Business Preparation PDF

Introduction to Business administration
Prof. Adriano Cecconi

adriano.cecconi@unive.it
© McGraw Hill 1
Contribution of the course to the overall
degree programme goals
Introduction to Business Administration course

presents a thorough and systematic introduction to
contemporary principles and practices of managing. It
focuses on the basic roles, skills and functions of
management, with special attention to managerial
responsibility for effective and efficient achievement of
organizational goals. Special attention is given to
organisation culture, planning and decision-making, and
controlling. This course analyzes multiple aspects of
how managers plan, organize and control activities
within organizations and introduces the students to the
fundamentals of financial accounting.
© McGraw Hill 22
Expected learning outcomes
After attending this course, the students can expect to be able to:
• Describe what managers do and distinguish between levels of
management, and understand principal managerial tasks
• Explain the role of managers in shaping organizational culture
• Understand the importance of ethical behavior and corporate social
responsibility
• Discuss the differences between national cultures, and understand
the challenges managers face in international environment
• Understand the nature of managerial decision-making
• Differentiate between corporate-, business- and functional-level
strategies
• Describe different types of organisational structures
• Define organisational controls, and understand how control process
is organized
• Understand fundamentals of financial accounting, describe different
ways in which entities can be legally organized, outline the form and
properties of income statements and balance sheets
© McGraw Hill 33
Pre-requirements
Good understanding of English language
© McGraw Hill 44
Contents
1. Managers and managing

2. Values, Attitudes, Emotions and Culture
3. Ethics and Social responsibility
4. Managing in multicultural and global environment
5. Decision-making, learning, creativity and
entrepreneurship
6. Planning and strategizing
7. Functional strategies for competitive advantage
8. Managing organizational structure and culture
9. Organizational control
10. Fundamentals of financial accounting
© McGraw Hill 55
Referral texts
The main reference for the course is “Contemporary

Management” (2020) by Gareth R. Jones and Jennifer
M. George, McGraw Hill; 11th edition, Chapters 1, 3 -11.
For the topic of “Fundamentals of financial accounting”

(week 5 of the course), the textbook is “Financial
Accounting” (2020) by David Alexander and Christopher
Nobes, Pearson, 7th edition, Chapters 1 and 2.
Additional materials will be distributed by the course
instructor via moodle platform.
© McGraw Hill 66
Assessment methods
The final grade for the course is based on the final
written exam. The written exam consists of multiple-
choice questions to verify a student’s knowledge and
understanding.
Written exam is closed-book. Students cannot use

textbook, slides, notes or browse the internet during the
exam.
Number of questions: 15 + 1 very specific question

2 points per each correct answer; 0 points for each
wrong or not given answer
Time available to submit the test: 30 minutes
Maximum grade: 30 e Lode “30 with honors”
© McGraw Hill 77
Because learning changes everything. ®
Chapter 1
Managers and
Managing
© 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom. No
reproduction or further distribution permitted without the prior written consent of McGraw Hill.
Learning Objectives 1
1. Describe what management is, why management is

important, what managers do, and how managers use
organizational resources efficiently and effectively to
achieve organizational goals.
2. Distinguish among planning, organizing, leading, and
controlling (the four principal managerial tasks), and
explain how managers’ ability to handle each one affects
organizational performance.
3. Differentiate among three levels of management, and
understand the tasks and responsibilities of managers at
different levels in the organizational hierarchy.
© McGraw Hill 9
4. Distinguish among three kinds of managerial skill, and

explain why managers are divided into different
departments to perform their tasks more efficiently and
effectively.
5. Discuss some major changes in management practices
today that have occurred as a result of globalization and
the use of advanced technologies.
6. Discuss the principal challenges managers face in today’s
increasingly competitive global environment.
© McGraw Hill 10
What Is Management? 1
Organizations
• Organizations are collections of people who work
together and coordinate their actions to achieve a
wide variety of goals or desired future outcomes.
• All managers work in organizations.
Managers
• Managers are the people responsible for supervising
the use of an organization’s resources to meet its
goals.
© McGraw Hill 11
12
General definitions (1)

1) What a company is?
• A company is a legal entity formed by a group of individuals

to engage in and operate a business—commercial or
industrial—enterprise. A company may be organized in
various ways for tax and financial liability purposes depending
on the corporate law of its jurisdiction.
• 2) What an enterprise is?
• Enterprise refers to a for-profit business started and run by an

entrepreneur. And we will often say that people running such
businesses are enterprising. The roots of the word lie in the
French word entreprendre (from prendre), meaning ‘to
undertake’, which in turn comes from the Latin “inter
prehendere” (seize with the hand).
© McGraw Hill 12
13
General definitions (2)
• 2) What an entrepreneur is?

• He / she is the owner of the enterprise.
The manager can coincide or not with
the entrepreneur
© McGraw Hill 13
Management
• Management includes the planning, organizing,
leading, and controlling of human and other resources
to achieve organizational goals effectively and
efficiently.
• What difference can a manager make? Zander Lurie,
SurveyMonkey CEO.
© McGraw Hill 14
Resources.
• Include assets such as:
1. People and their skills, know-how, and experience.
2. Machinery.
3. Raw materials.
4. Computers and information technology.
5. Patents, financial capital, and loyal customers and employees.
© McGraw Hill 15
Achieving High Performance: A Manager’s
Goal 1
Organizational performance:
• A measure of how efficiently and effectively managers
use available resources to satisfy customers and
• At SurveyMonkey, Zander Lurie’s goal is to continue
with cutting-edge technology (AI), to promote
innovation, and to grow the global market.
© McGraw Hill 16
Achieving High Performance: A Manager’s
Goal 2
Efficiency:
A measure of how well or how productively resources
are used to achieve a goal.
• Wendy’s fat fryers use less oil and are quicker.
Effectiveness:
A measure of the appropriateness of the goals an
organization is pursuing and the degree to which the
organization achieves those goals.
• McDonald’s all-day breakfast success.
© McGraw Hill 17
Figure 1.1 Efficiency, Effectiveness, and
Performance in an Organization
High-performing organizations are efficient and effective.
Access the text alternative for slide images.
© McGraw Hill 18
Why Study Management? 1
1. Individuals generally learn through personal

experience or the experiences of others.
By studying management in school, you are

exposing yourself to the lessons others have
learned.
© McGraw Hill 19
Why Study Management? 2
2. The economic benefits of becoming a good

manager are also impressive. In the United
States, general managers earn a median
wage of $100,930 with a projected growth rate
in job openings of 7% to 10% between now
and 2028.
3. Learning management principles can help you
make good decisions in nonwork contexts.
© McGraw Hill 20
Figure 1.2 Four Tasks of Management
© McGraw Hill 21
Steps in the Planning Process
1. Decide which goals the organization will
pursue.
2. Decide what strategies to adopt to attain those
goals.
3. Decide how to allocate organizational
resources.
Managers identify and select appropriate
organizational goals and develop strategies
for how to achieve high performance.
© McGraw Hill 22
Organizing 1
Organizing:
• Structuring working relationships so organizational
members interact and cooperate to achieve
organizational goals.
Managers deciding how best to organize

resources, particularly human resources.
© McGraw Hill 23
Organizing 2
Organizational structure
• A formal system of task and reporting relationships
that coordinates and motivates organizational
members so that they work together to achieve
• CEO Laurie of SurveyMonkey organizes in
coordination with employee opinions.
© McGraw Hill 24
Leading
• Articulating a clear vision and energizing and enabling
organizational members so they understand the part
they play in achieving organizational goals.
• Involves managers using their power, personality,
influence, persuasion, and communication skills to
coordinate people and groups.
© McGraw Hill 25
Controlling 1
Controlling:
• Evaluating how well Managers monitor
an organization is performance of
achieving its goals individuals,
and taking action to departments, and the
maintain or improve organization as a whole
performance. to determine if they are
meeting performance
standards.
© McGraw Hill 26
Controlling 2
The outcome of the control process is the

ability to measure performance accurately and
regulate organizational efficiency and
effectiveness.
Managers must decide which goals to measure.
© McGraw Hill 27
Example: Match Group
Mandy Ginsberg is the CEO of Match Group (Match,
OKCupid, Hinge, Tinder).
Her understanding of advanced technology and employment
of data scientists has improved the dating sites.
She is open to international expansion.
She employs locals who bring their cultural knowledge to the

table.
The profits of Match Group reflect Ginsberg’s success.
© McGraw Hill 28
Managerial Roles Identified: Decisional
Type of Role Specific Role Examples of Role Activities

Decisional Entrepreneur Commit organizational resources to develop innovative goods
and services; decide to expand internationally to obtain new
customers for the organization’s products.
Decisional Disturbance handler Move quickly to take corrective action to deal with unexpected
problems facing the organization from the external
environment, such as a crisis like an oil spill, or from the
internal environment, such as producing faulty goods or
services.
Decisional Resource allocator Allocate organizational resources among different tasks and
departments of the organization; set budgets and salaries of
middle and first-level managers.
Decisional Negotiator Work with suppliers, distributors, and labor unions to reach
agreements about the quality and price of input, technical, and
human resources; work with other organizations to establish
agreements to pool resources to work on joint projects.
Table 1.1 Managerial Roles Identified by Mintzberg
© McGraw Hill 29
Managerial Roles Identified: Interpersonal

Interpersonal Figurehead Outline future organizational goals to employees at company
meetings; open a new corporate headquarters building; state
the organization’s ethical guidelines and the principles of
behavior employees are to follow in their dealings with
customers and suppliers.
Interpersonal Leader Provide an example for employees to follow; give direct
commands and orders to subordinate; make decisions
concerning the use of human and technical resources;
mobilize employee support for specific organizational goals.
Interpersonal Liaison Coordinate the work of managers in different departments;
establish alliances between different organizations to share
resources to produce new goods and services; reach
agreements about the quality and price of input, technical, and
human resources; work with other organizations to establish
agreements to pool resources to work on joint projects.
© McGraw Hill 30
Managerial Roles Identified: Informational

Informational Monitor Evaluate the performance of managers in different tasks and
take corrective action to improve their performance; watch for
changes occurring in the external and internal environments
that may affect the organization in the future.
Informational Disseminator Inform employees about changes taking place in the external
and internal environments that will affect them and the
organization; communicate to employees the organization’s
vision and purpose.
Informational Spokesperson Launch a national advertising campaign to promote new goods
and services; give a speech to inform the local community
about the organization’s future intentions.
© McGraw Hill 31
Levels and Skills of Managers 1
Department:
• A group of managers and employees who work
together and possess similar skills or use the same
knowledge, tools, or techniques.
• Example: the manufacturing, accounting, engineering,
or marketing department.
© McGraw Hill 32
Figure 1.3 Levels of Managers
© McGraw Hill 33
Levels of Management 1
First-line managers (often called supervisors):

Responsible for the daily supervision of the
nonmanagerial employees.
• Paint foreman overseeing a crew of painters at a university.
Middle managers:
Supervises first-line managers.
Responsible for finding the best way to use resources to
• High school principal or a marketing manager.
© McGraw Hill 34
Levels of Management 2
Top managers:
Responsible for the performance of all departments.
Establish organizational goals.
Decide how different departments should interact.
Monitor how well middle managers in each department
use resources to achieve goals.
• President of a university.
© McGraw Hill 35
Levels and Skills of Managers 2
Figure 1.4 Relative

Amount of Time
Managers Spend
on the Four
Managerial Tasks.
© McGraw Hill 36
Types of Managerial Skills
Conceptual skills:
• The ability to analyze and diagnose a situation and
distinguish between cause and effect.
Human skills:
• The ability to understand, alter, lead, and control the
behavior of other individuals and groups.
Technical skills:
• Job-specific knowledge and techniques required to
perform an organizational role.
© McGraw Hill 37
Figure 1.5: Types and Levels of Managers
© McGraw Hill 38
Core Competency
Specific set of departmental skills, knowledge and
experience that allows one organization to outperform
another.
Skills for a competitive advantage:
• Dell’s materials management produced PCs at lower cost than
competitors.
© McGraw Hill 39
Recent Changes in Management Practices
Restructuring:
• Downsizing an organization by eliminating the jobs of
large numbers of top, middle, and first-line managers
and nonmanagerial employees.
Outsourcing:
• Contracting with another company, usually abroad, to
perform a work activity the company previously
performed itself.
© McGraw Hill 40
Empowerment and Self-Managed
Teams
Empowerment:
• Empowerment involves giving employees more authority
and responsibility over how they perform their work
activities.
• Example: Valve Corporation has no managers, no
hierarchy or top-down control. Employees pick their own
projects.
Self-managed teams:
• Groups of employees who assume collective responsibility
for organizing, supervising, and controlling their own work
activities.
© McGraw Hill 41
Challenges for Management in a Global
Environment
Build a competitive advantage.
Maintain ethical and socially responsible standards.
Manage a diverse workforce.
Utilize new technologies.
Practice global crisis management.
© McGraw Hill 42
Building Competitive Advantage
Competitive advantage:
• Ability of one organization to outperform other
organizations because it produces desired goods or
services more efficiently and effectively than
competitors.
Innovation:
• The process of creating new or improved goods and
services or developing better ways to produce or
provide them.
© McGraw Hill 43
Building Blocks of Competitive Advantage
Competitive Advantage
Efficiency
Innovation and Flexibility
Responsiveness to customers
Quality
© McGraw Hill 44
Turnaround Management
Creation of a new vision for a struggling company using
a new approach to planning and organizing to make
better use of a company’s resources and allow it to
survive and eventually prosper.
• CEO Niccol has turned Chipotle around after food scares
in 2015 and 2017.
© McGraw Hill 45
Maintaining Ethical and Socially
Responsible Standards
Managers are under considerable pressure to
make the best use of resources.
Too much pressure may induce managers to
behave unethically and even illegally.
• Nudges as ethical behavior tools.
© McGraw Hill 46
Managing a Diverse Workforce
To create a highly trained and motivated
workforce, managers must establish human
resource management (HRM) procedures that
are legal and fair and do not discriminate against
organizational members.
• Accenture earned top spot (out of 100
companies) for second year on Refinitiv’s
Diversity and Inclusion Index.
© McGraw Hill 47
Utilizing New Technologies
Efficient and effective technologies that link and
enable managers and employees to better
perform their jobs, regardless of role.
UPS uses ORION.
• A GPS system that optimizes drivers’ routes.
© McGraw Hill 48
Practicing Global Crisis Management 1
1. Create teams to facilitate rapid decision- making

and communication.
2. Establish the organizational chain of command
and reporting relationships necessary to mobilize
a fast response.
3. Recruit and select the right people to lead and
work in such teams.
4. Develop bargaining and negotiating strategies to
manage the conflicts that arise.
© McGraw Hill 49
Practicing Global Crisis Management 2
Natural causes: Human causes:

Crises that arise Human-created crises
because of natural result from factors such as
causes, including industrial pollution, poor
hurricanes, attention to worker and
earthquakes, famines, workplace safety, global
and diseases. warming, and the
destruction of the natural
habitat or environment, and
geopolitical tensions and
terrorism.
© McGraw Hill 50
www.mheducation.com
Chapter 3
Values, Attitudes,
Emotions, and Culture:
The Manager as a Person
Learning Objectives
1. Describe the various personality traits that affect how
managers think, feel, and behave.
2. Explain what values and attitudes are and describe their
impact on managerial action.
3. Appreciate how moods and emotions influence all
members of an organization.
4. Describe the nature of emotional intelligence and its role
in management.
5. Define organizational culture and explain how managers
both create and are influenced by organizational culture.
© McGraw Hill 2
Enduring Characteristics: Personality
Traits
Personality traits:
• Particular tendencies to feel, think, and act in
certain ways.
Managers’ personalities influence their behavior and
their approach to managing people and resources.
© McGraw Hill 3
Big Five Personality Traits 1
Figure 3.1: The Big Five Personality Traits

Managers’ personalities can be described by determining which point on each of
the following dimensions best characterizes the manager in question.
© McGraw Hill 4
Personality traits that enhance managerial

effectiveness in one situation may actually
impair it in another.
© McGraw Hill 5
Extraversion:
• Tendency to experience positive emotions and moods
and feel good about oneself and the rest of the world.
• Someone who sees the good even in the face of
troubles, who shows friendliness and openness to all.
© McGraw Hill 6
Negative affectivity:
• Tendency to experience negative emotions and
moods, feel distressed, and be critical of oneself and
others.
• Someone who is pessimistic, ready to fail.
© McGraw Hill 7
Agreeableness:
• Tendency to get along well with others.
Conscientiousness:
• Tendency to be careful, scrupulous, and persevering.
© McGraw Hill 8
Openness to experience:
Tendency to be original, have broad interests, be open
to a wide range of stimuli, be daring, and take risks.
Innovative persons, entrepreneurs.
• Marianne Harrison, CEO of John Hancock.
© McGraw Hill 9
Figure 3.2: Measures of

Extraversion, Agreeableness,
Conscientiousness, and
Openness to Experience
© McGraw Hill Source: L. R. Goldberg, Oregon Research Institute, http://ipip.ori.org/ipip/. 10

Will I be a successful manager?

• Successful managers occupy a variety of positions on
the Big Five personality trait continuum.
• To work well together inside and outside of the
organization, members of the organization must
understand and appreciate the fundamental ways in
which people differ one another.
© McGraw Hill 11
Other Personality Traits That Affect
Managerial Behavior 1
Internal locus of control:

• Belief that you are responsible for your own fate.
• Own actions and behaviors are major and decisive
determinants of job outcomes.
• Essential trait for managers.
• The buck stops here!
© McGraw Hill 12
External locus of control:

• The tendency to locate responsibility for one’s fate in
outside forces and to believe one’s own behavior has
little impact on outcomes.
• Wasn’t my fault!
© McGraw Hill 13
Self-esteem:
• The degree to which people feel good about
themselves and their capabilities.
High self-esteem causes a person to feel

competent, deserving and capable.
• Desirable for managers.
People with low self-esteem have poor opinions

of themselves and are unsure about their
capabilities.
© McGraw Hill 14
Need for achievement:

The extent to which an individual has a strong desire to
perform challenging tasks well and to meet personal
standards for excellence.
• High needs are assets for first-line and middle managers.
Need for affiliation:

The extent to which an individual is concerned about
establishing and maintaining good interpersonal relations,
being liked, and having other people get along.
• High levels are undesirable in managers.
© McGraw Hill 15
Need for power:

The extent to which an individual desires to control or
influence others.
• High needs are important for upper-level managers.
© McGraw Hill 16
Additional Personality Assessments
Effective tools in helping managers assess

employees, thereby contributing to an organization’s
success:
Myers-Briggs Type Indicator (MBTI):
• Measures preferences for introversion versus extroversion,
sensation versus intuition, thinking versus feeling, and judging
versus perceiving.
DiSC Inventory Profile:

• Behavior style is described in terms of dominance, influence,
steadiness, and conscientiousness (DiSC).
© McGraw Hill 17
Values, Attitudes, and Moods and
Emotions
Values:
• Describe what managers try to achieve through work and
how they think they should behave.
Attitudes:
• Capture managers’ thoughts and feelings about their
specific jobs and organizations.
Moods and Emotions:

• Encompass how managers actually feel when they are
managing.
© McGraw Hill 18
Values: Terminal and Instrumental 1
Terminal values:
A lifelong goal or objective that an individual seeks to achieve.
• Examples: Financial security, professional excellence, sense of
accomplishment, self-respect.
Lead to the formation of norms.
Instrumental values:
A mode of conduct that an individual seeks to follow.
• Examples: Honesty, integrity, fairness, hard-working.
© McGraw Hill 19
Norms:
Important unwritten, informal codes of conduct guiding
people how to act in particular situations.
• Examples: Shake hands when you meet someone, make direct eye
contact when speaking to someone, dress appropriately for the
environment you are in.
Changes with environment, situation, and culture.
© McGraw Hill 20
Value system:
• The terminal and
instrumental values that
are guiding principles in
an individual’s life.
• What a person is striving
to achieve in life and
how they want to
behave.
© McGraw Hill 21
Attitudes 1
Managers’ attitudes about their jobs and

organizations.
Affects how they approach their jobs.
Two of the most important attitudes:
1. Job satisfaction.
2. Organizational commitment.
© McGraw Hill 22
Attitudes 2
Job satisfaction:
• A collection of feelings and beliefs that managers have
about their current jobs.
Managers high on job satisfaction believe their jobs

have many desirable features or characteristics.
Upper managers, in general, tend to be more satisfied
with their jobs than entry-level employees.
© McGraw Hill 23
Attitudes 3
Job satisfaction:
Two reasons it is important for managers to satisfied
with their jobs:
• Perform Organizational Citizenship Behaviors (OCBs).
• Less likely to quit, reducing management turnover.
© McGraw Hill 24
Attitudes 4
Organizational citizenship behaviors (OCBs):

• Behaviors that are not required of organizational
members but that contribute to and are necessary for
organizational efficiency, effectiveness, and
competitive advantage.
• Above and beyond the call of duty.
© McGraw Hill 25
Attitudes 5
Figure 3.3: Sample items from Two Measures of Job Satisfaction
Source: D. J. Weiss et al., Manual for the Minnesota Satisfaction Questionnaire. Copyright by the Vocational Psychology
Research, University of Minnesota; copyright © 1975 by the American Psychological Association. Adapted by permission of
R.B. Dunham and J.B. Brett.
© McGraw Hill 26
Attitudes 6
Organizational commitment:
• The collection of feelings and beliefs that managers have
about their organization as a whole.
• Managers who are committed:
Believe in what their organizations are doing.
Proud of what their organizations stand for.
More likely to go above and beyond the call of duty.
Less likely to quit.
© McGraw Hill 27
Moods and Emotions 1
Mood:
• A mood is a feeling or state of mind.
• Positive moods provide excitement, elation, and
enthusiasm.
• Negative moods lead to fear, distress, and
nervousness.
© McGraw Hill 28
Emotions:
• Intense, relatively short-lived feelings.
• Often directly linked to whatever caused the emotion,
and are more short-lived.
Once whatever has triggered the emotion has been
dealt with, the feelings may linger in the form of a less
intense mood.
© McGraw Hill 29
Research has found that moods and emotions

affect the behavior of managers and all members
of an organization.
• Employees of managers who experience positive
moods at work may perform at somewhat higher
levels and be less likely to resign and leave the
organization.
• Under certain conditions creativity might be enhanced
by positive moods.
© McGraw Hill 30
Figure 3.4: A Measure of Positive and Negative Mood at Work
Source: A.P. Brief, M.J. Burke, J.M. George, B. Robinson, and J. Webster, “Should Negative Affectivity Remain an
Unmeasured Variable in the Study of Job Stress?” Journal of Applied Psychology 72 (1988), 193-98; M.J. Burke, A.P. Brief,
J.M. George, L. Roberson, and J. Webster, “Measuring Affect at work: Confirmatory Analyses of Competing Mood Structures
with Conceptual Linkage in Cortical Regulatory Systems,” Journal of Personality and Social Psychology 57 (1989), 1091-102.
© McGraw Hill 31
Emotional Intelligence
Emotional intelligence (EI):
It is the ability to understand and manage one’s own moods and
emotions and the moods and emotions of other people.
It helps managers carry out their interpersonal roles of figurehead,
leader, and liaison.
Managers with a high level of emotional intelligence are more:
• Likely to understand how they are feeling.
• Able to effectively manage their feelings so that they do not get in the
way of effective decision making.
Managing and reading emotions is important globally; it varies by
culture.
© McGraw Hill 32
Organizational Culture 1
Organizational culture:
• Organizational culture is the shared set of beliefs,
expectations, values, norms, and work routines that
influence how individuals, groups, and teams interact
with one another and cooperate to achieve
• IDEO’s employees encouraged to take a playful
attitude.
• More formal attitudes at Citibank or ExxonMobile.
© McGraw Hill 33
When organizational members share an intense

commitment to cultural values, beliefs, and
routines a strong organizational culture exists.
When members are not committed to a shared
set of values, beliefs, and routines,
organizational culture is weak.
© McGraw Hill 34
Example: Organizational Culture
At IDEO Product Development in Silicon Valley,
employees are encouraged to adopt a playful
attitude toward their work, look outside the
organization to find inspiration, and adopt a
flexible approach toward product design that
uses multiple perspectives.
© McGraw Hill 35
Attraction-selection-attrition framework:
• A model that explains how personality may influence
organizational culture.
As a result of these attraction, selection, and attrition

processes, people in the organization tend to have
similar personalities, and the dominant personality
profile of organizational members shapes
organizational culture.
© McGraw Hill 36
The Role of Values and Norms in
Terminal values:
• Signify what an organization and its employees are
trying to accomplish.
Instrumental values:
• Guide how the organization and its members achieve
© McGraw Hill 37
Values of the founder:

• Terminal and instrumental values influence the values,
norms, and standards of behavior.
• A founder’s personal values can affect an
organization’s competitive advantage.
© McGraw Hill 38
Managers determine and shape organizational

culture through the kinds of values and norms
they promote in an organization.
© McGraw Hill 39
Figure 3.6: Factors That Maintain and
Transmit Organizational Culture
© McGraw Hill 40
Socialization
Organizational socialization:
• Process by which newcomers learn an organization’s
values and norms and acquire the work behaviors
necessary to perform jobs effectively.
• Texas A and M’s Fish Camp.
© McGraw Hill 41
Ceremonies and Rites 1
Ceremonies and rites:

Formal events that recognize incidents of importance to
the organization as a whole and to specific employees.
• Rites of passage.
• Rites of integration.
• Rites of enhancement.
© McGraw Hill 42
Table 3.1: Organizational Rites

TYPE OF RITE EXAMPLE OF RITE PURPOSE OF RITE
Rite of passage Induction and basic Learn and internalize
training norms and values
Rite of integration Office holiday party Build common norms
and values
Rite of enhancement Presentation of Motivate
annual awards commitment to
norms and values
© McGraw Hill 43
Rites of passage:
• How individuals enter, advance within, or leave the
organization.
Rites of integration:
• Shared announcements of organization successes,
build and reinforce common bonds among
© McGraw Hill 44
Rites of enhancement:
• Allow organizations to publicly recognize and reward
employees’ contributions, and thus strengthen their
commitment to organizational values.
• Example: Award for top sales employee of the
month.
© McGraw Hill 45
Stories and Language
• Communicate organizational culture.
• Reveal behaviors that are valued by the organization.
• Include how people dress, the offices they occupy, the
cars they drive, and the degree of formality they use
when they address one another.
© McGraw Hill 46
Culture and Managerial Action 1
Culture influences how managers perform their

four main functions:
1. Planning.
2. Organizing.
3. Leading.
4. Controlling.
© McGraw Hill 47
Planning:
• Innovative culture: flexible approach to planning.
• Conservative culture: formal top down planning.
Organizing:
• Innovative culture: organic structure/decentralized.
• Conservative culture: well-defined hierarchy of authority.
© McGraw Hill 48
Leading:
• Innovative culture: managers lead by example and take
risks.
• Conservative culture: managers constantly monitor
progress toward goals.
Controlling:
• Innovative culture: managers promote flexibility and
taking initiatives.
• Conservative culture: managers emphasize caution and
maintenance of status quo.
© McGraw Hill 49
www.mheducation.com
Chapter 4
Ethics and Social
Responsibility
1. Explain the relationship between ethics and the

law.
2. Differentiate between the claims of the different
stakeholder groups affected by managers and
their companies’ actions.
3. Describe four rules that can help companies and
their managers act in ethical ways.
© McGraw Hill 2
4. Discuss why it is important for managers to

