Lecture – 4 Chapter 4 Managing In A Global Environment 434nf

LECTURE – 4

CHAPTER 4

Managing in a Global Environment

Stages of Globalization 1. Domestic stage – home country operation . 2. International – multi domestic approach with international division to deal with the marketing of products in other foreign country 3. Multinational- production facilities located many countries with more than 1/3 of its sales outside the home country. 4. Global or stateless stage - ownership, control and top management tend to be dispersed among several nationalities. Getting started internationally – Market entry strategies 1. Seek cheaper sources of raw materials and labor offshore ( Offshoring or global outsourcing ) 2. Develop markets for finished products outside the home country. Thru exporting, licensing, and direct investing. 2.1 Exporting – local production and its product for sale in foreign countries. 2.2 Outsourcing – or offshoring is engaging in the in the international division of labor so that work activities can be done in countries with the cheapest sources of labor and supplies. 2.3 Licensing – The licensor in one country makes a certain resources available to companies in another country ( licensee), Franchising is when a francisee buys a complete package of materials and services including equipment, product, ingredients, trademark, managerial advice and standardized 3. Direct investing – an entry strategy in which the organization is involved in managing its productions facilities in a foreign country. a. t venture – b. Wholly owned foreign – is a foreign subsidiary over which an organization has a complete control. c. Greenfield venture a company build a subsidiary from a scratch in a foreign country. China Inc. –and Chindia – combined powers of the two countries in international trade dimension. International management is the management of business operations conducted in more than one country. International Business Environment 1. Economic Environment represent the economy of the country 1.1 Economic development- developing countries or less developed countries (LDCs) Asia , Africa, and south America. Developed countries are North America, Europe and Japan 1.2 Infrastructure – physical facilities that economic activities such as highways, airport, utilities, telephone.

1.3 1.4 1.5 1.6

Resource and product markets- refers to market demand for their products. Per capita income – Production income divide by no.of population. Exchange rates – country currency equivalent in exchanged to another country. Economic conditions- inflation, interest rates and economic growth.

2. Legal-Political Environment – government supervision and regulation. Political Risk – the risk of loss of assets, earning power or managerial control due to politically based event of actions by host government. Political instability – riots, revolutions, civil disorders, and frequent changes in the government. 3. Sociocultural Environment – a nation’s culture, values beliefs as well as the common modes of behaviors and ways of thinking among of the society. Perplexing than political and economic factors. 3.1 Social values as developed by Geert Hofstede ( Hofstede Value Dimension) 1. Power distance High power distance – when people accept inequality in power among institutions, org. and people. Like in the Phils, Malaysia & Panama Low Power distance – people expect equality in power. Denmark, Austria and Israel. 2. Uncertainty avoidance High Uncertainty – avoidance means that of a society feel comfortable with uncertainty and ambiguity and thus s beliefs the promise certainty and conformity. LOW Uncertainty avoidance – people have high tolerance for the unstructured, the unclear and unpredictable. 3. Individualism and collectivism. – Individualist reflects a value for a loosely knit social framework in which individual s are expected to take care of themselves. Collectivism a preference for a tightly knit social framework in which individual look after one another in organization protects their ’ interest. 4. Masculinity/Femininity . Masculinity preference for achievement , heroism, assertiveness, work centrality with resultant high stress. Femininity refers to the values of relationship, cooperations, group decision making and quality 5. Long-term Orientation and Short term orientation. Long-term orientation refer to a greater concern for the future and highly values thrift and perseverance.

Short-term orientation – Is more concern with the past and the present and places a high value on tradition and meeting social obligations.

