Management and Its Evolution

MANA 3319 Ch 1-Ch7 Notes

Ch1 Management and its Evolution.

A Firm needs to be Successful and Effective. A firm can be efficient by making the best use of people, money, physical plants, and technology. It is ineffective if its goals do not provide a sustained competitive advantage. Successful organizations know how to manage people and resources efficiently and effectively to accomplish organizational goals and to keep those goals in tune with changes in the external environment.

Business in the 21st century is different: 1. Emphasis on the Management of Change 2. Increasing Emphasis on Customer Service 3. Need for Higher Business Ethics.

Manager: A person who is responsible for making resource allocation decisions and with the formal authority to direct others i. Operational- lowest level, supervise the affairs of the organization ii. Tactical- translate general goals into specific activities iii. Strategic- senior executives responsible for overall development. A Manager needs to:  Have a holistic view  Effective and Efficient Planning  Integrity, honesty, respect  Good Communication

Team: A set of people performing a task to attain a common goal. Cross-functional teams: Composed of individuals from different parts of the organization Cross-disciplinary: Composed of team members with diverse background

Functions of Management a. Planning: assesses the management environment to set future objectives and map out activities necessary to achieve those objectives COORDINATION is required b. Organizing: determines how the firm’s human, financial, physical, informational, and technical resources are arranged and coordinated to perform tasks to achieve desired goals.RESOURCE deployment is required c. Leading : energizes people to contribute their best individually and in cooperation with other people COMMUNICATION, MOTIVATION are required d. Controlling: measures performance, compares it to objectives, implements necessary changes, and monitors progress. FEEDBACK, PROBLEM SOLVING are required.

Roles of Managers  Interpersonal- involving interaction with superiors, peers and subordinates and people outside the organization.  Figurehead  Leader  Liaison  Informational- Obtaining, interpreting and giving out a great deal of information.  Monitor  Disseminator  Decisional- Choosing among alternatives, balancing interests of various parties.  Entrepreneur  Disturbance handler

A Pandey MANA 3319 Ch 1-Ch7 Notes  Resource allocator  Negotiator

Principles of Taylors Scientific Management a. Scientifically study each part of a task develop the best method of performing the task. b. Carefully select workers and train them to perform the task by using the scientifically developed method. c. Cooperate fully with workers to ensure that they use the proper method. d. Divide work and responsibility so that management is responsible for planning work methods using scientific principles and workers are responsible for executing the work accordingly.

Weber’s Ideal Bureaucracy a. Specialization of labor b. Formal rules and procedures c. Impersonality d. Well-defined hierarchy e. Career advancement based on merit

Functional approach to management a. Unity of command b. Unity of direction c. Equity

The Behavioral Perspective of Management is based on the fact that psychological and social processes of human behavior can result in improvements in productivity and work satisfaction. Human Relations Approach - the relationship between employees and a supervisor is a vital aspect of management. It involves:  Employee motivation  Leadership style

McGregor’s Theory X and Theory Y a. Theory X assumes that employees are inherently lazy and lack ambition. negative perspective on human behavior. b. Theory Y assumes that most employees do not dislike work and want to make useful contributions to the organization. positive perspective on human behavior.

Systems Theory  The organization is a system of interrelated parts that function in a holistic way to achieve a common purpose.  Input process output occurs  Environment= external market  Feedback is an important component  Important concepts are: A. Open and closed systems- open interact with environment, closed do not. B. Subsystems- interdependent parts of the system C. Synergy- whole greater than the parts D. Equifinality- same goal different routes

Contingency Theory  There is no “one best way” to manage an organization.  what works for one organization may not work for another

A Pandey MANA 3319 Ch 1-Ch7 Notes  Contingencies: are Situational characteristics which differ from situation to situation.  Managers need to understand the key contingencies that determine the most effective management practices in a given situation

The Learning Organization  The management approach based on an organization anticipating change faster than its counterparts to have an advantage in the market over its competitors.  Rather than reacting to change , which is a normal part of the business landscape, organizations need to anticipate change so they are well positioned to satisfy customer needs.

