CHAPTER 2 - Partners who jointly own the business,
The Environment of organization and managers
organization’s environment
External Environment – everything outside an
organization’s boundaries that might affect it. 2
separate external environment:
1. General environment - The set of broad
dimensions and forces in an organization’s
surroundings that determines its overall context
The economic dimension – the overall health and vitality of
the economic system in which the organization operates
(how alive the business is and how alive the economic is,
how is it outside the business)
Important factors in a business: general economic growth,
inflation, interest rates, and unemployment.
Moderate unemployment – fewer people can eat out
(example) inexpensive option
The technological dimension – methods available for
converting resources into products or service. (what type of
technology s evolving/what program, what machineries and
etc.
- The forms and availability of that technology comes
from the general environment.
the political-legal dimension – consists of the government
regulation of business
- The relationship between business and government
Dimensions three basic reasons
One – legal system partially defines what an
organization can and cannot do.
Two – pro or anti business sentiment in
government influences business activity
- Law, industries, taxes, permits and licenses
2. Task environment - Specific organizations or
groups that affect the organization (different
performances of the different organization,
managers will strategize. Competitors – what are
the resources of the org that competes with my
org
Competitors – other organization that compete with it for
resources
Customers – whoever pays money to acquire an
organization’s products or services
- Heart and soul of any industry and organization
Supplier – are organization that provide resources for other
organization
- Gives the managers the raw materials
Regulators – have the potential to control, legislate
- Influence an organization policies and practices
- Elements of the task environment
Regulatory agencies – created by the government to
protect the public from certain business practices
- Protect the organization from one another (Ex: fda)
individual
- investors who buy stock in a corporation
board of directors – is a governing body that is elected
by the stockholders and charged with overseeing a
firm’s general management to ensure that it is run to
best serve the stockholder’s interest
employees - Are also a major element of its internal
environment. Of particular interest to managers today
is the changing nature of the workforce, which is
becoming increasingly more diverse in terms of
gender, ethnicity, age, and other dimensions
physical work environment - A final part of the
internal environment is the organization’s actual
physical environment and the work that people do
- the work people do.
The Ethical and Social Environment of Management
Individual Ethics in Organizations
Ethics
An individual’s personal beliefs about whether a
behavior, action, or decision is right or wrong
Ethical behaviour - that conforms to generally
accepted social norms
Unethical behavior - that does not conform to
generally accepted social norms
Managerial ethics - Standards of behavior that
guide individual managers in their work
Codes of Ethics - A formal, written statement
of the values and ethical standards that guide a
firm’s action
Emerging Ethical Issues
Ethical Issues
Sarbanes–Oxley Act of 2002
A law that requires CEOs and CFOs to vouch personally
for the truthfulness and fairness of their firms’
financial disclosures and imposes tough new measures
to deter and punish corporate and accounting fraud
and corruption
Corporate Governance
A related area of emerging concern is ethical issues in
corporate governance. The board of directors of a
public corporation is expected to ensure that the
business is being properly managed and that the
decisions made by its senior management are in the
best interests of shareholders and other stakeholders
Ethics and Information Technology
A final set of issues that has emerged in recent times
involves information technology. Among the specific
focal points in this area are individual rights to privacy
and individuals’ potential abuse of information
technology.
Determinants of Organization Culture
Organization’s founder (personal values and beliefs).
Symbols, stories, heroes, slogans, and ceremonies
that embody and personify the spirit of the
organization.
Corporate success that strengthens the culture.
Shared experiences that bond organizational
members together.
Managing Organization Culture
Understand the current culture to understand
whether to maintain or change it.
Articulate the culture through slogans, ceremonies,
and shared experiences.
Reward and promote people whose behaviors are
consistent with desired cultural values
Changing Organization Culture
Develop a clear idea of what kind of culture you want
to create.
Bring in outsiders to important managerial positions.