3.2 Communication differences 1. High context culture – people are sensitive to circumstances surrounding social exchanges. Relationship and trust are more important than business and the welfare and harmony of the group are valued. 2. Low context culture – communication is used to primarily exchange business facts and information, thus, business transaction is more important than building relationship. Other Cultural characteristics 1. Language 2. Religion 3. Social organization 4. Education 5. And attitudes Etnocentrism a natural tendency of people to regard their own culture as a superior and to downgrade or dismiss other cultural values. Polycentric companies oriented toward the market of individual foreign host company. Geocentric companies – world-oriented and favor no specific country. International trade alliances and trade agreements 1. General agreement on tariffs and trade (GATT) 2. World trade Organization ( WTO ) 3. European Economic community formed the European union (EU) Euro – European currency that replaced 15 national currencies. 4. NAFTA ( North American free Trade Agreement ) THE GLOBALIZATION BACKLASH – 1. Loss of jobs 2. Low revenues 3. Shift of technology

MNCs = stateless corporation, global corporations, transnational corporations – more than 25% of the total global sales revenue derived from outside the home country. Distinctive characteristics 1. An MNC is managed as an integral worldwide business system in which foreign s act in close alliance and cooperation with one another. 2. An MNC is ultimately controlled by a single management authority that makes key strategic decisions relating to parent and s. 3. MNC top managers are presumed to exercise global perspective.

Managing in Global Environment 1. Developing cultural intelligence- refers to a person’s ability to use reasoning and observation skills to interpret unfamiliar gestures and situation and devise appropriate behavioral responses. 2. Managing Cross-culturally - a manager need to interpret the culture and develop the sensitivity require to avoid making costly cultural mistakes. Expatriates are employees who live and work in a country other than their own. a. Human resources b. Leading typical use of warm personalized approach with employees. c. Decision-making d. Motivating e. Controlling

LECTURE – 5 CHAPTER 5 MANAGING SOCIAL RESPONSIBILITY Ethics is the code of moral principles and values that governs the behavior of a person or group with respect to what is right or wrong. Three domain of Human Action Domain of Codified Law

Domain of Ethics

Domain of Free Choice

( Legal Standard ) High

( Social Standard ) Amount of Explicit control

( Personal Standard ) low

Ethical decision making 1. Utilitarian approach – moral behavior produces the greatest good for the greatest number. Select a decision that optimizes the benefits for the greatest number of people. 2. Individualism approach - when they promote the individual’s best long term interests. 3. Moral-rights Approach asserts that human beings have fundamental rights and liberties that cannot be taken away . 1. The right of free consent – to be treated only as they freely consent to be treated. 2. The right to privacy – to have control of information about their private life. 3. The right of freedom of conscience may refrain from carrying out any order that violates their moral and religious norms 4. The right of free speech – may criticize truthfully 5. The right to due process- right to impartial hearing and fair treatment 6. The right to life and safety- to live without endangerment or violation of their health and safety. 4. Justice Approach – must be based on standards of equity, fairness and impartiality. 1. Distributive justice – Individual who are similar in ways relevant to a decision should be treated similarly. 2. Procedural justice – rules should be istered fairly. 3. Compensatory justice - individual should be compensated for the cost of their injuries by the party responsible. Factor affecting Manager ethical choice. 1. Individual personality and behavioral traits to the job- Personal needs, family influence Level 3: and religious background. Postconventional 2. Specific personality characteristics – ego strength, self-confidence and strong sense of independence Follows self-chosen 3. Moral development

Level 2: Conventional Lives up to the expectation of others. Fulfills duties and obligations of social system. Upholds the laws.

principles of justice and right. Aware that people hold different values and seek creative solutions to ethical dilemmas. Balances concern for individual with concern for common goods.

Level 1: Preconventional Follows rules to avoid punishment. Act in own interest. Obedience for its own sake.

Leadership style: Aristocratic/coercive transformingor servant Leadership Employee Behavior: Task accomplishment empowered employee,

Guiding and encouraging

work group collaboration

Full participation

3- Levels of Personal Moral Development Corporate social responsibility – is the management’s obligation to make choices and take actions that will contribute to the welfare and interest of society as well as the organization. It involves moral, legal and economic consideration. 1. Stakeholders – “ Responsibility to whom? 2. The bottom of the Pyramid Concept (BOP) proposes that corporation can alleviate poverty and social ills as well as make significant profits, by selling to the world’s poorest people. Ethics of sustainability – refers to economic development that generates wealth and meets the needs of the current generation, while saving the

environment, so future generations can meet their needs as well. Evaluating corporate social responsibility 4. Discretionary Responsibility Contribute to the Community; Be a good Corporate citizen 3. Ethical responsibility

