most small-business ventures are in the low innovation/high risk cell (lower right). They are fairly conventional entries in well-established fields. The low innovation/low risk category includes ventures that require minimal investment and/or face minimal competition for strong market demand. The matrix also can help entrepreneurs remember a useful point: successful companies do not always require a cutting-edge technology or an exciting new product. Even companies offering the most mundane products—the type that might reside in the lower-left cell—can gain competitive advantage by doing basic things differently from and better than competitors.

12 LO 8: Describe types of opportunities to lead

There's plenty of opportunity to be a leader; being a manager of others who report to you is just the traditional one. You also can find or create opportunities to be a servant-leader or intergroup leader, and engage in shared leadership and lateral leadership. A servant-leader serves others' needs while strengthening the organization. Intergroup leaders facilitate collaborative performance between different groups or organizations. Shared leadership involves taking on a leadership role when your skills are most relevant to a particular situation. Lateral leadership is inspiring people to work collaboratively and solve problems together.

12 LO 7: Distinguish between charismatic and transformational leadership

To have charisma is to be dominant and self-confident, to have a strong conviction of the righteousness of your beliefs, to create an aura of competence and success, and to communicate high expectations for and confidence in your followers. Charisma is one component of transformational leadership. Transformational leaders translate a vision into reality by inspiring people to transcend their individual interests for the good of the larger community. They do this through charisma, individualized attention to followers, intellectual stimulation, formation and communication of their vision, building of trust, and positive self-regard.

12 LO 5: List personal characteristics that contribute to leader effectiveness

Useful leader characteristics include drive, leadership, motivation, integrity, self-confidence, and knowledge of the business. Perhaps the most important skill is flexibility: the ability to perceive the situation accurately and then change behavior accordingly.

Dynamic Network

Very flexible version of the network organization Also called modular or virtual corporation Comprised of temporary arrangements among partners that can be assembled and reassembled to adapt to the environment Suitable when much of the work can be done independently by experts

7 LO 4: Discuss common management challenges.

When new businesses fail, the causes often can be traced to some common challenges that entrepreneurs must manage well. You might not enjoy the entrepreneurial process. Survival—including getting started and fending off competitors—is difficult. Growth creates new challenges, including reluctance to delegate work to others. Funds may be put to improper use, and financial controls may be inadequate. Many entrepreneurs fail to plan well for succession. When needing or wanting new funds, initial public offerings provide an option, but they represent an important and difficult decision that must be considered carefully.

12 LO 9: Discover how to further your own leadership development

You can develop your own leadership skills not only by understanding what effective leadership is all about, but also by seeking challenging developmental experiences. Such important life experiences come from taking challenging assignments, through exposure to working with other people, by overcoming hardships and failures, by taking formal courses, and via many other actions. The most important elements of a good developmental experience are assessment, challenge, and support.

7 LO 2: Summarize how to assess opportunities to start new businesses.

You should always be on the lookout for new ideas, monitoring the current business environment and other indicators of opportunity. Trial and error and preparation play important roles. Assessing the business concept on the basis of how innovative and risky it is, combined with your personal interests and tendencies, also will help you make good choices. Ideas should be carefully assessed via opportunity analysis and a thorough business plan.