A Pandey MANA 3319 Ch 1-Ch7 Notes

The Culture of Management

Culture:- the collective programming of the mind

Culture shock- a person is exposed to a new culture with different norms, customs, expectations, has difficulty in adjusting

Dimensions

 Power Distance  Individualism  Uncertainty avoidance  Masculinity/feminity  Long-term/short term orientation

Change in world Business

1. Global Shift: The effects of changes in the competitive landscape prompted by worldwide competition. 2. Lowered trade barriers a. General Agreement on Tariffs and Trade (GATT) b. World Trade Organization (WTO) 3. Integrated Economic Markets a. The European Union (EU) b. The North American Free Trade Act (NAFTA) c. Central American-Dominican Republic Free Trade Agreement (CAFTA) d. The Association of Southeast Asian Nations (ASEAN) e. The Asia Pacific Economic Cooperation (APEC) 4. Global consumer preferences a. Tastes and preferences are converging b. Presence of mass media, exposure to goods from various countries, and standardized product 5. Globalized production a. Cost efficiency – Outsourcing, 6. Technological innovations a. Advances in communications, information processing, and transportation technology b. Fiber optics, wireless technology, the Internet and World Wide Web, and satellite technology 7. Management across cultures: Adaptation to business strategies, structures, operational policies, and human resource programs

Foreign expansion-

Firms are likely to expand in places with :

a. Large domestic market

A Pandey MANA 3319 Ch 1-Ch7 Notes b. Wealth of customers high likely to grow c. Available resources d. Firms offerings are suitable to the market( coals to New Castle) e. A positive business environment exists

Modes of Entry:

Name and Definition Pros Cons Exporting: entering new markets by Economies of scale No low cost sales sending products to other countries, still Lower foreign expenses High transportation costs maintaining production facilities within the Potential tariffs domestic borders Turnkey Project: specialized type of Access to closed Competition from local client exporting, where the firm handles the markets Loss of competitive advantage startup of the company and a local client is then handed the key

Licensing: entering new markets by Quick expansion Loss of competitive advantage transferring the rights to produce and sell Lower expenses and Limited ability to use profits in one products overseas to a foreign firm risks country to increase competition in Lower political risk another country

Franchising: entering new markets in Quick expansion Loss of competitive advantage which the franchise pays a fee for using the Lower development Potential quality control problems brand name and agrees to follow the costs and risks Limited ability to use profits in one standards and rules Lower political risk country to increase competition in another country

Joint Venture: means of entering new Knowledge of local Potential for conflict of interest markets where two or more independent markets Loss of competitive advantage firms agree to establish a separate firm Lower development costs and risk Access to closed markets Strategic Alliance: : cooperative Access to closed Loss of competitive advantage arrangements between competitors or markets Potential overestimation of partner’s potential competitors from different Pooled resources capabilities countries increase partner’s capabilities Complementary skills & assets Wholly owned Subsidiary: entering new Maximum control over Large capital outlay markets in which a firm fully owns its proprietary knowledge/ Lack of local knowledge subsidiary in foreign countries technology Increased risk Greater strategic flexibility Efficiencies of global production system

Basic Approaches to Managing an International Subsidiary

i. Ethnocentric Approach- top management and key positions filled with people from the home country (expatriates) ii. Polycentric Approach- staffed by nationals of the host country iii. Geocentric Approach- staffed by qualified people from other countries

A Pandey MANA 3319 Ch 1-Ch7 Notes iv. Third Country Nationals- citizens from other countries.

International Assignments End in Failure due to:

a) Career blockage – the feeling that working abroad has gotten their career sidetracked, while people back home are climbing the corporate ladder b) Culture shock – the inability to adjust to a different cultural environment c) Lack of pre-departure cross-cultural training – little if any is offered to expatriates before going to a different country. d) Overemphasis on technical qualifications – the expatriate may lack cultural adaptability, even though they have the technical skills e) Getting rid of a troublesome employee – provides the ability to solve interpersonal conflict, but at a huge expense to the company f) Family problems – inability or unwillingness of the expatriate’s family to adapt to life in another country