Be ethical, Do what is right, Avoid Harm 2. Legal Responsibility Obey the laws 1. Economic responsibility Be Profitable Criteria for corporate social performance Managing company ethics and social responsibility “ Management is responsible for creating and sustaining conditions in which people are likely to behave themselves.” 1. Ethical Leadership – managers are honest and trustworthy air in their dealings with employees and customers , and behave ethically in both their personal and professional lives. 2. Code of ethics is a formal statement of the company values concerning ethics and social issues. a. Principle- based statements – designed to affect corporate culture. They define fundamental values and contain general language about company responsibilities, quality of product, treatment of employees ( company Credo ) b. Policy-based statements outline the procedure to be used in specific ethical situations. It includes marketing practices, conflict of interest, observance of laws, proprietary information, political gifts and equal opportunities. 3. Ethical structures refers to various systems, positions and program a company can undertake to implement ethical behavior. a. Ethics committee – group of executives appointed to oversee company ethics. b. Chief ethic officer c. Ethics hotlines d. Ethics training e. for whistle blowers WHISTLE BLOWERS a person who report illegal or unethical activities. Employee disclosure of illegal, immoral or illegitimate practices on the employer’s part. LECTURE – 6 CHAPTER-6 MANAGERIAL PLANNING AND GOAL SETTING GOAL – is a desired future state that the organization attempts to realize. Organization exist for a purpose and goal define and state that purpose.

An

PLAN – is a blueprint for goal achievement and specifies the necessary resources allocation, schedules, task and other actions. Goal specify the future ends; plans specify the means. The concept of planning incorporates both ideas; it means determining the organization’s goals and defining the means for achieving them.

Mission Statement

Strategic Goal /Plans Senior Management ( Organization as a whole )

Tactical Goals/Plans Middle Management (Major Divisions, Functions )

Operational Goals/Plans Lower Management ( Departments, Individuals )

Levels of Goals/Plans and their importance

Purpose of Goals and Plans 1. Legitimacy – mission identify the overall purpose and reason for existence. It symbolizes legitimacy to external audiences such as investors, customers, suppliers and local community. 2. Source of motivation and commitment

3. 4. 5. 6.

Resource allocation Guides to action – provides a sense of direction Rationale for decision Standard of performance – also serve as performance criteria.

The Organizational planning process 1. The manager develop the overall plan for the organization by clearly defining MISSION AND STRATEGIC GOALS. 2. Translate the plan into action, which includes defining the tactical plans and objectives, developing a strategic map to align goals, formulating contingencies and scenario plans , and identifying intelligence teams to analyze competitive issues. 3. Manager layout the operational factors needed to achieve the goals 4. Execute the plans 5. Monitor and learn Mission the organization’s reason for existence. It describe the organization’s values, aspirations and reason for being. Mission statement – a broadly stated definition of purpose . It focuses on the market and customers and identifies desired field of endeavor, it describes company values, product quality, location of facilities and attitude towards employees. STRATEGIC GOALS OR OFFICIAL GOALS – a broad statement describing where the organization wants to be in the future. 1. Strategic Plans – define the action steps by which the company intend to attain strategic goals. 2. TACTICAL PLANS – Designed to help execute the major strategic plans ( Middle management ) 3. OPERATIONAL PLANS – action steps toward achieving operational goals and to tactical plans STRATEGY MAP – a visual representation of the key drivers of an organization’s success and how specific goals and plans in each area are linked.