behave ethically.
5. Identify the four main sources of managerial
ethics.
6. Distinguish among the four main approaches
toward social responsibility that a company can
take.
© McGraw Hill 3
The Nature of Ethics 1
Ethical dilemma:
The quandary people find themselves in when they
have to decide if they should act in a way that might
help another person or group even though doing so
might go against their own self-interest.
• Example: Sharon is offered a high-paying sales position
with a pharmaceutical company; however, she disagrees
with the money these companies spend in lobbying and
elections.
© McGraw Hill 4
The Nature of Ethics 2
Ethics:
• The inner guiding moral principles, values, and
beliefs that people use to analyze or interpret a
situation and then decide what is the right or
appropriate way to behave.
© McGraw Hill 5
Ethics and the Law
There are no absolute or indisputable rules
or principles that can be developed to decide
if an action is ethical or unethical.
Neither laws nor ethics are fixed principles.
Ethical beliefs can change over time.
© McGraw Hill 6
Changes in Ethics over Time
Changing ethical beliefs influence the law.
Examples:
Marijuana use.
Business behavior.
• Sometimes no laws are broken, yet are unethical.
© McGraw Hill 7
Stakeholders and Ethics
Stakeholders:
The people and groups that supply a company with
its productive resources and so have a claim on and
stake in the company.
• Shareholders, managers, employees, suppliers and
distributors, customers, and community, society, and the
nation-state.
• Shareholders want to guard the reputation of their
organization.
• #marchforourlives.
© McGraw Hill 8
Figure 4.1 Types of Company
Stakeholders
© McGraw Hill 9
Shareholders
Shareholders are owners.
Shareholders want to ensure that managers
are behaving ethically and not risking
investors’ capital by engaging in actions that
could hurt the company’s reputation.
Shareholders want to maximize their return
on investment.
© McGraw Hill 10
Managers 1
Managers are responsible for using a company’s

financial capital and human resources to increase
its performance.
Managers have the right to expect a good return or
reward by investing their human capital to improve
a company’s performance.
The frequently juggle multiple interests.
• Layoffs of employees to reduce costs and benefit
shareholders.
© McGraw Hill 11
Managers 2
One problem has been that in many companies,

corrupt managers focus not on building the
company’s capital and shareholder’s wealth but on
maximizing their own personal capital and wealth.
• U.S. CEOs get paid 278 times what the average
worker earns, 940% increase over the past 40
years.
• Average worker saw a 12% pay hike in same
period.
© McGraw Hill 12
Ethics and Nonprofit Organizations
More than 2,700 executives of nonprofit
organizations earn more than $1 million a year in
salary, bonus, and other benefits.
• 21% excise tax on nonprofit employers with salaries
over $1 million (2017).
Laws governing disclosure are far weaker for

nonprofits.
New laws would subject nonprofits to strict
Sarbanes-Oxley-type regulations that force the
disclosure of issues related to managerial
compensation and financial integrity.
© McGraw Hill 13
Employees
Employees expect to receive rewards consistent
with their performance.
Organizational structures with fair and equitable
rewards for their employees show an ethical stance.
© McGraw Hill 14
Suppliers and Distributors
Suppliers expect to be paid fairly and promptly for
their inputs.
• Raw materials, component parts.
Distributors expect to receive quality products at

agreed-upon prices.
• Wholesalers and retailers.
© McGraw Hill 15
Table 4.1 Some Principles from the
Gap’s Code of Vendor Conduct
As a condition of doing business with Gap Inc., each and every factory must comply with this Code of
Vendor Conduct. Gap Inc. will continue to develop monitoring systems to assess and ensure compliance.
If Gap Inc. determines that any factory has violated this Code, Gap Inc. may either terminate its business
relationship or require the factory to implement a corrective action plan. If corrective action is advised but
not taken, Gap Inc. will suspend placement of future orders and may terminate current production.
Code Description
I. General Factories that produce goods for Gap Inc. shall operate in full compliance with the laws of their respective
Principles countries and with all other applicable laws, rules, and regulations.
II. Environment Factories must comply with all applicable environmental laws and regulations. Where such requirements are less
stringent than Gap Inc.’s own, factories are encouraged to meet the standards outlined in Gap Inc.’s statement of
environmental principles.
III. Factories shall employ workers on the basis of their ability to do the job, without regard to race, color, gender,
Discrimination nationality, religion, age, maternity, or marital status.
IV. Forced Labor Factories shall not use any prison, indentured, or forced labor.
V. Child Labor Factories shall employ only workers who meet the applicable minimum legal age requirement or are at least 15
years of age, whichever is greater. Factories must also comply with all other applicable child labor laws. Factories
are encouraged to develop lawful workplace apprenticeship programs for the educational benefit of their
workers, provided that all participants meet both Gap Inc.’s minimum age standard of 15 and the minimum legal
age requirement.
VI. Wages and Factories shall set working hours, wages, and overtime premiums in compliance with all applicable laws. Workers
Hours shall be paid at least the minimum legal wage or a wage that meets local industry standards, whichever is greater.
While it is understood that overtime is often required in garment production, factories shall carry out operations
in ways that limit overtime to a level that ensures humane and productive working conditions.
© McGraw Hill 16
Customers
Customers are the most critical
stakeholder.
Company must work to increase efficiency
and effectiveness in order to create loyal
customers and attract new ones.
© McGraw Hill 17
Community, Society, and Nation
Community.
• Physical locations like towns or cities in which
companies are located.
• Provides a company with the physical and social
infrastructure that allows it to operate.
A company contributes to the economy of the

town or region through salaries, wages, and
taxes.
© McGraw Hill 18
Figure 4.2 Four Ethical Rules
© McGraw Hill 19
Practical Decision Model
1. Does my decision fall within the acceptable
standards that apply in business today?
2. Am I willing to see the decision
communicated to all people and groups
affected by it?
3. Would the people with whom I have a
significant personal relationship approve
of the decision?
© McGraw Hill 20
Why Should Managers Behave Ethically?
The relentless pursuit of self-interest can lead

to a collective disaster when one or more
people start to profit from being unethical
because this encourages other people to act
in the same way.
• Tragedy of the commons.
• Unethical behavior destroys the trust between a
company and its customers, suppliers and
distributors.
© McGraw Hill 21
Figure 4.3 Some Effects of Ethical and
Unethical Behavior
© McGraw Hill 22
Trust and Reputation 1
Trust:
• The willingness of one person or group to have
faith or confidence in the goodwill of another
person, even though this puts them at risk.
© McGraw Hill 23
Trust and Reputation 2
Reputation:
Esteem or high repute that individuals or
organizations gain when they behave ethically.
• Unethical behavior in the short run may have long-term
consequences.
• Theranos, Siemens, and Wells Fargo have all suffered
from unethical behavior.
© McGraw Hill 24
Figure 4.4 Sources of Ethics
© McGraw Hill 25
Societal Ethics
• Societal ethics are standards that govern how
members of a society should deal with one
another in matters involving issues such as
fairness, justice, poverty, and the rights of the
individual.
• People behave ethically because they have
internalized certain values, beliefs, and norms.
© McGraw Hill 26
Occupational Ethics
• Standards that govern how members of a
profession, trade, or craft should conduct
themselves when performing work-related
activities.
• Medical and legal ethics.
• Volkswagen’s rigging of vehicles for diesel
emission tests garnered one of the highest fines
ever for an automaker.
© McGraw Hill 27
Table 4.2 Some Failures in Professional
Ethics
For manufacturing and materials management managers:
• Releasing products that are not of a consistent quality because of defective inputs.
• Producing product batches that may be dangerous or defective and harm customers.
• Compromising workplace health and safety to reduce costs (for example, to maximize output, employees are not given
adequate training to maintain and service machinery and equipment).
For sales and marketing managers:

• Knowingly making unsubstantiated product claims.
• Engaging in sales campaigns that use covert persuasive or subliminal advertising to create customer need for the product.
• Marketing to target groups such as the elderly, minorities, or children to build demand for a product.
• Sponsoring ongoing campaigns of unsolicited junk mail, spam, door-to-door, or telephone selling.
For accounting and finance managers:

• Engaging in misleading financial analysis involving creative accounting or “cooking the books” to hide salient facts.
• Authorizing excessive expenses and perks to managers, customers, and suppliers.
• Hiding the level and amount of top management and director compensation.
For human resource managers:

• Failing to act fairly, objectively, and in a consistent manner toward different employees or kinds of employees because of
personal factors such as personality and beliefs.
• Excessively encroaching on employee privacy through non-job-related surveillance or personality, ability, and drug testing.
• Failing to respond to employee observations and concerns surrounding health and safety violations, hostile workplace
issues, or inappropriate or even illegal behavior by managers or employees.
© McGraw Hill 28
Individual Ethics
• Personal standards and values that determine
how people view their responsibilities to other
people and groups.
• How they should act in situations when their own
self-interests are at stake.
© McGraw Hill 29
Organizational Ethics
• Guiding practices and beliefs through which a
particular company and its managers view their
responsibility toward their stakeholders.
• Top managers are especially important in shaping
the organization’s code of ethics.
© McGraw Hill 30
Figure 4.5 Johnson & Johnson Credo
Source: © Johnson & Johnson. Used with permission.
© McGraw Hill 31
Social Responsibility
The way a company’s managers and employees view
their duty or obligation to make decisions that protect,
enhance, and promote the welfare and well-being of
stakeholders and society as a whole.
How a company admits or announces mistakes might
be reflects their social responsibilities:
• Fitbit’s recall of the Fitbit Force.
• GM and Fords reluctance to admit to mistakes.
© McGraw Hill 32
Table 4.3 Forms of Socially Responsible
Behavior
Managers are being socially responsible and showing their support for their
stakeholders when they:
• Provide severance payments to help laid-off workers make ends meet until they can find
another job.
• Give workers opportunities to enhance their skills and acquire additional education so
they can remain productive and do not become obsolete because of changes in
technology.
• Allow employees to take time off when they need to and provide health care and pension
benefits for employees.
• Contribute to charities or support various civic-minded activities in the cities or towns in
which they are located (Target and Levi Strauss both contribute 5 percent of their profits
to support schools, charities, the arts, and other good works).
• Decide to keep open a factory whose closure would devastate the local community.
• Decide to keep a company’s operations in the United States to protect the jobs of
American workers rather than move abroad.
• Decide to spend money to improve a new factory so it will not pollute the environment.
• Decline to invest in countries that have poor human rights records.
• Choose to help poor countries develop an economic base to improve living standards.
© McGraw Hill 33
Figure 4.6 Approaches to Social
Responsibility
© McGraw Hill 34
Four Different Approaches 1
Obstructionist
approach: Manville
Corporation hid
• Companies and their
evidence that
managers choose not to
asbestos causes
behave in a socially
responsible way and
lung damage.
instead, behave
unethically and illegally.
© McGraw Hill 35
Defensive approach:
Computer
• Companies and their Associates,
managers behave WorldCom, and
ethically to the degree Merrill Lynch gave
that they stay within the managers large
law and strictly abide stock options and
by legal requirements.
bonuses as
performance was
declining.
© McGraw Hill 36
Accommodative
approach:
Managers make
managers behave choices that are
legally and ethically reasonable in the
and try to balance the eyes of society and
interests of different want to do the right
stakeholders as the thing.
need arises.
© McGraw Hill 37
Proactive approach:
managers actively embrace
socially responsible behavior,
going out of their way to learn
Nucor refuses to lay
about the needs of different off employees.
stakeholder groups and using
organizational resources to
promote the interests of all
stakeholders.
© McGraw Hill 38
Why Be Socially Responsible?
1. Demonstrating its social responsibility helps
a company build a good reputation.
2. If all companies in a society act socially, the
quality of life as a whole increases.
© McGraw Hill 39
Role of Organizational Culture
Ethical values and norms help organizational
members:
• Resist self-interested action.
• Realize they are part of something bigger
than themselves.
© McGraw Hill 40
Ethics Ombudsman
Responsible for communicating ethical
standards to all employees.
Designing systems to monitor employees’
conformity to those standards.
Teaching managers and employees at all
levels of the organization how to
appropriately respond to ethical dilemmas.
© McGraw Hill 41
www.mheducation.com
Chapter 5
Managing Diverse
Employees in a
Multicultural Environment
Learning Objectives
1. Discuss the increasing diversity of the workforce and the
organizational environment.
2. Explain the central role that managers play in the effective
management of diversity.
3. Explain why the effective management of diversity is both
an ethical and a business imperative.
4. Discuss how perception and the use of schemas can
result in unfair treatment.
5. List the steps managers can take to manage diversity
effectively.
6. Identify the two major forms of sexual harassment and
how they can be eliminated.
© McGraw Hill 2
The Increasing Diversity of the Workforce
and the Environment
Diversity. • Age.
• Gender.
• Dissimilarities or
• Race.
differences
• Ethnicity.
among people
due to: • Religion.
• Sexual orientation.
• Socioeconomic background.
• Education.
• Experience.
• Physical appearance.
• Capabilities and disabilities.
• Any other characteristic that is used to
distinguish between people.
© McGraw Hill 3
Figure 5.1 Sources of Diversity in the
Workplace
© McGraw Hill 4
Glass Ceiling
A metaphor alluding to the invisible barriers
that prevent minorities and women from being
promoted to top corporate positions.
2020: 27 leaders of Fortune 500 companies
were women (5.8%) and only 4 were African
American men (0.8%). As of 2020, there are
no African American women running these
top organizations.
© McGraw Hill 5
Age
Aging U.S. Population:
• Median age in the United States is 38.2 years, By
2060, 24% of the population will be over 65 or
older.
Age Discrimination in Employment Act of

1967:
• Prohibits age discrimination.
© McGraw Hill 6
Major EEO Laws
Table 5.1 Major Equal Employment Opportunity Laws Affecting Human Resources Management
Year Law Description

