1-22-2019

The Cognitive Revolution- Key Points

- Humans can cooperate in large number and flexibly across tasks - What is the mechanism that allows us to do this? - Two layers of reality - The best leaders are masters of both objective and subjective reality

1-24-2019

- Governing bodies are not for-profit, exist for a certain population - What is organization?

- Managers operate within an organization. - A group of people working together toward a specific purpose, - Three Types:

- For profit- Non profit

- VT - Department of state - US Government

- Mutual benefit - They exist to provide mutual aid to members to advance mutual

interests - European Commission - Democratic party - UAW

- Management is defined as: - The pursuit of organization goals efficiently and effectively by

- Integrating the work through people - Planning, organizing, leading and controlling resources

- Managing Efficiently and Effectively - To be efficient means to use resources- people, money, raw materials, and the

like- and wisely and cost effectively- To be effective means to achieve results, to make the right decisions and to

successfully carry them out so that they achieve the organization's goals.

- The rewards of studying management - You will understand how to:

- Deal with organization from the outside, - Relate to your supervisors - Interact with co-workers - Manage yourself in the workplace

- The rewards of practicing management - Experience a sense of accomplishment - Stretch your abilities and magnifying your range- Build a catalog of successful products and services- Mentoring & helping others.

- The Management Process- Plan

- Set the goals and formulate how to achieve them - Organize

- You arrange tasks, people, and other resources to accomplish the work. - Lead

- You motivate, direct, and otherwise influence people to work hard to achieve the organization’s goals.

- Control - You monitor performance, compare it with goals, and take corrective

action as needed

- Challenges to being an Exceptional Manager - 1. Managing for competitive advantage- 2. Managing for information technology- 3. Managing for diversity. - 4. Managing for globalization- 5. Managing for ethical standards- 6. Managing for sustainability - 7. Managing for happiness and meaningfulness

- Managing for Competitive Advantage - The ability of an organization to product goods and services more effectively than

competitors - Having a competitive advantage means:

- Being responsive to customers - Innovation- finding ways to deliver better goods or services- Quality- making improvements in quality so that consumers choose your

product - Efficiency- avoiding overstaffing and overuse of raw materials

- Managing for Information Technology - Consumer’s online spend in 2019 ($3.5 trillion) will be double 2015 - Internet used to facilitate every aspect of running a business - An abundance of new tools:

- Email, text, social media - Cloud computing, big data and Al

- Telecommuting and videoconferencing

- Managing for Diversity - The future won’t resemble the past. - Very long term trend toward an ever interconnected world. - Consider:

- U.S. Non-Hispanic white population will decrease from 62% to 43% by 2060.

- By 2030, 1 in 5 U.S. residents will be > 65 years old. - In the coming years there will be a different mix of women, immigrants,

and older people in the general population, as well as in the workforce. - Managing for Ethical Standards

- Ethical behavior is not just a nicety.- In 2008, Bernie Madoff confessed to a $50 billion Ponzi scheme, and

sentenced to 150 years in prison. - Former Tyco International CEO Dennis Kozlowski served prison time for

grand larceny, securities fraud, and tax evasion. - WorldCom head Bernard Ebbers is serving 25 years for fraud. - Wells Fargo CEO John Stumpf steps down after fake accounts scandal.

- Managing for Sustainability - Sustainability

- Economic Development that meets the needs of the present without compromising the ability of future generations.

- Our changing climate has brought the issue of being “green” to increased prominence.

- PepsiCo to Walmart to UPS- recognize a responsibility to address the causes of climate change.

- Managing for Happiness and Meaningfulness - Happiness is getting “what you want”. - Meaningfulness is a valued sense of self and purpose in your community. - Research shows that a sense of meaningfulness in your life is associated with

better health, work and life satisfaction, and performance.

- Four Levels of Management - Team Leaders

- Responsible for facilitating team activities toward achieving key results- First-Line Managers

- Make short term operating decisions, directing the daily tasks of non managerial personnel

- Middle Managers - Implement the policies and plans of the top managers above them and

supervise and coordinate the activities of the first-line managers below them/

- Titles like plant, district or regional manager. - Top Managers

- Make long term decisions about the overall direction of the organization and establish the objectives, policies, and strategies for it

- Functional Versus General Managers - Functional Manager

- Responsible for just one organizational activity - I.e. director of finance, vice president of production

- General Manager - Responsible for several organizational activities - examples include:

- EVP for Production, HR and Finance

- Managers for Three Types of Organizations - For-Profit Organizations

- Making…. - Nonprofit Organizations

- Offering services to some clients, not to make a profit (i.e. hospitals, colleges, social-welfare agencies)

- Mutual-Benefit Organizations - Aiding members in order to advance their interests (i.e. political parties,

farm cooperatives, labor unions, trade associations, clubs)

- The Skills Exceptional Managers Need - Technical Skills

- The job-specific knowledge needed to perform well in a specialized field- Conceptual Skills

- The ability to think analytically, to visualize an organization as a whole and understand how the parts work together

- Human Skills - The ability to work well in cooperation with other people to get things

done; the ability to motivate, to inspire trust, to communicate with others

- The Most Valued Traits in Managers - The ability to motivate and engage others - Work experience outside - High energy levels to meet demands of global travel and a 24/7 world

- Roles Managers Must Play Successfully - The Manager's roles: Mintzberg’s useful findings

- 1. A manager relies more on _____ than on ____ communication. - 2. A manager works long hours at an _______ pace. - 3. A manager's work is characterized by _______, brevity, and variety.