GOAL CHARACTERESTICS 1. Specific and measurable 2. Define time period 3. Cover key result areas

4. Challenging but realistic 5. Linked to rewards. MANAGEMENT BY OBJECTIVES (MBO) – IS A SYSTEM whereby managers and employees define goals for every department, project and person and use them to monitor subsequent performance. 1. Set Goals – Strategic Goals, Department Goals and Individual Goals 2. Develop Action Plans 3. Review Progress and take corrective actions 4. Appraise overall performance. Planning in turbulent environment 1. Contingency Planning – company responses to be taken in case of emergencies, setbacks or unexpected conditions. 2. Building Scenarios - - looking at current trends and discontinuities and visualizing future possibilities. Just in case when a best laid plans collapse, what shall a best manager do? 3. Crisis Planning  Crisis prevention prevent crisis from occurring and to detect warning signs of potential crises. 1. Build relationship 2. Detect signals from environment  Crises Preparation planning to handle the crises when it occurs 1. Designate crisis management team and spokesperson 2. Create detailed crisis management plans 3. Set up effective communications system. Planning for high performance 1. Traditional approaches to planning – creating a central planning departmentgroup of planning specialist who report directly to the CEO 2. High Performance Approaches a. Decentralized Planning – planning experts works with managers throughout the company and come up with their own solutions to the problems. Planning comes alive when employees are involvech goals for excellence. – Big hairy audacious Goal ( BHAG) b. Use Performance Dashboard – gauge their progress toward achieving goals. c. Organizing intelligence team – a cross functional group of managers and employees led by a competitive intelligence professional, who work together to gain a deep understanding of a specific business issue. Lecture – 7 ( Chapter 7 ) Strategy Formulation and Implementation Thinking strategically – to take the long term view and to see the big picture, including the organization and the competitive environment and consider how they fit together.

Strategic management – refers to the set of decisions and actions used to formulate and execute strategies that will provide a competitively superior fit between organization and its environment so as to achieve the organizational goals. Strategy – the plan of action that prescribes resource allocation and other activities for dealing with the environment , achieving a competitive advantage and attaining organization goals. Competitive advantage – refers to what sets the organization apart from others and provides it with a distinctive edge for meeting customers or clients needs in the marketplace. Purpose of Strategy ( Why the org. will be different ) 1. Exploit core competencies – something the firm does especially well in comparison to its competitors. It can be in the area of superior research and development, expert technological know how, process efficiency or exceptional customer service. 2. Build synergy- It is the condition that exits when the organizational ‘s parts interact to produce a t effect that is greater than the sum of the parts acting alone.; the concept that the whole is greater than the sum of the its parts. 3. Deliver value to customers – the combination of benefits received and cost paid. Levels of Strategy ( Org. level to which strategic issues apply) 1. Corporate Level Strategy : What Business are we in? 2. Business Level Strategy: How do we compete? 3. Functional Level Strategy : How do we the business level strategy? Level

ACTION PLAN

Corporate level strategy – pertains to the org. as a whole and the combination of business units and product lines that make-up the corporate entity.

 

Acquisition of new businesses Addition or divestment s of business units, plants, or product lines  t venture with other corporation in new areas.

  Business Level Strategy – pertains to each business units or product lines

 

Functional Level strategy – refers to the major functional dept. within the business unit. Scan the Identify External Strategic Environme factors nt

 

Nationa l Global

 Opportunities  Threats

  

Advertising Direction and extent of research and development Product changes, new product development, equipment facilities Expansion or contraction of product and service lines Finance Research and development Marketing and mfg.

Evaluate Current:   

MISSION Goals Strategie s

SWOT

Define New:

FORMULA TE

MISSION

STRATEGY

GOALS

Scan the Internal Environmen t  Core Competencies  Synergy  Value creation

Identify Strategic factors

GRAND STRATEG Y

 Corporate  Busness  Functional

IMPLEMENT STRATEGY via Changes in:  Leadership/ Culture  Structure  Information & Control system

 Strenghts  Weakness es

The Strategic Management Process

Strategic formulation – includes the planning and decision making that lead to the establishment of the company goals and the development of the specific strategic plan. This may include the assessing the external and internal problems and integrating the results into goals and strategy.

Strategic execution – is the istration and implementation of the strategic plan. The use of managerial and organizational tools to direct resources toward accomplishing strategic results.