Cross-cultural Training

 Impression Management – High intensity. Assessment center, field experiences, simulations, sensitivity training  Affective Approach- Language training, role-playing, critical incidents, cases, stress-reduction training, moderate language training  Information-Giving Approach- area briefing, cultural briefing, films/ books/ interpreters, survival-level language

A Pandey MANA 3319 Ch 1-Ch7 Notes Ch3 Managing Social Responsibility and Ethics Benefits of Social Responsibility -Organizations with CSR are good corporate citizens to the community and to the environment. – Policies can enhance the image of a company as well as its product brands from the perspective of the consumers. – Have fewer conflicts with stakeholder groups who disagree with the company over how it uses its resources. – Are more likely to influence stakeholders to become loyal customers and become advocates of the company’s products. – Research shows that corporate social responsibility is related to higher financial performance and the ability to recruit better quality job applicants.

Costs/ Disadvantages of CSR: • Socially responsible companies may:  Lose focus on the business goals while focusing on goals related to good corporate citizenship.  Divert needed resources for improving the business into other social responsibility projects which could put a company at a competitive disadvantage.

ETHICS: guidelines on right and wrong, good and bad, and what is appropriate or inappropriate in various settings. Business ethics provide standards or guidelines for the conduct and decision making of employees and managers. Without a code of ethics:  There is no consensus regarding ethical principles  Different people will use different ethical criteria in determining whether a practice or behavior is ethical or unethical Business ethics are not the same things as law

Various Ethical Approaches Individuals Rights Approach: Individualism Approach: Matter Each person has fundamental Personal self interests should be human rights that should be promoted as long as they DO NOT respected and protected. harm others. Conflicting rights should be sorted It is in people’s self interest to do out while making decisions business with ethical firms and other people. Justice Approach: Utilitarianism Approach: Treating all people justly and fairly Decisions should be made on the when making decisions. basis of what is good for the greatest Distributive Justice number of people. Procedural Justice A solution that satisfies most of the people is chosen. Community Matters

Egalitarian Economic Freedom  Libertarian

Ethical Issues in Business- The different contexts are:  Employee-Employer Relations- eg.Petty theft of office supplies  Employer-Employee Relations- eg Sexual harassment  Company-Customer Relations- eg Deceptive marketing or advertising  Company-Shareholder Relations- eg Excessive pay for top executives  Company-Community/Public Interest- eg Sponsoring activities that harm the environment.

Value Systems: People utilize different ethical value systems based on: 1. Personal experiences 2. Religious background 3. Education 4. Family training Organizations need to ensure agreement about relevant criteria on which to judge the ethics of a business decision, so that people do not base their decision on personal value systems. They need to establish a. Code b. Credo- eg Johnson and Johnson c. Ethical Policy Statements

Managing Ethics a. Ethics Training Contains three elements: a. Messages from top executives emphasizing ethical business practices b. Discussion of Code of Ethics c. Procedures for discussing or reporting unethical behavior b. Ethical Structures Procedures and divisions or departments within a company that promote and advocate ethical behavior. There are two types of ethical structures: i. Ethics Officer ii. Ethics Committee c. Whistleblower Policies  Reporting unethical conduct.  Procedures to deal fairly with reported violations.  Protection from retaliation.  Alternative reporting procedures.  Anonymous reporting to an ethics officer/committee.  Feedback to employees on ethics violations.  Top management support and involvement.

Mangers Can Influence the Ethical Behavior of Associates by:  Actions to develop trust.  Acting consistently.  Being truthful and avoiding white lies and manipulative actions.  Demonstrating integrity.  Meeting with employees to discuss and define what is expected of them.  Ensure employees are treated equitably.  Adhering to clear standards that are seen as just and reasonable.  Respecting employees.