- The Mintzberg Study - A manager relies more on verbal than on written communication

- Three Types of Managerial Roles - Interpersonal Roles

- Interact with people inside and outside their work units - Figurehead, leader, liaison

- Informational Roles - Receive and communicate information - Monitor, disseminator, spokesperson

- Decisional Roles - Use information to make decisions to solve problems or take advantage

of opportunities - Entrepreneur, disturbance handler, resource allocator, negotiator

- Sample Test Question - CEO Gary Kelly sets the direction and strategy for Southwest Airlines. What type

of managerial role is he performing? - Interpersonal - Informational- Decisional - Conclusive

- The Link Between Entrepreneurship and Management - Entrepreneurship

- Process of taking risks to create a new enterprise - Entrepreneur vs. Intrapreneur

- An entrepreneur is someone who sees a new opportunity for a product or service and launches an organization to try to realize it

- An intrapreneur is someone who works inside an existing organization who sees an opportunity for a product or service and mobilies the organization’s resources to try to realize it

- How Do Entrepreneurs and Managers Differ? - Being an entrepreneur is what it takes to start a business; they are high-energy,

and tend to have high self-confidence and a high tolerance to risk. - Being a manager is what it takes to grow or maintain a business. - Entrepreneurs and managers both:

- Have a high need for achievement - Have a high tolerance for ambiguity - Believe they are in personal control of their destiny

- Sample Test Question - Jamira thought there was an opportunity and opened a new BBQ restaurant on

campus. She is a(n): - Manager - Intrapreneur - Entrepreneur - Omnipreneur

- Major Questions You Should Be Able to Answer

- 1.1 - What are the rewards of being an exceptional manager?

- 1.2 - What would I actually do - that is, what would be my four principal

functions- as a manager? - Planning, organizing, leading, and controlling

- 1.3 - Challenges can make one feel alive. What are seven challenged I can

look forward to as a manager? - 1.4

- What are the levels and areas of management I need to know to move up, down, and sideways?

- Top managers, middle managers, first-line managers, and team leaders

- 1.5 - To be a terrific manager, what skills should i cultivate?

- 1.6 - To be an exceptional manager, what roles must i play successfully?

- 1.7- Do i have what it takes to be an entrepreneur?

- Take risks to create a new enterprise

Chapter 1 Review - “Setting goals” → planning - A group of people who work together to provide aid to members and advance one

another's interest are working at a: - Mutual-benefit organization

- According to the textbook, which of the following is NOT one of the three categories of skills managers must possess:

- Answer→ intercultural - Human, Technical, & Conceptual skills are the skills managers must possess

- Pat and Jesse implement the policies and plans of managers above them and supervise and coordinate the activities of managers below them. They are:

- Answer→ Middle Managers

1-29-2019

- **20%(12 of 60) of Exam questions were on Ch. 1

- CLI and Solstice - B2B → business to business- B2C→ business to customers - Sales and Operations:

-- Good to Great

- 1. Level 5 Leadership - 2. First Who…. Then What - 3. Confront the Brutal Facts - 4. The Hedgehog Concept - 5. A Culture of Discipline - 6. Technology Accelerators - 7. The Flywheel and the Doom Loop

- Level 5 Leadership - “You can accomplish anything in life, provided that you do not mind who gets

credit.” -Harry S Truman

-

- Confront the Brutal Facts - “One of the biggest mistakes people generally make, and I’m guilty of it

too, is wishful thinking. You want something to be true, even if it isn’t true. Always take the position that you are to some degree wrong, and the goal

is to be less wrong over time. Solicit critical feedback, particularly from friends.”- Elon Musk

- “We [use Bridgewater’s ‘idea meritocracy algorithm’] because it eliminates what I believe to be one of the greatest tragedies of mankind, and that is people arrogantly, naively holding opinions in their minds that are wrong—and acting on them—and not putting them out there to stress test them, and that is a tragedy.”- Ray Dalio (founder of Bridgewater, the most valuable hedge fund in history)

- The Flywheel - What is the flywheel?

-- Task Environment

- 11 groups that present you with daily tasks to handle: - Customers - Competitors - Suppliers - Distributors - Strategic allies - Employee organizations - Local communities - Financial institutions - Government regulators - Special-interest groups - Mass media

- Special Interest Groups - Groups whose members try to influence specific issues

Quiz 1 Review

- New developments in methods for transforming resources into goods or services are called ____ forces.

- Technological

- Which of the following are types of owners a business can have? - Stockholder - Partnership - Sole proprietors

- Obligations of a Corporation (in order) - Being a good global corporate citizen - Being ethical in its practice - Obeying the law - Making a profit

- Ethical Standards do not vary among countries or cultures - False

- Level of Personal Moral Development with its description - Preconventional

- Obey managers to avoid consequences - Conventional

- Generally adhere to the expectations of others - Postconventional

- Follow internal values and standards - Which of the following are required by the Sarbanes-Oxley Act of 2002?