Adopt new slogans, stories, ceremonies, and
purposely
break with tradition.
CHAPTER 4
Managing DECISION MAKING
The Nature of Decision Making
Decision making
The act of choosing one alternative from among a set of
alternatives
Decision-making process
Recognizing and defining the nature of a decision situation,
identifying alternatives, choosing the best alternative, and
putting it into practice
Types of Decision Making
Programmed decision
A decision that is relatively structured or recurs with some
frequency (or both)
Non-programmed decision
A decision that is relatively unstructured and occurs much
less often than a programmed-decision
Decision-Making Conditions
Decision Making Under Certainty:
State of certainty
A condition in which the decision maker knows with
reasonable certainty what the alternatives are and what
conditions are associated with each alternative
Decision Making Under Risk:
A condition in which the availability of each
alternative and its potential payoffs and costs are all
associated with probability estimates
Decision Making Under Uncertainty:
2. They can effectively eliminate uncertainty to
achieve a decision condition of certainty.
3. They evaluate all aspects of the decision situation
logically and rationally.
Evidence Based Management - A commitment to
finding and using the best theory and data available at
the time to make decision
Behavioral Aspects of Decision Making
Administrative model
A decision-making model that argues that decision
makers (1) use incomplete and imperfect information,
(2) are constrained by bounded rationality, and (3)
tend to “satisfice” when making decisions
Bounded rationality
A concept suggesting that decision makers are limited
by their values and unconscious reflexes, skills, and
habits
Satisficing
The tendency to search for alternatives only until one
is found that meets some minimum standard of
sufficiency
Coalition
An informal alliance of individuals or groups formed to
achieve a common goal
Intuition and escalation of commitment
Intuition
An innate belief about something, without conscious
consideration
Escalation of commitment
When a decision maker stays with a decision even
when it appears to be wrong
Ethics and Decision Making
Managerial Ethics
Individual ethics:
(personal beliefs about right and wrong behavior)
combine with the organization’s ethics to create
managerial ethics.
Components of managerial ethics:
Relationships of the firm to
employees
Employees to the firm
The firm to other economic
agents
Group and Team Decision Making in Organizations
Forms of Groups and Team Decision Making
Interacting group or team
A decision-making group or team in which members
openly discuss, argue about, and agree on the best
alternative
Delphi group
A form of group decision making in which a group
arrives at a consensus of expert opinion
Nominal group
Managing Social Responsibility
Formal Organizational Dimensions
Legal compliance
The extent to which an organization complies with local,
state, federal, and international laws
Ethical compliance
The extent to which an organization and its members follow
basic ethical standards of behavior
Philanthropic giving
Awarding funds or gifts to charities or other worthy causes
Informal Organizational Dimensions
Whistle-blowing
The disclosure, by an employee, of illegal or unethical
conduct on the part of others within the organization
The International Environment of Management
Exporting
Making a product in the firm’s domestic marketplace and
selling it in another country
Importing
Bringing a good, service, or capital into the home country
from abroad
Licensing
An arrangement whereby one company allows another
company to use its brand name, trademark, technology,
patent, copyright, or other assets in exchange for a royalty
based on sales
Levels of International Business Activity
Strategic alliance
A cooperative arrangement between two or more firms for
mutual gain
Joint venture
A special type of strategic alliance in which the partners
share in the ownership of an operation on an equity basis
Direct investment
When a firm builds or purchases operating facilities or
The Context of International Business
The Cultural Environment
One significant contextual challenge for the
international manager is the cultural environment and
how it affects business.
A country’s culture includes all the values, symbols,
beliefs, and language that guide behavior. Cultural
values and beliefs are often unspoken; they may even
be taken for granted by those who live in a particular
country.