Ethical Dilemmas at the workplace Performance appraisal

A Pandey MANA 3319 Ch 1-Ch7 Notes Formal evaluations of an employee’s performance provided on a recurring basis To perform effective evaluations, the supervisor should devote substantial time to collecting accurate performance information Rating are used for: Letting employees know which skills they have mastered and which require improvement A basis for pay increases, future work assignments, promotions, and sometimes layoffs

Employee discipline Guidelines for giving employee discipline in a fair and impartial way: Notify employees in advance of a company’s work rules and the consequences for violating them Investigate the facts of an employee’s misconduct before applying discipline Be consistent in the response to rule violations

Office romance Suggestions for ethical employee conduct in a romantic relationship in the workplace: Public displays of affection at work should be discouraged Employees should be prohibited from dating people they directly supervise

Giving gifts in the workplace Ethical test of accepting gifts: Think about how a manager or co-worker would perceive the gift and the person who gave it If you feel uncomfortable explaining the gift, the discomfort probably means it would be ethically problematic The laws and ethics related to giving gifts between parties as a business practice are highly diverse from culture to culture

Stakeholders: Owners, Employees, Government, Customer, Community, Competitor, Social Groups, Strategies for Managing Stakeholders  Confrontation strategies use courts, public relations, and lobbying to fight a stakeholder group.  Damage control strategies admit mistakes and attempt to improve public image and their relationship with stakeholders.  Accommodation strategies accept social responsibility for business practices and make appropriate changes.  Proactive strategies signify a partnership with the stakeholder and go beyond the groups expectations.

A Pandey MANA 3319 Ch 1-Ch7 Notes Ch4 Managing Organizational Culture and Change

Change: a planned event or an unplanned condition a. Planned Change--change that is anticipated and allows for advanced preparation b. Dynamic Change--change that is ongoing or happens so quickly that the impact on the organization cannot be anticipated and specific preparations cannot be made

External Forces: Put pressure on a firm’s relationships with customers, suppliers, and employees. • Environmental forces include:  Technology  Market forces  Political and regulatory agencies and laws  Social trends Internal Forces: • Events within the company. • May originate with top executives and managers and travel top-down • May originate with front-line employees or labor unions and travel bottom-up .

Resistance to Change: It is caused by: 1. Lack of Trust and Understanding 2. Self Interest 3. Uncertainty 4. Different Perspectives and Goals 5. Cultures that Value Tradition

Models of Change Lewin’s( next page) Lawler’s Star Model • The Star Model: Five Points - Each of the following can be seen as one of the points of a star.  Types of change-evolutionary or transformational  Structure: decisions and people  Reward system: Team or Individual  Processes: Information Communication, behavior Control  People: Skills and Capabilities, within or outside the system. Organizational Culture, which derives from these 5 points and is thus included in the model.

Organizational Change can be implemented in the following ways: a. Top-down Change: initiated by executives b. By Change Agents: people who act as catalysts to change c Bottom-up Change: originates with employees

How to implement Change effectively: 1. Communication and Education 2. Employee involvement 3. Negotiation 4. Coercion 5. Top Management Support

A Pandey MANA 3319 Ch 1-Ch7 Notes Lewin’s Three Step Model:

Desired state 3. Refreezing: change becomes routine

2. Change: departure from the status quo

Present State 1. Unfreezing: melting away resistance

Force Field Analysis: gives us

Desired state

Decrease Restraining Restraining Forces Increase Driving Forces forces Both

Status quo

Driving forces

Organizational culture is a system of shared values, assumptions, beliefs, and norms that unite the members of an organization ("The way things are done around here"). Levels of corporate culture:

A Pandey MANA 3319 Ch 1-Ch7 Notes Visible culture can be seen heard, and felt. It is viewed by dress, pace, office design, and through the use of status and power symbols. Espoused values cannot be readily observed but understood by the ways managers justify actions and decisions. Core beliefs are widely shared, operate unconsciously, and are non-negotiable.

Importance of Culture Employee Self-Management - Induce employees to behave in a particular way without close supervision or formal mechanisms, many of which are informal and unspecified. Stability - cultures creates a sense of continuity in the midst of change and intense competitive pressure. Socialization – the process of internalizing or taking organizational values as one’s own. Stages are: : Pre-arrival Encounter stage Metamorphosis stage Implementation of the Organization's Strategy – If strategy and culture reinforce each other, employees find it natural to be committed to the strategy.