1963 Equal Pay Act Requires that men and women be paid equally if they are performing equal work
1964 Title VII of the Civil Rights Act Prohibits discrimination in employment decisions on the basis of race, religion,
sex, color, or national origin; covers a wide range of employment decisions,
including hiring, firing, pay, promotion, and working conditions
19 67 Age Discrimination in Prohibits discrimination against workers over the age of 40 and restricts
Employment Act mandatory retirement
1978 Pregnancy Discrimination Act Prohibits discrimination against women in employment decisions on the basis of
pregnancy, childbirth, and related medical decisions
1990 Americans with Disabilities Prohibits discrimination against the disabled individuals in employment decisions
Act and requires that employers make accommodations for disabled workers to
enable them to perform their jobs
1991 Civil Rights Act Prohibits discrimination (as does Title VII) and allows for the awarding of punitive
and compensatory damages, in addition to back pay, in cases of intentional
discrimination
1993 Family and Medical Leave Act Requires that employers provide 12 weeks of unpaid leave for medical and
family reasons, including paternity and illness of a family member
1994 Uniformed Services Protects the civilian employment of active and reserve military personnel called
Employment & to active duty; prohibits discrimination on the basis of military status and military
Reemployment Rights Act service obligations; also provides certain re-employment rights following military
service.
© McGraw Hill 7
Gender
Women in the workplace:
• The U.S. workforce is 44.8% female.
• Women’s median weekly earnings are $843
compared to $1,022 for men.
• Women hold only 26.5% of executive officer
positions.
© McGraw Hill 8
Race and Ethnicity 1
Census Bureau distinguishes between the

following races:
• American Indian or Alaska Native, Asian Indian, black or
African American, Chinese, Filipino, Japanese, Korean,
Vietnamese, other Asian, Native Hawaiian, Guamanian or
Chamorro, Samoan, other Pacific Islander, white, and
other races.
The racial and ethnic diversity of the U.S. population is
increasing quickly, as is the diversity of the workforce.
© McGraw Hill 9
Race and Ethnicity 2
The U.S. Census Bureau treats ethnicity in

terms of whether a person is Hispanic, Latino,
or of Spanish origin or not.
Most Hispanics prefer to be identified by their
country of origin.
In 2060, the U.S. population will be about
56% minority.
© McGraw Hill 10
Religion
Title VII of the Civil Rights Act:
Prohibits discrimination based on religion.
Managers:
• Recognize and be aware of religious differences.
• Don’t schedule critical meetings during religious holy days.
• Be flexible in allowing employees to take days off for
religious reasons.
• Can enhance employee loyalty with these considerations.
© McGraw Hill 11
Capabilities and Disabilities
Americans with Disabilities Act (ADA):
• Prohibits discrimination against persons with
disabilities.
• Requires employers to make reasonable
accommodations.
• This may present challenges for managers.
© McGraw Hill 12
Socioeconomic Background
Refers to a combination of social class and
income-related factors.
Socioeconomic diversity requires that
managers be sensitive and responsive to
the needs and concerns of individuals who
might not be as well off as others.
© McGraw Hill 13
Sexual Orientation
4.5% or 11 million U.S. residents identify as
LBGT.
2015 Equal Employment Opportunity
Commission: Discrimination on the grounds
of sexual orientation is illegal.
2015’s U.S. Supreme Court decision that
same-sex marriage is legal.
© McGraw Hill 14
Other Kinds of Diversity
In most cases, whether individuals are
attractive or unattractive, thin or overweight
has no bearing on their job performance.
Sometimes these physical sources of
diversity end up influencing advancement
rates and salaries.
© McGraw Hill 15
Managers and the Effective Management
of Diversity
Managers can take many more steps to
become sensitive to the ongoing effects of
diversity in their organizations, take
advantage of all the contributions diverse
employees can make, and prevent diverse
employees from being unfairly treated.
© McGraw Hill 16
Critical Managerial Roles
Table 5.2 Managerial Roles and the Effective Management of Diversity
Type of Role Specific Role Example
Interpersonal Figurehead Conveys that the effective management of diversity is a valued goal and
objective
Interpersonal Leader Serves as a role model and institutes policies and procedures to ensure that
diverse members are treated fairly
Interpersonal Liaison Enables diverse individuals to coordinate their efforts and cooperate with one
another
Informational Monitor Evaluates the extent to which all employees are treated fairly
Informational Disseminator Informs employees about diversity policies and initiatives and the intolerance
of discrimination
Informational Spokesperson Supports diversity initiatives in the wider community and speaks to diverse
groups to interest them in career opportunities
Decisional Entrepreneur Commits resources to develop new ways to effectively manage diversity and
eliminate biases and discrimination
Decisional Disturbance handler Takes quick action to correct inequalities and curtail discriminatory behavior
Decisional Resource allocator Allocates resources to support and encourage the effective management of
diversity
Decisional Negotiator Works with organizations (e.g. suppliers) and groups (e.g. labor unions) to
support and encourage the effective management of diversity
© McGraw Hill 17
The Ethical Imperative to Manage Diversity
Effectively 1
Distributive justice.
• A moral principle calling for fair distribution of pay,
promotions, and other organizational resources based on
meaningful contributions that individuals have made and
not on personal characteristics over which they have no
control.
• Are things getting better?
© McGraw Hill 18
Table 5.3 Median Weekly Earnings for Full-
Time Workers by Sex and Occupation in 2019
Women’s Earnings
as a Percentage of
Occupation Men Women Men’s
Management, professional and $1,539 $1,135 73%
related.
Service. $659 $537 81%
Sales and office. $874 $713 82%
Natural resources, construction, $881 $614 70%
and maintenance.
Production, transportation, and $780 $593 76%
material moving.
Source: Bureau of Labor Statistics, “Household Data Annual Averages: Table 39. Median Weekly
Earnings of Full-Time Wage and Salary Workers by Detailed Occupation and Sex,” www.bls.gov, January
22, 2020.
© McGraw Hill 19
The Ethical Imperative to Manage Diversity
Effectively 2
Procedural justice.
A moral principle calling for the use of fair
procedures to determine how to distribute outcomes
to organizational members.
Example: Employee performance reviews.
Managers:
• Carefully do employee appraisals.
• Consider any obstacles to employee’s performance.
• Ignore irrelevant personal characteristics.
© McGraw Hill 20
Effectively Managing Diversity Makes
Good Business Sense
What diversity of employees provides:
• A variety of points of view and approaches to
problems and opportunities can improve
managerial decision-making.
• Diverse employees can provide a wider range of
creative ideas.
• Diverse employees are more attuned to the needs
of diverse customers.
• Diversity can increase the retention of valued
• Diversity is expected and required by other firms.
© McGraw Hill 21
Perception
The process through which people select, organize,
and interpret what they see, hear, touch, smell, and
taste to give meaning and order to the world around
them.
Example: McDonald’s manager’s go the extra mile
to make sure their perceptions of what customers
want are accurate.
© McGraw Hill 22
Factors That Influence Managerial
Perception
Schema:
• An abstract knowledge structure stored in memory
that allows people to organize and interpret
information about a person, event, or situation.
Gender schema:
• Preconceived beliefs or ideas about the nature of
men and women, their traits, attitudes, behaviors,
and preferences.
© McGraw Hill 23
Perception as a Determinant of Unfair
Treatment
Stereotype:
• Simplistic and often inaccurate beliefs about the
typical characteristics of particular groups of
people.
Bias:
• The systematic tendency to use information about
others in ways that result in inaccurate
perceptions.
© McGraw Hill 24
Bias
Implicit bias:
• Attitudes or stereotypes that affect our understanding,
actions, and decisions in an unconscious manner.
Social status effect:

• Perceive individuals with high social status more positively
than those with low social status.
Salience effect:
• Focus attention on individuals who are conspicuously
different.
© McGraw Hill 25
Overt Discrimination
• Knowingly and willingly denying diverse
individuals access to opportunities and outcomes
in an organization.
• Unethical and illegal.
• A clear violation of principles of distributive and
procedural justice.
© McGraw Hill 26
Steps in Managing Diversity Effectively 1
Table 5.4 Promoting the Effective Management of

Diversity
• Secure top management commitment.
• Strive to increase the accuracy of perceptions.
• Increase diversity awareness.
• Increase diversity skills.
• Encourage flexibility.
• Pay close attention to how organizational members are
evaluated.
• Consider the numbers.
© McGraw Hill 27
Steps in Managing Diversity Effectively 2
Table 5.4 Promoting the Effective Management of

Diversity, continued:
• Empower employees to challenge discriminatory
behaviors, actions, and remarks.
• Reward employees for effectively managing diversity.
• Provide training utilizing a multipronged,
ongoing approach.
• Encourage mentoring of diverse employees.
© McGraw Hill 28
Diversity Awareness Programs
Goals of programs:
• Provide members with accurate information about
diversity.
• Uncover personal biases and stereotypes.
• Assess personal beliefs, attitudes, and values and learning
about other points of view.
• Overturn inaccurate stereotypes and beliefs about different
groups.
• Develop an atmosphere in which people feel free to share
their differing perspectives.
• Improve understanding of others who are different.
© McGraw Hill 29
Forms of Sexual Harassment 1
Quid pro quo:

• Asking for or forcing
an employee to
perform sexual
favors in exchange
for receiving some
reward or avoiding
negative
consequences.
© McGraw Hill 30
Forms of Sexual Harassment 2
Hostile work environment:

• Telling lewd jokes, displaying pornography, making
sexually oriented remarks about someone’s
personal appearance, and other sex-related
actions that make the work environment
unpleasant.
• Interferes with coworkers’ ability to perform their
jobs effectively.
© McGraw Hill 31
Steps to Eradicate Sexual Harassment 1
Develop and clearly communicate a sexual

harassment policy endorsed by top
management.
Use a fair complaint procedure to
investigate charges of sexual harassment.
© McGraw Hill 32
Steps to Eradicate Sexual Harassment 2
When it has been determined that sexual

harassment has taken place, take corrective
action as soon as possible.
Provide sexual harassment education and
training to all organizational members,
including managers.
© McGraw Hill 33
www.mheducation.com
Chapter 6
Managing in the Global
Environment
© 2022 McGraw Hill. All rights reserved. Authorized only for instructor use in the classroom.
No reproduction or further distribution permitted without the prior written consent of McGraw Hill.
1. Explain why the ability to perceive, interpret, and

respond appropriately to the global environment
is crucial for managerial success.
2. Differentiate between the global task and global
general environments.
3. Identify the main forces in both the global task
and general environments, and describe the
challenges that each force presents to managers.
© McGraw Hill 2
4. Explain why the global environment is becoming

more open and competitive, and identify the
forces behind the process of globalization that
increase the opportunities, complexities,
challenges, and threats managers face.
5. Discuss why national cultures differ and why it is
important that managers be sensitive to the
effects of falling trade barriers and regional trade
associations on the political and social systems of
nations around the world.
© McGraw Hill 3
Global Organizations
A global organization:
• An organization that operates and competes in
more than one country.
• Uncertain and unpredictable.
© McGraw Hill 4
What Is the Global Environment? 1
Global environment:
The set of global forces and conditions that
operates beyond an organization’s boundaries but
affects a manager’s ability to acquire and utilize
resources.
• Opportunities: new production technology, lower-cost
components, new global markets.
• Threats: economic recession, oil shortages.
© McGraw Hill 5
Figure 6.1 Forces in the Global Environment
© McGraw Hill 6
Task environment:
The set of forces and conditions that originates with
suppliers, distributors, customers, and competitors
and affects an organization’s ability to obtain inputs
used to manufacture and sell the products or
services.
Immediate and direct effects on managers,
influencing managers daily.
• Example: Competitor’s spontaneous sale or new
product introduction.
© McGraw Hill 7
General environment:
The wide-ranging global, economic, technological,
sociocultural, demographic, political, and legal
forces that affect an organization and its task
environment.
More difficult to identify and respond to than task
environment elements.
• Example: Natural disasters.
© McGraw Hill 8
The Task Environment: Suppliers
Suppliers are individuals and organizations
that provide an organization with the input
resources that it needs to produce goods and
services.
• Examples: Raw materials, component parts,
employees.
© McGraw Hill 9
The Task Environment: Global
Outsourcing
Global outsourcing refers to the purchase or
production of inputs or final products from
overseas suppliers to lower costs and
improve product quality or design.
• Example: Boeing 787 Dreamliner.
© McGraw Hill 10
The Task Environment: Distributors
Distributors help other organizations sell
their goods or services to customers.
• Examples: Delivery services, Walmart.
Powerful distributors can limit access to markets

through its control of customers in those markets.
© McGraw Hill 11
The Task Environment: Customers
Customers are individuals and groups that
buy goods and services that an organization
produces.
A manager’s ability to identify an organization’s
main customer groups and make the products that
best satisfy their particular needs is a crucial
factor affecting organizational and managerial
success.
© McGraw Hill 12
The Task Environment: Competitors
Competitors are organizations that produce
goods and services that are similar to a
particular organization’s goods and services.
Rivalry between competitors is potentially the
most threatening force that managers deal
with.
© McGraw Hill 13
The Task Environment: Barriers to Entry
Barriers to entry are factors that make it

difficult and costly for the organization to enter
a particular task environment or industry.
The greater the barriers to entry the smaller
the number of competitors.
© McGraw Hill 14
Figure 6.2 Barriers to Entry and Competition
© McGraw Hill 15
Barriers to Entry
Economies of scale:
• Cost advantages associated with large operations.
Brand loyalty:
• Customers’ preference for the products of
organizations currently existing in the task
environment.
Government regulations can impede entry.
© McGraw Hill 16
The General Environment: Economic Forces
Interest rates, inflation, unemployment,

economic growth, and other factors that affect the
general health and well-being of a nation or the
regional economy of an organization
Example: Money Sony made during the 1990s
global economic boom due to advances in
technology and the growing global trade.
© McGraw Hill 17
The General Environment:
Technological Forces
Technology is the combination of skills and
equipment that managers use in designing,
producing, and distributing goods and
services. The forces are the outcomes of
changes in technology.
• Changes in technology have altered our notions of
work, including a manager’s job.
• Recent example of changes: AMD’s new
generation of Ryzen processors.
© McGraw Hill 18
The General Environment: Sociocultural
Forces 1
Sociocultural forces are pressures