Controls on International Trade
Tariff
A tax collected on goods shipped across national
boundaries
Quota
A limit on the number or value of goods that can be
traded
Export restraint agreements
Accords reached by governments in which countries
voluntarily limit the volume or value of goods they
export to or import from one another
Economic Community
A set of countries that agree to markedly reduce or
eliminate trade barriers among member nations (a
formalized market system)
European Union (EU)
The first and most important international market
system
North American Free Trade Agreement (NAFTA)
An agreement among the United States, Canada, and
Mexico to promote trade with one another
The Role of the GATT and WTO
General Agreement on Tariffs and Trade (GATT)
A trade agreement intended to promote international
trade by reducing trade barriers and making it easier
for all nations to compete in international markets
World Trade Organization (WTO)
An organization, which currently includes 140 member
nations and 32 observer countries, that requires
members to open their markets to international trade
and to follow WTO rules
The Context of International Business
The Role of the GATT and WTO
General Agreement on Tariffs and Trade (GATT)
A trade agreement intended to promote international
trade by reducing trade barriers and making it easier
for all nations to compete in international markets
World Trade Organization (WTO)
An organization, which currently includes 140 member
nations and 32 observer countries, that requires
members to open their markets to international trade
and to follow WTO rules
Classical Management perspective – viewed organization
and jobs from an essentially mechanistic point of view –
considered as a universal perspective because they identify
the “ONE BEST WAY” to manage organizations.
Behavioral Management Perspective
Emphasis on individual attitudes, behaviors and group
process and recognized importance of behavioral processes
in the workplace
- Movement was industrial psychology – the practice
of applying psychological concepts to industrial
settings
HUGO Munsterberg – German psychologist
- Father of industrial psychologist
- Suggested that psychologist could make
contributions to managers in the areas of employee
selection and motivation
MARy parker follet
- Work before in the scientific management era
- She appreciated the need to understand the role of
human behavior in organization.
The hawthorne studies – the research orginally sponsored
by general electric was conducted by Elton mayo and his
associates
Elton mayo – found people being motivated by the desire
for leisure time, status, social acceptance or any
combination of these.
The first study – manipulating illumination for one group of
workers whose illumination was not changed.
- Productivity went up in both groups
The human relations management (the human relations
movement) – grew from hawthorne studies
- Popular approach to management for many years
Two writers who helped advance the human relations
movement
Abraham maslow – the hierarchy of needs
DOUGLAS MCGREgor – theory y and theory x
Theory x – negative view and theory y – positive view and
represents assumptions made by human relation advocates
Contemporary behavioral science in management – the current
behavioral perspectives on management is known as
organizational behavior
The quantitative management perspective – concerned with
applying quantitative techniques to management.
Considered as a universal perspective because they identify
the “ONE BEST WAY” to manage organizations.
- Focuses on decision making, cost effectiveness,
mathematical models and the use of computers.
- Two branches of quantitative approach
- Today: useful in the areas of planning and controlling
management science – focuses specifically on the
development of mathematical models and can be applied to
wide range of problems
- Focuses on models, equations, and similar
representations of reality.
- Mathematical models – system, process, or
relationship
operation management – concerned with helping the
organization more efficiently produce its products or
services
- Less mathematical and statically sophisticated
- Be applied more directly to managerial situations
- A form of applied management science
Contemporary management perspectives – system –
interrelated set of elements functioning as a whole
For basic elements - input, transformation process, outputs
and feedback,
Inputs – material, human, financial, and information
resources
- Technological and managerial process inputs are
transformed into outputs
Outputs – products, services or both (tangible or intangible):
profit, losses or both)
Transformation – technology, operating systems,
administrative systems, and control systems.
Concepts
Open systems – interact with the environment
- organizations
Closed systems – do not interact with the environment
Subsystems – systems within a broader system
- marketing, production, and finance function
synergy – suggests that subsystems may be successful when
working together rather than working alone
entropy – normal process that leads to system decline
THE CONTINGENCY PERSPECTIVE – suggests that
appropriate managerial behavior in a given situation
depends on or is contingent on.
- Unique elements is given in a situation.