ButManagement notes all summed up

CHAPTER 1
o Manager: someone who coordinates and oversees the work of other people so that organizational goals
can be accomplished. When you begin your career, you will either manage or be managed.
o Level of management
 Top managers: responsible for making organization-wide decisions and establishing plans and
goals that affect the entire organization
 Middle managers: manage the work of first-line managers
 First-line managers: manage the work of non-managerial employees
 Non-managerial employees
o Management involves coordinating and overseeing the work activities of others so that their activities
are completed efficiently and effectively.
o Organization: a deliberate arrangement of people to accomplish some specific purpose (where
managers work). Characteristics of an organization:
 Distinct purpose
 Deliberate structure
 People
o Why are managers needed?
 Organizations need their managerial skills and abilities
now more than ever
 Managers are critical to getting things done
 Managers do matter to organizations
o Efficiency: doing things right
 getting the most output from the least amount of input
o Effectiveness: doing the right things
 attaining organizational goals
o Functions of a manager
 Planning: Defining goals, establishing strategies to achieve goals, and developing plans to
integrate and coordinate activities
 Organizing: Arranging and structuring work to accomplish organizational goals (determining
what needs to be done, how it will be done and who is to do it)
 Leading: Working with and through people to accomplish goals (motivating, leading and any
other actions that involves people)
 Controlling: Monitoring, comparing, and correcting work (monitoring activities to ensure they
are done as planned)
o Roles: specific actions or behaviors expected of and exhibited by a manager. Mintzberg identified 10
roles grouped around interpersonal relationships, the transfer of information, and decision making.
Types of roles:
 Interpersonal: involve people and other ceremonial/symbolic duties (Figurehead, leader,
liaison)
 Informational: collecting, receiving, and disseminating information (Monitor, disseminator,
spokesperson)
 Decisional: making choices (Entrepreneur, disturbance handler, resource allocator, negotiator)
o Management skills:
 Technical skills (Knowledge and proficiency in a specific field)
 Human skills (The ability to work well with other people)
  Conceptual skills (The ability to think and conceptualize about abstract and complex situations
concerning the organization)
o Challenges Facing Managers Today and into the Future
 Focus on technology
 Managers must get employees on board with new technology
 Managers must oversee the social interactions and challenges involved in using
collaborative technologies
 Focus on disruptive innovation
 One of the most critical challenges facing managers today is dealing with disruptive
innovation
 Disruptive innovation involves new products, processes, or services that radically change
the rules of the game
 One example is how the automobile destroyed the horse-drawn buggy industry
 Focus on social media
 Social media: forms of electronic communication through which users create online
communities to share ideas, information, personal messages, and other content
 Focus on ethics
 We commonly see unethical business practices in the news
 Examples include pharmaceutical firms raising drug prices by 500% or someone turning
in fake receipts for expenses
 Organizational survival depends on building trust with customers, clients, suppliers,
employees, and other stakeholders
 Focus on political uncertainty
 In the past, major democratic nations like the U S, Canada, and the U K have been
relatively stable politically
 In the last 10 years these countries have shifted to greater political uncertainty
 Brexit and the U S M C A are examples of that shift
 Some states, such as California, have placed additional regulations on business
 Focus on the customer
 Without customers, most organizations would cease to exist
 Managing customer relationships is the responsibility of all managers and employees
 Consistent, high-quality customer service is essential
o Rewards for being a manager
 Responsible for creating a productive work environment
 Recognition and status in your organization and in the community
 Attractive compensation in the form of salaries, bonuses, and stock options
 Create a work environment in which organizational members can work to the best of their ability
 Have opportunities to think creatively and use imagination
 Help others find meaning and fulfilment in work
 Support, coach, and nurture others
 Work with a variety of people
 Receive recognition and status in organization and community
 Play a role in influencing organizational outcomes
 Receive appropriate compensation in the form of salaries, bonuses, and stock options
o Employability skill matrix
CHAPTER 2
o A key to success in management and in your career is knowing how to be an effective decision maker.
Decision—a choice among two or more alternatives.
o Decision making process
1. Identify a Problem: Problem: an obstacle that makes it difficult to achieve a desired goal or
purpose. Every decision starts with a problem, a discrepancy between an existing and a desired
condition.
2. Identify the Decision Criteria: Decision criteria are factors that are important to resolving the
problem.
3. Allocate Weights to the Criteria: If the relevant criteria aren’t equally important, the decision
maker must weigh the items in order to give them the correct priority in the decision.
4. Develop Alternatives: List viable alternatives that could solve the problem.
5. Analyze Alternatives: Once you identify the alternatives you need to analyze them using the
criteria established in Step 2.
6. Select an Alternative: Choose the alternative that generates the highest total in Step 5.
7. Implement the Alternative: Put the chosen alternative into action. Convey the decision to those
affected and get their commitment to it.
8. Evaluate Decision Effectiveness: Evaluate the result or outcome of the decision to see if the
problem was resolved. If it wasn’t resolved, what went wrong?
o Rational Decision Making: choices that are logical and consistent and maximize value. Assumptions of
rationality:
 Rational decision maker is logical and objective
 Problem faced is clear and unambiguous
 Decision maker would have clear, specific goal and be aware of all alternatives and
consequences
 The alternative that maximizes achieving this goal will be selected
 Decisions are made in the best interest of the organization
o Bounded rationality: decision making that’s rational, but limited by an individual’s ability to process
information
o Satisfice: accepting solutions that are “good enough”
o Intuitive Decision Making: making decisions on the basis of experience, feelings, and accumulated
judgment