emanating from the social structure of a
country or society or from the national culture.
• Example: Concern for diversity.
© McGraw Hill 19
Forces 2
Social structure:
• The traditional system of relationships established
between people and groups in a society.
• High degree of social stratification: many
distinctions among individuals and groups.
• Low degree of social stratification: few
distinctions among individuals and groups.
© McGraw Hill 20
Forces 3
National culture:
• The set of values that a society considers
important and the norms of behavior that are
approved or sanctioned in that society.
• In the United States, individualism is highly
valued; in Korea and Japan individuals expected
to conform.
• Can affect how managers motivate employees
and do business.
© McGraw Hill 21
The General Environment: Demographic
Forces
Demographic forces are outcomes of
change in, or changing attitudes toward, the
characteristics of a population, such as age,
gender, ethnic origin, race, sexual orientation,
and social class.
• Example: Aging population creating need for
health care and medical industries.
© McGraw Hill 22
The General Environment: Political and
Legal Forces
Political and legal forces are outcomes of
changes in laws and regulations:
Deregulation of industries.
Privatization of organizations.
Increased emphasis on environmental protection.
• Brexit.
• Example: EU investigation of Apple’s acquisition of
Shazam.
© McGraw Hill 23
Process of Globalization
Globalization:
• The set of specific and general forces that work together to
integrate and connect economic, political, and social
systems across countries, cultures, or geographical
regions so that nations become increasingly
interdependent and similar.
© McGraw Hill 24
Four Principal Forms of Capital 1
Human capital:
• The flow of people around the world through
immigration, migration, and emigration.
Financial capital:
• The flow of money capital across world markets
through overseas investment, credit, lending, and
aid.
© McGraw Hill 25
Resource capital:
• The flow of natural resources, parts, and
components between companies and countries,
such as metals, minerals, lumber, energy, food
products, microprocessors, and auto parts.
© McGraw Hill 26
Political capital:
• The flow of power and influence around the world
using diplomacy, persuasion, aggression, and
force of arms to protect the right or access of a
country, world region, or political bloc to the other
forms of capital.
© McGraw Hill 27
Declining Barriers to Trade and
Investment
Tariffs:
• Taxes that government imposes on imported or,
occasionally, exported goods.
• Intended to protect domestic industry and jobs
from foreign competition.
• Example: Trump’s tariffs on imported steel and
aluminum and sanctions on China.
© McGraw Hill 28
Example: USITC
The United States International Trade
Commission is an “independent, quasi-judicial
federal agency with broad investigative
responsibilities on matters of trade.”
The commission also serves as a federal
resource in which trade data and other trade
policy-related information are gathered and
analyzed.
© McGraw Hill 29
GATT and the Rise of Free Trade
Free-trade doctrine:
• The idea that if each country specializes in the
production of the goods and services that it can
produce most efficiently, this will result in the best
use of global resources and lower prices.
• General Agreement on Tariffs and Trade (GATT).
• World Trade Organization (WTO).
© McGraw Hill 30
Declining Barriers of Distance and Culture
Distance:
• Markets were essentially closed because of the slowness
of communications over long distances.
Culture:
• Language barriers and cultural practices made managing
overseas businesses difficult.
Changes in Distance and Communication:

Improvement in transportation technology and fast, secure
communications have greatly reduced the barriers of
physical and cultural distances.
• Commercial jet travel.
© McGraw Hill 31
Effects of Free Trade on Managers
Lowering of trade barriers:
• Opened enormous opportunities for managers to
expand the market for their goods and services.
• Allowed managers to now both buy and sell goods
and services globally.
• Increased intensity of global competition so that
managers now have a more dynamic and exciting
job of managing.
© McGraw Hill 32
The Role of National Culture: Values
Ideas about what a society believes to be good,
right, desirable, and beautiful.
Provide the basic underpinnings for notions of
individual freedom, democracy, truth, justice,
honesty, loyalty, love, sex, marriage, etc.
More than abstract concepts; they are invested with
emotional significance.
Arguing, fighting, or even dying over values such as
freedom.
© McGraw Hill 33
The Role of National Culture: Norms
Norms are unwritten, informal codes of conduct that
prescribe how people should act in particular
situations that are considered important by most
members of a group or organization.
• Mores: Central to the functioning of society and
social life.
• Folkways: Routine social conventions of everyday
life.
© McGraw Hill 34
Hofstede’s Model of National Culture 1
Individualism:
• A worldview that values individual freedom and self-
expression and adherence to the principle that people
should be judged by their individual achievements
rather their social background.
Collectivism:
• A worldview that values subordination of the individual
to the goals of the group and adherence to the
principle that people should be judged by their
contribution to the group.
© McGraw Hill 35
Power distance:
• Degree to which
societies accept the idea
that inequalities in the
power and well-being of
their citizens are due to
differences in individuals’
physical and intellectual
capabilities and heritage.
© McGraw Hill 36
Achievement orientation:
• A worldview that values assertiveness,
performance, success, and competition.
• United States and Japan.
Nurturing orientation:
• A worldview that values the quality of life, warm
personal friendships, and services and care for the
weak.
• Netherlands, Sweden, Denmark.
© McGraw Hill 37
Uncertainty avoidance:
• The degree to which societies are willing to
tolerate uncertainty and risk.
Low uncertainty avoidance cultures are

easygoing, value diversity, and tolerate differences
in personal beliefs and actions.
High uncertainty avoidance societies are more
rigid and expect high conformity in their citizens’
beliefs and norms of behavior.
© McGraw Hill 38
Long-term orientation:
• A worldview that values thrift and persistence in
achieving goals.
Short-term orientation:
• A worldview that values personal stability or
happiness and living for the present.
© McGraw Hill 39
The GLOBE Project
Extends Hofstede’s work, looking at additional
cultural dimensions.
1990s, Robert J. House (U of Penn).
Ongoing international research with 200+
researchers.
Data from 17,000+ managers from 62
countries.
© McGraw Hill 40
The GLOBE Project: Nine Cultural
Dimensions
1. Performance 6. In-group
orientation. collectivism.
2. Assertiveness. 7. Gender
3. Future orientation. egalitarianism.
4. Human orientation. 8. Power distance.
5. Institutional 9. Uncertainty
orientation. avoidance.
© McGraw Hill 41
www.mheducation.com
Chapter 7
Decision Making, Learning,
Creativity, and
Entrepreneurship
1. Understand the nature of managerial decision

making, differentiate between programmed and
nonprogrammed decisions, and explain why
nonprogrammed decision making is a complex,
uncertain process.
2. Describe the six steps managers should take to
make the best decisions, and explain how
cognitive biases can lead managers to make poor
decisions.
© McGraw Hill 2
3. Identify the advantages and disadvantages of

group decision making, and describe techniques
that can improve it.
4. Explain the role that organizational learning and
creativity play in helping managers to improve
their decisions.
5. Describe how managers can encourage and
promote entrepreneurship to create a learning
organization, and differentiate between
entrepreneurs and intrapreneurs.
© McGraw Hill 3
The Nature of Managerial Decision Making 1
Decision making:
• The process by which managers respond to
opportunities and threats that confront them by
analyzing options and making determinations about
specific organizational goals and courses of action.
© McGraw Hill 4
The Nature of Managerial Decision Making 2
Decisions in response to opportunities:

• This occurs when managers respond to ways to improve
organizational performance to benefit customers,
employees, and other stakeholder groups.
Decisions in response to threats:

• Events inside or outside the organization are adversely
affecting organizational performance, and managers seek
ways to increase performance.
© McGraw Hill 5
Decision Making 1
Programmed decision:
• Programmed decision involves routine, virtually
automatic decision making that follows established
rules or guidelines.
• Decisions have been made so many times in the
past that managers have developed rules or
guidelines to be applied when certain situations
inevitably occur.
• Manufacturing supervisor hires new workers when
existing workers’ overtime increases by more than
10 percent.
© McGraw Hill 6
Decision Making 2
Nonprogrammed decisions:
• Nonroutine decision making that occurs in
response to unusual, unpredictable
opportunities and threats.
• No rules because the situation is unexpected
or uncertain and managers lack the
information they would need to develop rules
to respond to it.
© McGraw Hill 7
Decision Making 3
Intuition:
• Feelings, beliefs, and hunches that come readily
to mind, require little effort and information
gathering, and result in on-the-spot decisions.
Reasoned judgment:
• Decision that requires time and effort and results
from careful information gathering, generation of
alternatives, and evaluation of alternatives.
© McGraw Hill 8
The Classical Model 1
Classical model of decision making:

• A prescriptive approach to decision making
based on the assumption that the decision maker
can identify and evaluate all possible alternatives
and their consequences and rationally choose the
most appropriate course of action.
© McGraw Hill 9
The Classical Model 2
Optimum decision:
• The most appropriate decision in light of what
managers believe to be the most desirable
consequences for their organization.
© McGraw Hill 10
Figure 7.1 The Classical Model of Decision
Making
© McGraw Hill 11
The Administrative Model 1
Administrative model:
• An approach to decision making that explains why
decision making is inherently uncertain and risky
and why managers usually make satisfactory
rather than optimum decisions.
• Based on 3 important concepts: bounded
rationality, incomplete information, and
satisficing.
© McGraw Hill 12
The Administrative Model 2
Bounded rationality:
• Cognitive limitations that constrain one’s ability to
interpret, process, and act on information.
Incomplete information:
• Because of risk and uncertainty, ambiguity, and
time constraints.
© McGraw Hill 13
Figure 7.2 Why Information Is
Incomplete
© McGraw Hill 14
Causes of Incomplete Information 1
Risk:
The degree of probability that the possible
outcomes of a particular course of action will occur.
• 90% new drug failure rate in biotechnology industry.
Uncertainty:
Probabilities of alternative outcomes cannot be
determined and future outcomes unknown.
• Apple’s Newton PDA.
© McGraw Hill 15
Ambiguous information:
• Information that can be
interpreted in multiple and
often conflicting ways.
Young woman or old

woman?
© McGraw Hill 16
Time constraints and information costs:

• No time or money to search for all possible
alternatives and evaluate potential consequences.
Satisficing:
• Searching for and choosing a satisfactory
response to problems and opportunities rather
than trying to make the best decision.
© McGraw Hill 17
Figure 7.4 Six Steps in Decision Making
© McGraw Hill 18
Figure 7.5 General Criteria for Evaluating
Possible Courses of Action
© McGraw Hill 19
Feedback Procedure
1. Compare what actually happened to what was
expected to happen as a result of the decision.
2. Explore why any expectations for the decision were
not met.
3. Derive guidelines that will help in future decision
making.
© McGraw Hill 20
Cognitive Biases and Decision Making
Heuristics:
• Rules of thumb that simplify the process of making
decisions.
Systematic errors:
• Errors that people make over and over and that
result in poor decision making.
© McGraw Hill 21
Figure 7.6 Sources of Cognitive Bias at
the Individual and Group Levels
© McGraw Hill 22
Sources of Cognitive Biases 1
Confirmation Bias:
• The tendency to make decisions based on strong
existing beliefs even when evidence suggests
those beliefs may be wrong.
Representativeness:
• A cognitive bias resulting from the tendency to
generalize inappropriately from a small sample or
from a single vivid event or episode.
© McGraw Hill 23
Sources of Cognitive Biases 2
Illusion of control:
• The tendency to overestimate one’s own ability to
control activities and events.
• Top managers.
Escalating commitment:
• A source of cognitive bias resulting from the
tendency to commit additional resources to a
project even if evidence shows that the project is
failing.
© McGraw Hill 24
Group Decision Making 1
Superior to individual decision making.

Choices less likely to fall victim to bias.
Able to draw on combined skills of group
members.
Improve ability to generate feasible
alternative.
© McGraw Hill 25
Potential disadvantages:
1. Can take much longer for groups than
individuals to make decisions.
2. Can be difficult to get two or more
managers to agree because of different
interests and preferences.
3. Can be undermined by biases.
© McGraw Hill 26
Groupthink:
• Pattern of faulty and biased decision making that
occurs in groups whose members strive for
agreement among themselves at the expense of
accurately assessing information relevant to a
decision.
© McGraw Hill 27
Figure 7.7 Devil’s Advocacy and
Dialectical Inquiry
© McGraw Hill 28
Organizational Learning and Creativity 1
Organizational learning:
• Managers seek to improve an employee’s desire
and ability to understand and manage the
organization and its task environment.
Learning organization:
• A learning organization is one in which managers
try to maximize the ability of individuals and
groups to think and behave creatively and, thus,
maximize the potential for organizational learning
to take place.
© McGraw Hill 29
Organizational Learning and Creativity 2
Creativity
• A decision maker’s
ability to discover
original and novel
ideas that lead to
feasible alternative
courses of action.
• Get off email and
lose the desk! Think
outside the box!
© McGraw Hill 30
Figure 7.8 Senge’s Principles for Creating
a Learning Organization
© McGraw Hill 31
Promoting Group Creativity 1
Brainstorming:
• Managers meet face-to-face to generate and
debate many alternatives.
Production blocking:
• There might be a loss of productivity in
brainstorming sessions due to the unstructured
nature of brainstorming.
© McGraw Hill 32
Nominal group technique:

• A decision-making technique in which group
members write down ideas and solutions, read
their suggestions to the whole group, and discuss
and then rank the alternatives.
Useful when an issue is controversial and

when different managers might be expected
to champion different courses of action.
© McGraw Hill 33
Delphi technique:
• A decision-making technique in which group
members do not meet face-to-face but respond in
writing to questions posed by the group leader.
© McGraw Hill 34
Entrepreneurship 1
Entrepreneurs:
• Individuals who notice opportunities and decide how to
mobilize the resources necessary to produce new and
improved goods and services.
Social entrepreneurs:
• Individuals who pursue initiatives and opportunities and
mobilize resources to address social problems and needs
in order to improve society and well-being through creative
solutions.
© McGraw Hill 35
Entrepreneurship 2
Intrapreneurs:
• Managers, scientists, or researchers who work
inside an organization and notice opportunities to
develop new or improved products and better
ways to make them.
© McGraw Hill 36
Characteristics of Entrepreneurs
Open to experience.
• They are original thinkers and take risks.
Internal locus of control.

• They take responsibility for their own actions.
High self-esteem.
• They feel competent and capable.
High need for achievement.