- A company’s CEO and CFO certify the accuracy of the company’s financial reports

- Top management abstain from taking personal loans or lines of credit from the company

- An organization put procedures and guidelines in place for audit committees

- Companies are expected to benefit the interests of society in addition to the interests of the organization, a concept known as _____ social responsibility (CSR).

- Corporate - The ___ of an organization consists of all those who can claim it as their

legal property. - Owners

- The forces that arise form relationship between people in a community are known as ___ forces.

- Sociocultural - The passage of the US Patient Protection and Affordable Care Act during

the Obama administration and its impact on employers is an example of which force?

- Political-legal - What are the three levels of personal moral development proposed by

Laurence Kohlberg?

- Following others’ expectations - Acting according to internal values - Obeying the rules

- The Sarbanes-Oxley Reform Act was established to monitor ___ of public institutions

- Financial records - Which of the following statements regarding ethical climates is TRUE?

- An ethical climate significantly affects the frequency of ethical behavior. - Garrison Company is in the process of evaluating its operating procedures,

code of conduct, and other factors to determine their effect on society. The company is conducting a(n)

- Social audit - Changes in the way politics shape laws and laws shape the opportunities

for and threats to organizations are called ____ forces. - Political-legal

- A(n) ___ reflects workers beliefs about whether or not their organization endorses moral behavior.

- Ethical climate - Kendrick believes that it is important to understand why his employees take

certain actions because this allows him to motivate them to get the job done. Which managerial viewpoint does Kendrick possess?

- Behavioral - Which of the following would be considered characteristics of Theory Y workers?

- Imaginative and creative - Accepting of responsibility - Capable of self-direction

- A supervisor who considers employees to be irresponsible and wanting to be led rather than wanting to lead would be characteristics of Theory ____ manager.

- X - Management science is sometimes known as

- Operations research

Chapter 3 Quiz1. At any given organization, employees, owners and the Board of Directors

are examples of: a. Internal stakeholders

2.

1-31-2019

- The Triple Bottom Line: People, Planet, Profit - Triple bottom line

- Represents people, planet, and profit (the 3 Ps) - Measures an organization’s social, environmental, and financial

performance - Success can be measured through social audit

- A systematic assessment of a company’s performance in implementing socially responsible programs

-

- Internal Stakeholders - Consists of employees, owners, and the board of directors

- Employees - Individuals employed for wages or salary at an organization,

especially at the non-executive level- Owners

- Consists of all those who can claim the organization as their legal property

- Board of Directors - Members elected by the stockholders to see that the

company is being run according to their interests

- External Stakeholders - People or groups in the organization’s external environment that are

affected by it - Inner Ring: the task environment

- Consists of 11 groups that present an organization with daily tasks to handle

- Outer Ring: the general environment - Refers to the macro-environment such as economic,

technological, and sociocultural

- The Task Environment - Customers

- Those who pay to use an organization’s goods or services. - Competitors

- People or organizations that compete for customers or for service - Supplier

- Provides raw materials, services, equipment, labor, or energy to other organizations

- Distributor - A person or organization that helps another organization sell tis

good and services to customer- Strategic Allies

- The relationship of two organizations who join forces to achieve advantages neither can perform as well alone

- Employee organizations - Labor unions and professional associations

- Local communities - May institute clawbacks (rescinding tax breaks when firms don’t

deliver promised jobs), and may engage in crowdfunding (raising money for a project by obtaining many small amounts of money from many people)

- Financial institutions - Banks, savings and loans, and credit unions

- Government regulators - Regulatory agencies that establish ground rules under which

organizations may operate - Special Interest Groups

- Groups whose members try to influence specific issues - Mass Media

- The power of print, radio, TV, and the Internet on an organization's news, both good and bad

- The General Environment - Economic Force

- Consists of the general economic conditions and trends: unemployment,inflation, interest rates, economic growth

- Technological Force - New developments in methods for transforming resources into

goods and services - Sociocultural Force

- Influences and trends originating in a country’s, a society's, or a culture’s human relationships and values that may affect an organization

- Demographic Forces - Influences on an organization arising from changes in the

characteristics of a population, such as age, gender, or ethnic origin - political-Legal Forces

- Changes in the way politics shape laws and laws shape the opportunities for and threats to an organization

- International Forces - Changes in the economic, political, legal, and technological global

system that may affect an organization

- Defining Ethics and Values - Ethics

- Standards of right or wrong that influence behavior; may vary among countries and cultures

- Values - Relatively permanent and deeply help underlying beliefs and

attitudes that help determine a person's’ behavior

- Five Moral Underpinnings across Cultures - harm/care - fairness/reciprocity - ingroup/loyalty - authority/respect - purity/sanctity

- Conflicting Values - Organizations may have two value systems that conflict:

- 1. The Value System stressing financial performance versus - 2. The Value System stressing cohesion and solidarity in employee

relationships

- Ethical Dilemma - Situation in which you have to decide whether to pursue a course of action

that may benefit you or your organization but that is unethical or even illegal.