o Evidence-based management (E B Mgt): the systematic use of the best available evidence to improve
management practice.
o Crowdsourcing: a decision-making approach where you solicit ideas and input from a network of
people outside of the traditional set of decision makers.
o Structured problems: straightforward, familiar, and easily defined problems
 o Programmed decisions: repetitive decisions that can be handled by a routine approach. Types of
programmed decisions:
 Procedure: a series of sequential steps used to respond to a well-structured problem
 Rule: an explicit statement that tells managers what can or cannot be done
 Policy: a guideline for making decisions
o Unstructured problems: problems that are new or unusual and for which information is ambiguous or
incomplete
o Nonprogrammed decisions: unique and nonrecurring and involve custom-made solutions
o Characteristic o Programmed Decisions o Nonprogrammed Decisions
o Type of problem o Structured o Unstructured
o Managerial level o Lower levels o Upper levels
o Frequency o Repetitive, routine o New, unusual
o Information o Readily available o Ambiguous or incomplete

o Goals o Clear, specific o Vague

o Time frame for solution o Short o Relatively long

o Solution relies on… o Procedures, rules, policies o Judgment and creativity

o Research has identified four different individual decision-making styles based on two dimensions:
 An individual’s way of thinking
 An individual’s tolerance for ambiguity
o The four styles are directive, analytic, conceptual and behavioral.
 Directive style: low tolerance for ambiguity and seek rationality
 Analytic style: seek rationality but have a higher tolerance for ambiguity
 Conceptual style: intuitive decision makers with a high tolerance for ambiguity
 Behavioral style: intuitive decision makers with a low tolerance for ambiguity
o Heuristics or “rules of thumb” can help make sense of complex, uncertain, or ambiguous information.
However, they can also lead to errors and biases in processing and evaluating information.
o Decision-making biases and errors:
 Overconfidence Bias: holding unrealistically positive views of oneself and one’s performance
 Immediate Gratification Bias: choosing alternatives that offer immediate rewards and avoid
immediate costs
 Anchoring Effect: fixating on initial information and ignoring subsequent information
 Selective Perception Bias: selecting, organizing and interpreting events based on the decision
maker’s biased perceptions
 Confirmation Bias: seeking out information that reaffirms past choices while discounting
contradictory information
 Framing Bias: selecting and highlighting certain aspects of a situation while ignoring other
aspects
 Availability Bias: losing decision-making objectivity by focusing on the most recent events
 Representation Bias: drawing analogies and seeing identical situations when none exist
 Randomness Bias: creating unfounded meaning out of random events
 Sunk Costs Errors: forgetting that current actions cannot influence past events and relate only
to future consequences
 Self-serving Bias: taking quick credit for successes and blaming outside factors for failures
  Hindsight Bias: mistakenly believing that an event could have been predicted once the actual
outcome is known (after-the-fact)
o Technology has changed the ability of managers to access information. Two technology driven cutting-
edge aides to decision making are:
 Design thinking: approaching management problems as designers approach design problems
 Big data and Artificial Intelligence: big data refers to huge and complex data sets now
available. Big data has opened the door to widespread use of artificial intelligence (A I).
 Big data: the vast amount of quantifiable data that can be analyzed by highly
sophisticated data processing. Can be a powerful tool in decision making, but collecting
and analyzing data for data’s sake is wasted effort
 Artificial Intelligence (A I) – uses computing power to solve complex problems. A I
systems have the ability to learn and have facilitated the use of new tools such as:
Machine learning, Deep learning and Analytics
o Machine Learning: A method of data analysis that automates analytical model building.
o Deep Learning: A subset of machine learning that use algorithms to create a hierarchical level of
artificial neural networks that simulate the function of the human brain.
o Analytics: The use of mathematics, statistics, predictive modeling, and machine learning to find
meaningful patterns in a data set.