• They set high goals and enjoy working toward them.
© McGraw Hill 37
Entrepreneurship and Management
Frequently, a founding entrepreneur lacks
the skills, patience, and experience to engage
in the difficult and challenging work of
management.
• Entrepreneurship is not the same as
management.
© McGraw Hill 38
Intrapreneurship and Organizational
Learning
Product champion.
• A manager who takes “ownership” of a project and
provides the leadership and vision that take a
product from the idea stage to the final customer.
Skunkworks:
• A group of intrapreneurs who are deliberately
separated from the normal operation of an
organization to encourage them to devote all their
attention to developing new products.
© McGraw Hill 39
Example: Xerox PARC
The Palo Alto Research Center is a Xerox research
and development division.
Many innovations, such as the laser printer, personal
workstation, WYSIWYG printing, and GUI came out
of PARC.
© McGraw Hill 40
www.mheducation.com
Chapter 8
The Manager as a Planner
and Strategist
1. Identify the three main steps of the planning

process, and explain the relationship between
planning and strategy.
2. Describe some techniques managers can use to
improve the planning process so they can better
predict the future and mobilize organizational
resources to meet future contingencies.
© McGraw Hill 2
3. Differentiate among the main types of business-

level strategies, and explain how they give an
organization a competitive advantage that may
lead to superior performance.
4. Differentiate among the main types of corporate-
level strategies, and explain how they are used to
strengthen a company’s business-level strategy
and competitive advantage.
5. Describe the vital role managers play in
implementing strategies to achieve an
organization’s mission and goals.
© McGraw Hill 3
Planning and Strategy 1
Planning: The organizational

plan that results from
• Identifying and the planning process
selecting appropriate details the goals and
goals and courses of the specific
action for an strategies managers
organization. will implement to
attain those goals.
© McGraw Hill 4
Strategy:
• A cluster of decisions
Example: Sorenson’s
about what goals to
strategy at Marriott.
pursue, what actions
to take, and how to
use resources to
achieve goals.
© McGraw Hill 5
Mission statement:
• A broad declaration of an organization’s purpose
that identifies the organization’s products and
customers and distinguishes the organization from
its competitors.
© McGraw Hill 6
Figure 8.1 Three Steps in Planning
© McGraw Hill 7
Example: Nike’s Mission
To bring inspiration and innovation to

every athlete in the world.
© McGraw Hill 8
The Nature of the Planning Process
To perform the planning task, managers:
1. Establish and discover where an organization is
at the present time.
2. Determine its desired future state.
3. Decide how to move it forward to reach that
future state.
© McGraw Hill 9
Why Planning Is Important 1
1. Necessary to give the organization a sense of

direction and purpose.
2. Useful way of getting managers to participate in
decision making about the appropriate goals and
strategies for an organization.
3. Helps coordinate managers of the different
functions and divisions of an organization.
4. Can be used as a device for controlling
managers.
© McGraw Hill 10
Unity:
• At any one time, only one central, guiding plan is
put into operation.
Continuity:
• Planning is an ongoing process in which
managers build and refine previous plans and
continually modify plans at all levels.
© McGraw Hill 11
Accuracy:
• Managers need to make every attempt to collect
and utilize all available information at their
disposal.
Flexibility:
• Plans can be altered if the situation changes.
© McGraw Hill 12
Figure 8.2 Levels of Planning at General
Mills
© McGraw Hill 13
Figure 8.3 Levels and Types of Planning
© McGraw Hill 14
Levels and Types of Planning 1
Corporate-level plan:
• Top management’s decisions pertaining to the organization’s mission, overall
strategy, and structure.
• General Mill’s seeks to increase market share in the organic/natural food sector.
Corporate-level strategy:
• A plan that indicates in which industries and national markets an organization
intends to compete.
Functional strategy:
• A plan of action to improve the ability of each of an organization’s functions to
perform its task-specific activities in ways that add value to an organization’s
goods and services.
• General Mill’s invests in state-of-the-art manufacturing facilities to achieve
business level strategy of increasing production by 20% over next 3 years.
© McGraw Hill 15
Business-level plan:
• Long-term divisional goals that will allow the
division to meet corporate goals.
• Division’s business-level strategy and structure to
achieve divisional goals.
© McGraw Hill 16
Business-level strategy:
• This strategy outlines the specific methods a
division, business unit, or organization will use to
compete effectively against its rivals in an industry.
• General Mills’ Beyond Meat, Kite Hill, and Blue
Buffalo.
© McGraw Hill 17
Functional-level plan:
• Goals that the managers of each function will
pursue to help their division attain its business-
level goals.
© McGraw Hill 18
Time Horizons of Plans
Time horizon:
• Period of time over which plans are intended to
apply or endure.
Long-term plans are usually 5 years or more.

Intermediate-term plans are 1 to 5 years.
Short-term plans are less than 1 year.
© McGraw Hill 19
Types of Plans 1
Standing plans:
• Used in situations in which programmed decision making
is appropriate.
• Policies are general guides to action.

• Rules are formal written guides to action.
• Standard operating procedures (SOP) are written
instructions describing the exact series of actions that
should be followed in a specific situation.
© McGraw Hill 20
Types of Plans 2
Single-use plans:
• Developed to handle non-programmed decision-making in
unusual or one-of-a-kind situations.
• Programs: Integrated sets of plans achieving certain goals.

• Project: Specific action plans to complete various aspects
of a program.
© McGraw Hill 21
Scenario Planning
Scenario planning (contingency planning):
• The generation of multiple forecasts of future
conditions followed by an analysis of how to
respond effectively to each of those conditions.
• Shell’s oil market scenario planning.
© McGraw Hill 22
Determining the Organization’s Mission
and Goals
Defining the business:
• Who are our customers?
• What customer needs are being satisfied?
• How are we satisfying customer needs?
Establishing major goals:

• Provides the organization with a sense of
direction.
© McGraw Hill 23
Figure 8.4 Mission Statements for Three
Internet Companies
COMPANY MISSION STATEMENT

Facebook: “To give people the power to build community and
bring the world closer together.”
Twitter: “To give everyone the power to create and share
ideas and information instantly, without barriers.”
Google: “To organize the world’s information and make it
universally accessible and useful.”
Sources: Facebook's mission: https://investor.fb.com; Twitter's mission: https://investor.twitterinc.com;

Google's mission: https://about.google, accessed February 20, 2020.
© McGraw Hill 24
Establishing Major Goals
Strategic leadership:
• The ability of the CEO and top managers to
convey to their employees a compelling vision of
what they want the organization to achieve.
• Motivates employees.
© McGraw Hill 25
Formulating Strategy 1
Strategy formulation:
• The development of a set of corporate, business,
and functional strategies that allow an
organization to accomplish its mission and
achieve its goals.
© McGraw Hill 26
Formulating Strategy 2
SWOT analysis:
• A planning exercise in which managers identify
internal organizational strengths (S) and
weaknesses (W) and external environmental
opportunities (O) and threats (T).
© McGraw Hill 27
Figure 8.5 Planning and Strategy
Formulation
© McGraw Hill 28
Table 8.1 Questions for SWOT Analysis
Example of some questions to ask.
Potential Potential Potential

Strengths Opportunities Weaknesses Potential Threats
Well-developed Expand core Poorly developed Attacks on core
strategy? business(es)? strategy? business(es)?
Manufacturing Widen product Rising Increase in foreign
competence? range? manufacturing competition?
costs?
Brand-name Enter new related Loss of brand Potential for
reputation? businesses? name? takeover?
Ability to manage Apply-brand-name High conflict and Rising labor costs?
strategic change? capital in new politics?
areas?
Other strengths? Other opportunities? Other weaknesses? Other threats?
© McGraw Hill 29
The Five Forces 1
Level of rivalry in an industry.
Potential for new entrants.
Power of large suppliers.
Power of large customers.
Threat of substitute products.
© McGraw Hill 30
The Five Forces 2
Hypercompetition:
• Permanent, ongoing, intense competition brought
about in an industry by advancing technology or
changing customer tastes.
© McGraw Hill 31
Formulating Business-Level Strategies 1
Porter developed a theory of how managers

can select a business-level strategy.
• Reduces rivalry.
• Prevents new competitors from entering the
industry.
• Reduces the power of suppliers or buyers.
• Lowers the threat of substitutes, raising prices and
profits.
© McGraw Hill 32
Table 8.2 Porter’s Business-Level
Strategies
Number of Market Segments Served.
Many or Few Market

Strategy
Segments Served
Low-cost Many
Focused low-cost Few
Differentiation Many
Focused differentiation Fes
© McGraw Hill 33
Low-cost strategy:
• Driving the organization’s total costs down below
the total costs of rivals.
Differentiation:
• Distinguishing an organization’s products from
the products of competitors on dimensions such
as product design, quality, or after-sales service.
© McGraw Hill 34
Focused low-cost:
• Serving only one segment of the overall market
and trying to be the lowest-cost organization
serving that segment.
Focused differentiation:
• Serving only one segment of the overall market
and trying to be the most differentiated
organization serving that segment.
© McGraw Hill 35
Formulating Corporate-Level Strategies 1
Concentration on a single industry:

• Reinvesting a company’s profits to strengthen its
competitive position in its current industry.
Vertical integration:
• Expanding a company’s operations either
backward into an industry that produces inputs for
its products or forward into an industry that uses,
distributes, or sells its products.
© McGraw Hill 36
Figure 8.6: Stages in a Vertical Value
Chain
© McGraw Hill 37
Formulating Corporate-Level Strategies 2
Diversification: Examples:
• Expanding a
• PepsiCo’s diversification
company’s business
into the snack food
operations into a new
business with the purchase
industry in order to
of Frito Lay.
produce new kinds of
valuable goods or • Cisco’s diversification into
services. consumer electronics with
its purchase of Linksys.
© McGraw Hill 38
Diversification 1
Related diversification:
• Entering a new business or industry to create a
competitive advantage in one or more of an
organization’s existing divisions or businesses.
Synergy:
• Obtained when the value created by two divisions
cooperating is greater than the value that would
be created if the two divisions operated separately
and independently.
© McGraw Hill 39
Diversification 2
Unrelated diversification:
• Entering a new industry or buying a company in a
new industry that is not related in any way to an
organization’s current businesses or industries.
• Portfolio strategy.
• But there can be too much diversification.
© McGraw Hill 40
International Expansion 1
Global Strategy:
• Little to no customization to suit specific needs of
customers in different countries.
• Lowers production cost.
• Ignores national differences that local competitors
can address to their advantage.
• Example: Panasonic.
© McGraw Hill 41
International Expansion 2
Multidomestic Strategy:
• Customizing products and marketing strategies to
specific national conditions.
• Helps gain local market share.
• Raises production costs.
• Example: Unilever.
© McGraw Hill 42
Figure 8.7 Four Ways to Expand
Internationally
© McGraw Hill 43
Choosing a Way to Expand
Internationally
Managers need to analyze the forces in the country the
organization is contemplating expanding into in order choose
the correct method and the most appropriate way.
• Exporting and importing: The least complex.
• Licensing: The foreign organization takes charge.
• Franchising: The foreign organization buys the rights to use brand
name and operations know-how.
• Strategic alliances: The organization shares with the foreign company.
• Wholly owned foreign subsidiaries: The organization invest in
established production operations in a foreign country, independent of
any local direct involvement.
© McGraw Hill 44
Planning and Implementing Strategy
1. Allocate responsibility for implementation to the
appropriate individuals or groups.
2. Draft detailed action plans that specify how a strategy is to
be implemented.
3. Establish a timetable for implementation that includes
precise, measurable goals linked to the attainment of the
action plan.
4. Allocate appropriate resources to the responsible
individuals or groups.
5. Hold specific individuals or groups responsible for the
attainment of corporate, divisional, and functional goals.
© McGraw Hill 45
www.mheducation.com
Chapter 9
Value Chain Management:
Functional Strategies for
1. Explain the role of functional strategy and value

chain management in achieving superior quality,
efficiency, innovation, and responsiveness to
customers.
2. Describe what customers want, and explain why
it is so important for managers to be responsive
to their needs.
3. Explain why achieving superior quality is so
important, and understand the challenges facing
managers and organizations that seek to
implement total quality management.
© McGraw Hill 2
4. Explain why achieving superior efficiency is so

important, and understand the different kinds of
techniques that need to be employed to increase
efficiency.
5. Differentiate between two forms of innovation,
and explain why innovation and product
development are crucial components of the
search for competitive advantage.
© McGraw Hill 3
Figure 9.1 Four Ways to Create a
© McGraw Hill 4
Functional Strategies and Value
Chain Management 1
Functional-level strategy:
• Plan of action to improve the ability of each of an
organization’s departments to performs its task-
specific activities in ways that add value to an
organization’s goods and services.
© McGraw Hill 5
Chain Management 2
Value chain:
• The coordinated series or sequence of functional
activities necessary to transform inputs such as
new product concepts, raw materials, component
parts, or professional skills into the finished goods
or services customers value and want to buy.
© McGraw Hill 6
Chain Management 3
Value chain management:

• Development of a set of functional-level strategies
that support a company’s business-level strategy
and strengthen its competitive advantage.
© McGraw Hill 7
Figure 9.2 Functional Activities
and the Value Chain
Access the text alternative for slide images
© McGraw Hill 8
Chain Management 4
Product development:
• Engineering and scientific research activities
involved in innovating new or improved products
that add value to a product.
Marketing function:
• Once a new product is developed, marketing’s
task is to persuade customers that a product
meets their needs and to convince them to buy it.
© McGraw Hill 9
Chain Management 5
Materials management function:

• Controls the movement of physical materials from
the procurement of inputs through production and
into distribution and delivery to the customer.
© McGraw Hill 10
Chain Management 6
Production function:
• Production function is responsible for the creation,
assembly or provision of a good or service—for
transforming inputs into outputs.
• Production for physical products generally means
manufacturing or assembly.
• Production for services takes place when the
service is provided or delivered to the customer.
© McGraw Hill 11
Chain Management 7
Sales function:
• Plays a crucial role in locating customers and then
informing and persuading them to buy the
company’s products.
• Personal, face-to-face communication, selling to
existing and potential customers.
© McGraw Hill 12
Chain Management 8
Customer service function:

• Provides after-sales service and support.
• Can create a perception of superior value by
solving customer problems and supporting
customers.
© McGraw Hill 13
What Do Customers Want?
1. A lower price.
2. Products that are high-quality.
3. Quick service and good after-sales service.
4. Products with many useful or valuable
features.
5. Products that are tailored to their unique
needs.
© McGraw Hill 14
Customer Relationship Management
Customer relationship management (CRM):
• Technique that uses technology to develop an
ongoing relationship with customers to maximize
the value an organization can deliver to them over
time.
© McGraw Hill 15
Figure 9.3 Impact of Increased Quality
on Organizational Performance

© McGraw Hill 16
Total Quality Management
Total quality management (TQM):
• Focuses on improving the quality of an
organization’s products and stresses that all of an
organization’s value chain activities should be
directed toward this goal.
© McGraw Hill 17
Steps to Successful TQM
Implementation 1
1. Build organizational commitment to quality.