Cultural Processes Cultural Symbols - includes acts, events, and objects that communicate organizational values Company Rituals and Ceremonies - opportunities to share cultural meanings Company Heroes - individuals whose deeds reflect what the organization believes in, so others will emulate them Stories - narratives and legends that capture the organization's values Language - can be positive or negative (sexist remarks, racism, slogans) Leadership - judged by what executives do (more than what they say) Organizational Policies and Decision-Making – performance appraisals, budgets, new plans, and other policies and decisions communicate company values and culture

Characteristics and Types of Organizational Culture 1. Cultural Uniformity versus Heterogeneity - includes the presence of subcultures versus a. more uniform culture that permeates the entire organization 2. Strong versus Weak Cultures - a strong culture pressures workers to get in line without formal control mechanisms, but can also become a liability if it presents a barrier to adaptation in a rapidly changing environment 3. Culture versus Formalization - the extent to which formal rules, procedures, policies and supervision are used 4. National versus Organizational Culture - global versus local; a firm should retain the type of employee that fits into its culture regardless of where it is located

Approaches to Culture: Traditional Control or Employee Involvement a. Traditional control – emphasizes the chain of command and relies on top-down control and orders b. Employee involvement – emphasizes participation and involvement Four Types of Culture Classification: i. Baseball team culture, rapidly changing environment, short product life cycle, high risk decision making, dependent on innovation for survival; often characterized by "free agents" ii. Club culture seeks people who are loyal, committed, and need to fit into a group iii. Academy culture, hires people willing to make a slow steady climb up the ladder iv. Fortress culture, obsessed with surviving and reversing sagging fortunes

Competing values framework—for evaluating organizational cultures Based on two dimensions: focus and control

A Pandey MANA 3319 Ch 1-Ch7 Notes Focus – whether the primary attention of the organization is directed toward internal dynamics or directed outward toward the external environment Control – the extent to which the organization is flexible or fixed in how it coordinates and control activities

A Pandey MANA 3319 Ch 1-Ch7 Notes Ch5 Managing the Planning Process Planning: It is the management function that maps objectives; andactivities necessary to achieve those objectives. It involves careful resource allocation and implementation guidelines.

Benefits of Planning  Assessment of external forces o Develop a sense of direction and purpose o Identifying the factors that affect the organization  Encouraging participation o Coordination of efforts o Establishment of priorities  Focusing attention on different time horizons o Understanding circumstances contributing to past success or failure o Ensuring the availability of adequate resources o Establishing performance standards  Supporting organizational control systems o Developing “what if” scenarios o Management development

Pitfalls of Planning Poor forecasts of future conditions – Plans imposed from above – Planning as a self-contained activity Extensive bureaucratization – Inflexible adherence to objectives and processes

Successful planning: contains the following elements: Decentralizing the planning powers- Using both numerical and judgmental methods Viewing planning as continuous and capable of adapting to change Avoiding paralysis of the analysis Concentrating on a manageable set of issues

Formal planning Identify objectives Structure the major tasks of the organization to accomplish them. Opportunistic planning triggered by unforeseen circumstances. can coexist with formal planning and help the formal plan function more smoothly.

The formal Planning process consists of: i. Setting objectives ii. Charting a course of action to meet the objectives iii. Implementation

Setting Objectives- objectives need to be Specific Measurable Attainable Realistic Timely.( SMART)  more general at the top and become more specific at the lower level  reflect its mission  specific and measurable.  challenging and achievable  specify a timetable or deadline for accomplishment.  should be prioritized.

MBO or management by Objectives is a technique used in modern management. It involves

1. Establish Mutually 3. Formally Evaluate Agreed Objectives Extent to Which between Employee Objectives Were Met and Supervisor or Exceeded

4. Monitor 2. Develop Action Progress toward Plan to Accomplish Achievement of Objectives Objectives (Ongoing)

Planning in an organization is Strategic, Tactical and Operational( just like the levels of managers) Strategic plans need to have Proactivity – The degree to which the strategic action plan takes a long-term view of the future. Congruency – The extent to which the strategic action plan fits with organizational characteristics and the external environment. Synergy – The integration of the efforts of various organizational subunits to better accomplish corporate-wide business objectives.

