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Principles of Management Openstax Rice University 6100 Main Street MS-375 Houston, Texas 77005 Principles of Management OpenStax Rice University 6100 Main Street MS-375 Houston, Texas 77005 To learn more about OpenStax, visit https://openstax.org. Individual print copies and bulk orders can be purchased through our website. ©2019 Rice University. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0). 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For questions regarding this licensing, please contact [email protected]. Trademarks The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, OpenStax CNX logo, OpenStax Tutor name, Openstax Tutor logo, Connexions name, Connexions logo, Rice University name, and Rice University logo are not subject to the license and may not be reproduced without the prior and express written consent of Rice University. PRINT BOOK ISBN-10 0-9986257-6-0 PRINT BOOK ISBN-13 978-0-9986257-6-8 PDF VERSION ISBN-10 0-9986257-7-9 PDF VERSION ISBN-13 978-0-9986257-7-5 10 9 8 7 6 5 4 3 2 1 OPENSTAX OpenStax provides free, peer-reviewed, openly licensed textbooks for introductory college and Advanced Placement® courses and low-cost, personalized courseware that helps students learn. A nonprofit ed tech initiative based at Rice University, we’re committed to helping students access the tools they need to complete their courses and meet their educational goals. RICE UNIVERSITY OpenStax, OpenStax CNX, and OpenStax Tutor are initiatives of Rice University. As a leading research university with a distinctive commitment to undergraduate education, Rice University aspires to path-breaking research, unsurpassed teaching, and contributions to the betterment of our world. It seeks to fulfill this mission by cultivating a diverse community of learning and discovery that produces leaders across the spectrum of human endeavor. PHILANTHROPIC SUPPORT OpenStax is grateful for our generous philanthropic partners, who support our vision to improve educational opportunities for all learners. Laura and John Arnold Foundation The Maxfield Foundation Arthur and Carlyse Ciocca Charitable Foundation Burt and Deedee McMurtry Ann and John Doerr Michelson 20MM Foundation Bill & Melinda Gates Foundation National Science Foundation Girard Foundation The Open Society Foundations Google Inc. Jumee Yhu and David E. 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The future of education. openstax.org TABLE OF CONTENTS Preface 1 1 Managing and Performing 7 1.1 What Do Managers Do? 8 1.2 The Roles Managers Play 9 1.3 Major Characteristics of the Manager's Job 12 2 Managerial Decision-Making 21 2.1 Overview of Managerial Decision-Making 23 2.2 How the Brain Processes Information to Make Decisions: Reflective and Reactive Systems 26 2.3 Programmed and Nonprogrammed Decisions 28 2.4 Barriers to Effective Decision-Making 31 2.5 Improving the Quality of Decision-Making 35 2.6 Group Decision-Making 45 3 The History of Management 55 3.1 The Early Origins of Management 58 3.2 The Italian Renaissance 61 3.3 The Industrial Revolution 61 3.4 Taylor-Made Management 63 3.5 Administrative and Bureaucratic Management 68 3.6 Human Relations Movement 71 3.7 Contingency and System Management 75 4 External and Internal Organizational Environments and 81 Corporate Culture 4.1 The Organization's External Environment 84 4.2 External Environments and Industries 88 4.3 Organizational Designs and Structures 91 4.4 The Internal Organization and External Environments 103 4.5 Corporate Cultures 109 4.6 Organizing for Change in the 21st Century 111 5 Ethics, Corporate Responsibility, and Sustainability 119 5.1 Ethics and Business Ethics Defined 121 5.2 Dimensions of Ethics: The Individual Level 122 5.3 Ethical Principles and Responsible Decision-Making 125 5.4 Leadership: Ethics at the Organizational Level 129 5.5 Ethics, Corporate Culture, and Compliance 136 5.6 Corporate Social Responsibility (CSR) 139 5.7 Ethics around the Globe 