2. Focus on the customer.
3. Find ways to measure quality.
4. Set goals and create incentives.
5. Solicit input from employees.
© McGraw Hill 18
Steps to Successful TQM
Implementation 2
6. Identify defects and trace them to their

source.
7. Introduce just-in-time inventory systems.
8. Work closely with suppliers.
9. Design for ease of production.
10.Break down barriers between functions.
© McGraw Hill 19
Six Sigma
• A technique used to improve quality by
systematically improving how value chain activities
are performed and then using statistical methods
to measure the improvement.
• Founded by Motorola.
© McGraw Hill 20
Example – Meyers Brothers
Kalicka (MBK)
MBK values continuous learning, which laid the foundation
for involvement with Six Sigma. Some senior managers
attended a presentation on Six Sigma, and Melyssa Brown,
senior manager in the auditing department, underwent the
first level of training, earning a “green belt” certification.
Her improvements in the data sharing process improved
interaction with clients, reduced the unproductive client
hours, and increased delivery of services. She is now looking
at streamlining billing and administrative work.
© McGraw Hill 21
Facilities Layout, Flexible
Manufacturing, and Efficiency 1
Facilities layout:
• Strategy of designing the machine-worker
interface to increase operating system efficiency.
• Product.
• Process.
• Fixed Position.
© McGraw Hill 22
Facilities Layout, Flexible
Manufacturing, and Efficiency 2
Flexible manufacturing:
• The set of techniques that attempt to reduce the
costs associated with the product assembly
process or the way services are delivered to
customers.
• Able to produce many more varieties of a product
than before, in the same amount of time.
• Example: How patients are routed through a
hospital.
© McGraw Hill 23
Figure 9.4 Three Facilities Layouts
© McGraw Hill 24
Facilities Layout 1
Product layout:
• Machines organized so that each operation is
performed at work stations arranged in a fixed
sequence.
• Mass production.
• Car assembly lines.
© McGraw Hill 25
Facilities Layout 2
Process layout:
• Self-contained work stations not organized in a
fixed sequence.
• Product goes to whichever workstation needed
to perform next operation.
• More flexible, less efficient.
• Custom furniture manufacturer.
© McGraw Hill 26
Facilities Layout 3
Fixed-position layout:
• Product stays in fixed position and components
produced at remote stations brought to the
product for final assembly.
• Airplane manufacturing.
© McGraw Hill 27
Just-in-Time Inventory and Efficiency
Just-in-time (JIT) inventory system gets
components to the assembly line just as they
are needed to drive down costs.
Major cost savings can result from increasing
inventory turnover and reducing inventory
holding costs.
© McGraw Hill 28
Self-Managed Work Teams and
Efficiency
Self-managed work teams produce an
entire product instead of just parts of it.
Team members learn all tasks and move from
job to job.
Teams can increase productivity and
efficiency.
© McGraw Hill 29
Process Reengineering and Efficiency
Process reengineering:
• The fundamental rethinking and radical
redesign of business processes to achieve
dramatic improvement in critical measures of
performance such as cost, quality, service, and
speed.
© McGraw Hill 30
Information Systems, the Internet,
and Efficiency
Information systems:
Operating efficiencies and a lower cost structure.
Example of Cisco Systems.
Internet: Real-time information.
• Reduces the number of employees, reducing costs.
© McGraw Hill 31
Two Kinds of Innovation 1
Quantum product innovation:

The development of new, often radically different,
kinds of goods and services because of
fundamental shifts in technology brought about by
pioneering discoveries.
• Internet and the World Wide Web.
• Fast-casual food.
© McGraw Hill 32
Two Kinds of Innovation 2
Incremental product innovation:

The gradual improvement and refinement of existing
products that occur over time as existing
technologies are perfected.
Examples:
• Google’s Chrome: thousands of small improvements.
© McGraw Hill 33
Strategies to Promote Innovation and
Speed Product Development 1
Product development:
• Management of the value chain activities
involved in bringing new or improved goods and
services to the market.
• Example: Monte Peterson, former CEO of
Thermos, and the new barbecue grill.
© McGraw Hill 34
Establish cross-functional teams.

Involve both customers and suppliers.
Establish a stage-gate development
funnel.
© McGraw Hill 35
Stage-gate development funnel:

• A planning model that forces managers to choose
among competing projects so organizational
resources are not spread thinly over too many
projects.
• Example: 3M’s 15% rule.
© McGraw Hill 36
Figure 9.5 A Stage-Gate Development
Funnel
© McGraw Hill 37
A Stage-Gate Development Funnel 1
Product development plan:

• A plan that specifies all of the relevant information
that managers need in order to decide whether to
proceed with a full-blown product development
effort.
© McGraw Hill 38
A Stage-Gate Development Funnel 2
Contract book:
• A written agreement that details product
development factors such as responsibilities,
resource commitments, budgets, timelines, and
development milestones.
• Example: 3M team members and top
management negotiate contract at launch.
© McGraw Hill 39
Establish Cross-Functional Teams
Core members:
• Members of a team who bear primary
responsibility for the success of a project and who
stay with a project from inception to completion.
© McGraw Hill 40
Figure 9.6 Members of a Cross-Functional
Product Development Team
© McGraw Hill 41
www.mheducation.com
Chapter 10
Managing Organizational
Structure and Culture
Learning Objectives
1. Identify the factors that influence managers’ choice of an
organizational structure.
2. Explain how managers group tasks into jobs that are motivating
and satisfying for employees.
3. Describe the types of organizational structures managers can
design, and explain why they choose one structure over
another.
4. Explain why managers must coordinate jobs, functions, and
divisions using the hierarchy of authority and integrating
mechanisms.
5. List the four sources of organizational culture, and explain why
and how a company’s culture can lead to competitive
advantage.
© McGraw Hill 2
Organizational Structure
Organizational architecture:
• The organizational structure, control systems,
culture, and human resource management
systems that together determine how efficiently
and effectively organizational resources are used.
© McGraw Hill 3
Designing Organizational Structure 1
Organizing:
• Process by which managers establish the structure of
working relationships among employees to allow them to
achieve an organization’s goals efficiently and effectively.
© McGraw Hill 4
Designing Organizational
Structure 2
Organizational
structure:
• Formal system of task
and reporting
relationships that
coordinates and
motivates organizational
members so they work
together to achieve
© McGraw Hill 5
Structure 3
Organizational design:
• The process by which managers create a specific
type of organizational structure and culture so that
a company can operate in the most efficient and
effective way.
© McGraw Hill 6
Figure 10.1 Factors Affecting
Organizational Structure
© McGraw Hill 7
Structure 4
The way an organization’s structure works

depends on the choices managers make
about:
1. How to group tasks into individual jobs.
2. How to group jobs into functions and
divisions.
3. How to allocate authority and coordinate
functions and divisions.
© McGraw Hill 8
Grouping Tasks into Jobs:
Job Design
Job design:
• Job design is the process by which managers
decide how to divide tasks into specific jobs
(division of labor).
• The appropriate division of labor results in an
effective and efficient workforce.
© McGraw Hill 9
Job Design
Job simplification:
• The process of reducing the number of tasks that
each worker performs.
Job enlargement:
• Increasing the number of different tasks in a given
job by changing the division of labor.
Job enrichment:
• Increasing the degree of responsibility a worker
has over a job.
© McGraw Hill 10
Job Enrichment
1. Empowering workers to experiment to find
new or better ways of doing the job.
2. Encouraging workers to develop new skills.
3. Allowing workers to decide how to do the
work.
4. Allowing workers to monitor and measure
their own performance.
© McGraw Hill 11
The Job Characteristics Model 1
Skill variety:
• Employee uses a wide range of skills.
Task identity:
• Worker is involved in all tasks of the job from
beginning to end of the production process.
Task significance:
• Worker feels the task is meaningful to the
organization.
© McGraw Hill 12
The Job Characteristics Model 2
Autonomy:
• Employee has freedom to schedule tasks and
carry them out.
Feedback:
• Worker gets direct information about how well the
job is done.
© McGraw Hill 13
Grouping Jobs into Functions
Functional structure:
• Organizational structure composed of all the
departments that an organization requires to to
produce its goods or services.
© McGraw Hill 14
Figure 10.2 The Functional
Structure of the Home Depot
© McGraw Hill 15
Functional Structure 1
Advantages:
• Encourages learning from others doing similar
jobs.
• Easy for managers to monitor and evaluate
workers.
• Allows managers to create the set of functions
they need in order to scan and monitor the
competitive environment.
© McGraw Hill 16
Functional Structure 2
Disadvantages:
• Difficult for departments to communicate with
others.
• Preoccupation with own department and losing
sight of organizational goals.
© McGraw Hill 17
Divisional Structures: Product,
Market, and Geographic
Divisional structure:
• An organizational structure composed of separate
business units within which are the functions that
work together to produce a specific product for a
specific customer.
© McGraw Hill 18
Figure 10.3 Product, Geographic,
and Market Structures
© McGraw Hill 19
Types of Divisional Structures 1
Product structure:
• Managers place each distinct product line or
business in its own self-contained division.
• Divisional managers have the responsibility for
devising an appropriate business-level strategy to
allow the division to compete effectively in its
industry or market.
• GlaxoSmithKline groups research into 8 product
divisions to focus on particular clusters of
diseases.
© McGraw Hill 20
Product Structure
Advantages:
• Allows functional managers to specialize in one product
area.
• Allows division managers to become experts in their area.
• Removes need for direct supervision of division by
corporate managers.
• Allows divisional management to improve the use of
resources.
• Puts divisional managers close to customers for a quick
and appropriate response.
© McGraw Hill 21
Geographic structure:
• Divisions are broken down by geographic location.
Global geographic structure:

• Managers locate different divisions in each of the
world regions where the organization operates.
• This generally occurs when managers are
pursuing a multidomestic strategy.
© McGraw Hill 22
Figure 10.4 Global Geographic
and Global Product Structures
© McGraw Hill 23
Market structure
• Groups divisions according to the particular kinds
of customers they serve.
• Allows managers to be responsive to the needs of
their customers and act flexibly in making
decisions in response to customers’ changing
needs.
© McGraw Hill 24
Matrix Structure
• A matrix structure is an organizational structure
that simultaneously groups people and resources
by function and product.
• The structure is very flexible.
• Each employee has two bosses.
© McGraw Hill 25
Figure 10.5 Matrix Structure
Figure 10.5
Matrix and Product Team Structures
© McGraw Hill 26
Product Team Structure 1
Product team structure:

• Structure in which employees are permanently
assigned to a cross-functional team and report
only to the product team manager or to one of the
manager’s direct subordinates.
• Does away with dual reporting relationships and
two-boss managers.
© McGraw Hill 27
Product Team Structure 2
Cross-functional team:
• A group of managers brought together from
different departments to perform organizational
tasks.
• Example: Northwestern Mutual’s work on
redesigning visuals for customers.
© McGraw Hill 28
Figure 10.5 Product Team Structure
© McGraw Hill 29
Allocating Authority 1
Authority:
• Power to hold people accountable for their actions
and to make decisions concerning the use of
organizational resources.
Hierarchy of authority:
• An organization’s chain of command, specifying
the relative authority of each manager.
© McGraw Hill 30
Span of control:
• The number of subordinates who report directly to
a manager.
© McGraw Hill 31
Line manager:
• Someone in the direct line or chain of command
who has formal authority over people and
resources at lower levels.
Staff manager:
• Someone responsible for managing a specialist
function, such as finance or marketing.
© McGraw Hill 32
Tall and Flat Organizations 1
Tall structures have many levels of authority

and narrow spans of control.
• As hierarchy levels increase, communication gets
difficult, creating delays in the time being taken to
implement decisions.
• Communications can also become distorted as
they are repeated through the firm.
• Tall structures can become expensive.
© McGraw Hill 33
Tall Organizations
© McGraw Hill 34
Tall and Flat Organizations 2
Flat structures have fewer levels and wide