CHAPTER 3

o Omnipotent view: managers are directly responsible for an organization’s success or failure
o Symbolic view: much of an organization’s success or failure is due to external forces outside managers’
control
o In reality, managers are neither all-powerful nor helpless. But their decisions and actions are
constrained. External constraints come from the organization’s environment and internal constraints
come from the organization’s culture
o Environment: institutions or forces outside of the organization that could potentially affect
performance.
 Environments differ on degree of environmental uncertainty
 Environmental uncertainty has two dimensions
 Degree of change
 Degree of complexity
o Environments can be either dynamic or stable. In a dynamic environment the components in an
organization’s environment change frequently. In a stable environment the components in an
organization’s environment change very little
o Environmental complexity looks at the number of components in an organization’s environment and the
extent of the knowledge the organization has about those components. Depending on the organizational
environment, managers may need to know a lot about the components, or very little.
o Those factors and forces outside the organization that affect its performance (external factors):
 Economic
 Demographic
 Political/Legal
 Sociocultural
 Technological
 Global
o Specific Environment: the part of the environment directly relevant to the achievement of
organizational goals. Most of management’s attention typically focuses on the specific environment. The
nature of stakeholder relationships is another way in which the environment influences managers. The
more obvious and secure these relationships, the more influence managers will have over organizational
outcomes. Stakeholders are any constituencies in the organization’s environment affected by an
organization’s decisions and actions. These groups have a stake in or are significantly influenced by
what the organization does. In turn, these groups can influence the organization. Management
researchers who have looked at this issue are finding that managers of high-performing companies tend
to consider the interests of all major stakeholder groups as they make decisions.
o The specific environment includes one or more of the following:
 Suppliers: Managers need to ensure a steady flow of inputs
 Customers: Organizations exist to meet customer needs
 Competitors: All organizations have competitors that they need to monitor
 Government agencies: Federal, state, and local governments influence what the organization
can and cannot do.
 Special interest groups: Special interest groups can have a significant impact on the
organization. Lobbyists, protestors, various action groups all effect change.
o Just as each individual has a unique personality—traits and characteristics influence the way we act and
interact with others. An organization, too, has a personality, which is referred to as organizational
culture. An organization’s culture can make employees feel included, empowered, and supported or it
can make them feel the opposite. Because culture can be a very powerful agent in organizations, it is
very important for managers to pay attention to it. Organizational culture: the shared values,
 principles, traditions, and ways of doing things that influence the way organizational members act and
that distinguish the organization from other organizations. First, culture is a perception. It’s not
something that can be physically touched or seen, but employees perceive it on the basis of what they
experience within the organization. Second, organizational culture is descriptive. It’s concerned with
how members perceive the culture and describe it, not with whether they like it. Finally, even though
individuals may have different backgrounds or work at different organizational levels, they tend to
describe the organization’s culture in similar terms. That’s the shared aspect of culture.
o Research shows there are six dimensions that appear to capture an organization’s culture:
 Adaptability
 Attention to detail
 Outcome orientation
 People orientation
 Team orientation
 Integrity
o Strong cultures: organizational cultures in which the key values are intensely held and widely shared.