143 5.8 Emerging Trends in Ethics, CSR, and Compliance 147 6 International Management 157 6.1 Importance of International Management 159 6.2 Hofstede's Cultural Framework 164 6.3 The GLOBE Framework 172 6.4 Cultural Stereotyping and Social Institutions 177 6.5 Cross-Cultural Assignments 183 6.6 Strategies for Expanding Globally 186 6.7 The Necessity of Global Markets 189 7 Entrepreneurship 207 7.1 Entrepreneurship 209 7.2 Characteristics of Successful Entrepreneurs 215 7.3 Small Business 219 7.4 Start Your Own Business 222 7.5 Managing a Small Business 231 7.6 The Large Impact of Small Business 234 7.7 The Small Business Administration 235 7.8 Trends in Entrepreneurship and Small-Business Ownership 237 8 Strategic Analysis: Understanding a Firm’s Competitive 247 Environment 8.1 Gaining Advantages by Understanding the Competitive Environment 249 8.2 Using SWOT for Strategic Analysis 250 8.3 A Firm's External Macro Environment: PESTEL 252 8.4 A Firm's Micro Environment: Porter's Five Forces 257 8.5 The Internal Environment 261 8.6 Competition, Strategy, and Competitive Advantage 266 8.7 Strategic Positioning 269 9 The Strategic Management Process: Achieving and Sustaining 279 Competitive Advantage 9.1 Strategic Management 281 9.2 Firm Vision and Mission 281 9.3 The Role of Strategic Analysis in Formulating a Strategy 283 9.4 Strategic Objectives and Levels of Strategy 284 9.5 Planning Firm Actions to Implement Strategies 288 9.6 Measuring and Evaluating Strategic Performance 297 This OpenStax book is available for free at http://cnx.org/content/col28330/1.8 10 Organizational Structure and Change 305 10.1 Organizational Structures and Design 306 10.2 Organizational Change 313 10.3 Managing Change 318 11 Human Resource Management 339 11.1 An Introduction to Human Resource Management 340 11.2 Human Resource Management and Compliance 343 11.3 Performance Management 345 11.4 Influencing Employee Performance and Motivation 349 11.5 Building an Organization for the Future 354 11.6 Talent Development and Succession Planning 356 12 Diversity in Organizations 369 12.1 An Introduction to Workplace Diversity 370 12.2 Diversity and the Workforce 371 12.3 Diversity and Its Impact on Companies 382 12.4 Challenges of Diversity 386 12.5 Key Diversity Theories 391 12.6 Benefits and Challenges of Workplace Diversity 394 12.7 Recommendations for Managing Diversity 396 13 Leadership 407 13.1 The Nature of Leadership 408 13.2 The Leadership Process 410 13.3 Types of Leaders and Leader Emergence 415 13.4 The Trait Approach to Leadership 421 13.5 Behavioral Approaches to Leadership 424 13.6 Situational (Contingency) Approaches to Leadership 428 13.7 Substitutes for and Neutralizers of Leadership 433 13.8 Transformational, Visionary, and Charismatic Leadership 436 13.9 Leadership Needs in the 21st Century 440 14 Work Motivation for Performance 449 14.1 Motivation: Direction and Intensity 451 14.2 Content Theories of Motivation 454 14.3 Process Theories of Motivation 469 14.4 Recent Research on Motivation Theories 486 15 Managing Teams 497 15.1 Teamwork in the Workplace 498 15.2 Team Development Over Time 500 15.3 Things to Consider When Managing Teams 504 15.4 Opportunities and Challenges to Team Building 508 15.5 Team Diversity 510 15.6 Multicultural Teams 512 16 Managerial Communication 523 16.1 The Process of Managerial Communication 524 16.2 Types of Communications in Organizations 526 16.3 Factors Affecting Communications and the Roles of Managers 530 16.4 Managerial Communication and Corporate Reputation 533 16.5 The Major Channels of Management Communication Are Talking, Listening, Reading, and Writing 534 17 Organizational Planning and Controlling 549 17.1 Is Planning Important 550 17.2 The Planning Process 553 17.3 Types of Plans 559 17.4 Goals or Outcome Statements 563 17.5 Formal Organizational Planning in Practice 565 17.6 Employees' Responses to Planning 569 17.7 Management by Objectives: A Planning and Control
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