SWOT ANAYLSIS- Analysis of strengths, weakness, opportunities and threats that affect organizational performance. Strengths – are internal positive characteristics that the organizational can exploit to achieve its strategic performance goals. Weaknesses are internal characteristics that might inhibit or restrict the organizational’s performance. Opportunities the external characteristic that have a potential to help the organization achieve or exceed its strategic goals. Threats the external characteristics that may prevent organization in achieving its strategic goal.

Analyzing Organizational strengths Areas Management & Organization Marketing

Particular Management quality, Staff Quality, Degree of centralization, Organizational Charts, Planning information, control system Distribution Channels, Market Share, Advertising efficiency,

Human Resources Finance Operations/Productio n Research & Development

Customer satisfactions, Product quality, Service reputation, Sales force turn-over Employee experience, union , employee turnover, absenteeism, work satisfaction, grievances Profit margin, debt-equity ratio Inventory ratio. Return of investment, credit ratings Plant location, machinery status, purchasing system, quality control, productivity/ efficiency. Basic applied research, Laboratory capabilities Research program, new product innovations, technology innovations

Formulating Corporate-level Strategy 1. Portfolio Strategy – pertains to the mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage for the corporation. The Boston Consulting Group Matrix (BCG Matrix) – evaluates SBU’s with respect to the dimensions of business growth rate and market share. Business Growth rate pertains to how rapidly the entire industry is increasing, Market share – whether a business has a larger or smaller share than competitors.

STAR – Rapid growth and expansion

QUESTION MARK

?

CASH COW – Milk to finance question mark and Star

DOG – no investment , keep if some profit, consider divestment.

2. Diversification Strategy – moving into new lines of business. 1. Related Diversification – when the new business is related to the existing business activities. 2. Unrelated Diversification – when the organization expands in a totally new line of business. 3. Vertical integration expanding into businesses that either produce the supplies needed to make products or that distribute and sell those products. Formulating Business-Level Strategy – formulation within the SBU in which the concern is how to compete. 1. Michel Porter’s PORTER’S FIVE COMPETITIVE FORCES. 1. Potential new Entrants - capital requirements, and economies of scales are examples of two potential barriers to entry that can keep out new competitors 2. Bargaining power of buyers 3. Bargaining power of the suppliers 4. Threats of substitute products 5. Rivalry among competitors

PORTER’S STRATEGIES

1. Differentiation – strategy involves an attempt to distinguish the firm’s product or services from others in the industry. Org. may use creative ads, distinctive product features, exceptional service or new technology to achieve a product perceived as unique. 2. Cost leadership – pursues cost reductions and uses cost controls to produce products more efficiently than competitors. 3. Focus strategy – concentrates on a specific regional market or buyer group. New Trends in strategy ( Other than Mergers and acquisition) 1. Innovation from within – or dynamic capabilities which means that managers focus on leveraging and developing more from the company’s existing assets, capabilities and core competencies in a way that will provide a sustained competitive advantage 2. Strategic Partnership – collaboration with other organization, sometimes even with competitors. GLOBAL STRATEGY 1. GLOBALIZATION strategy it means that product design and advertising strategies are standardized throughout the world. Example Coke and McDonald 2. Multidomestic Strategy - it means competition is each country is handled independently of industry competition in other countries. 3. Transnational strategy-seeks to achieve global integration and national responsiveness. Example Caterpillar

Strategy Execution – How strategy is implemented. 1. Leadership – ability to influence people. To adopt to the new behaviors needed for putting the strategy to action. Persuasion, motivation and cultural values to the strategy. 2. Structural Design – pertains to manager’s responsibilities , their degree of authority, and the consolidation of facilities, departments and divisions . It also refers to the centralization and decentralization and the design of job tasks. 3. Information and control system. Includes reward systems, pay incentives, budgets for allocating resources, information technology systems and the org. rules, policies and procedures. 4. Human resources employees – recruit, select, train transfer promote and lay-off.

LECTURE – 8 Chapter – 8 Managerial Decision Making. Decision is a choice made from available alternatives. Decision making is the process of identifying problems and opportunities and then resolving them.

Types of decision 1. Programmed decision– is a decision made in response to a situation that has occurred often enough to enable decision rules to be developed and applied in the future. 2. Non programmed decisions - are made in response to situations that are unique, are poorly define and largely unstructured and have important consequences for the organization. Facing Certainty and uncertainty

Organizational Problems

LOW

Failure Possibility of

CERTAINTY

uncertainty

HIGH AMBIQUITY

RISK PROGRAMMED UNPROGRAMED

PROBLEM SOLUTION Conditions that affect the Possibility of Decision Failure

Certainty - that all information the decision maker needs is fully available. Risk – The a decision has clear-cut goal and that good information is available, but the future outcomes associated with each alternative are

subject to change. Future events will render the probabilities of success or failures.

Uncertainty – that the manager knows which goals they wish to achieve , but information about the alternatives and future events is incomplete Ambiguity- is by far the most difficult decision situation. It means that the goals to be achieved or the problem to be solved is unclear. , alternatives are difficult to define and information about outcomes is unavailable.

Three decision making approaches 1. Classical model is the ideal and rational model of decision making 2. istrative Model- more descriptive of how manager s actually make decisions 3. Political Model takes into consideration the discussion and coalition building that many decisions involve

Classical Model – based on rational economic assumptions and manager beliefs about what ideal decision making should be. 4 assumptions

1. The decision maker operates to accomplish goals that are know and agreed on. Problems are precisely formulated and defined. 2. The decision maker strives for conditions of certainty, gathering complete information. All alternatives and the potentials results of each are calculated. 3. Criteria for evaluating alternatives are known. 4. The decision maker is rational and uses logic to assign values, order of preferences, evaluates alternatives and make the decision that will maximize the attainment of org. goal. istrative Model – describes how a manager actually makes decisions. a. Bounded rationality – people have limits or boundaries on how rational they can be. b. Satisficing- means the decision maker choose the first solution alternative that satisfies minimal decision criteria. c. Intuition - represent a quick apprehension of a decision situation based on past experience but without conscious thought.

4-Assumptions. 1. Decision goals are vague, conflicting and lack consensus 2. Rational procedures are not always used. 3. Manager’s searches for alternative are limited because of constraints

4. Most manager settle for a satisficing rather than a maximizing solution.

POLITICAL MODEL – useful when making unprogrammed decision when conditions are uncertain, information is limited. Coalition building is the process of forming alliances among managers who a specific alternate 4 assumptions 1. Orgs are made up of groups with diverse interest , goals and values. 2. Information is ambiguous and incomplete. 3. Manager do not have time, resources and mental capacity to identify all dimensions of the problem. 4. Managers engage in the push and pull of debate to decide goals and discuss alternatives.

Six steps in the managerial decision making process 1. Recognition of Decision requirement ( Problem or opportunity ) 2. Diagnosis and Analysis of Causes 3. Development of Alternatives

4. Selection of desired Alternative 5. Implementation of Chosen alternative 6. Evaluation and

WHY MANAGERS make a bad decisions? 1. 2. 3. 4. 5. 6.

Being influenced by initial impressions. Justifying past decisions. Seeing what you want to see, Perpetuating the status quo Being influenced by problem framing Over confidence

Innovative Group decision making 1. Start by brainstorming 2. Engage in rigorous debate 3. Avoid groupthink – tendency of the people to suppress contrary opinions. 4. Know when to bail. Escalating commitment – continuing to invest in time and resources in a failing decision. ‘ FAIL EARLY, FAIL OFTEN AND PULL THE PLUG EARLY.

Quiz no 4.

Discuss : Decisions are made as part of a group. In addition, involving lower level employees in decision making contributes to individual and organizational

learning. How can you innovative group decision making?

LECTURE`- 9 CHAPTER -9 ORGANIZATIONS

DEG ADAPTIVE

Organizing function – the deployment of organizational resources to achieve strategic goals. The deployment of the resources is reflected in the organization’s division of labor into specific departments and jobs, formal lines of authority and mechanism for coordinating diverse organizational tasks. Strategy defines what to do , organizing defines how to do it

Org. Structure – is 1. The set of formal tasks assigned to individuals and departments; 2. Formal reporting relationships, including lines of authority, decision responsibility; number of hierarchical levels and span of manager’s control and 3. the design of systems to ensure effective coordination of employees across departments. Organizational Chart- the visual representation of an organization’s structure. Fundamental characteristics of org. structure. 1. Work specialization ( Division of Labor) – is the degree to which organizational tasks are subdivided into separate jobs. Employees within the dept. perform only the task relevant to their specialized function. 2. Chain of Command is an unbroken line of authority that links all persons in an org. and show who reports to whom. a. Unity of command – each employee is held able to only one supervisor. b. Scalar principle refers to a clearly defined line of authority in the organization that includes all employees. Authority is the formal and legitimate right of a manager to make decisions, issue orders and allocate resources to achieve organizationally desired outcomes. Authority characteristics 1. Authority is vested in organizational positions, not people. 2. Authority is accepted by subordinates 3. Authority flows down vertical hierarchy RESPONSIBILITY – is the duty to perform the task assigned.

ABILITY – that people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command. Line authority – that people in management position have formal authority to direct and control immediate subordinates. Staff Authority – the right to advise, recommend and counsel in the staff specialists’ area of expertise. 4. Span of Management ( Span of Control – is the number of employees reporting to a supervisor Factors that are associated with less supervisors involvement thus larger spans of controls 1. Work performed by subordinates is stable and routine 2. Subordinates perform similar work tasks 3. Subordinates are concentrated in a single location 4. Subordinates are highly trained and need little directions 5. Rules and procedures defining task are available 6. systems and personnel are available for the manager 7. Little time is required in non-supervisory activities such as coordination with other departments or planning 8. Managers’ personal preferences and styles favor a large span Centralization – that decision authority is located near the top of the organization. Decentralization – decision authority is pushed downward to lower organization levels. Factors that affects Centralization or decentralization 1. Greater change and uncertainty in the environment are usually associated with decentralization

2. The amount of Centralization or decentralization should fit the firm’s strategy 3. In time of crisis or risk of company failure, authority may be centralized at the top. 4. Departmentalization – grouping positions into departments and departments into the total organization. I Traditional approaches 1. Vertical Functional Approach – grouping of positions into dept. Based on similar skills, expertise, work activities and resource use. 2. Divisional Approach based on similar organizational outputs 3. Matrix Approach – combines the aspects of both functional and divisional structures II. Innovative Approaches 1. Team approach – Gives manager a way to delegate authority, push responsibility to lower levels and be more flexible and responsive in the competitive global environment. 2. The Virtual Network Approach –the firm subcontracts most of its major functions to separate companies and coordinates their activities from a small headquarters organization.

Advantages and disadvantages of Approaches ADVANTAGES 1. Functional Effective use of resources. Skills specialization and development Top manager direction and control

DISADVATAGES Poor Communication across functional dept. Slow response to external change. Top decision concentrated at the TOP. Creating

2. Divisional

3. Matrix

4. Team

5. Virtual Network

delays Fast response, Duplication of Flexibility and resources. Poor excellent coordination across coordination divisions More efficient use of Frustrations and resources. confusions from dual Flexibility to change chain of command. Many meetings , discussions than action Reduced barriers Dual Loyalties and among depts.. conflicts. Shorter response time,

Can draw on expertise worldwide, reduced overhead cost.

Lack of control, weak boundaries, greater demand on managers Employee loyalty weakened

Coordination – refers to the quality of collaboration across departments, Task Force – temporary team or committee designed to solve a short term problem involving several departments.

Reengineering ( Business process reengineering – is the radical redesign of business processes to achieve dramatic improvement in cost, quality, service and speed.

LECTURE-10 CHARPTER 10 - MANAGING CHANGE AND INNOVATION Organizational change – is the adoption of a new idea or behavior by an organization. AMBIDEXTROUS APPROACH – incorporating structures and process that are appropriate for both the creative impulse and for the systematic implementation of innovations. Key Aspects of change in Organizations 1. Changing Products and Technologies 2. Changing people and culture Product Change – a change in the organizational product or service outputs. Ex. Apple’s iPhone, e-file

Technology change – change in the organization’s production process. 3 Innovation strategies for changing products and technologies 1. Exploration – deg the organization to encourage creativity and initiation of new ideas. 2. Cooperation-creating conditions and systems to facilitate internal and external coordination and knowledge sharing 3. Entreprenuership means that the managers put in place processes and structures to ensures that new ideas are carried forward for acceptance and implementation. Exploration   

Creativity Experimentatio n Idea Incubators

Cooperation

Entreprenuership





 

Horizontal coordination Customers, partners Open Innovation

  

Idea Champions New Ventures Teams Skunkworks New Venture Fund

Creativity – refers to the generation of novel ideas that might meet perceived needs or respond to opportunities for the organization. Idea Incubator safe harbor where ideas from employees can be developed without interference from company bureaucracy or politics. Open innovation means extending the search for and commercialization of new idea beyond the boundaries of the organization or even beyond the boundaries of the industry. Idea champion – is a person who sees the need for and champions productive change within the organization. Skunkworks is a separate small, informal highly autonomous and often secretive group that focuses on breakthrough ideas for the business. CHANGING PEOPLE AND CULTURE – How employees think – changes in mind set. Tool to Change People and culture 1. Training and Development

2. Organizational Development – is a planned, systematic process of change that uses behavioral science knowledge and techniques to improve an organization’s health and effectiveness through its ability to adapt to the environment., improve internal relationships and increase learning and problem solving capabilities. OD can help managers at least three types of current problems 1. Mergers/acquisition 2. Organizational Decline 3. Conflict management OD Activities 1. Team building 2. Survey- 3. Large group intervention OD STEPS /STAGES FOR BEHAVIORAL AND ATTIUDE CHANGE 1. Unfreezing – people are made aware of problems and the need for change. – Motivation 2. Changing – occurs when individual experiments with new behavior and learn new skills to be used in the workplace. 3. Freezing – When individual acquire new attitude or values and are rewarded for them by the organization. Factors of Implementing change 1. Reasons people resist change 2. Techniques to enlist employee cooperation Need for change using performance gap – a disparity between existing and desired performance levels. Resistance to change 1. Self interest 2. Lack of understanding and trust 3. Uncertainty 4. Different assessment and goals

Force- Field Analysis – change is a result of the competition between driving and restraining forces. By selectively removing restraining forces, the driving forces will be strong to enable implementation. Driving Forces are problems or opportunities that provide motivation for change within the organization. Restraining Forces are the barriers to change, such as a lack of resources, resistance from managers or inadequate employees skills.

Driving Forces ( Need for Change) forces

Restraining Forces ( barriers to Change)

Driving Forces

Reduced Restraining

Implementation tactics 1. Communication, education 2. Participation 3. Negotiation 4. Coercion 5. Top Management

Lecture -11 Chapter 11 Managing Human Resource

The Strategic role of HRM is to drive organization performance. ( employees productivity and stronger financial results )

HUMAN RESOURCE MANAGEMENT – refers to the design and application of formal systems in an organization to ensure the effective and efficient use of human talent to accomplish organizational goals. Strategic approach to HRM

1. All managers are involved in human resource management 2. Employees are viewed as assets. Employees give a company its competitive edge. 3. HRM is a matching process, integrating the organization’s strategy and goals with the correct approach to managing human capital Primary goal of HRM 1. Find the Right people – HRM Planning, job analysis, forecasting, Recruiting, Selecting 2. Manage the talent – Training, Development and Appraisal 3. Maintain an effective workforce – wage and salary, benefits, labor relations, Terminations Human Capital – refers to the economic value of the combined knowledge, experience, skills and capabilities of employees Assignment : Research and discuss the following: 1. Employee’s Rights and 2. Benefits of employee in the Philippines.