- Four Approaches to Deciding Ethical Dilemmas - The Utilitarian Approach

- Guided by what will result in the greatest good for the greatest number of people

- Often associated with financial performance - The Individual Approach

- Guided by what will result in the individuals best long-term interest, which ultimately is in everyone’s self-interest

- Assumes that people will act ethically in the short run to avoid harm in the long run

- Flaw is one person’s short term gain may not be good for everyone in the long term

- The Moral-Rights Approach - Guided by respect for the fundamental rights of human beings: the

right to life, liberty, privacy, health, safety, and due process - For example, the U.S. Constitution's Bill of Rights

- The Justice Approach - Guided by respect for impartial standards of fairness and equity - Policies administered impartially and fairly regardless of gender,

age, sexual orientation, and the like

- The Sarbanes-Oxley Reform Act - White-collar crime

- Illegal trading, Ponzi schemes, and other white-collar crimes dominated the headlines in the early 21st century

- Sarbanes-Oxley Act of 2002 - Established requirements for proper financial record keeping for

public companies - Penalties of as much as 25 years in prison for noncompliance - Sometimes called SarbOC or SOX

- How do People Learn Ethics - Kohlberg’s three levels of persona moral development

- Level 1- Preconventional: follow rules to avoid unpleasant

consequences - Level 2

- Conventional: follows expectations of others (most managers are at this level)

- Level 3- Postconventional: guided by internal values, they lead by

example

- How Organizations Can Promote Ethics - 1. Create a strong ethical climate - 2. Screen prospective employees - 3. Institute ethics codes and training programs - 4. Protect whistleblowers who report organizational misconduct

- Your Social Responsibilities as a Manager - Social Responsibility

- Manager’s duty to take actions that will benefit the interests of society as well as of the organization

- Corporate Social Responsibility - Notion that corporations are expected to go above and beyond

following the law and making a profit

- Carroll's’ Global Corporate Social Responsibility

- Types of Social Responsibility - Sustainability

- Economic development that meets the needs of the present without compromising the ability of future generations to meet their own needs

- Natural Capital - The value of natural resources, such as topsoil, air, water, and

genetic diversity, which humans depend on - Philanthropy

- Making charitable donations to benefit humankind - 136 billionaires have joined Bill and Melinda Gates in the

Giving Pledge, a commitment to dedicate a majority of their wealth to philanthropy

- How does Being Good Pay Off? - 1. Positive effects on customers - 2. Positive effects on employees’ work attitudes and intentions to quit - 3. Positive effect on employees’ behavior and work performance

- 4. Positive effect on sales growth, company efficiency, company revenue, stock price, and profits

- Corporate Governance - How can I trust a company is doing the right thing?

- Definition of Corporate Governance - The systems of governing a company so that the interests of

corporate owners and other stakeholders are protected - More attention paid to strengthening corporate governance

so that directors are clearly separated in their authority from the CEO

Chapter 3 Review - Hamsters “R” Us has an excellent system of oversight that ensures the interests

of corporate owners and other stakeholders are protected. Based on this information, we can be sure that Hamsters “R” Us has strong:

- Corporate governance- When managing Candy4everyone, Paula frequently runs into ethical dilemmas.

In deciding these dilemmas, she prefers to be guided by respect or impartial standards of equity regardless of the gender, age, sexual orientation, etc. for the people involved. Which approach does Paula prefer?

- Justice Approach - Which of the following statements about the Individual Approach to deciding

ethical dilemmas is correct? - Assumes that people will act ethically in the short run to avoid harm in the

long run- Customers, allies, and unions are examples of:

- External Stakeholders

2-5-2019 Chapter 4

Global Management

- Major Questions You Should Be Able to Answer - 4.1

- What three important developments of globalization will probably affect me?

- 4.2 - Why learn about international management, and what characterizes the

successful international manager? - 4.3

- Why do companies expand internationally, and how do they do it? - 4.4

- What are barriers to free trade, what major organizations and trading blocs promote trade, and how important are the BRICS countries?

- 4.5 - What are the potential areas of cultural differences?

- Competition and Globalization: Who will be No. 1 Tomorrow? - Globalization

- The trend of the world economy toward becoming a more interdependent system

- The Rise of the “Global Village” - The “global village”

- The “shrinking” of time and space as air travel and the electronic media have made it much easier for the people of the globe to communicate with one another.

- 25 years ago, cell phones, pagers, fax, and voicemail links barely existed. By 3015, there were nearly 7 billion mobile-cellular subscriptions.

- As of june 2018, of the 7.5 billion people in the world, 55% are Internet users.

- Examples of the “Global Village”- You can outsource tasks around the world instantly

- Upwork - You can learn any language online

- iTalki - Fluent Forever

- So easy to live abroad! - Internships - Language study - Teach english - Volunteer - Goabroad.com- homestay.com

- The Rise of Electronic Commerce - E-commerce

- E-commerce is the buying and selling of products and services through computer networks.

- U.S. retail ecommerce sales were estimated at $341.17 billion for 2015, up 14.7% over the previous year.

- Asian countries account for nearly half of the world’s mobile online shopping, worth more than $230 billion annually (in U.S. dollars).