spans of control.
• Results in quick communications but can lead to
overworked managers.
© McGraw Hill 35
The Minimum Chain of Command
The organizing principle:
• Top managers should always construct a
hierarchy with the fewest levels of authority
necessary to efficiently and effectively use
organizational resources.
• David Novak of Yum Brands: aGOLead.
• Plexus Corp.: Empowered work teams.
© McGraw Hill 36
Centralization and
Decentralization of Authority
Decentralizing authority:
• Giving lower-level managers and non-managerial
employees the right to make important decisions
about how to use organizational resources.
• Flexible and responsive.
© McGraw Hill 37
Figure 10.8 Types and Examples
of Integrating Mechanisms
© McGraw Hill 38
• The shared set of beliefs, expectations, values,
and norms that influence how members of an
organization relate to one another and cooperate
to achieve organizational goals.
• Organizational values: The shared standards that
its members use to evaluate whether they have
helped the company achieve its vision and goals
© McGraw Hill 39
• Organizational norms: Specify or prescribe the
kinds of shared beliefs, attitudes, and behaviors
that its members should observe and follow.
• Informal, but powerful, rules about how employees
should behave or conduct themselves.
© McGraw Hill 40
Figure 10.9 Sources of an
Organization’s Culture
© McGraw Hill 41
Organizational ethics:
• The moral values, beliefs, and rules that establish
the appropriate way for an organization and its
members to deal with each other and with people
outside the organization.
© McGraw Hill 42
Employment Relationship
Human resource policies:
• Can influence how hard employees will work to
achieve the organization’s goals.
• How attached they will be to the organization.
• Whether or not they will buy into its values and
norms.
© McGraw Hill 43
Organizational Culture
Different kinds of structure give rise to
different kinds of culture.
Tall organizations have little personal
autonomy, perhaps a focus on authority.
Flat organizations might have more freedom
with a focus on creativity.
Centralized or decentralized might lead to
difference values.
© McGraw Hill 44
Strong, Adaptive Cultures versus
Weak, Inert Cultures
Adaptive cultures:
• Values and norms help an organization to build
momentum and to grow and change as needed to
achieve its goals and be effective.
Inert cultures:
• Those that lead to values and norms that fail to
motivate or inspire employees.
• Lead to stagnation and often failure over time.
© McGraw Hill 45
Example: A.C. Moore Arts & Crafts
A.C. Moore is organized with a functional
structure.
Examples of divisions are marketing and
merchandising, stores and loss prevention,
store operations, merchandise administration,
real estate, and legal.
© McGraw Hill 46
www.mheducation.com
Chapter 11
Organizational Control
and Change
Learning Objectives
1. Define organizational control, and explain how it increases
organizational effectiveness.
2. Describe the four steps in the control process and the way it operates
over time.
3. Identify the main output controls, and discuss their advantages and
disadvantages as means of coordinating and motivating employees.
4. Identify the main behavior controls, and discuss their advantages and
disadvantages as means of coordinating and motivating employees.
5. Discuss the relationship between organizational control and change,
and explain why managing change is a vital management task.
© McGraw Hill 2
What Is Organizational Control?
Organizational control:
• Managers monitor and regulate how efficiently and
effectively an organization and its members are
performing the activities necessary to achieve
© McGraw Hill 3
The Importance of Organization Control
To obtain superior efficiency, quality,

responsiveness to customers, and innovation:
• Control system to monitor inputs and outputs.
• Control system to monitor the quality of goods.
• Control system to monitor how well customer-contact
employees perform jobs.
• Control system to encourage risk-taking.
© McGraw Hill 4
Control Systems and Technology 1
Control systems:
• Formal, target-setting, monitoring, evaluation, and
feedback systems that provide managers with
information about whether the organization’s strategy
and structure are working efficiently and effectively.
© McGraw Hill 5
Figure 11.1 Three Types of Control
© McGraw Hill 6
Concurrent control:
• Control that gives managers immediate feedback on
how efficiently inputs are being transformed into
outputs so managers can correct problems as they
arise.
© McGraw Hill 7
Input Stage.
Feedforward control:
• Control that allows managers to anticipate problems
before they arise.
• Giving stringent product specifications to suppliers in
advance.
© McGraw Hill 8
Example: University of Alabama Gameday
The University of Alabama provides information

for fans to be ready for football game day
parking and events.
This is an example of feedforward control.
© McGraw Hill 9
Output Stage.
Feedback control:
• Control that gives managers information about
customers’ reactions to goods and services so
corrective action can be taken if necessary.
© McGraw Hill 10
Figure 11.2 Four Steps in Organizational
Control

© McGraw Hill 11
The Control Process 1
1. Establish standards of performance, goals,

or targets against which performance is to
be evaluated.
• Managers decide on the standards of performance,
goals, or targets that they will use in the future to
evaluate the performance of the entire organization
or part of it.
© McGraw Hill 12
2. Measure actual performance.

• Managers measure outputs resulting from worker
behavior or measure the behavior themselves.
• The more non-routine the task, the harder it is to
measure behavior or outputs.
© McGraw Hill 13
3. Compare actual performance against

chosen standards of performance.
• Managers evaluate whether, and to what extent,
performance deviates from the standards of
performance chosen in step 1.
© McGraw Hill 14
4. Evaluate the result and initiate corrective

action if the standard is not being
achieved.
• If managers decide that the level of performance is
unacceptable, they must try to change the way work
activities are performed to solve the problem.
© McGraw Hill 15
Figure 11.3 Three Organizational Control
Systems
Type of Control Mechanisms of Control
Output Financial measures of
control performance
Organizational goals
Operating budgets
Behavior Direct supervision
control Management by objectives
Rules and standard
operation procedures
Clan Values
control Norms
Socialization
© McGraw Hill 16
Financial Measures of Performance 1
Profit ratios:
• Measure how efficiently managers are using the
organization’s resources to generate profits.
Return on investment (ROI):

• Organization’s net income before taxes, divided by its
total assets.
• Most commonly used financial performance measure.
© McGraw Hill 17
Operating margin:
• Calculated by dividing a company’s operating profit by
sales revenue.
• Provides managers with information about how
efficiently an organization is utilizing its resources.
© McGraw Hill 18
Liquidity ratios:
• Measure how well managers have protected
organizational resources to be able to meet short-term
obligations.
Leverage ratios:
• Measure the degree to which managers use debt or
equity to finance ongoing operations.
© McGraw Hill 19
Activity ratios:
• Show how well managers are creating value from
organizational assets.
Inventory turnover:
• Measures how efficiently managers are turning inventory
over so excess inventory is not carried.
Days sales outstanding:

• Reveals how efficiently managers are collecting revenue
from customers to pay expenses.
© McGraw Hill 20
Figure 11.4 Organization wide Goal Setting

© McGraw Hill 21
Operating Budgets
• Blueprint that states how managers intend to use
organizational resources to achieve organizational
goals efficiently.
© McGraw Hill 22
Effective Output Control
Objective financial measures.
Challenging goals and performance standards.
Appropriate operating budgets.
© McGraw Hill 23
Problems with Output Control
Managers must create output standards that
motivate at all levels.
These should not cause managers to behave in
inappropriate ways to achieve organizational
goals.
© McGraw Hill 24
Behavior Control
Direct supervision:
• Managers who actively monitor and observe the
behavior of their employees.
• Teaches employees appropriate behaviors.
• Intervenes to take corrective action.
• Most immediate and potent form of behavioral control.
• Can be an effective way of motivating employees.
© McGraw Hill 25
Problems with Direct Supervision
Very expensive because a manager can
personally manage only a relatively small
number of employees effectively.
Can demotivate employees if they feel that they
are under such close scrutiny that they are not
free to make their own decisions.
© McGraw Hill 26
Management by Objectives 1
Management by objectives (MBO):

• A goal-setting process in which a manager and each
of his or her employees negotiate specific goals and
objectives for the subordinate to achieve and then
periodically evaluate the extent to which the
subordinate is achieving those goals.
© McGraw Hill 27
Management by Objectives 2
1. Specific goals and objectives are established

at each level of the organization.
2. Managers and their subordinates together
determine the employees’ goals.
3. Managers and their subordinates periodically
review the employees’ progress toward
meeting goals.
© McGraw Hill 28
Balanced Scorecard
Developed by Kaplan and Norton.
Extension of MBO, but more balanced.
Addresses financial matters as well as:
• Customer service.
• Internal business processes.
• Learning and growth.
© McGraw Hill 29
Bureaucratic Control
• Control by means of a comprehensive system of rules
and standard operating procedures (SOPs) that
shapes and regulates the behavior of divisions,
functions, and individuals.
© McGraw Hill 30
Problems with Bureaucratic Control
Rules are easier to make than discard, leading to
bureaucratic “red tape” and slowing
organizational reaction times to problems.
People might become so used to automatically
following rules that they stop thinking for
themselves.
© McGraw Hill 31
Clan Control
• The control exerted on individuals and groups in an
organization by shared values, norms, standards of
behavior, and expectations.
© McGraw Hill 32
Organizational Change
• Movement of an organization away from its present
state and toward some desired future state to increase
its efficiency and effectiveness.
© McGraw Hill 33
Figure 11.5 Organizational Control and
Change

© McGraw Hill 34
Figure 11.6 Lewin’s Force-Field Model of
Change

© McGraw Hill 35
Evolutionary and Revolutionary Change 1
Evolutionary change:
• Gradual, incremental, and narrowly focused.
• Constant attempt to improve, adapt, and adjust
strategy and structure incrementally to accommodate
changes in the environment.
© McGraw Hill 36
Evolutionary and Revolutionary Change 2
Revolutionary change:
• Rapid, dramatic, and broadly focused.
• Involves a bold attempt to quickly find ways to be
effective.
• Likely to result in a radical shift in ways of doing
things, new goals, and a new structure for the
organization.
© McGraw Hill 37
Figure 11.7 Four Steps in the
Organizational Change Process

© McGraw Hill 38
Implementing the Change 1
Top-down change:
• A fast, revolutionary approach to change in which top
managers identify what needs to be changed and then
move quickly to implement the changes throughout
the organization.
© McGraw Hill 39
Implementing the Change 2
Bottom-up change:
• A gradual or evolutionary approach to change in which
managers at all levels work together to develop a
detailed plan for change.
© McGraw Hill 40
Evaluating the Change
Benchmarking:
• The process of comparing one company’s
performance on specific dimensions with the
performance of other, high-performing organizations.
• Examples: Xerox benchmarking against L.L.Bean,
John Deere, and Proctor and Gamble.
© McGraw Hill 41
www.mheducation.com
Introduction to Accounting

In order to keep information recorded in the enterprise information system we need to use
accounting techniques

There are many kinds of accounting techniques:

● Management accounting:
o Focused on cost and revenues of products and services in order to allow managers
to take the most correct decisions

● Inventory accounting:
o Focused on determining the value of the inventory you have in stock at the end of a
certain year

● Accounting of Income - outcome:
o focused on "contabilità di cassa" > only those revenues and costs that have actually
been collected and paid are considered in the financial statements.

● Financial accounting /general accounting:
o Invented in 1450 a.d. by Pacioli, a religious person that wrote a book about
accounting in religious structures (he was focused on determining revenues and
costs for a religious structure)

The modern way in which we are taking accounting is just an implementation of Pacioli’s book.
The implementation was done by different professors during the IX - XX centuries and then
imported all over the world.
This method allows you to record every operation using a double perspective (Double-entry
bookkeeping):
● Financial perspective > considers credits, debts, financial income and outcomes
● Economic perspective > considers costs and revenues

Double-entry bookkeeping - How it works?

2 different counts:
● Financial counts
● Economical counts

Counts are represented with 2 different sections:
● To give (dare)
● To have (avere)

Financial perspective

● Each time we have a financial INCOME we have to write it in the TO GIVE section.
● Each time we have a financial OUTCOME we have to write it in the TO HAVE section

● When we originate a CREDIT, it goes in the TO GIVE section.
● When we originate a DEBIT, it goes in the TO HAVE section.
● When we PAY the DEBT, it goes in the TO GIVE section.
● When we COLLECT a CREDIT, it goes in the TO HAVE section

Economical perspective

Economical counts work in the opposite way than financial counts
● In the TO GIVE section you write down COSTS
● In the TO HAVE section you write down REVENUES

● Elementary rule: if you have an x value on the to give section, you must find the same value
x on the to have section (they must balance)

Final accounting reports

● Accounting rules are written by accounting authorities and they tell us how accounting
should be kept.
● These rules are mandatory.
● They are technical rules

● In EU these rules are called IAS/IFRS
o IAS = international accounting standards
o IFRS = international financial reporting system (new and updated version of the
accounting rules, based on the IAS)

● US GAAP = general accepted accounting principles (USA)

Thanks to these rules we can give the enterprise the accounting necessary and create accounting
reports which determine the profit and the loss in the last year

We can also create another report: the company heritage which measures the richness the
company has accumulated over time

The most important financial reports are:
● Profit and loss statement:
o Shows costs and revenues
o Revenues - costs = Profit (+) or loss (-)
● Balance sheet:
o Shows the company heritage and determines the company assets (a resource that a
company owns) and liabilities (something a company owes)

Examples of assets:
● Machinery
● Cash
● Inventory

Examples of liabilities ->financial resources:
● Bank loans
● Short term debts

Business Preparation PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Business Preparation PDF

Uploaded by

Copyright:

Available Formats

Introduction to Business administration

Prof. Adriano Cecconi

Introduction to Business Administration course

Good understanding of English language

1. Managers and managing

The main reference for the course is “Contemporary

For the topic of “Fundamentals of financial accounting”

Written exam is closed-book. Students cannot use

Number of questions: 15 + 1 very specific question

Time available to submit the test: 30 minutes

Maximum grade: 30 e Lode “30 with honors”

1. Describe what management is, why management is

4. Distinguish among three kinds of managerial skill, and

General definitions (1)

• A company is a legal entity formed by a group of individuals

• 2) What an enterprise is?

• Enterprise refers to a for-profit business started and run by an

General definitions (2)

• 2) What an entrepreneur is?

Access the text alternative for slide images.

1. Individuals generally learn through personal

By studying management in school, you are

2. The economic benefits of becoming a good

Access the text alternative for slide images.

Managers deciding how best to organize

The outcome of the control process is the

She is open to international expansion.

She employs locals who bring their cultural knowledge to the

The profits of Match Group reflect Ginsberg’s success.

Type of Role Specific Role Examples of Role Activities

Table 1.1 Managerial Roles Identified by Mintzberg

Type of Role Specific Role Examples of Role Activities

Table 1.1 Managerial Roles Identified by Mintzberg

Type of Role Specific Role Examples of Role Activities

Table 1.1 Managerial Roles Identified by Mintzberg

First-line managers (often called supervisors):

Figure 1.4 Relative

Access the text alternative for slide images.

Access the text alternative for slide images.

Build a competitive advantage.

Maintain ethical and socially responsible standards.

Manage a diverse workforce.

Utilize new technologies.

Practice global crisis management.

Innovation and Flexibility

1. Create teams to facilitate rapid decision- making

Natural causes: Human causes:

Figure 3.1: The Big Five Personality Traits

Access the text alternative for slide images.

Personality traits that enhance managerial

Figure 3.2: Measures of

Access the text alternative for slide images.

© McGraw Hill Source: L. R. Goldberg, Oregon Research Institute, http://ipip.ori.org/ipip/. 10

Will I be a successful manager?

Internal locus of control:

External locus of control:

High self-esteem causes a person to feel

People with low self-esteem have poor opinions

Need for achievement:

Need for affiliation:

Need for power:

Effective tools in helping managers assess

DiSC Inventory Profile: