Chapter Six What Is the Global Environment? Managing in the Global Environment Global Environment Set of forces and conditions in the world outside the organization s boundaries that affect the way it operates and shape its behavior Changes over time Presents managers with opportunities and threats 5-2 Task Environment The General Environment Task Environment Set of forces and conditions that originate with suppliers, distributors, customers, and competitors Affects an organization s ability to obtain inputs and dispose of its outputs Most immediate and direct effect on managers Economic Forces factors that affect the general health and wellbeing of a country or world region Interest rates, inflation, unemployment, economic growth 5-3 5-4 Process of Globalization Globalization Set of specific and general forces that work together to integrate and connect economic, political, and social systems across countries, cultures, or geographical regions Result is that nations and peoples become increasingly interdependent Figure 6.4 5-5 5-6 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 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 5-7 5-8 Achievement versus Nurturing Orientation Achievement-oriented societies value assertiveness, performance, and success and are results-oriented. Nurturing-oriented cultures value quality of life, personal relationships, and service. Uncertainty Avoidance Societies and people differ in their tolerance for uncertainty and risk. Low uncertainty avoidance cultures (e.g., U.S. and Hong Kong) value diversity and tolerate a wide range of opinions and beliefs. High uncertainty avoidance societies (e.g., Japan and France) are more rigid and expect high conformity in their citizens beliefs and norms of behavior. 5-9 5-10 Chapter Seven Long-term vs. Short-term Orientation Cultures with a long-term orientation rest on values such as thrift and persistence in achieving goals Cultures with a short-term orientation are concerned with maintaining personal stability or happiness and living for the present Decision Making, Learning, Creativity and Entrepreneurship 5-11 2
The Nature of Managerial Decision Making 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. Decision Making Programmed Decision Routine, virtually automatic process 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 5-13 5-14 The Classical Model of Decision Making The Administrative Model Administrative Model An approach to decision making that explains why decision making is inherently uncertain and risky and why managers can rarely make decisions in the manner prescribed by the classical model Figure 7.1 5-15 5-16 Six Steps in Decision Making Group Decision Making Superior to individual making Choices less likely to fall victim to bias Able to draw on combined skills of group members Improve ability to generate feasible alternatives Figure 7.4 5-17 5-18 3
Organizational Learning and Creativity Organizational Learning and Creativity Organizational learning Managers seek to improve a employee s desire and ability to understand and manage the organization and its task environment so as to raise effectiveness. Learning organization Managers try to maximize the people s ability to behave creatively to maximize organizational learning. Creativity The ability of the decision maker to discover novel ideas leading to a feasible course of action. A creative management staff and employees are the key to the learning organization. 5-19 5-20 Building Group Creativity Chapter Eight Nominal Group Technique Provides a more structured way to generate alternatives in writing and gives each manager more time and opportunity to come up with potential solutions Useful when an issue is controversial and when different managers might be expected to champion different courses of action The Manager as a Planner and Strategist 5-21 Planning and Strategy Levels of Planning Planning Identifying and selecting appropriate goals and courses of action for an organization. The organizational plan that results from the planning process details the goals and specifies how managers will attain those goals. Corporate-Level Plan Top management s decisions pertaining to the organization s mission, overall strategy, and structure. Provides a framework for all other planning. Corporate-Level Strategy A plan that indicates in which industries and national markets an organization intends to compete. 5-23 5-24 4
Levels of Planning Levels of Planning Business-Level Plan: Long-term divisional goals that will allow the division to meet corporate goals Division s business-level and structure to achieve divisional goals Functional-Level Plan Goals that the managers of each function will pursue to help their division attain its businesslevel goals Functional Strategy A plan of action that managers of individual functions can take to add value to an organization s goods and services 5-25 5-26 Determining the Organization s Mission and Goals Planning and Strategy Formulation 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 Figure 8.5 5-27 5-28 The Five Forces Formulating Business-Level Strategies Level of rivalry in an industry Potential for new entrants Power of large suppliers Power of large customers Threat of substitute products Low-Cost Strategy Driving the organization s total costs down below the total costs of rivals. Differentiation Distinguishing the organization s products from those of competitors on one or more important dimensions. 5-29 5-30 5
Formulating Business-Level Strategies Four Ways to Expand Internationally Focused Low-Cost Serving only one market segment and being the lowest-cost organization serving that segment. Focused Differentiation Serving only one market segment as the most differentiated organization serving that segment. Figure 8.7 5-31 5-32 Chapter Nine Four Ways to Create a Competitive Advantage Value-Chain Management: Functional Strategies for Competitive Advantage Figure 9.1 5-34 Functional Strategies and Value-Chain Management Functional-level strategy plan of action to improve the ability of each of an organization s departments to performs its taskspecific activities in ways that add value to an organization s goods and services Functional Strategies and Value-Chain Management Value-chain management development of a set of functional-level strategies that support a company s business-level strategy and strengthen its competitive advantage 5-35 5-36 6
What Do Customers Want? Impact of Increased Quality on Organizational Performance 1. A lower price to a higher price 2. High-quality products 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 Figure 9.4 5-37 5-38 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 Facilities Layout, Flexible Manufacturing, and Efficiency Facilities Layout strategy of designing the machine-worker interface to increase production system efficiency Flexible Manufacturing strategy based on the use of IT to reduce the setup costs associated with a product assembly process 5-39 5-40 Facilities Layout Facilities Layout Product layout machines are organized so that each operation is performed at work stations arranged in a fixed sequence Process Layout self contained work stations not organized in a fixed sequence Fixed-Position Layout the product stays in a fixed spot and components produced at remote stations are brought the product for to final assembly 5-41 5-42 7
Just-in-Time Inventory and Efficiency Chapter Ten 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 Managing Organizational Structure and Culture 5-43 Organizational Structure Designing 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. Organizing The process by which managers establish working relationships among employees to achieve goals. Organizational Structure Formal system of task and reporting relationships showing how workers use resources. 5-45 5-46 Factors Affecting Organizational Structure Job Design Job Design The process by which managers decide how to divide tasks into specific jobs. The appropriate division of labor results in an effective and efficient workforce. Figure 10.1 5-47 5-48 8
Job Design Grouping Jobs into Functions Job Simplification The process of reducing the tasks 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 Functional Structure An organizational structure composed of all the departments that an organization requires to produce its goods or services. 5-49 5-50 Divisional Structures Matrix Design Structure Divisional Structure Managers create a series of business units to produce a specific kind of product for a specific kind of customer Product, market, geographic Matrix Structure An organizational structure that simultaneously groups people and resources by function and product. The structure is very flexible and can respond rapidly to the need for change. Each employee has two bosses 5-51 5-52 Product Team Design Structure Hybrid Structures Product Team Structure Does away with dual reporting relationships and two-boss managers Functional employees are permanently assigned to a cross-functional team that is empowered to bring a new or redesigned product to work Hybrid Structure The structure of a large organization that has many divisions and simultaneously uses many different organizational structures Figure 10.7 5-53 5-54 9