- One Big World Market: The Global Economy

- Mega Firms and mergers are on the rise - Industries are becoming bigger and cross-global, especially automobiles,

telecommunications, and healthcare - Mini Firm s are operating worldwide

- The internet allows almost anyone to be global- Small companies can get started more easily - Small companies can maneuver faster

- Question- Jelene sells her art through her own website and her Etsy store. She received questions

from many different countries. Jelene is engaged in - E-commerce - Global trading - Counter-trading - Embargo

- International Management - Multinational Corporation

- Business firm with operations in several countries - Multinational Organization

- Non Profit organization with operations in several countries

- Learning to Be a Success Abroad- A survey conducted by DDB Worldwide in more than 100 countries found that

respondents repeatedly mentioned “arrogant”, “loud”, and “uninterested in the world” when asked by their perceptions of Americans.

- Developing a global mindset: - Be patient, be quiet, listen, don’t use slang, don’t talk about wealth - Be global in your focus, but study up on local customs - Learn what is appropriate behavior (gestures, eye contact, etc.) - Learn rituals of respect (shaking hands, dressing appropriately, etc.)- Become at least minimally skilled in the language

- Why Learn About International Management - You may deal with foreign customers or partners. - You may deal with foreign employees or suppliers. - You may work for a foreign firm in the United States. - You may work for an American firm outside the United States, or for a foreign one.

- The Successful International Manager - Ethnocentric managers

- Believe that their native country, culture, language, and behavior are superior to all others

- Related to parochialism, a narrow view in which people see things solely through their own perspective

- Polycentric managers - Take the view that native managers in the foreign offices best understand native

personnel and practices, and so the home office should leave them alone- Geocentric managers

- Accept that there are differences and similarities between home and foreign personnel and practices and that they should use whatever techniques are most effective.

- Questions - David has studied SPanish for several years and has visited ARgentina a few times, but

he still doesn’t really understand the consumer mindset in Buenos Aires. He prefers to leave local managerial decisions to the local team themselves, rather than imposing his way of doing things. David is an example of a(n):

- Polycentric Manager

- Why Companies Expand Internationally - 1. Availability of supplies - 2. New markets - 3. Lower Labor costs

- Example: maquiladoras in Mexico) - 4. Access to financial capital - 5. Avoidance of tariffs and import quotas

- Five Ways of Expanding Internationally

- How Companies Expand Internationally - Global outsourcing

- Also called offshoring- Using suppliers outside the United States to provide labor, goods, or services

- Importing - A company buys good outside the country and resells them domestically

- Exporting - A company produces goods domestically and sells them outside the country

- Countertrading - Bartering goods for goods

- Top 10 Exporting Countries, 1999 and 2015

- How Companies Expand Internationally

- Licensing - A

company allows a foreign company to pay it a fee to make or distribute the firm’s product or service

- Franchising - A company allows a foreign company to pay it a fee and a share of the profit in

return for using the company’s brand name and a package of materials and services

- Joint ventures

- Formed with a foreign company to share the risks and rewards of starting a new enterprise together in a foreign country

- Also known as a “strategic alliance” - Wholly-owned subsidiary

- Foreign subsidiary that is totally owned and controlled by an organization - “Greenfield venture”

- A foreign subsidiary that the owning organization has built from scratch

- The World of Free Trade - Barriers to International Trade

- Tariffs - Customs duty, or tax, levied mainly in imports

- Import quotas - Limits on the numbres of a product that can be imported

- Embargoes - Complete bans on trade between one country and another

- Sanctions - A trade prohibition on certain types of products or services for a specific reason

(e.g. nuclear proliferation)

- Playing by the Rules? - 4 of the top 5 solar cell producers are based in China, where the government has

subsidized the development of this technology, to the detriment of American and European solar industries.

- Organizations Promoting International Trade - World Trade Organization (WTO)

- Designed to monitor and enforce trade agreements - agreements based on the General AGreement on Tariffs and Trade (GATT), an

international accord first signed by 23 nations in 1947 - Currently consists of 164 countries - Headquartered in Geneva, Switzerland

- The World Bank - It was founded after WWII to help European countries rebuild - Today the purpose is to provide low-interest loans to developing nations for

improving transportation, education, health, and telecommunications

- It has 188 member nations, with most contributions coming from Britain, the US, Japan, and Germany

- Headquartered in Washington, D.C. - International Monetary Fund (IMF)

- Designed to assist in smoothing the flow of money between nations - Founded in 1945 and now affiliated with the United Nations - Operates as a last-report lender that makes short-terms loans to countries

suffering from unfavorable balance of payments (example: Greece) - Headquartered in Washington, D.C

- Major Trading Blocs- A trading bloc is a group of nations within a geographic region that have agreed to

remove trade barriers to one another. - NAFTA (North American Free Trade Agreement)

- Allows for freer flow of goods, services, and capital among the US, Canada, and Mexico

- EU (European Union) - 28 “borderless” trading partners in Europe; or 27 with “Brexit” (Britain’s

exit) - APEC (Asia-Pacific Economic Cooperation)

- group of 21 Pacific Rim countries in Southeast Asia - ASEAN (Association of Southeast Asian Nations)

- Trading bloc of 10 countries in Southeast Asia - Mercosur

- Largest trading block in Latin America - CAFTA (Central American Free Trade Agreement)

- Central America - The Trans-Pacific Partnership

- Most Favored Nation Trading Status - Most favored nation trading status

- Describes a condition in which a country grants other countries favorable trading treatment such as the reduction of import duties

- Exchange Rates - The rate at which the currency of one area or country can be exchanged for the currency

of another’s - For example:

- Let’s pretend $1 trades equal to 1 British pound - An item that costs 3 pounds can be bought for $3. - If the exchange rate changes so that $1 buy 1.50pounds then an item

that cost 3 pounds can be bought for $2 (the dollar is “stronger”)

- The BRICS Countries - The five major emerging economies

- Brazil, Russia, India, China, and South Africa - Coined by a financial analyst as promising markets for finance capital in the 21st

century - Represent 40% of the world’s population

- Represent about 20% of the world’s economic activity

- Understanding Cultural Differences - Culture

- Shared set of beliefs, values, knowledge, and patterns of behavior common to a group of people

- Ex. → the culture of tipping in restaurants varies from country to country

- Low-context Culture - Shared meanings primarily derived from written and spoken words - Includes US, Great Britain, Scandinava, Germany

- High-Context Culture - Rely heavily on situational cues for meaning when communicating with others - Includes China, Korea, Japan, Mexico, many Arab countries

- Cultural Dimensions: The GLOBE project

- Other Cultural Variations - 1. Language

- More than 3,000 languages spoken in the world - 2. Interpersonal Space

- Americans like 3-4 feet of space; range is 1 foot in Latin America and Asian cultures

- 3. Communication- Do you treat business as a “task” (U.S.) or as a “relationship” (China)?

- 4. Time orientation - Doing one thing at a time (monochronic) or more than one thing at a time

(polychronic) - 5. Religion

- How does religion influence work-related values?- 6. Law and political stability

- Be aware of the Foreign Corrupt Practices Act, instability, expropriation, corruption, or labor abuses

- U.S. Managers on Foreign Assignments - Expatriates

- Americans living or working in a foreign country - Between 2.2 million and 6.8 million Americans living or working outside American

borders - 10%-20% of all U.S. managers sent abroad returned early because of job

dissatisfaction or adjustment difficulties

- One study showed a turnover rate double that of managers who did not go abroad

2-7-2019 Planning - Chapter 5

- The Likelihood of Success of Any Endeavor - Strategy X Execution X The Wind - Quality of the Plan X Quality of the Team X Luck (or General Environment Forces)

- Strategy: Setting Long-Term Direction - Strategy/Strategic Plan (long term)

- A large-scale action plan that sets the long term goals and direction for an organization

- Represents an “educated guess” about what must be done in the long term for the survival or the prosperity of the organization or its principal parts

- Strategic plans generally reconsidered every year due to ever-changing business conditions

- Strategic Management - 5-Step Process

- 1. Establish the mission, vision, and values- 2. Access the current reality - 3. Formulate the grand strategy and the strategic, tactical, and operational plans - 4. Implement the strategy - 5. Maintain strategic control

- Fundamentals of Planning

- Mission, Vision, and Value Statements - Mission Statement

- Expresses the purpose of the organization - What is our reason for being? - Why are we here?

- Vision Statement - What the company stands for, it’s core priorities, the values its employees

embody, and what its products contribute to the world - What values do we want to emphasize?

- Value Statement - It is a clear sense of the future and the actions needed to get there. - What do we want to become? - Where do we want to go?

- Example: Hilton Hotels - Mission Statement: “To be the preeminent global hospitality company- the first choice of

guest, members, and owners alike.” - Values Statement: “To fill the earth with the light and warmth of hospitality.” - VIsion Statement: acronym based on family/brand name

- Hospitality: We’re passionate about delivering exceptional guest experiences - Integrity: We do the right thing, all the time. - Leadership: We’re leaders in our industry and in our communities - Teamwork: We’re team players in everything we do. - Ownership: We’re the owners of our actions and decisions - Now: We operate with a sense of urgency and discipline.

- Strategy and Tactics - What’s the difference? - Strategy defines your long-term goals and how you’re planning to achieve them. In

other words, your strategy gives you the path you need toward achieving your organization’s mission.

- Tactics are much more concrete and are often oriented toward smaller steps and shorter time frames along the way. They involve best practices, specific plans, resources, etc. They’re also called “initiatives.” (6 to 24 months)

- Planning- Business Plan:

- A document that outlines a proposed firm’s goals, the strategy for achieving them, and the standards for measuring success.

- Business Model: - Outlines the need the firm will fill, the operations of the business, it’s component

and functions, as well as the expected revenues and expenses

- SMART Goals - Specific

- Urban mobility plan - 9 square city blocks, close off inside to through traffic - Speed limit kept to 6 mph - Curbside parking replaced with underground parking

- Measureable

- Improvements in air quality - Increase in amount of “markets, outdoor games, and events”? - Increase in business activity within superblock?

- Attainable - “Barcelona has some unique advantages”. Much of Barcelona built before cars

and built on a simple grid design - Results-Oriented

- City northwest of Barcelona achieved pedestrian space increase of 45% to 74% - In comparison city, noise levels dropped from 66.5 dBA to 61bBA - 42% of reduction in nitrogen oxide emissions - 38% reduction in particle pollution

- Target dates - None mentioned! But Barcelona urban planners almost definitely set project

completion dates!

- VRIO:Value, Rarity, Imitability, Organization - VRIO is a framework for analyzing a resource or capability to determine its competitive

strategic potential by answering four questions about its: - Value

- Is the resource or capability valuable? - Rarity

- Is the resource or capability currently controlled by only a few organizations or no other organizations?

