Recent Trends in Management

WHAT IS GLOBALIZATION?

•Globalization is the trend of the world economy

toward becoming a more interdependent
system

•Today, we are witnessing a shrinking of time

and space as air travel and the electronic media
have made it easier for people around the world
to communicate with each other
•We call this the global village
Globalisation

Globalisation
could involve
all these
things!
 IS GLOBALIZATION A GOOD THING?
•The global economy refers to the increasing
tendency of the economies of the world to interact
with one another as one market instead of many
national markets
•Growth in jobs and income in one country means
growth in jobs and income in other countries—a
win-win situation
•However, global interdependency can be negative
when negative events in one country generate
negative events in other countries
•Outsourcing jobs also brings negative effects to the
country that loses the jobs
•Two types of firms are emerging in the world
economy: mergers of huge companies into even bigger
companies, and small, fast-moving start-up companies
•Companies in many industries are merging with other
companies to be bigger, cross-border enterprises
•Almost any firm can operate globally today
•Thanks to the Internet and World Wide Web, small
companies can get started more easily, and small
companies can maneuver faster
 WHY SHOULD YOU LEARN ABOUT INTERNATIONAL MANAGEMENT?

•International managers oversee the conduct of

operations in, or with, organizations in foreign
countries
•Operations can be multinational corporations
(business firms with operations in several
countries) or multinational organizations
(nonprofit organizations with operations in
several countries)
You need to learn about international management because
you may find yourself in any of the following situations:

•dealing with customers or partners from different cultures

•buying components, raw materials, or services from foreign
suppliers
•working for a superior from a foreign country
•working in a foreign subsidiary or for a foreign firm located
in another country
 WHY DO COMPANIES EXPAND INTERNATIONALLY?

Firms expand internationally to take advantage of:

1. Availability of supplies - some companies have to go to
foreign countries to get their supplies
2. New markets - when domestic demand declines,
companies need to find new markets
3. Lower labor costs - manufacturing is cheaper where
wages are lower
4. Access to finance capital - foreign financing, either
private or through a government, can entice companies
to go international
5. Avoidance of tariffs & import quotas - companies might
establish a foreign subsidiary to avoid tariffs or quotas
 HOW DO COMPANIES EXPAND INTERNATIONALLY?

There are five ways to expand internationally:

1. Global outsourcing - many companies engage in
global outsourcing (using suppliers outside the
country to provide goods and services)
2. Importing, exporting, & countertrading - a
company that buys goods outside the country and
resells them domestically is importing, while a
company that produces goods domestically and sells
them outside the country is exporting, and
countertrading occurs when a firm barters for goods
3. Licensing & franchising - licensing (when a company allows
a foreign company to pay a fee to make or distribute the first
company’s product or service) and franchising (when a
company allows a foreign company to pay a fee and a share of
the profits in exchange for using the first company’s brand
name and a package of materials and services) are very similar
4. Joint ventures - when firms join forces to share the risks and
rewards of starting a new enterprise together in a foreign
country, they form a joint venture or strategic alliance
5. Wholly-owned subsidiaries - a foreign subsidiary that is
totally owned and controlled by an organization is a wholly
owned subsidiary
HOW CAN MANAGERS ADJUST TO ECONOMIC DIFFERENCES IN OTHER COUNTRIES?

•Managers need to consider economic systems,

economic development, infrastructure and
resources, and currency exchange rates in
foreign markets

•There are three types of economic systems:

free market, command, and mixed
 The Importance Of Understanding
Cultural Differences

•Managers need to bridge cross-cultural gaps by

understanding basic cultural across four areas
1. Language - more than 3,000 different languages are
spoken in the world
•Managers can either speak their own language, use a
translator, or learn the local language
2. Interpersonal space - how close people should be
when communicating varies by culture
•Some cultures like the people of Latin America prefer
a smaller interpersonal space, whereas others, like the
people of Northern Europe prefer to be further apart
3. Time orientation - time orientation varies by culture
•Americans practice monochromatic time (a preference
for doing one thing at a time)
•Arab cultures follow polychromatic time (preference for
doing more than one thing at a time)
4. Religion - Christianity has the largest following with 2.1
billion adherents, Islam is next with 1.3 billion followers,
then Hinduism, Buddhism, and Judaism
•Organizations need to consider the impact of religious
differences on employee groups
Business Ethics and Social
Responsibility
 f or E t h i ca l
Concern s
ta l Is s u e
and Socie
Business Ethics
The standards of conduct and moral values governing actions and decisions in
the work environment.
– Social responsibility.
– Balance between what’s right and what’s profitable.
– Often no clear-cut choices.
– Often shaped by the organization’s ethical climate.

Sarbanes-Oxley Act
2002 law that added oversight for the nation’s major companies and a special
oversight board to regulate public accounting firms that audit the financial
records of these corporations.
 t em p o rar y
The Con n t
i ron m e
Ethical Env
• High profile investigations and
arrests in headlines.
• Vast majority of businesses
ethical.
• New corporate officers charged
with deterring wrongdoing and
ensuring ethical standards.
 id u al s M a ke
Indiv
AD i f fe r en c e
• Individuals can make the difference in ethical
expectations and behavior
– Putting own interest ahead of the
organization
– Lying to employee
– Misrepresenting hours
– Safety violations
– Internet Abuse
• Technology is expanding unethical behavior
 l o pm e n t o f
Deve
u al E th i c s
Individ
 ob E t h ic al
On-the-J
Dilemmas

Telling the
truth and
Situation in which a adhering to
business decision deeply felt
may be influenced ethical
for personal gain. principles in
business
decisions.
Businesspeople
expect
Employee’s employees to be
disclosure of loyal
illegal, and truthful, but
immoral, or ethical conflicts
unethical may arise.
practices in the
 g a n i z ati o n s
How Or ct
E t h ic a l C o n d u
Sh ap e
 w a re n e ss
Ethical A

Code of Conduct Formal

statement that defines
how the organization
expects and requires
employees to resolve
ethical questions.
 E du ca ti on
Ethical

Codes of conduct cannot

detail a solution for every
ethical situation, so
corporations provide
training in ethical
reasoning.
 Eth i c al Acti on

Helping employees
recognize and reason
through ethical problems
and turning them into
ethical actions.
 eade rs hi p
Ethical L

Executives must
demonstrate ethical
behavior in their
actions.
 po n s i b ly t o
Acting Res
y So c i e ty
Satisf
Social Responsibility
• Management’s consideration of profit, consumer
satisfaction, and societal well-being of equal value in
evaluating the firm’s performance.
• Contributions to the overall economy, job opportunities,
and charitable contributions and service.
• Organizations measure through social audits.
 e spo n si b il ity
Areas of R
 ib i li ti e s t o
Respons
e ra l P u b li c
the Gen
• Public Health Issues. What to do about inherently dangerous products
such as alcohol, tobacco, vaccines, and steroids.
• Protecting the Environment. Using resources efficiently, minimizing
pollution.
• Recycling. Reprocessing used materials for reuse.
• Developing the Quality of the Workforce. Enhancing quality of the
overall workforce through education and diversity initiatives.
• Corporate Philanthropy. Cash contributions, donations of equipment
and products, and supporting the volunteer efforts of company
employees.
 i bi li ti e s to
Respons
Cu st o m e r s

• The Right to Be Safe. Safe operation of products, avoiding product liability.

• The Right to Be Informed. Avoiding false or misleading advertising and providing
effective customer service.
• The Right to Choose. Ability of consumers to choose the products and services
they want.
• The Right to Be Heard. Ability of consumers to
express legitimate complaints to the appropriate parties.
 i bi li ti es to
Respons
E mp lo y e e s
• Workplace Safety. Monitored by
Occupational Safety and Health Administration.
• Quality-of-Life Issues. Balancing work and family through flexible work
schedules, subsidized child care, and regulation such as
the Family and Medical Leave Act of 1993.
• Ensuring Equal Opportunity on the Job. Providing equal opportunities
to all employees without discrimination; many aspects regulated by
law.
• Age Discrimination. Age Discrimination in Employment Act of 1968
protects workers age 40 or older.
• Sexual Harassment and Sexism. Avoiding unwelcome actions of a
sexual nature; equal pay for equal work without regard to gender.
 i bi li ti es to
Respons
Investors

• Obligation to make profits for shareholders.

• Expectation of ethical and moral behavior.
• Investors protected by regulation by the
Securities and Exchange Commission
and state regulations.
 Business Process Reengineering
Business Process Reengineering (BPR) is the
means by which an organization achieves
radical change in performance as measured by
cost, cycle time, service, and quality, by the
application of a variety of tools that focus on a
set of customer-oriented core business
processes.
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 Types of Reengineering
• Type 1 - Process Improvement;
cost-reduction focus
• Type 2 - To achieve parity, or “best-in-class;”
competitive focus
• Type 3 - Searching core business for
breakpoints; rewriting the rules
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 BPR Process

• Frame the project

• Create the vision, values and goals
• Redesign the business operation
• Conduct proof of concept
Andrews & Stalick, Business Reengineering: The
Survivor’s Guide
33
 BPR Process

• Plan the implementation

• Obtain implementation approval

• Implement the redesign

• Transition to a continuous improvement state

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The Dimensions of Business Process
Reengineering

• Physical/Technical Layer

– Process structure

– Technical structure

– Organization structure

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The Dimensions of Business Process
Reengineering

• Infrastructure Layer

– Reward structure

– Measurement systems

– Management methods

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The Dimensions of Business Process
Reengineering

• Value Layer

– Organizational culture

– Political power

– Individual belief systems

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 The Top Ten Ways to Fail at Reengineering

1. Don’t reengineer but say that you are.

2. Don’t focus on processes.
3. Spend a lot of time analyzing the current
situation.
4. Proceed without strong executive leadership.
5. Be timid in redesign.
Hammer & Champy, The Reengineering Revolution, 1995

38
The Top Ten Ways to Fail at Reengineering

6. Go directly from conceptual design to

implementation.
7. Reengineer slowly.
8. Place some aspects of the business off-
limits.
9. Adopt a conventional implementation style.
10. Ignore the concerns of your people.
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 Benchmarking

Benchmarking is the search for the

“best practices” that will lead to

superior performance of an

organization.
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 Benchmarking is NOT
• A cure for all organizational ills
• A means to justify blatant personnel cuts
• A one-shot program
• A process cookbook with no creativity
• A process to conduct industrial espionage
• A one-way information flow
• An improvement tool requiring little cost or effort

41
 Benchmarking Approaches

• Performance benchmarking
– To identify candidates for conducting
benchmarking studies

• Process benchmarking
– To identify the “best practices”

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 Types of Benchmarking

• Internal

– Comparing yourself against a similar

process, product, or service within your own

organization

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 Types of Benchmarking

• Competitive

– Comparing yourself against the toughest

external competitor or against world-class

companies in your industry

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 Types of Benchmarking

• Generic/Functional

– Comparing yourself against a world-class

company that is not even in your industry,

but that uses a process similar to yours

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 Benchmarking Process

1. Getting Organized
– Obtain management buy-in
– Communicate and educate benchmarking
concepts
– Plan the overall benchmarking process
– Address fear and concerns

46
 Benchmarking Process

2. Preparing to Benchmark
– Identify process to benchmark

– Establish benchmark team

– Understand existing process

– Determine process metrics

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 Benchmarking Process
3. Conduct Research
– Who performs similar processes
– Who performs the best
– What information is needed
4. Select the organization to Benchmark
– Establish a relationship
– Reach an agreement on the exchange
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 Benchmarking Process

5. Collect Data and Information

– Identify sources of data/information
• Site visits
• Interviews
• Third parties
• Documents
– Plan and collect data/information
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 Benchmarking Process

6. Analyze and Adapt the Process

– Compare the data/information
– Determine process gaps
– Establish improvement goals
– Design the improved process
– Estimate the improvement

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 Benchmarking Process

7. Implement the New Process

– Train the affected staff
– Implement the process on a trial basis
– Monitor the results
– Adjust and adapt
– Adopt the process
– Celebrate
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Change Management
 Change Management
Change management is the process, tools and
techniques to manage the people side of change
to achieve the required business outcome.

Change management incorporates the

organizational tools that can be utilized to help
individuals make successful personal transitions
resulting in the adoption and realization of
change.
 Reasons for Change
It is natural for organizations to experience
change throughout time:
• Leadership/personnel
• Mission/expectations
• Equipment/resources
• Societal/environmental
• Natural/forced (significant event)
 Barriers to Change
Famous one-liners:
• In my previous unit we did it like this.
• My last unit was awesome.
• I don’t want to train a new boss.
• The new leader thinks they know everything.
• This is how we do it.
• I was taught to do it like this.
• This organization stinks.
• We never had that problem before.
 Barriers to Change (cont.)
Observed Barriers
– Members showing up late to meetings.
– Members walking away when leadership is speaking
to them.
– Members rolling their eyes during meetings.
– Appearance standards decrease.
 Process for Change

Monitor Performance

Change Management

Current Transition Future

 Strategies for Change (cont.)
How leaders get the “buy in” from everyone?
– Prepare
– “A-B-C”
– Reinforce commitment to change
 Strategies for Change (cont.)
Example of Change Management using the
7 step Problem Solving Process

Situation: In your current organization, mid-

grade leaders are having problems getting
subordinates to follow their instructions.
Strategies for Change (cont.)

1. Problem
 Strategies for Change (cont.)

Jobs are not getting completed on time, people

are getting more on the job injuries
 Strategies for Change (cont.)

2. Gather Facts and Make Assumptions

 Strategies for Change (cont.)
The facts are:
– There has been a decrease in productivity by 10%
– There has been an increase of safety mishaps by 20%
over the last 12 months.
The assumptions are:
– Subordinates are not being trained to standards.
– Mid-level supervisors are not monitoring subordinates.
– Shortcuts are being done within the workplace and
policies are not being followed.
 Strategies for Change (cont.)

3. Define End States and Establish Criteria

 Strategies for Change (cont.)
End state:
– Priority 1* Eliminate all future safety mishaps.
– Priority 2* Eliminate the decrease in productivity
and increase productivity by additional 10%.
Strategies for Change (cont.)

4. Develop Possible Solutions

 Strategies for Change (cont.)
Priority 1* (Possible Solutions)
• Re-train all employees on safety procedures
• Make all high risk areas supervised
• Only supervisors handle equipment
• Purchase additional safety equipment
• Hire a team to monitor employees just for safety violations
Priority 2* (Possible Solutions)
• Pay members based on output rather than flat/hourly salary.
• Hold managers accountable for not meeting production
standards.
• Incentives for supervisors for meeting/exceeding quotas.
• Fire nonproductive employees
• Identify if problem is due to reduction of employees
Strategies for Change (cont.)

5. Analyze and Compare Possible Solutions

 Strategies for Change (cont.)
Priority 1* Safety
• Re-train all employees on safety procedures- Possible
solution
• Make all high risk areas supervised- Possible solution (would
have to hire additional employees)
• Only supervisors handle equipment- Not a solution (time
consuming)
• Purchase additional safety equipment - Possible solution
• Hire a team to monitor employees just for safety violations-
Not an option (costly)
 Strategies for Change (cont.)
Priority 2* Decrease in productivity
• Pay members based on output rather than flat/hourly salary.-
Not a solution (pay is strictly restricted)
• Hold managers accountable for not meeting production
standards.- Possible solution (counseling, denied
advancement)
• Incentives for supervisors for meeting/exceeding quotas.-
Possible solution (time off/ training opportunities)
• Fire nonproductive employees- Not a solution (lengthy
process)
• Reward employees for meeting quotas. Possible solution
(awards, time off)
Strategies for Change (cont.)

6. Select and Implement Solution

 Strategies for Change (cont.)
Priority 1* Safety
• Identify if new safety equipment is needed (if yes, purchase new
equipment when possible)
• Ensure supervisors are monitoring subordinates
• Re-train all employees on safety procedures
– Prepare time on work schedule /calendar
– Ensure senior leadership is present during training
• Ensure all members are aware of the increased mishaps
Priority 2* Decrease in productivity
• Reward employees for meeting quotas.
– Create/modify recognition system
– Recognize performers through an internal promotion program
Strategies for Change (cont.)

7. Analyze Solution for Effectiveness

 Strategies for Change (cont.)
Priority 1* Safety
• Review the safety mishaps, check for improvements or if
additional modifications must be implemented.
Priority 2* Decrease in productivity
• Review the output of products/services to determine if
solution worked.
 Follow-up
Conduct follow-ups to ensure success:
–Face to face
–Observations
–Surveys