Strong Cultures Weak Cultures

Values widely shared
Culture conveys consistent messages
about what’s important
Most employees can tell stories about
company history or heroes
Employees strongly identify with
culture
Strong connection between shared
values and behaviors
Values limited to a few people – usually top
management
Culture sends contradictory messages about
what’s important
Employees have little knowledge of company
history or heroes
Employees have little identification with culture
Little connection between shared values and
behaviors

CHAPTER 5
o Workforce diversity: the ways in which people in an organization are different from and similar to one
another.
o Types of diversity:
 Surface-level diversity: Easily perceived differences that may trigger certain stereotypes, but that
do not necessarily reflect the ways people think or feel. The demographic characteristics that we
tend to think of when we think of diversity—age, race, gender, ethnicity, and so on—are just the
tip of the iceberg. These demographic differences reflect surface-level diversity, which are
easily perceived differences that may trigger certain stereotypes but that do not necessarily
reflect the ways people think or feel. Such surface-level differences in characteristics can affect
the way people perceive others, especially when it comes to assumptions or stereotyping.
 Deep-level diversity: Differences in values, personality, and work preferences. As people get to
know one another, these surface-level differences become less important and deep-level
diversity—differences in values, personality, and work preferences—becomes more important.
These deep-level differences can affect the way people view organizational work rewards,
communicate, react to leaders, negotiate, and generally behave at work.
o Why is Managing Workplace Diversity So Important?
 People management:
 Better use of employee talent
 Increased creativity in team problem-solving
 Ability to attract and retain employees of diverse backgrounds
 Organizational performance:
 Reduced costs associated with high turnover,
 absenteeism, and lawsuits
 Enhanced problem-solving ability Improved system flexibility
 Strategic:
 Increased understanding of the marketplace, which improves ability to better market to
diverse consumers
 Potential to improve sales growth and increase market share
 Potential source of competitive advantage because of improved innovation efforts
 Viewed as moral and ethical; the “right” thing to do
o Workforce Diversity:
 Age: Both Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment
Act of 1967 prohibit age discrimination. One issue with older workers is the perception that
people have of those workers. Perceptions such as they’re sick more often and they can’t work as
hard or as fast as younger employees—perceptions that are inaccurate. Employers have mixed
feelings about older workers. On the positive side, they believe that older workers bring a
number of good qualities to the job, including experience, judgment, a strong work ethic, and a
commitment to doing quality work. But there remain many employers who also view older
workers as not being flexible or adaptable and being more resistant to new technology. The
challenge for managers is overcoming those misperceptions of older workers and the widespread
belief that work performance and work quality decline with age.
 Gender: Women (47%) and men (53%) now each make up almost half of the workforce. Yet,
gender diversity issues are still quite prevalent in organizations. The latest information shows
that women’s median earnings were 83 percent of male full-time wage and salary workers. And
research by Catalyst found that men start their careers at higher levels than women. And after
starting out behind, women don’t ever catch up. Men move up the career ladder further and faster
as well. Few, if any, important differences between men and women affect job performance. But
to accommodate their family responsibilities, working mothers are more likely to prefer part-
time work, flexible work schedules, and telecommuting. They also prefer jobs that encourage
work-life balance.
 
Disability/abilities: the Americans With Disabilities Act of 1990 prohibits discrimination against
persons with disabilities.
 Religion: Title VII of the Civil Rights Act prohibits discrimination on the basis of religion
 Other types of diversity: diversity refers to any dissimilarities or differences that might be
present in a workplace. Diversity refers to any dissimilarities or differences that might be present
in a workplace. Other types of workplace diversity that managers might confront and have to
deal with include socioeconomic background (social class and income-related factors), team
members from different functional areas or organizational units, physical attractiveness,
obesity/thinness, job seniority, or intellectual abilities.
o Challenges in Managing Diversity
 Bias: a tendency or preference toward a particular perspective or ideology. . It’s generally seen
as a “one-sided” perspective. Our personal biases cause us to have preconceived opinions about
people or things. Such preconceived opinions can create all kinds of inaccurate judgments and
attitudes.
 Prejudice: a preconceived belief, opinion, or judgment toward a person or a group of people. .
Our prejudice can be based on all the types of diversity we discussed: race, gender, ethnicity,
age, disability, religion, sexual orientation, or even other personal characteristics.
 Stereotyping: judging a person based on a perception of a group to which that person belongs
 Discrimination: when someone acts out their prejudicial attitudes toward people who are the
targets of their prejudice
Types of Definition Examples from Organizations
Discrimination
Discriminatory Actions taken by representatives of the Older workers may be targeted for
policies or practices organization that deny equal layoffs because they are highly paid and
opportunity to perform or unequal have lucrative benefits.
rewards for performance
Sexual harassment Unwanted sexual advances and other Salespeople at one company went on
verbal or physical conduct of a sexual company-paid visits to strip clubs,
nature that create a hostile or offensive brought strippers into the office to
work environment celebrate promotions, and fostered
pervasive sexual rumors.
Intimidation Overt threats or bullying directed at African American employees at some
members of specific groups of companies have found nooses hanging
employees over their workstations.
Mockery and Jokes or negative stereotypes; Arab Americans have been asked at
insults sometimes the result of jokes taken too work whether they were carrying
far bombs or were members of terrorist
organizations.

Exclusion Exclusion of certain people from job
opportunities, social events,
discussions, or informal mentoring; can
occur unintentionally
Incivility Disrespectful treatment, including
behaving in an aggressive manner,
interrupting the person, or ignoring his
or her opinions
Many women in finance claim they are
assigned to marginal job roles or are
given light workloads that don’t lead to
promotion.
Female team members are frequently
cut off in meetings.
o Glass ceiling: the invisible barrier that separates women and minorities from top management positions.
Decision makers in organizations need to actively take steps to eliminate this. The idea of a “ceiling”
means something is blocking upward movement and the idea of “glass” is that whatever’s blocking the
way isn’t immediately apparent. Research on the glass ceiling has looked at identifying the
organizational practices and interpersonal biases that have blocked women’s advancement. Findings
from those studies have ranged from lack of mentoring to sex stereotyping, views that associate
masculine traits with leader effectiveness, and bosses’ perceptions of family–work conflict.

o Workplace diversity needs to be more than understanding and complying with federal laws. The fact is
that federal laws have contributed to some of the social change we’ve seen over the last 50-plus years.
Failure to comply with federal laws can be costly and damaging to an organization’s bottom line and
reputation. It’s important that managers know what they can and cannot do legally and ensure that all
employees understand as well. However, effectively managing workplace diversity needs to be more
than understanding and complying with federal laws. Organizations that are successful at managing
diversity use additional diversity initiatives and programs.
o Workplace Diversity Initiatives
 Some businesses do effectively manage diversity
 Some organizations mandate diversity training every month
 There are numerous diversity initiatives that firms can use to increase the diversity of their
workforce including:
 Top management commitment to diversity
 Mentoring
 Diversity training
 Employee resource groups (E R G)
o Top management commitment is probably the most important factor in achieving a diverse workforce.
Management needs to integrate diversity into all aspects of the firm’s business, including all
stakeholders and the supply chain. Policies and procedures should be in place to address issues
immediately
o Mentoring: a process whereby an experienced organizational member (a mentor) provides advice and
guidance to a less experienced member (a protégé)
o Diversity skills training: specialized training to educate employees about the importance of diversity
and to teach them skills for working in a diverse workplace
o Employee resource groups are made up of employees connected by some common dimension of
diversity. Such groups typically are formed by the employees themselves, not the organizations.
However, it’s important for organizations to recognize and support these groups. Why are they so
prevalent? The main reason is that diverse groups have the opportunity to see that their existence is
acknowledged and that they have the support of people within and outside the group. Individuals in a
minority often feel invisible and not important in the overall organizational scheme of things. Employee
resource groups provide an opportunity for those individuals to have a voice.
 FINALS SYLLABUS

CHAPTER 6 MANAGING SOCIAL RESPONSIBILITY AND ETHICS

o Social obligation: when a firm engages in social actions because of its obligation to meet certain
economic and legal responsibilities. The organization does what it’s obligated to do and nothing more.
o Classical view: the view that management’s only social responsibility is to maximize profits
o Socioeconomic view: the view that managers’ social responsibilities go beyond making profits to
include protecting and improving society’s welfare. This view is based on the belief that corporations
are not independent entities responsible only to stockholders, but have an obligation to the larger
society.
o Social responsiveness: when a company engages in social actions in response to some popular social
need. Managers are guided by social norms and values and make practical, market-oriented decisions
about their actions.
o Social responsibility: A business’s intention, beyond its legal and economic obligations, to do the right
things and act in ways that are good for society. We define social responsibility as a business’s
intention, beyond its legal and economic obligations, to do the right things and act in ways that are good
for society. A socially responsible organization does what is right because it feels it has an ethical
responsibility to do so.
 Blank Social Responsibility Social Responsiveness
Major consideration Ethical Pragmatic
Focus Ends Means
Emphasis Obligation Responses
Decision framework Long-term Medium- and short-term