Tactical plan: Division of Labor – The formal assignment of authority and responsibility to job holders.  Helps ensure that tasks of jobholders are appropriate for accomplishing the department’s tactical action plan, which in turn should support the organization’s strategic action plan. Budgeting – Controlling and allocating funds.  Variable budgeting  Moving budgeting

Operational plans: Operation Cycle:

Control

Inputs Transformation Outcome

Feedback Loop The benefits of Operational planning: i. incremental learning. ii. The ability to visualize alternative types of operations – that is, alternative ways to use resources to create a product or service. iii. The ability to predict the effects of modifications in operations on the efficiency of operations. iv. The ability to evaluate the effectiveness of operations.

Plans are implemented by: i. Authority ii. Persuasion iii. Policy iv. Feedback mechanism

The 6-step problem solving model: 1. Identify performance gaps. 2. Identify tasks and work processes. 3. Check for organizational congruence. 4. Align in-congruencies or inconsistencies to effectively implement the plan. 5. Execute the plan. 6. Learn from the consequences.

Dealing with Change: i. Deal with power and politics ii. Reduce individual anxiety and resistance iii. Maintaining control during the transition period

Guidelines for managers engaged in planning: i. Focus on the Customer ii. Ensure Goal congruity with the organization. iii. Establish an effective goal-driven plan. iv. Planning should not become a straitjacket. v. Engage others in plan design and implementation.

Ch 6 Decision Making Decision Making: It is the process of identifying problems and opportunities and resolving them. Management decisions can be made by managers, teams, or individual employees, depending on:  The scope of the decision, and  The design and structure of the organization.  conditions of risk and uncertainty  lack of information and a limited amount of time available Procrastinating and not making a decision sometimes has greater risk than making it.

Characteristics of Management Decision making: Programmability: Programmed Decisions- established Routines and procedures Non-programmed Decisions- Unique situation with no previous routines Uncertainty: Certainty-all information needed to make decision is available Uncertainty- incomplete information is available about a particular decision Risk – occurs when the outcome of management decision is uncertain  Risk has positive and negative aspects  Decision environment for risk vary depending upon company culture and size Conflict – occurs when there are opposing goals, scares resources, or differences in priorities Crisis – a situation that involves small amounts of time to make a decision that can impact the survival of the organization Decision Scope – the effect and time horizon of a decision. Decisions are made at all leels( remember chapter 1) The scope and time horizon of these decisions varies. Strategic Decisions – long term perspective of 2-5 years and affect on the organization Tactical Decisions – short term perspective of 1 year or less and focus on subunits Operational Decisions – shortest time perspective, generally less than a year, often measured on a daily or weekly basis

Decision making process: 1. identify and Diagnose the problem 2. Generate Alternative Solutions 3. Evaluate Alternatives 4. Select the best alternative 5. Implement the decision 6. Evaluate the decision

Evaluating Alternatives Decision criteria should be related to the performance goals of the organization and its subunits. Decision criteria can include:  Costs  Profits  Timeliness  Whether the decision will work  Fairness A practical way to apply decision criteria is to consider: a. Decision quality – aspect of decision making based on such facts as costs, revenues, and product design specifications b. Decision acceptance – aspect of decision making based on people’s feelings.

Selecting the best alternative: Optimizing – selecting the best alternative from among multiple criteria

A Pandey MANA 3319 Ch 1-Ch7 Notes Satisficing – selecting the first alternative solution that meets a minimum criterion.

Successful implementation: Providing resources (staff, budgets, office space) that will be needed for the activities that are required for successful implementation. Exercising leadership to persuade others to move the implementation forward. Developing communication and information systems that enable management to know if the decision alternative is meeting its planned objectives. Recognition and rewards for individuals and teams that are successful with implementation.

Rational Decision Making Process- So far we have discussed the rational decision making process with the following assumptions:  The problem is clear and unambiguous.  There is a single, well-defined goal that all parties agree to.  Full information is available about criteria.  All the alternatives and their consequences are known.  The decision preferences are clear.  The decision preferences are constant and stable over time.  There are no time and cost constraints affecting the decision.  The decision solution will maximize the economic payoff These are unrealistic and idealistic. In real life Rational Decision making is limited by:  Organization politics  Emotions and Personal Preferences  Illusion of Control

Non-rational Decision Making Models: 1. Administrative Model Bounded rationality – the ability of a manager to be perfectly rational is limited by factors such as cognitive capacity and time constraints Heuristics , or decision rules, quickly eliminate alternatives . Applied by decision makers Satisficing, heuristic applied to seek out the first decision alternative that appears to be satisfactory It is an accurate model many management decisions. 2. Garbage Can Model Managers have a set of pre-established solutions to problems located in “garbage cans.” These are used when decision makers are undisciplined and have no clear immediate goals. This Lacks structure and can lead to serious difficulties.

Group Decision Making: Leadership Style:  Decide and persuade  Discover facts and decide  Consult and decide  Consult with group and decide  Group decision Devil’s Advocate: the role of criticizing and challenging decision alternatives that are agreed on by other members of the group, to induce creative conflict and possible alternative better solutions. Stimulating Creativity Brainstorming generate creative ideas for solving problems by reducing critical and judgmental reactions to ideas from group members Storyboarding – a variation of brainstorming in which group members jot down ideas on cards and then can shuffle, rewrite, or even eliminate cards to examine complex processes Nominal group technique (NGT) – a decision making technique that helps a group generate and select solutions while letting group members think independently Delphi technique – a decision making technique in which group members are presented with a problem and complete an anonymous questionnaire soliciting solutions.

Skills for decision making are: Time management skills: To make good decisions, managers need time to understand the problem and develop creative solutions. i. Plan a list of things that need to be done today. ii. Plan weekly, monthly, and annual schedules of activities. iii. Schedule difficult and challenging activities when you are at your highest level of energy and alertness. iv. Set deadlines. v. Answer phone messages and e-mail in batches during a lull in your work schedule. vi. Have a place to work uninterrupted. vii. Do something productive during non-productive activities. Delegation skills: Managers who know how to delegate are able to accomplish more than those who feel the need to be involved in every decision, no matter how trivial. i. Determine the task ii. Match the desired task with the most appropriate employee. iii. Communicate clearly iv. Keep communication channels open. v. Allow employees to do the task the way they feel comfortable doing it. vi. Trust employees’ capabilities. vii. Check on the progress of the assignment. viii. Hold the employee responsible for the work. ix. Recognize what the employee has done, and show appropriate appreciation

A Pandey MANA 3319 Ch 1-Ch7 Notes Ch 7 Strategic Management The Strategic Management Process- It is the job of the top management to chart the course of the entire organization. It involves both long-range thinking and adaptation to changing conditions. Strategies should be designed to generate sustainable competitive advantage. Steps in the process: 1. Analyze the internal and external environment 2. Define the strategic intent and mission 3. Formulate strategies 4. Implement strategies 5. Assess strategic outcomes

Analyzing External and Internal Environments SWOT Analysis – A strategic management tool to evaluate the firm, which is accomplished by identifying its strengths and weaknesses and identifying its opportunities and threats. 1. Analyze the organization's internal environment, identifying its strengths and weaknesses 2. Analyze the organization's external environment, identifying its opportunities and threats 3. Crossmatch strengths with opportunities, weaknesses with threats, strengths with threats, and weaknesses with opportunities.

The External Environment: Management needs to: Identify opportunities and threats in the marketplace. Avoid surprises. Respond appropriately to competitors’ moves.

Components of External Environment Scanning - analysis of the general environmental factors that may directly or indirectly be relevant to the firm's future Monitoring - observing environmental changes on a continuous basis to determine whether a clear trend is emerging Forecasting - the firm predicts what is likely to happen in the future, the intensity of the anticipated event, its importance to the firm, and the pace and time frame. Assessing - evaluating the environmental data received to study the implications for the firm. Scope of the External Analysis The General Environment - broad environmental forces and trends (population growth, economic conditions) Demographic Trends – the study of population characteristics, including population size, age distribution, ethnic mix, levels of labor force participation by women, and the size and composition of families Economic Conditions – the economy of a region surrounding a company has a major impact on the strategic success of that company Political/Legal Forces – the segment of the environment in which government policies and actions take place that also has major effects on firms Socio-cultural Conditions – the norms, values, and preferences of a society Technological Changes – the segment of the environment in which new knowledge is created and transformed into innovative products, services, or inputs Globalization – firms are becoming increasingly dependent on foreign markets for raw materials, as well as for processing and the sale of products and services

The Industry Environment: An industry is composed of a group of firms with products that can substitute for each other. The best-known framework for analyzing industry environment was developed by Michael Porter . Called Porter’s Five Forces Framework, it analyzes threats on the basis of: a. Threat of new entrants b. Threat of substitute products c. Threat of Suppliers Bargaining Power

A Pandey MANA 3319 Ch 1-Ch7 Notes d. Threat of Buyers bargaining power e. Threat of intensity of rivalry amongst competitors. Strategic Groups - A strategic group consists of a cluster of firms within an industry that tend to adopt common strategies of technological leadership, quality standards, prices, distribution channels, and customer service Competitor Analysis - study each major company providing competition

The Internal Environment Core Competencies: Things a company does well. Resource based view is a strategic management viewpoint that bases business strategy on what the firm is capable of doing and provides a more sustainable competitive advantage than basing it on external opportunities Resource Types 1.Tangible resources are assets that can be quantified and observed, such as financial resources, physical assets, and manpower 2.Intangible resources are resources that are difficult to quantify and include on a balance sheet. The three most strategically important intangible resources are . Reputation: Other things being equal, consumers tend to buy products from a firm that is held in high regard . Technology: Valuable patents, copyrights and trade secrets . Human capital: The skills, knowledge, reasoning, and decision-making abilities of the workforce which support a firm’s innovation and productivity Analyzing the Firm's Capabilities 1. Functional analysis – establishes organizational capacities for each of the major functional areas of the business 2. Value chain analysis – breaks down the firm into a sequential series of activities and attempts to identify the value added of each activity 3. Benchmarking - the assessment of capabilities by comparing the firm’s activities or functions with those of other firms, which includes  Identifying activities or functions that are weak and need improvement  Identifying firms that are on the leading edge of these activities or functions  Studying the leading edge firms  Using the information to redefine goals, modify processes, acquire resources, and engage in improvement

Strategic Intent and Mission Strategic Intent - the firm’s internally focused definition of how the firm intends to use its resources, capabilities, and core competencies to win competitive battles Strategic Mission – the firm’s externally focused definition of what it plans to produce and market, utilizing its internally based core competence

Strategy Formulation - the design of the approach to achieve the firm's mission Corporate level strategy – the corporation’s overall plan concerning the number of businesses the corporation holds, the variety of markets or industries it serves, and the distribution of resources among those businesses. 1. Portfolio Analysis – classifies the businesses of a diversified company within a single framework a. McKinsey-General Electric Portfolio Analysis Matrix The model has two sides and classifies all businesses held by a diversified corporation . The horizontal side refers to the health of the business unit in terms of markets of the business, its competitive situation, and its profitability . The vertical side reflects the attractiveness of the industry of the business unit

A Pandey MANA 3319 Ch 1-Ch7 Notes b. Boston Consulting Group’s Growth Share Matrix . Also referred to as the BCG matrix . The horizontal axis refers to the business unit’s market share and the vertical axis refers to the annual real rate of market growth. . The matrix provides four quadrants: Question Mark, Stars, Cash Cows, and Dogs; and recommends a set of strategies for divisions falling in each of these quadrants.

Types of diversification a. Concentration strategy – a form of diversification strategy that focuses on a single business operating in a single industry segment) b. Vertical integration strategy – a form of diversification strategy in which a firm integrates vertically by acquiring businesses that are supply channels or distributors to the primary business c. Concentric diversification – a form of diversification strategy in which the firm expands by creating or acquiring new businesses that are related to the firm’s core business d. Conglomerate diversification – a form of diversification strategy that involves managing a portfolio of businesses that are unrelated to each other

1. Business-level Strategy Cost leadership strategy – provide products and services that cost less than competitors

Differentiation strategy – delivering products and services that customers perceive as unique. Competitive dynamic - the actions and counteractions of firms competing in a particular industry segment

Strategy Implementation - the process of carrying out the strategy .

A Pandey