People and their talent, what they know, what they learn, and what they do with it
Intellectual Capital: collective brainpower or shared knowledge of a workforce
Knowledge Worker: someone whose mind is a critical asset to employers
Workforce Diversity: describes differences among workers in gender, race, age, ethnicity,
religion, sexual orientation, and able-bodiedness
Prejudice: display of negative attitudes toward members of diverse populations
Discrimination: actively denies minority members the full benefits of organizational membership
Glass Ceiling Effect: an invisible barrier limiting career advancement of women and minorities
Globalization: Worldwide interdependence of resource flows, product markets, and business
We live and work in a technology-driven world,
Ethics: Set of moral standards of what is "good" and "right" in one's behaviour
Portfolio worker: someone who always has the skills needed to readily shift jobs or careers.
Organizations in the New Workplace
What is an organization?
Organization: A collect of people working together to achieve a common purpose
Organizations as systems
Open System: transform inputs from the environment into product outputs
Productivity: the quantity and quality of work performance, with resource utilization considered
Performance Effectiveness: an output measure of task or goal accomplishment
Performance Efficiency: an input measure of resource cost associated with goal accomplishment
Changing nature of organizations
Change is a continuing theme in society, and organizations are certainly undergoing changes
Dynamic forces and the general environment
General Environment: composed of economic, legal-political, technological, socio-cultural, and
natural environment conditions. SLENT environment
o Socio-cultural - philosophy/objectives of political party running the government
o Legal-political - norms, customs, social values
o Economic- health of the economy o Natural environment - nature and conditions of environment
Sustainable business: firms that operate in ways that both meet the needs of
customers and protect or advance the well-being of our natural environment.
Business is “sustainable” in the sense that it minimizes our impact on the
environment and helps preserve it for the benefit of future generations.
Sustainable innovation: the creation of new products and production methods
that have lower environmental impacts than the available alternatives.
Sustainable innovations are found in areas like energy use, water use,
packaging, waste management and transportation practices, as well as in
o Technological - development and availability of technology
Stakeholders and the specific environment
Specific Environment(Task Environment): includes the people and groups with whom an
Stakeholders: persons, groups, and institutions directly affected by an organization
Value Creation: the creation of value for and satisfying needs of stakeholders
Competitive Advantage: allows an organization to deal with market and environmental forces
better than its competitors
Strategic Positioning: occurs when an organization does different things or the same things in
different ways from its major competitors
Can be achieved through cost, quality, deliver, flexibility
Environmental uncertainty: the lack of complete information regarding what exists and what
developments may occur in the external environment.
Organizational effectiveness: sustainable high performance in using resources to accomplish a
Managers in the New Workplace
What is a manager?
Manager: a person who supports, activates, and is responsible for the work of others
Levels of managers
Top Managers: guide the performance of the organization as a whole or one of its major parts
Middle Managers: oversee the work of large departments or divisions
Team Leader: report to middle managers and supervise non-managerial workers
Types of managers
Line Managers: directly contribute to producing the organization's goods or services
Staff Managers: use special technical expertise to advise and support line works
Functional Managers: responsible for one area such as finance, marketing, production,
personnel, accounting, or sales General Managers: responsible for complex, multifunctional units
Administrator: A manager in a public or non-profit organization
Accountability: the requirement to show performance results to a supervisor
Effective Manager: helps other achieve high performance and satisfaction at work
Quality of Work Life: the overall quality of human experiences in the workplace
Changing nature of managerial work
Upside-Down Pyramid: operating works are at the top, serving customers, while managers are
at the bottom supporting them
The Management Process
Functions of management
Management: the process of planning, organizing, leading, and controlling the use of resources
to accomplish performance goals
Planning: process of setting objectives and determining what should be done to accomplish
Organizing: process of assigning task, allocating resources, and coordinating work activities
Leading: process of arousing enthusiasm and inspiring efforts to achieve goals
Controlling: process of measuring performance and taking action to ensure desired results
Managerial roles and activities
Interpersonal Roles: interaction with other people
Informational Roles: exchanges and processes information
Decisional Roles: decision making
Managerial agendas and networks
Agenda Setting: develops action priorities for accomplishing goals and plans
Networking: process of creating positive relationships with people who can help advance
Social Capital: capacity to get things done with support and help of others
Essential managerial skills
Learning: a change in behaviour that results from experience
Lifelong Learning: continuous learning from daily experiences
Skill: ability to translate knowledge into action that results in desired performance
Technical Skill: ability to use expertise to perform a task with proficiency
Human Skill (Interpersonal Skill): ability to work well in cooperation with other people
Emotional Skill: ability to manage ourselves and our relationships effectively
Conceptual Skills: ability to think analytically to diagnose and solve complex problems
Developing managerial competencies
Managerial Competency: is a skill-based capability for high performance in a management job
Communication, teamwork, self-management, leadership, critical thinking, professionalism Chapter 2
Classical Management Approaches
Taylor - Scientific management which emphasizes careful selection and training of workers and
supervisory support. He advocated the following four principles of scientific management
1. Develop for every job a “science” that includes rules of motion, standardized work
implements, and proper working conditions
2. Carefully select working with the right abilities for the job
3. Carefully train workers to do the job and give them the proper incentives to cooperate
with the job “science”
4. Support workers by carefully planning their work and by smoothing the way as they go
about their job
Motion Study - is the science of reducing a task to its basic physical motions
Fayol introduced the following key principles of manage (among others):
o Scalar chain principle – there should be a clear and unbroken line of communication
from the top to the bottom of the organization
o Unity of command principle – each person should receive orders from only one boss
o Unity of direction principle – one person should be in charge of all activities that have
the same performance objectives
Max Weber – bureaucracy promotes efficiency and fairness
o Bureaucracy is an ideal, intentionally rational, and very efficient form of organization
founded on principles of logic, order, and legitimate authority
o Characteristics – clear division of labour, clear hierarchy of authority, formal written
rules and procedures, impersonality: no one receives preferential treatment, careers
based on merit
o Disadvantages – Excessive paperwork “red tape”, slowness in handling problems, rigidity
in the face of shifting customer or client needs, resistance to change, employee apathy
Bureaucracy - a rational and efficient form of organization founded on logic, order, and
Behavioral Management Approaches
Human resource approaches - assumption: people are social and self-actualizing
Follett's organizations as communities
Managers and workers should labour in harmony, without one party dominating the other and
with the freedom to talk over and truly reconcile conflicts and differences
The Hawthrone studies
Hawthorne effect: was identified as a tendency of people who are singled out for special
attention to perform as anticipated merely because of expectations created by the situation
People’s feelings, attitudes, and relationships with co-workers influence their performance Human relations movement: based on the viewpoint that managers who used good human
relations in the workplace would achieve productivity.
Organizational behaviour: the study of individuals and groups in organizations.
Maslow's theory of human needs
Managers need to help workers satisfy their important needs at work to achieve productivity
A need is physiological or psychological deficiency that a person feels compelled to satisfy
Needs from lowest to highest: physiological, safety, social, esteem, self-actualization
McGregor's Theory X and Theory Y
Theory X managers assume that subordinate: dislike work, lack ambition, are irresponsible,
resist change, prefer to be led rather than to lead
Prophecy: x managers create situations where workers become dependent and reluctant
Theory Y managers assume that subordinates are: willing to work, capable of self-control,
willing to accept responsibility, imaginative and creative, capable of self-direction
Prophecy: y managers create situations where workers respond with initiative and high
Self-fulfilling prophecies: occurs when a person acts in ways that confirm another’s
Argyri's theory of adult personality
Classical management principles are inconsistent with the mature adult personality
Modern Management Foundations
Quantitative analysis and tools
Management science: uses quantitative analysis and applied mathematics to solve problems.
This is also known as operations research.
Operations research: uses quantitative analysis and applied mathematics to solve problems.
This is also known as management science.
Operations management: the study of how organizations produce goods and services.
Organizations as systems
System: A collection of interrelated parts working together for a purpose.
Subsystem: a smaller component of a larger system.
Open system: interacts with its environment and transforms resource inputs into outputs.
Contingency thinking: attempts to match management practices with situational demands.
Total quality management: is managing with an organization-wide commitment to continuous
improvement, product quality, and customer needs.
Continuous improvement: a process of always looking for new ways to improve work quality
ISO certification: indicates conformance with a rigorous set of international quality standards. Knowledge management and organization learning
Knowledge management: the process of using intellectual capital for competitive advantage.
Learning organization: an organization that continuously changes and improves, using the
lessons of experience.
High performance organization: consistently achieves excellence while creating a high-quality
Evidence-based management: involves making decisions based on hard facts about what really
Management and Globalization
Global economy: an economic perspective based on worldwide interdependence of resource
supplies, product markets, and business competition.
Globalization: the process of growing interdependence among the components of the global
Global management: involves managing operations in more than one country.
Global manager: a manager who is informed about international developments, transnational in
outlook, competent in working with people from other cultures, and always aware of regional
developments in a changing world.
Why companies go global
Profits, customers, suppliers, capital, labour
How companies go global
Global business: conducts commercial transactions across national boundaries.
Global sourcing: a form of international business that involves purchasing materials,
manufacturing components, or business services from around the world.
Exporting: selling locally made products in foreign markets.
Importing: buying foreign-made products and selling them in domestic markets.
Licensing agreement: a form of international business that occurs when a foreign firm pays a fee
for the rights to make or sell another company’s products in a specified region.
Franchising: a form of licensing in which a foreign firm buys the rights to use another’s name
and operating methods in its home country.
Foreign direct investment: involves buying all, or buying part of a business in another country.
Insourcing: describes job creation through foreign direct investment.
Joint ventures: a form of international business that establishes business operations in a foreign
country through co-ownership arrangements that pool resources and share risks and control.
Global strategic alliance: a partnership in which foreign and domestic firms share resources and
knowledge for mutual gains.
Foreign subsidiary: a local operation completely owned and controlled by a foreign firm. Greenfield investment: the building of an entirely new operation in a foreign country.
Global business environments
Political risk: the potential loss in value of a foreign investment due to instability and political
changes in the host country.
Political risk analysis: attempts to forecast political disruptions that can threaten the value of a
World Trade Organization: an international organization that monitors international trade and
tries to resolve disputes among countries about tariffs and trade restrictions. 153
Most favoured nation status: gives a trading partner most favourable treatment for imports and
Tariffs: taxes governments levy on imports from abroad.
Protectionism: government legislation and support to protect domestic industries from foreign
NAFTA: a trade agreement that links Canada, Mexico, and the United States in a regional
European Union: a political and economic alliance of European countries that have agree to
support mutual economic growth by removing barriers that previously limited cross-border
trade and business development.
Euro: the common currency used in the European Union.
Global Corporation: a multinational business with extensive operations in more than one
country. Also known as an MNC.
Types of global businesses
Transnational: a MNC that operates worldwide without being identified with one national home.
Pros and cons of global corporations
Host-country Issues re: MNCs enter other countries to do business there
o Problems: excessive profits, economic domination, interference with government, hire
best local talent, limited technology transfer, and disrespect for local customs
o Benefits: larger tax bases, increased employment opportunities, technology transfer,
the introduction of new industries, and the development of local resources
Home-county Issues re: MNCs
o MNCs have traditionally come from developed countries and sometimes they have
problems in LDCs
o MNCs complaints about host countries: profit limitations, overpriced resources,
exploitative rules, foreign exchange restrictions, failure to uphold contracts
Ethics challenges for global managers
Corruption: engaging in illegal practices to further one’s business interests.
Child labour: the full-time employment of children for work otherwise done by adults.
Sweatshops: business operations that employ workers at low wages for long hours and in poor
working conditions. Sustainable development: refers to development that meets the needs of the present without
compromising the ability of future generations to meet their own needs.
Culture and Global Diversity
Culture: a shared set of beliefs, values, and patterns of behaviour common to a group of people.
Culture shock: the confusion and discomfort a person experiences when in an unfamiliar culture.
Ethnocentrism: managers believe that the best approaches are always found in the home
country. Consider ones culture superior to others
Cultural intelligence: is the ability to accept and adapt to new cultures
Silent languages of culture
Low-context culture: a culture in which most communication takes place via the written or
High-context culture: a culture where much communication takes place through nonverbal and
situational cues in addition to the written or spoken word.
Monochronic cultures: cultures in which people tend to do one thing at a time.
Polychronic cultures: cultures in which time is used to accomplish many different things at once.
Proxemics: how people use space to communicate.
Values and national cultures
Ecological fallacy: assumes that a generalized cultural value applies equally well to all members
of the culture.
Power distance: the degree to which a society accepts unequal distribution of power.
Individualism – collectivism: the degree to which a society emphasizes individuals and their self-
Uncertainty avoidance: the degree to which a society tolerates risk and uncertainty.
Masculinity-femininity: the degree to which a society values assertiveness and materialism.
Time orientation: the degree to which a society emphasizes short-term or long-term goals.
Global Management Learning
Global management attitudes and learning
Comparative management: the study of how management systematically differs among
countries and/or cultures.
Ethnocentric attitudes: manager beliefs that the best approaches of management are found at
home and find little to learn from their international counterparts.
Polycentric attitude: a belief that respects local knowledge and allows foreign operations to run
with substantial freedom.
Geocentric attitude: management beliefs that are high in cultural intelligence and take a
collaborative approach to global management practices. Chapter 5
The Nature of Entrepreneurship
Who are the Entrepreneurs?
Entrepreneur: a risk-taking individual who takes action to pursue opportunities and situations
others may fail to recognize as such or may even view as threats
Entrepreneurship: describes strategic thinking and risk-taking behaviour that results in the
creation of new opportunities
Characteristics of entrepreneurs
1. Internal locus of control - believe that they control their own destiny; they are self-directing and
2. High energy level - persistent, hard working, and willing to exert extraordinary efforts to succeed
3. High need for achievement - are motivated to act individually to accomplish challenging goals;
they thrive on performance feedback
4. Tolerance for ambiguity - are risk takers; tolerate situations with high degrees of uncertainty
5. Self-confidence - feel competent, believe in themselves, and are willing to make decisions
6. Passion and action-orientation - try to act ahead of problems; they want to get things done and
not waste valuable time
7. Self-reliance and desire for independence - want independence; they are self-reliant; they want
to be their own boss, not work for others
8. Flexibility - are willing to admit problems and errors, and to change a course of action when
plans are not working
Diversity and entrepreneurship
Necessity-based entrepreneurship: takes place because other employment options don’t exist
Entrepreneurship and Small Business
How to get started
Small business: commonly defined as one with 100 or fewer employees, that is independently
owned and operated, and that does not dominate its industry
Franchise: a business owner sells to another person the right to operate the same business in
another location, under the original owner’s business name and guidance
Saves the cost of renting retail space and hiring store employees
Family business: a business that is owned and financially controlled by family members
Family business feud: occurs when family members have major disagreements over how the
business should be run
Succession problem: involves transferring leadership from one generation to the next
Succession plan: a formal statement that describes how the leadership transition and related
financial matters will be handled when the time for changeover arrives Why many small businesses fail
1. Lack of experience - not having sufficient know-how to run a business in the chosen market
2. Lack of expertise - not having expertise in the essentials of business operations, finance,
purchasing, selling, production
3. Lack of strategy and strategic leadership - not taking the time to craft a vision and mission, nor
to formulate and properly implement a strategy
4. Poor financial control - not keeping track of numbers, and failure to control business finances
5. Growing too fast - not taking time to consolidate a position, fine-tune the organization
6. Insufficient commitment - not devoting enough time to meet the requirements of the business
7. Ethical failure - falling prey to the temptations of fraud, deception, and embezzlement
New Venture Creation
First-mover advantage: exploiting a market niche or entering a market before competitors
Life cycles of entrepreneurial firms
o Establish the firm, getting customers, finding the money, fight for existence and survival
o Work on finances, become profitable, growing, coping with growth and takeoff
o Refine the strategy, continue growth, manage for success, invest wisely and stay flexible
Writing the business plan
Business plan: a plan that describes all the details necessary to set the direction for a new
business and to obtain the necessary financing to operate it
Choosing the form of ownership
Sole proprietorship: an individual or a married couple pursing business for a profit
Partnership: formed when two or more people agree to contribute resources to start and
operate a business together
Corporation: a legal entity that exists separate from its owners
Limited Liability Corporation: a hybrid legal form of business combining advantages of a sole
proprietorship or a partnership with the liability advantages of a corporation
Financing the new venture
Debt financing: involves going into debt by borrowing money from another person, a bank, or
financial institution and repaying it over time with interest
Equity financing: involves exchanging ownership shares in the business to outsiders in return for
outside investment monies
Venture capitalists: companies that pool capital and make investments in new ventures in return
for an equity stake in the business
Initial Public Offering (IPO): an initial selling of shares of stock to the public at large
Angel investor: a wealthy individual who is willing to invest a portion of this wealth in return for
equity in a new venture Chapter 6
Why and How Mangers Plan
Importance of planning
Planning: the process of setting objectives and determining how best to accomplish them.
Planning sets the stage for organizing, leading, and controlling by providing directions
The planning process
Plan: a statement of action steps to be taken in order to accomplish the objectives.
Objectives: the specific results or desired end states that one intends to achieve.
1. Define your objectives – where you want to go
2. Determine where you stand vis-a-vis objectives – where you stand, strengths and weaknesses
3. Develop premises regarding future conditions – anticipate future events
4. Analyze alternatives and make a plan – list and evaluate the possible actions, choose the
alternative most likely to accomplish your objectives
5. Implement the plan and evaluate results – take action and carefully measure your progress
Benefits of planning
Complacency trap: is being carried along by the flow of events.
Types of Plans Used by Managers
Long-range and short-range plans
Long range 3+ years and medium range 1-2 years and short range <1 year
Strategic and tactical plans
Strategic plan: sets broad, comprehensive, and longer-term action directions for the entire
Tactical plan: helps to implement all or parts of a strategic plan.
Vision: clarifies the purpose of the organization and expresses what it hopes to be in the future
Functional plans: indicate how different operations within the organization will help advance the
overall strategy. Production, financial, facilities, logistics, marketing, human resources
Operational plan: define what needs to be done in specific areas to implement strategic plans.
Short term. Standing plans and single-use plans
Policy: a standing plan that communicates broad guidelines for making decisions and taking
action in specific circumstances.
Procedures(rules): standing plans that describe exactly what actions are to be taken in specific
Budget: a single-use plan that commits resources to activities, projects, or programs.
Zero-based budget: a budget that allocates resources to projects or activities as if they were
brand new in each budget cycle. Ongoing and newly proposed programs are forced to compete
on an equal footing for funding. Planning Tools and Techniques
Forecasting: the process of making assumptions about what will happen in the future.
Qualitative forecasting – uses expert opinion to predict the future
Quantitative forecasting – techniques use mathematical and statistical analyses of historical
data and surveys to predict future events
Contingency planning: identifies alternative courses of action that can be implemented to meet
the needs of changing circumstances.
Scenario planning: a long-term version of contingency planning which involves identifying
several alternative future scenarios or states of affairs that may occur, and then making plans to
deal with each should it actually occur.
Benchmarking: using external comparisons to better evaluate current performance and identify
possible actions for the future.
Best practices: a benchmarking technique that involves identifying those things that help both
competitors and noncompetitors achieve superior performance.
Use of staff planners
Coordinate the planning function of the organization or a component. One risk is a
communication gap between planner and managers
Implementing Plans to Achieve Results
Goal setting and goal alignment
o Specific – clearly target key results and outcomes to be accomplished
o Measurable – described so results can be measured without ambiguity
o Attainable – challenging, including a stretch factor that moves toward real gains, yet,
realistic and possible to achieve
o Referred to – goals need to be referred to regularly to keep people focused on the task
o Timely – linked to specific timetables and due dates
Hierarchy of objectives: a means-ends chain in which lower-level objectives (the means) lead to
the accomplishment of higher-level objectives (the ends).
Objectives: the specific results or desired end states that one intends to achieve.
Management by objectives
Management by objectives (MBO): a structured process of regular communication in which a
supervisor/team leader and subordinates/team members jointly set performance objectives and
review results accomplished.
Improvement objectives: describe intentions for specific performance improvements. Personal development objectives: describe intentions for personal growth through knowledge
and skills development.
Advantages – focuses workers on the most important task and objectives, focuses supervisors
on areas of support, agreed-upon objectives, contributes to relationship building
Actions to avoid in using MBO – tying MBO to pay, focus on easy objectives, excessive paper
work, supervisor tell subordinates their objectives
Participation and involvement
Participatory planning: requires that the planning process include people who will be affected by
the resulting plans and/or will be asked to help implement them.
Planning makes organizations more:
o Results oriented – creating a performance oriented sense of direction
o Priority oriented – making sure the most important things get first attention
o Advantage oriented – ensuring that all resources are utilized to best advantage
o Change oriented – anticipating problems and opportunities so they can be best dealt
Competitive advantage: operating with an attribute or set of attributes that allows an
organization to outperform its rivals
o Sources include cost, quality, knowledge, speed, barriers to entry, and financial
Sustainable competitive advantage: the ability to outperform rivals in ways that are difficult or
costly to imitate
Strategy and strategic intent
Strategy: a comprehensive action plan that identifies long-term direction for an organization and
guides resource utilization to accomplish goals with sustainable competitive advantage
Strategic intent: having all organizational energies directed toward a unifying and compelling
target or goal
Levels of strategy
1. Corporate strategy: a strategy that directs the organization as a whole toward sustainable
2. Business strategy: a strategy that sets the strategic direction for a single business unit or product
3. Functional strategy: a strategy that guides the use of resources to implement business strategy;
this level of strategy focuses on activities within a specific functional area of operations
The strategic management process
Strategic management: the process of formulating and implementing strategi