o Green management: managers consider the impact of their organization on the natural environment.
Managers and organizations can do many things to protect and preserve the natural environment. Some
do no more than what is required by law; that is, they fulfill their social obligation. Organizations go
green by:
 Legal (light green) approach is simply doing what is required legally. In this approach, which
illustrates social obligation, organizations exhibit little environmental sensitivity. They obey
laws, rules, and regulations without legal challenge and that’s the extent of their being green.
 Market approach: As an organization becomes more sensitive to environmental issues, it may
adopt the market approach and respond to environmental preferences of customers. Whatever
customers demand in terms of environmentally friendly products will be what the organization
provides.
 Stakeholder approach: an organization works to meet the environmental demands of multiple
stakeholders such as employees, suppliers, or the community.
 Activist approach: it looks for ways to protect the earth’s natural resources. The activist
approach reflects the highest degree of environmental sensitivity and illustrates social
responsibility.
More than 7,500 companies around the globe now voluntarily report their efforts in promoting
environmental sustainability using the guidelines developed by the Global Reporting Initiative (GRI).
These reports, which can be found on the GRI website describe the numerous green actions of these
 organizations. Another way organizations show their commitment to being green is through pursuing
standards developed by the nongovernmental International Organization for Standardization (ISO).
Organizations that want to become ISO 14000 compliant must develop a total management system for
meeting environmental challenges. One final way to evaluate a company’s green actions is to use the
Global 100 list of the most sustainable corporations in the world. To be named to this list a company has
displayed a superior ability to effectively manage environmental and social factors.
o

CHAPTER 8 FOUNDATION OF PLANNING

o Planning: management function that involves setting goals, establishing strategies for achieving those
goals, and developing plans to integrate and coordinate work activities. It’s concerned with both ends
(what) and means (how). When we use the term planning, we mean formal planning. In formal planning,
specific goals covering a specific time period are defined. These goals are written and shared with
organizational members to reduce ambiguity and create a common understanding about what needs to be
done. Finally, specific plans exist for achieving these goals.
o Formal planning
 Specific, time-oriented goals
 Goals written and shared
o Why Do Managers Plan?
 Planning provides direction to managers and nonmanagers alike. When employees know what
their organization or work unit is trying to accomplish and what they must contribute to reach
goals, they can coordinate their activities, cooperate with each other, and do what it takes to
accomplish those goals.
 It reduces uncertainty by forcing managers to look ahead, anticipate change, consider the impact
of change, and develop appropriate responses. Although planning won’t eliminate uncertainty,
managers plan so they can respond effectively.
 It minimizes waste and redundancy. When work activities are coordinated around plans,
inefficiencies become obvious and can be corrected or eliminated.
 It establishes the goals or standards used in controlling. When managers plan, they develop
goals and plans. When they control, they see whether the plans have been carried out and the
goals met.
o Relation of planning and performance
 Formal planning is associated with positive financial results hence higher profits, higher return
on assets, and so forth.
 Quality of planning/implementation more important than the extent of it. Doing a good job of
planning and implementing those plans plays a bigger part in high performance than how much
planning is done.
 External factors can reduce the impact of planning on performance. When external forces—think
governmental regulations or powerful labor unions—constrain managers’ options, it reduces the
impact planning has on an organization’s performance.
 Planning-performance relationship seems to be influenced by the planning time frame. It seems
that at least four years of formal planning is required before it begins to affect performance.
o Goals
 Goals (objectives) are desired outcomes or targets. They guide management decisions and form
the criterion against which work results are measured. That’s why they’re often described as the
essential elements of planning. You have to know the desired target or outcome before you can
 establish plans for reaching it. They provide management with direction and serve as a means to
measure progress.
 Stated Objectives: Official statements of what the organization wants the public to believe.
 Real Objectives: Objectives that the organization actually pursues.
 Approach to setting objectives:
 Traditional objective-setting: an approach to setting objectives in which top managers
set objectives that then flow down through the organization and become subgoals for
each organizational area. Turning broad strategic objectives into departmental, team, and
individual goals can be a difficult and frustrating process. Another problem with
traditional objective-setting is that when top managers define the organization’s goals in
broad terms—such as achieving “sufficient” profits or increasing “market leadership”—
these ambiguous objectives must be made more specific as they flow down through the
organization. Managers at each level define the objectives and apply their own
interpretations and biases as they make them more specific. However, what often happens
is that clarity is lost as the objectives make their way down from the top of the
organization to lower levels.
 Management by objectives (MBO): a process of setting mutually agreed-upon goals
and using those goals to evaluate employee performance. MBO involves setting
objectives that cascade down through the organization that are translated into operational
objectives at each level. MBO programs have four elements: goal specificity,
participative decision making, an explicit time period, and performance feedback. Instead
of using goals to make sure employees are doing what they’re supposed to be doing,
MBO uses goals to motivate them as well. The appeal is that it focuses on employees
working to accomplish goals they’ve had a hand in setting.
o Plans are documents that outline how goals are going to be met. They usually include resource
allocations, schedules, and other necessary actions to accomplish the goals. As managers plan, they
develop both goals and plans. The types of plans are:
 Breadth
 Strategic plans: plans that apply to the entire organization and establish the
organization’s overall goals
 Operational plans: plans that encompass a particular operational area of the organization
 Time frame
 Long-term plans: plans with a time frame beyond three years
 Short-term plans: plans covering one year or less
 Specificity
 Specific plans are clearly defined and leave no room for interpretation. A specific plan
states its objectives in a way that eliminates ambiguity and problems with
misunderstanding.
 Directional plans are flexible plans that set out general guidelines. They provide focus
but don’t lock managers into specific goals or courses of action.
 Frequency of use
 Single-use plans: a one-time plan specifically designed to meet the needs of a unique
situation
 Standing plans: ongoing plans that provide guidance for activities performed repeatedly.
Standing plans include policies, rules, and procedures.
o Three contingency factors affect planning
 Level in the organization
 Degree of environmental uncertainty
 Length of future commitments
o How Can Managers Plan Effectively in Dynamic Environments?
  Develop plans that are specific but flexible. . Although this may seem contradictory, it’s not. To
be useful, plans need some specificity, but the plans should not be set in stone. Managers need to
recognize that planning is an ongoing process. The plans serve as a road map, although the
destination may change due to dynamic market conditions.
 Keep planning even when the environment is uncertain, it’s important to continue formal
planning in order to see any effect on organizational performance. It’s the persistence in planning
that contributes to significant performance improvement. Why? It seems that, as with most
activities, managers “learn to plan,” and the quality of their planning improves when they
continue to do it.
 Allow lower organizational levels to set goals and develop plans. Make the organizational
hierarchy flatter to effectively plan in dynamic environments. This means allowing lower
organizational levels to set goals and develop plans because there’s little time for goals and plans
to flow down from the top. Managers should teach their employees how to set goals and to plan
and then trust them to do it.
o How Can Managers Use Environmental Scanning?
 A manager’s analysis of the external environment may be improved by environmental
scanning, which involves screening information to detect emerging trends. One of the fastest-
growing forms of environmental scanning is competitive intelligence, gathering information
about competitors that allows managers to anticipate competitors’ actions rather than merely
react to them.
 In a changing global business environment, environmental scanning and obtaining competitive
intelligence can be quite complex, especially since information must be gathered from around the
world. However, one thing managers could do is subscribe to news services that review
newspapers and magazines from around the globe and provide summaries to client companies.
 Managers do need to be careful about the way information, especially competitive intelligence, is
gathered to prevent any concerns about whether it’s legal or ethical.
o Increasingly, we’re finding that companies are making strategic changes based on data, as distinct from
day-to-day decisions. These leaders understand the importance of business intelligence in their planning
process. Sources of business intelligence are company records, industry trends, and competitors’
financial (for example, profits) or market (for example, market penetration) data. How do managers
make sense of vast amounts of data? Managers can use digital tools to make sense of business
intelligence data. Digital tools refer to technology, systems, or software that allow the user to collect,
visualize, understand, or analyze data. Specific examples of digital tools include software such as
Microsoft Excel, online services such as Google Analytics, or networks that connect computers and
people, such as social media.
 Business intelligence: data that managers can use to make more effective strategic decisions
 Digital tools: technology, systems, or software that allow the user to collect, visualize,
understand, or analyze data
 Social Media: Facebook, LinkedIn, Twitter, and other social media sites are becoming
increasingly important places to extract competitive intelligence
o Virtual Reality: a three-dimensional, interactive, computer-generated experience that occurs within a
simulated environment. Potential applications include interviewing job candidates, virtual meetings,
complex job training, and previewing office or plant layouts.

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