- Imitability - Is the resource or capability costly for other firms to imitate?

- Organization - Is the firm organized to exploit the resource or capability?

- Why Plan? Program Direction and Momentum - Why are direction and momentum important?

- Unless a plan is in place, managers may well focus on just whatever is in front of them, just “putting out fires.”

- Managers might be so preoccupied with day-to-day pressures that their organizations can lose momentum.

- Examples: - How did Amazon impact Borders bookstores? - How has uber impacted taxicabs? - How have blogs and internet news impacted the newspaper business? - How have microbreweries impacted Anheuser-Busch?

- Why Plan? Developing a Sustainable Competitive Advantage - Competitive advantage

- The ability of an organization to produce goods or services more effectively than its competitors do, thereby outperforming them

- Sustainable Competitive Advantage - Occurs when an organization is able to get and stay ahead in four areas:

- In being responsive to customers - In innovating - In quality

- In effectiveness

- Three types of Planning for Three Levels of Management

- The Operating Plan and Action Plan - Operating plan

- A plan that breaks long-term output into short-term targets or goals - Turns strategic plans into actionable short-term goals and action plans

- Action Plan - Defines the course of action (the tactics) needed to achieve a stated goal - Contains a projected date for completing the desired activities for each tactic

- Example: Means-End Chain - Strategic goal:

- Increase revenue from new customers by 10% over the next 12 months - Operational Goal:

- Introduce (roll out) two new product offerings over the next 12 months - Action Plan:

- Product development team to propose two new products by March 31- Products to be produced and pilot-tested in selected markets by May 1- Products to be modified as needed and a marketing plan prepared to

support their introduction (rollout) by May 31- Sales force to be trained to sell products and execution of marketing

plan: begun by June 30- Sales managers to meet with sales force to discuss progress and receive

comments on marketing plan: ongoing

- Standing Plans and Single-Use Plans

- Cascading Goals - Making lower-level goals align with Top Goals

- For MBO goal setting to be successful, the following three things have to happen:- Top management must be committed to the goals - Goals must be applied organization wide - Goals must “cascase” - be linked consistently down through the

organization

- The Planning/Control Cycle

- Strategic Management - Why Planning and strategic management are important:

- Provides direction and momentum - Encourages new ideas - Develops a sustainable competitive advantage

- Long-Term and Short-Term Goals - Goals

- A specific commitment to achieve a measurable result within a stated period of time

- Long-term goals - Generally referred to as strategic goals - Tend to spain 1 to 5 years and focus on achieving the strategies identified in a

company's strategic plan - Short-Term Goals

- Sometimes referred to as tactical or operational goals, or just plain goals - Generally span 12 months and connected to strategic goals in hierarchy knows

as a means-end chain

- Planning - three definitions - 1. Planning is defined as setting goals and deciding how to achieve them - 2. Planning is coping with uncertainty by formulating future courses of action to achieve

specified results - 3. A plan is a document that outlines how goals are going to be met.

- Review - Danny is participating with other managers in a discussion about what his organization

goals should be for the next decade. He is participating in: - Strategic planning

- Melissa wants her employee, Ralpha, to turn in his monthly sales report by the 5th of every month. Which requirement of SMART goals is this?

- Time oriented - Apply has fired employees who have leaked news about unannounced products. Which

step of the planning and controlling process is this? - Take the corrective action

2-12-2019 Strategic Management Ch. 6

- Major Questions You Should Be Able to Answer - 6.1

- What is strategic positioning, and what are the three principles that underlie it? - 6.2

- What’s the five step recipe for the strategic management process? - 6.3

- What are the characteristics of good mission, vision, and values statements? - 6.4

- What tools can help me describe where the organization stands from a competitive point of view?

- 6.5 - How can four techniques- Porter’s four competitive strategies, diversification

strategy, blue ocean strategy, and the BCG matrix - help me formulate strategy? - 6.6

- How does effective execution help managers during the strategic management process?

- What is an Effective Strategy? - Strategic Positioning

- 1. Developed by famous strategist Michael Porter - 2. Attempts to achieve sustainable competitive advantage by preserving what is

distinctive about a company - 3. “Performing different activities from rivals, or performing similar activities in

different ways.”

- From a 1997 Fortune Magazine Story on Apple: - “Apple Computer, Silicon Valley’s paragon of dysfunctional management and fumbled

techno-dreams, is back on crisis mode, scrambling lugubriously in slow motion to deal with imploding sales, a floundering technology strategy, and a hemorrhaging brand name.”

- “Deciding what not to do is as important as deciding what to do. It’s true for companies and it’s true for products.”

- Strategic Positioning and its Principles - 1. Strategy is the creation of a unique and valuable position

- Few needs, many customers - Broad needs, few customers- Broad needs, many customers

- 2. Strategy requires trade-offs in competing - In the apple example, what were some of the trade-offs? How about in the Wells

Fargo example? - 3. Strategy involved creating a “fit” among activities.

- The Strategic Management Process

- Establishing the Mission Statement - Does your organization’s mission statement answer these questions:

- What are our customers? - What are our major products or services - In what geographical areas do we compete? - What is our basic technology? - What is our commitment to economic objectives? - What are our belief, values, aspirations, and philosophical priorities? - What are our major strengths and competitive advantages? - What are our public responsibilities, and what images do we wish to project? - What is our attitude toward our employees?

- Example: The Periodic Table → VT food truck

- Establishing the Vision Statement - Does your organization's vision statement answer these questions:

- Is it appropriate for the organization and for the times? - Does it set standards of excellence and reflect high ideals? - Does it clarify purpose and direction? - Does it inspire enthusiasm and encourage commitment? - Is ti well articulated and easily understood? - Does it reflect the uniqueness of the organization, its distinctive competence,

what is stands for, what it’s able to achieve? - Is it ambitious? An ambitious vision will help attract top talent.

- Establishing the Values Statement

- Assessing the Current Reality - Look at where the organization stands internally and externally, to determine what’s

working and what’s not - See what can be changed so as to increase efficiency and effectiveness in achieving the

organization’s vision

- Tools include competitive intelligence, SWOT analysis, forecasting, benchmarking, Porter’s model for industry analysis

- Competitive Intelligence - Means gaining information about one’s competitors activities so that you can anticipate

their moves and react appropriately - Sources of information include public print and advertising, investor information, informal

sources

- SWOT Analysis - Environmental scanning

- Monitoring of an organization's internal and external environments to detect early signs of opportunities and threats that may influence the firm’s plans

- SWOT, process for scanning - Internal Strengths - Internal weaknesses - External opportunities - External threats

- Example: SWOT Characteristics of a College Campus -

- When analyzing the “W” in the SWOT analysis, the manager might be assessing:

- High turnover of employees

- Forecasting: Predicting the Future - Forecasting

- A vision or projection of the future - Trend analysis

- Hypothetical extension of a past series of events into the future - Contingency planning

- Creation of alternative hypothetical but equally likely future conditions - Also called scenario planning and scenario analysis

- Benchmarking: Comparing with the Best - A process by which a company its performance with that of high-performing organizations

- Porter’s Five Competitive Forces - Porter contends that business-level strategies originate in 5 primary competitive forces in

the firm’s environment: - 1. Threat of new entrants - 2. Bargaining power of suppliers - 3. Bargaining power of buyers - 4. Threat of substitute products or services - 5. Rivalry among competitors

- Formulate the Grand Strategy - Grand Strategy

- Comes after assessing the current reality - Explain how the organization’s mission is to be accomplished

- Common Grand Strategies - Growth Strategy

- Involves expansion, as in sales revenues, market share, number of employees, or number of customers

- Stability - Involves little or no significant change

- Defensive- Involved reduction in the organization’s efforts - Retrenchment

- How Companies Can Implement a Grand Strategy

- Porters 4 Competitive Strategies - Cost-leadership Strategy

- Keep the costs, and hence prices, of a product or service below those of competitors and target a WIDE market

- Cost-Focus Strategy - Keep the costs of a product below those of competitors and to target a NARROW

market - Differentiation Strategy

- Offers products that are of unique value compared to those of competitors but to target a wide market

- Focused-Differentiation Strategy - Offers products that are of unique and superior value compared to those of

competitors and to target a NARROW market

- Single-Product Strategy: Focused but Vulnerable - Company makes and sells only one product within its market - Benefit is that a company can focus on just one product - Risk is that you are vulnerable - why?

- The Diversification Strategy - Diversification

- Operating several businesses in order to spread the risk

- Products may be related or unrelated - Vertical integration

- Firm expands into businesses that provide the supplies it needs to make it products or that distribute and sell its products

- The Blue Ocean Strategy - A company creates a new, uncontested market space that makes competitors irrelevant,

created new consumer value, and decreases costs - “Competing in overcrowded industries is no way to sustain high performance,” the

authors write. “The real opportunity is to create blue oceans of uncontested market space.”

- The BCG Matrix

- Implementing and Controlling Strategy - Strategy implementation

- Putting strategic plans into effect - Means dealing with roadblocks within the organization’s structure and culture and

seeing if the right people and control systems are available to execute the plans - Strategic Control

- Monitoring the execution of strategy and taking corrective action, if necessary- To keep on track, you must (1) engage people (2) keep it simple (3) stay focused

and (4) keep moving

- Execution: Getting Things Done - Execution

- Consists of using questioning analysis and follow-through in order to mesh strategy with reality, align people with goals, and achieve results promised

- Three Core Processes of Business - A company’s overall ability to execute is a function of effectively executing according to

three processes: - 1. People - consider who will benefit you in the future - 2. Strategy- consider how success will be accomplished - 3. Operators - consider what path will be followed

- What Questions Should a Strong Strategic Plan Address?- 1. What is the assessment of the external environment? - 2. How well do you understand the existing customers and markets? - 3. What is the best way to grow the business profitability, and what are the obstacles to

growth? - 4. Who is the competitor? - 5. Can the business execute the strategy? - 6. Are the short term and long term balanced? - 7. What are the important milestones for executing the plan? - 8. What are the critical issues facing the business? - 9. How will the business make money on a sustainable basis?

- Building a Foundation of Execution - Know you people and your business - Insist on realism - Set clear goals and priorities - Follow through on accountability and results - Reward the doers. - Expand people’s capabilities - Know and understand yourself.