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CHAPTER 2 – THE MANAGEMENT ENVIRONMENT

LEARNING OUTCOMES

After reading this chapter students should be able to:

1. Describe the three waves in modern social history and their implications for organizations.

2. Explain the importance of viewing management from a global perspective.

3. Identify the ways in which technology is changing the manager’s job.

4. Describe the difference between an e-business, e-commerce, and an e-organization.

5. Define social responsibility and ethics.

6. Explain what is meant by the term entrepreneurship and identify the components of the

entrepreneurial venture.

7. Describe the management implications of a diversified workforce.

8. Identify which work/life concepts are currently affecting employees.

9. Explain why many corporations have downsized.

10. Describe the key variables for creating a customer-responsive culture.

11. Explain why companies focus on quality and continuous improvement.

Opening Vignette

SUMMARY

Even a company like WalMart cannot guarantee success or the answers to the questions of “Is

bigger always better when it comes to organizational size? Does size allow for economies of scale that

create greater efficiencies? Does largeness promote success and profitability?” It depends; size alone

cannot control environmental factors. Wal-Mart executives learned this lesson in its German companies.

For a period of time, Wal-Mart’s expansion into Germany appeared to be working. Its 85 stores

there employed more than 11,000 employees and annual sales there exceeded $2.5 billion USD.

However, annual costs exceeded those annual sales figures, and after years of no success in turning the

situation around, Wal-Mart executives sold off all 85 stores in Germany (just two months after Wal-Mart

pulled out of South Korea for much the same reason).

Wal-Mart’s failure in Germany was ironically brought about for some of the same reasons Wal-

Mart succeeds in the US. Strategies of linking to suppliers and taking much of the cost out of the supply

chain did not work in Germany. Many perceived the store locations to be poor locations, because Wal-

Mart purchased stores the Germans considered second tier. Food suppliers were already aligned with

Wal-Mart’s major competitor. Accordingly, Wal-Mart could not compete on price in several areas---a

hallmark of the Wal-Mart philosophy.

Cultural differences also created problems. Germans differ from Americans in that they do not

like having others bag their groceries, or smiling greeters or cashiers. They prefer a more abrupt and to

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41

the point interaction when they shop. Thus, the American managers and the friendly practices that Wal-

Mart put in their German stores backfired and offended German patrons.

Wal-Mart learned a more than $1 billion dollar lesson-----that success in one country is not a

recipe for success in another.

Teaching Notes

1. Ask the students to respond to the following questions

What other countries might WalMart do well in? Do poorly in? (Similar countries on

friendliness---e.g. Sweden; Ireland; Countries that prefer more abruptness---e.g. France)

Ask students to consider any other examples of companies who did not do as well in another

country as they thought they would. (e.g. Euro Disney)

What steps might a company take to make the most informed strategic decisions possible when

considering moving into another country? (Hiring locals, expatriates living in the country for time before

decisions are made, hiring local consultants, etc)

I. THE CHANGING ECONOMY

A. Introduction

1. Organizations that are stagnant and bound by tradition are increasingly fading from the

limelight.

2. One of the biggest problems in managing an organization is failing to adapt to change.

a) Just 30 years ago, no one had a fax machine, a cellular phone, or a notebook computer.

b) E-mail and modems were known to maybe, at best, a few hundred people.

c) Computers often took up considerable space, quite unlike the 4-pound laptop today.

d) The silicon chip and other advances in technology have permanently altered the

economies of the world and the way people work.

3. Alvin Toffler studied these changes, and predicted some of their implications.

4. He argued that modern civilization has evolved over three “waves.” (PPT 2-2)

a) The first wave was driven by agriculture.

1) Until the late nineteenth century, all economies were agrarian.

2) Individuals were typically their own boss and performed a variety of tasks.

3) Their success—or failure—was contingent on how well they produced.

4) Now less than five percent of the global workforce is needed to provide our food.

b) The second wave was industrialization.

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1) From the late 1800s until the 1960s, most developed countries moved to industrial

societies.

2) Work left the fields and moved into formal organizations.

3) The industrial wave forever changed the lives of skilled craftsmen.

4) Workers were hired into tightly structured and formal workplaces.

5) Mass production, specialized jobs, and authority relationships became common.

6) By the 1950s, industrial workers were the largest group in every developed country.

7) Today, blue-collar industrial workers account for less than 30 percent of the U.S.

workforce (and will be less than half of that in a few years)

8) The shift since World War II has been away from manufacturing and toward service

jobs.

5. By the start of the 1970s, the information age was gaining momentum.

a) Technological advancements were eliminating many low-skilled, blue-collar jobs.

b) The information wave was transforming society from manufacturing to service.

c) Job growth in the past 20 years has been in low-skilled service work and knowledge

work.

(1) Knowledge workers (those whose jobs are designed around the acquisition and

application of information) as a group make up about a third of the U.S. work force.

d) The dot.com business has been the most powerful technological innovation to influence

business in the past decade.

(1) Using the Internet is completely changing the rules of business.

6. These waves also affect how we do business.

a) See Exhibit 2-1, The Changing Economy.

Teaching Notes _______________________________________________________________________

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II. A GLOBAL MARKET PLACE

A. The Globalization of Business

1. Management is no longer constrained by national borders.

a) BMW, a German-owned firm, builds cars in South Carolina.

b) McDonald’s sells hamburgers in China.

c) Exxon, a so-called American company, receives more than three fourths of its revenues

from sales outside the U.S.

d) Toyota makes cars in Kentucky.

e) General Motors makes cars in Brazil.

f) Mercedes makes SUVs in Alabama.

g) Parts for Ford Motor Company’s Crown Victoria come from Mexico, Japan, Spain,

Germany, and England.

h) The world has become a global village. (PPT 2-3)

2. To be effective in this boundaryless world, managers need to adapt.

3. In the 1960s, Canada’s prime minister described his country’s proximity to the United States

as analogous to sleeping with an elephant.

a) In the 2000s, we can generalize this analogy to the entire world.

4. International businesses have been with us for a long time.

b) Siemens, Remington, and Singer, were selling their products in many countries in the

nineteenth century.

c) By the 1920s, some companies, including Fiat, Ford, Unilever, and Royal Dutch/Shell,

had gone multinational.

d) Not until the mid-1960s were multinational corporations (MNCs) commonplace.

5. The generic global organization, the transnational corporation (TNC).

a) Decisions in TNCs are made at the local level.

b) Nationals are typically hired to run operations in each country.

c) The products and marketing strategies for each country are tailored to that country’s

culture.

d) Nestle and Frito Lay, for example, are transnationals.


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6. The borderless organization operates effectively by breaking down artificial geographic

barriers. (PPT 2-3)

a) IBM reorganized into 14 industry groups.

b) Ford merged its culturally distinct European and North American auto operations.

c) Borderless management is an attempt to increase efficiency and effectiveness in a

competitive global marketplace.

Teaching Notes _______________________________________________________________________

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B. How Does Globalization Affect Organizations?

1. An organization going global typically proceeds through three stages as shown in Exhibit 2-3.

2. Stage I, the first step toward going international, exporting the organization’s products.

a) This is a passive step involving minimal risk.

b) The organization fills foreign orders only when it gets them.

c) Mail order businesses may have this kind of international involvement.

3. In Stage II, managers make an overt commitment to sell products or make products abroad.

a) Still no physical presence of company employees outside the company’s home country.

b) Sales through sending domestic employees on regular business trips to meet foreign

customers or by hiring foreign agents or brokers.

c) To manufacture, managers contract with a foreign firm to produce their products.

4. Stage III, a strong commitment to pursue international markets aggressively.

a) As shown in Exhibit 2-3, managers can do this in different ways.

b) License or franchise the right to use the brand name, technology, or product

specifications.

1) This approach is used widely by pharmaceutical companies and fast-food chains.


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c) Joint ventures involve larger commitments; a domestic and a foreign firm share the cost

of developing new products or building production facilities in a foreign country.

1) These are called strategic alliances.

2) These partnerships provide a fast and less expensive way for companies to compete

globally than would doing it on their own.

d) The greatest commitment (and risk), occurs when the organization sets up a foreign

subsidiary.

1) Such subsidiaries can be managed as an MNC (with domestic control), a TNC (with

foreign control), or a borderless organization (with global control).

Teaching Notes _______________________________________________________________________

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C. What Effect Does Globalization Have on Managers?

1. Whirlpool is the top manufacturer and distributor of appliances in the U.S., Latin America,

Europe, and Asia.

2. In the changing global environment, the spread of capitalism makes the world smaller.

a) Business has new markets to conquer.

b) The implementation of free markets in Eastern Europe further underscores the growing

interdependence between countries of the world.

3. A boundaryless world introduces new challenges for managers.

4. One specific challenge, one of the first issues to deal with, is the perception of “foreigners.”

(PPT 2-4)

5. U.S. managers in the past held a rather parochial view of the world of business.

a) Parochialism is a narrow focus.

b) Seeing things solely through their own eyes and perspectives is an ethnocentric view.

c) They believed that their business practices were the best in the world.

d) They did not recognize different ways of doing things or living.

6. Countries have different values, morals, customs, political and economic systems, and laws.


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7. Traditional approaches to international business sought to advance general principles.

a) Organizational success can come from a variety of managerial practices.

b) Example, status is perceived differently in different countries.

1) In France, status is the result of factors important to the organization, ascribed status.

2) In the United States, status is more a function of what individuals have personally

accomplished, achieved status.

c) Countries also have differences in their laws.

1) In the United States, laws guard against employers’ taking action against employees

solely on the basis of an employee’s age.

2) Similar laws do not exist in all other countries.

8. Viewing the global environment from any single perspective may be potentially problematic.

9. An appropriate approach is recognizing the cultural dimensions of a country’s environment.

Teaching Notes _______________________________________________________________________

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10. A study of the differences of cultural environments was conducted by Geert Hofstede. (PPT

2-4)

a) Surveyed over 116,000 employees in forty countries—all of whom worked for IBM.

b) Found that managers and employees vary on five value dimensions of national culture.

1) Power distance.

2) Individualism versus collectivism.

3) Quantity of life versus quality of life.

4) Uncertainty avoidance.

5) Long-term versus short-term orientation.

11. Highlights of conclusions from Hofstede’s research.

a) China and West Africa scored high on power distance; the United States and the

Netherlands scored low.

b) Most Asian countries were more collectivist than individualistic.


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c) The United States ranked highest among all countries on individualism.

d) Germany and Hong Kong rated high on quantity of life.

e) Russia and the Netherlands rated low on quantity of life.

f) On uncertainty avoidance, France and Russia were high; Hong Kong and the United

States were low.

g) China and Hong Kong rated high on Long-Term Orientation while France and the U.S.

rated low.

12. The Global Leadership and Organizational Behavior Effectiveness (GLOBE) research

program has updated Hofstede’s research. (PPT 2-5)

a) Using data from 825 organizations in 62 countries, GLOBE identified 9 dimensions on

which national culture differ:

1) Assertiveness

2) Future orientation

3) Gender differentiation

4) Uncertainty avoidance

5) Power distance

6) Individualism/collectivism

7) In-group collectivism

8) Performance orientation

9) Human orientation

b) See Exhibit 2-4 (PPT 2-5)

c) The GLOBE study confirms that Hofstede’s original dimensions are still valid, and has

added some additional dimensions.

d) It also provides us with an update measure of where countries rate on each dimension.

1) For example, the United States led the world in individualism in the 1970s

but today scores in the mid-ranks of countries.


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e) We can expect future cross-cultural studies of human behavior to increasingly use the

GLOBE dimensions to assess differences between countries.

Teaching Notes _______________________________________________________________________

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III. EMPHASIS ON TECHNOLOGY (PPT 2-6)

A. Introduction

1. Suppose you need information on how well your unit is meeting its production standards.

a) Thirty years ago you would have submitted a requisition to the operations-control

department.

b) Today, a few keystrokes on your computer will get that information almost

instantaneously.

2. Since the 1970s, U.S. companies such as General Electric, CitiGroup Technologies, Wal-

Mart, and 3M have been using automated offices, robotics, computer-assisted design

software, integrated circuits, microprocessors, electronic meetings, etc.

a) These technologies make organizations more productive and help them create and

maintain a competitive advantage.

3. Technology includes any equipment, tools, or operating methods that are designed to make

work more efficient.

a) Technological advances reflect integrating technology into a process for changing inputs

into outputs.

b) Technology made it possible to enhance production processes by replacing human labor

with electronic and computer equipment.

c) Technology is making it possible to better serve customers (e.g., ATMs at banks)

4. Technological advancements are also used to provide better, more useful information.

a) Most cars built today have an on-board computer circuit that a technician can use to

determine problems with the automobile, saving countless diagnostic hours.

b) And at Wal-Mart, technology has meant getting better and more timely information.

Teaching Notes _______________________________________________________________________

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B. How Does an Organization Benefit From Information Technology? (PPT 2-6)

5. Technological changes, especially IT changes, have a significant effect on organizational

management.

6. IT has created the ability to circumvent the physical confines of doing work only in a

specified organizational location.

7. One important implication is that employees’ job skill requirements will increase.

8. Another implication is that IT tends to level the competitive playing field.

C. What is an E-Organization? (PPT 2-7)

9. E-commerce is becoming the standard label to describe the sales side of electronic business.

a) Encompasses presenting products on Web sites and filling orders.

b) Global e-commerce spending trillions of dollars. .

10. E-business refers to the full breadth of activities included in a successful Internet-based

enterprise.

a) Developing strategies for running Internet-based companies.

b) Improving communication between employees, customers, and suppliers.

c) Collaborating with partners to electronically coordinate design and production.

11. E-organization (e-orgs) refers to applications of e-business concepts to all organizations.

a) The Internal Revenue Service is an e-organization because it now provides access to

taxpayers over the Internet.

b) There are three underlying concepts of the e-organization.

1) The Internet—a worldwide network of interconnected computers.

2) Intranets—an organization’s private Internet.

3) Extranets—extended intranets, accessible only to selected employees and authorized

outsiders.

c) E-organizations are defined by the degree to which they use global (Internet) and private

(intranet and extranet) network linkages (See Exhibit 2-5)

1) Type A—traditional organizations.


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2) Type B—Contemporary organizations with heavy reliance on intranets and

extranets.

3) Type C—small e-commerce firms.

4) Type D—full e-organizations with completely integrated global and private

networks.

5) See Exhibit 2-5.

12. The Internet and E-organizations.

a) The Internet created thousands of new businesses,

b) Changed the way organizations operated, and

c) Left a lot of road kill.

d) Growth of e-organizations is expected.

Teaching Notes _______________________________________________________________________

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D. In What Ways Does Technology Alter a Manager’s Job? (PPT 2-8)

13. Technology changed the manager’s job.

14. Organizations today have become integrative communication centers.

15. Managers can get complete information quickly, better formulate plans, make faster

decisions, more clearly define the jobs that workers need to perform, and monitor work.

a) Information technology enhanced a manager’s ability to more effectively and efficiently

perform the four primary activities of management.

16. Technology is also changing how a manager’s work is performed.

a) Historically, the work site was located close to a source of skilled labor.

b) Management could observe what work was being done and communicate face to face.

c) Managers are able to supervise employees in remote locations, and the need for face-to-

face interaction has decreased dramatically.

d) Telecommuting capabilities make it possible for employees to be located anywhere on

the globe.

e) Many employers no longer have to consider locating a business near their work force.


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(1) Example, Progressive Auto Insurance in Omaha, Nebraska could hire qualified

workers in Dillon, South Carolina ---provide them with computer equipment and

appropriate ancillaries, and the work could be done hundreds of miles away and

transmitted to the home office.

17. Management’s two biggest challenges—effectively communicating with individuals in

remote locations, as well as ensuring that performance objectives are being met.

a) Addressing these challenges will focus on training managers in establishing performance

standards and ensuring appropriate work quality and on-time completion.

b) Need for more employee involvement with emphasis on output, not means.

Teaching Notes _______________________________________________________________________

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IV. WHAT DOES SOCIETY EXPECT FROM ORGANIZATIONS AND ITS MANAGERS?

(PPT 2-9)

A. Introduction

1. The importance of corporate social responsibility surfaced in the 1960s when the activist

movement began questioning the singular economic objective of business.

2. Before the 1960s, few people asked such questions. Good arguments can be made for both

sides of the social responsibility issue.

a) See Exhibit 2-6.

3. Managers are now regularly confronted with decisions that have a dimension of social

responsibility.

4. In a globally competitive world, few organizations can afford the bad press or potential

economic ramifications associated with being seen as socially irresponsible.

5. Few terms have been defined in as many different ways as social responsibility.

6. Some of the more popular meanings.

a) Profit making only.

b) Going beyond profit making.


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c) Voluntary activities.

d) Concern for the broader social system.

e) Social responsiveness.

7. The debate has focused at the extremes.

a) The classical—or purely economic—view that management’s only social responsibility is

to maximize profits.

b) The socioeconomic position, which holds that management’s responsibility goes well

beyond making profits to include protecting and improving society’s welfare.

Teaching Notes _______________________________________________________________________

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B. How Can Organizations Demonstrate Socially Responsible Actions? (PPT 2-9)

1. According to the text, social responsibility is a business firm’s obligation, beyond that

required by the law and economics, to pursue long-term goals that are good for society.

a) This definition assumes that business obeys the law and pursues economic interests.

b) This definition views business as a moral agent.

2. Comparison with two similar concepts: social obligation and social responsiveness.

a) Social obligation is the foundation of a business’s social involvement. A business has

fulfilled its social obligation when it meets its economic and legal responsibilities. A firm

pursues social goals only to the extent that they contribute to its economic goals.

b) Social responsibility and social responsiveness go beyond meeting basic economic and

legal standards. This might mean respecting the community in which the company

operates, treating all employees fairly, respecting the environment, supporting women

and minorities, not doing business in countries where there are human rights violations,

etc.

3. Social responsibility also adds an ethical imperative.

4. Social responsiveness refers to the capacity of a firm to adapt to changing societal conditions.

5. Social responsibility requires businesses to determine what is right or wrong and thus seek

fundamental ethical troths.

6. Social responsiveness is guided by social norms.


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C. How Do Managers Become More Socially Responsible? (PPT 2-10)

1. Ethics commonly refers to the rules or principles that define right and wrong conduct.

a) Corporate scandals at companies such as Adelphia, Enron, and ImClone have resulted in

a lack of trust for management.

b) Exhibit 2-7 presents three views of ethical standards.

2. Whether a manager acts ethically or unethically will depend on several factors, including:

a) the individual’s morality.

b) values.

c) personality and experiences.

d) the organization’s culture.

e) the issue in question.

3. 82 percent of corporate executives surveys admitted they cheat at golf –and 72 percent of

them believe that golf and business behaviors are parallel.

4. People who lack a strong moral sense are much less likely to do the wrong things if they are

constrained by rules, policies, job descriptions, or strong cultural norms.

Guidelines for Acting Ethically

About the Skill: Making ethical choices can often be difficult for managers. Below are some guidelines.

Steps in Practicing the Skill:

1) Study the following guidelines for enhancing your managerial abilities in acting ethically.

2) Know your organization’s policy on ethics.

3) Understand the ethics policy.

4) Think before you act.

5) Ask yourself what-if questions.

6) Seek opinions from others.

7) Do what you truly believe is right.

Practicing the Skill

Have students evaluate your school’s code of ethics or the code of ethics of any organization they’re part

of. They should evaluation the code’s provisions and policies answering such questions as:

1) Are there any provisions and/or policies that you are uncomfortable with? Why?

2) Are there any that are routinely violated? Why do you think this is happening?


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3) What are the usual consequences of such violations? Do you think they are appropriate?

If you or the students had trouble obtaining the code of conduct, you might want to find out why. Under

what circumstances is it normally distributed, posted, or otherwise made available to members?

5. Codes of ethics are an increasingly popular tool for reducing that ambiguity.

a) A formal document that states an organization’s primary values and the ethical rules it

expects managers and operative employees to follow.

b) Nearly 90 percent of Fortune 1000 companies have a stated code of ethics.

6. The effectiveness of ethical codes depends heavily on whether management supports them,

ingrains them into the corporate culture, and how employees who break the codes are treated.

Teaching Notes _______________________________________________________________________

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V. WHAT IS ENTREPRENEURSHIP?

A. Introduction (PPT 2-11)

1. Entrepreneurship—a process where an individual or a group of individuals risk time and

money in pursuit of opportunities to create value and grow through innovation regardless of

the resources they control.

2. Three important themes in this definition.

a) The pursuit of opportunities—to grow a business by changing, revolutionizing,

transforming, or introducing new products or services.

b) Innovation.

c) Growth.

3. Entrepreneurs create entrepreneurial ventures—characterized by innovative practices with

growth and profitability as their primary goals.

4. Small businesses—independently owned, operated, and financed with fewer than 500

employees, relatively little impact on its industry—may or may not engage in any new or

innovative practices.

B. Is There an Entrepreneurial Process?

1. Four key steps that entrepreneurs must address as they start and manage their entrepreneurial

ventures. (PPT 2-11)


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a) Exploring the entrepreneurial context.

1) Includes the realities of the new economy, society’s laws and regulations that

compose the legal environment, and the realities of the changing world of work.

b) Identifying opportunities and possible competitive advantages.

c) Starting the venture.

d) Managing the venture.

C. What Do Entrepreneurs Do? (PPT 2-12)

1. Entrepreneurs are creating something new—searching for change, responding to it, and

exploiting it.

2. Assessing the potential for the entrepreneurial venture and then dealing with start-up issues.

3. Researching the venture’s feasibility—uncovering business ideas, looking at competitors, and

exploring financing options.

4. Developing a viable organizational mission, exploring organizational culture issues, and

creating a well-thought-out business plan (See Ch. 3)

5. Organizing the venture—choosing a legal form of business organization, addressing other

legal issues such as patent or copyright searches, and coming up with an appropriate

organizational design for structuring how work is going to be done.

6. Launching the venture—setting goals and strategies, and establishing the technology-

operations methods, marketing plans, information systems, financial-accounting systems, and

cash flow management systems.

7. Managing the entrepreneurial venture—making decisions, establishing action plans,

analyzing external and internal environments, measuring and evaluating performance, and

making needed changes.

8. Managing the people-related activities—selecting and hiring, appraising and training,

motivating, managing conflict, delegating tasks, and being an effective leader.

9. Managing the venture’s growth—developing and designing growth strategies, dealing with

crises, exploring various avenues for financing growth, placing a value on the venture, and

perhaps eventually exiting the business.

D. Can Large Organizations Have Entrepreneurs?

1. The entrepreneurial spirit is not limited solely to the small business.

2. Some companies are attempting to model the activities of the entrepreneur.

a) Entrepreneurs are better able to respond to a changing environment.


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b) The owner-manager is usually close to the customer.

c) The owner-manager is the main decision maker; the result is a flatter organization.

3. Intrapreneurs—people who demonstrate entrepreneurial characteristics in large organizations.

a) Can entrepreneurs exist in every large, established organization?

b) The answer depends on one’s definition of entrepreneur.

4. Peter Drucker argues that they can.

a) An entrepreneurial manager is someone confident in his/her abilities, who seizes

opportunities for change, and who not only expects surprises but capitalizes on them.

b) Contrasted with the traditional manager, who feels threatened by change, is bothered by

uncertainty, prefers predictability, and is inclined to maintain the status quo.

c) Drucker’s use of the term “entrepreneurial” is misleading.

1) By any definition of good management, his entrepreneurial type would be preferred

to the traditional type.

2) Intrapreneurship can never capture the autonomy and riskiness inherent in true

entrepreneurship.

Teaching Notes _______________________________________________________________________

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VI. WHAT WILL THE WORK FORCE OF 2010 LOOK LIKE? (PPT 2-13)

A. Introduction

1. Until very recently, managers took a “melting-pot” approach to differences in organizations.

2. They assumed that people who were different would somehow automatically want to

assimilate.

3. Managers found that employees do not set aside their cultural values and lifestyle preferences

when they come to work.

4. The melting-pot assumption is being replaced by the recognition and celebration of

differences.


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B. What Does the Work Force Look Like Today?

1. Much of the change that has occurred in the work force is attributed to the passage of U.S.

federal legislation in the 1960s prohibiting employment discrimination.

2. Avenues began to open up for minority and female applicants and they have become the

fastest growing segment in the work force.

3. Birthrates in the United States began to decline.

4. As globalization became more pronounced, Hispanic, Asian, and other immigrants came to

the United States and sought employment.

5. Work-force diversity will be heterogeneous: males and females; whites and people of color;

gays and straights; Hispanics, Asians, and Native Americans; the disabled, and the elderly.

6. The aging Baby Boom population is also having a significant impact on the work force.

7. Referred to as the “graying of the work force,” our work force is increasingly witnessing

those individuals who desire to work past “retirement” age.

a) Need to have a greater income to sustain current living standards, and

b) Desire to remain active.

8. More than 80 percent of the Baby Boom generation indicate they expect to work past 65. 9. The U.S. Congress passed the Senior Citizen’s Freedom to Work Act which eliminated the

benefits penalty for those individuals on Social Security who earn more than $17,000 per year.

10. We can expect our work force to continue to get older, with 70- and 80-year-old workers no

longer uncommon.

11. Multi-culturalism is also reshaping the labor pool as the proportion of people of Hispanic, Asian, Pacific Island, and African origins has increased significantly over the past two decades.

C. How Does Diversity Affect Organizations?

1. More diversity leads to adapting human resource practices to reflect those changes. 2. Many organizations today, like Bank of America, have work force diversity programs.

a) Hire, promote and retain minorities. b) Encourage vendor diversity.

c) Provide diversity training for employees.

3. Some, like Coca-Cola, Motorola, and Mars actually conduct cultural audits to ensure that

diversity is pervasive. (See Exhibit 2-8)


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a) The diversity that exists in the work force requires managers to be more sensitive to the

differences that each group brings to the work setting.

b) Managers may have to shift their philosophy to recognizing individual differences and

responding to those differences in ways that will ensure employee retention and greater

productivity.

1) Recognize and deal with the different values, needs, interests, and expectations of

employees;

2) Avoid any practice or action that can be interpreted as being sexist, racist, or

offensive to any particular group;

3) Not illegally discriminate against any employee; and

4) Find ways to assist employees in managing work/life issues.

D. How Can Organizations Help Employees Balance Work/Life Concepts?

1. Employees in the 1960s and 1970s showed up at the workplace Monday through Friday and

did their job in eight- or nine-hour chunks of time.

2. Today’s employees are increasingly complaining that the line between work and non-work

time has become blurred, creating personal conflicts and stress.

a) The creation of global organizations means their world never sleeps.

b) Communication technology allows employees to do their work at home, in their car, or

on the beach in Tahiti.

c) Organizations are asking employees to put in longer hours.

d) Fewer families have only a single breadwinner.

3. Employees are increasingly recognizing that work is squeezing out their personal lives and

they want jobs that give them flexibility in their work schedules so they can better manage

work/life conflicts.

4. Organizations that don’t help their people achieve work/life balance will find it increasingly

hard to attract and retain the most capable and motivated employees.

VII. IS LABOR IN SHORT SUPPLY?

A. Introduction

1. There is both an abundance and a shortage of skilled labor in the United States.

B. Why Do Organizations Lay Off Workers? (PPT 2-14)

1. Corporate America used to follow a simple rule—in good times you hire employees; in bad

times, you fire them.


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2. Since the late 1980s that “rule” no longer holds true; most Fortune 500 companies made

significant cuts in their overall staff.

a) In the fourth quarter of 2006 alone, more than 255,000 jobs were cuts in US companies;

nearly one-million lost jobs in 2006.

b) Jobs are being eliminated (downsizing) in almost all industrialized nations.

3. Organizations are attempting to increase their flexibility to better respond to change.

4. Quality emphasis programs are creating flatter structures and redesigning work to increase

efficiency.

a) The result is a need for fewer employees.

5. Downsizing as a strategy is here to stay.

a) It’s part of a larger goal of balancing staff to meet changing needs.

6. A better term might be rightsizing. Rightsizing involves linking staffing levels to

organizational goals.

a) Rightsizing promotes greater use of outside firms for providing necessary products and

services—outsourcing—in an effort to remain flexible and responsive to the ever-

changing work environment.

7. Why is there a need for flexible and rapid response systems?

a) Thousands of organizations are converting many jobs into temporary or part-time

positions—giving rise to what is commonly referred to as the contingent work force.

1) See Exhibit 2-9. (PPT 2-14)

b) Many large companies are converting some permanent jobs into temporary ones.

c) Organizations facing a rapidly changing environment must be in a position to adjust

rapidly to those changes.

1) Having a large number of permanent full-time employees limits the ability to react.

2) Organizations that rely heavily on contingent workers will have greater flexibility

because workers can be easily added or taken away as needed.

8. What issues do contingent workers create for managers?

a) Each contingent worker may need to be treated differently in terms of practices and

policies.

b) Managers must also make sure that contingent workers do not perceive themselves as

second-class workers.


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c) They may not be as loyal, as committed to the organization, or as motivated on the job as

permanent workers are.

d) Today’s managers need to motivate their entire work force—full-time and temporary

employees—and to build their commitment to doing good work!

Ethical Dilemma in Management

The Contingent Work Force

SUMMARY

Hiring contingent workers can be a blessing for both organizations and individuals.

A rich set of diverse skills on an as-needed basis.

Hired precisely when the specific work is to begin is very cost effective.

Individuals who desire part-time work can keep their skills sharp.

Contingent workers can balance their commitment to personal matters and their careers.

The blessings for individuals depend on the individual choosing to be a contingent worker.

Being part of the contingent work force might not be so bad if employees received benefits

typically offered to full-time core employees. Although hourly rates sometimes are higher for the

contingent workers, these individuals have to pay themselves for the benefits that organizations typically

provide. Another added expense to the contingent worker is having to pay for one’s office supplies and

equipment. As for time off with pay benefits, forget about it. When you don’t work, you don’t get paid!

Nearly two decades ago, there were 619,000 temporary jobs in the United States. Today that

number is over 14 million. It’s probably accurate to say that the majority of the work force prefers

permanent, full-time employment. But in a world of rapid change, permanent employees sometimes limit

management’s flexibility. So we can expect employers to increasingly rely on temporaries to fill new and

vacated positions.

Questions

Do you believe organizations that hire contingent workers who would rather have permanent employment

are exploiting them?

Should organizations be legally required to provide some basic level of benefits—such as health

insurance, vacation, sick leave, and retirement—to contingent workers? What’s your opinion?

Teaching notes

1. This issue is really a philosophical question. Help students see this by beginning with a discussion of

questions such as these:

What is the purpose of a business?

Does an employer or owner “owe” employees a job?

If forced to choose between layoffs or shutting down, which choice should a company make?


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If students choose laying off workers, then how close to failure must a company be to justify layoffs?

2. Next, brainstorm with students what an employer would have to do to treat contingency workers

fairly, in their opinion.

3. Then discuss what this would cost the business or organization.

4. These questions and the related discussion should help students see the difficulty of this choice.

Movies and TV have created an image of managers laying off workers without any feelings about it.

In reality, layoffs are the hardest thing a manager can do.

C. Is There a Pending Labor Shortage in the United States? (PPT 2-15)

1. In the late 1990s, most employers found it difficult to find skilled workers to fill vacancies.

2. In 2001, layoffs were widespread and the supply of skilled workers became much more

plentiful.

3. A labor shortage is expected in the United States and most of Europe for at least another 10 to

15 years.

4. The U.S. labor shortage is a function of two factors—birth rates and labor participation rates.

a) There are 76 million Baby Boomers (those born between 1946 and 1965) in the work

force.

b) There are 30 million fewer Gen-Xers (those born after 1965) to replace them when they

retire.

c) Around 2010, the major exodus of Boomers from the workplace will be in full force,

anticipating that nearly 6 million jobs will be unfilled.

d) Repercussions from Sept. 11th 2001 in the US may have the potential of reducing

immigration and further reducing the supply of skilled labor.

e) The huge increase of women that entered the workforce in the latter part of the twentieth

century has now been tapped.

f) There is declining interest by older workers to stay in the labor force.

1) In 1950, nearly 80 percent of all 62-year-old men were still working.

2) Today, only slightly more than half are.

5. In tight labor markets, those managers who don’t understand human behavior and fail to treat

their employees properly, risk having no one to manage!


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VIII. HOW DO ORGANIZATIONS MAKE THE CUSTOMER KING?

A. Introduction

1. Henry Ford said his customers could have any color car they wanted—as long as it was black.

2. Stew Leonard, the world’s largest dairy store in southern Connecticut, says it only has two

rules in his business.

a) Rule 1—the customer is always right.

b) Rule 2—if the customer is ever wrong, reread Rule 1.

3. Managers are being influenced by the Stew Leonards of the world.

a) Long-term success can be achieved only by satisfying the customer.

b) Customers have more choices than ever before, and are therefore more difficult to please.

c) Customers are demanding quicker service, higher quality, and more value for their

money.

4. Mass customization, toll-free service hotlines, the growth of e-commerce and mail order,

discount superstores, and managers who have become obsessed with quality are all responses.

5. Organizations are creating a customer-responsive culture, continuous improvements in

quality, and work process engineering.

B. Can Organizations Improve Customer Service?

1. American Express believes in customer service.

a) A customer service representative received a call at 10:30 p.m. that a gold card customer left her card in a restaurant 30 miles away and had to catch a 7:30 a.m. flight the next morning.

b) At 11:45 p.m. the same evening, the customer received a replacement card delivered by

courier to her front door!

2. The majority of employees today in developed countries work in service jobs.

a) 75 percent of all private sector jobs in the United States and Canada are in service industries.

b) These jobs require substantial interaction with an organization’s customers.

3. In organizations in service industries, there is a clear chain of cause-and-effect running from

employee attitudes and behavior to customer attitudes and behavior to an organization’s revenues and profits.

4. Sears found that a 5 percent improvement in employee attitudes leads to a 1.3 point increase

in customer satisfaction, which in turn translated into a 0.5 percent improvement in revenue growth.


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5. Sears also found that by training employees to improve the employee-customer interaction, it

was able to improve customer satisfaction by 4 percent over a 12-month period, which

generated an estimated $200 million in additional revenues.

6. Many an organization has failed because its employees failed to please the customer.

7. Management needs to create a customer-responsive culture—where employees are friendly

and courteous, accessible, knowledgeable, prompt in responding to customer needs, and

willing to do what’s necessary to please the customer.

8. Can you create a customer-responsive culture?

a) French retailers have a well-established reputation for indifference to customers.

b) Most organizations today are trying very hard to be un-French-like.

c) Companies that have created customer-responsive cultures include Southwest Air,

FedEx, Johnson & Johnson, Nordstrom, and L. L. Bean.

1) They have built a strong and loyal customer base and have generally outperformed

their competitors in revenue growth and financial performance.

9. What are the key variables shaping customer-responsive cultures?

a) Five variables are routinely evident in customer-responsive cultures. (See Exhibit 2-10)

1) The employees are outgoing and friendly.

2) Service employees need to have the freedom to meet changing customer-service

requirements—rigid rules, procedures, and regulations make this difficult.

3) Employees need to be empowered—have the decision discretion to do what’s

necessary to please the customer.

4) Good listening skills—the ability to listen to and understand messages sent by the

customers.

5) Customer-responsive cultures have employees who exhibit organizational citizenship

behavior.

(a) They are conscientious in their desire to please the customer.

(b) They’re willing to take the initiative, even when it’s outside their normal job

requirements, to satisfy a customer’s needs.

10. What managerial actions are needed?

a) There are seven actions management can take to make its culture more customer

responsive and to create employees with the competence, ability, and willingness to solve

customer problems as they arise.


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b) Selection—hiring service-contact people with the personality and attitudes consistent

with a high service orientation.

1) Southwest Airlines puts its job applicants through an extensive interview process to

assess whether a candidate has the outgoing and fun-loving personality that it wants

in all its employees.

c) Training—making its current employees more customer-focused.

1) General Motors, Shell, and J.P. Morgan have used training focusing on such areas as

improving product knowledge, active listening, showing patience, and displaying

emotions to help employees move away from their product focus.

2) Even new employees who have a customer-friendly attitude may need to understand

management’s expectations.

3) Even the most customer-focused employees can lose direction every once in a while

and benefit from regular training updates where the organization’s customer-focused

values are restated and reinforced.

d) Organizing—give employees more control.

1) Reducing rules and regulations. Allow employees to adjust their behavior to the

changing needs and requests of customers.

e) Empowerment—allows service employees to make on-the-spot decisions to completely

satisfy customers.

f) Leadership—conveying a customer-focused vision and demonstrating by their continual

behavior that they are committed to customers.

g) Evaluation—based on such measures as how they behave or act—on criteria such as

effort, commitment to teamwork, friendliness, and the ability to solve customer

problems—rather than on measurable outcomes they achieve.

h) Rewards—reward good service.

1) Provide ongoing recognition to employees who have demonstrated extraordinary

effort to please customers and who have been singled out by customers for “going

the extra mile.”

2) Make pay and promotions contingent on outstanding customer service.

C. How Have Organizations Shown An Increased Concern with Quality? (PPT 2-17)

1. There is a quality revolution.

a) The generic term that has evolved to describe this revolution is quality management, or

continuous improvement.


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b) Inspired by quality experts like Joseph Juran and the late W. Edwards Deming.

2. An American, Deming found few managers in the United States interested in his ideas.

a) In 1950, he went to Japan and began advising many top Japanese managers.

b) Central to his methods, the use of statistics to analyze variability in production processes.

c) A well-managed organization was one in which statistical control reduced variability and

resulted in uniform quality and predictable quantity of output.

3. Deming developed a 14-point program for transforming organizations.

4. Today, Deming’s original program has been expanded into a philosophy of management that

is driven by customer needs and expectations (See Exhibit 2-11). (PPT 2-17)

5. Quality management expands the term “customer” to include everyone involved with the

organization, either internally or externally—encompassing employees and suppliers as well

as the people who buy the organization’s products or services. (PPT 2-17)

a) The objective is to create an organization committed to continuous improvement, or as

the Japanese call it, “kaizen.”

6. Quality management is a departure from the earlier management theories that were based on

the belief that low costs were the only road to increased productivity.

a) The Japanese demonstrated that it was possible for the highest-quality manufacturers to

be among the lowest-cost producers.

b) Managers in American auto manufacturing facilities and in other industries soon

recognized the importance of quality management and implemented many of its basic

components.

c) The elements and the goals of quality management and continuous improvements are

essential characteristics in achieving an effective and lean workplace.

Teaching Notes _______________________________________________________________________

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D. Why Must Managers Think in Terms of Quantum Changes Rather Than Continuous

Improvement?

1. Continuous improvement methods provide useful innovations; they focus on incremental

change.


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2. Such action—a constant and permanent search to make things better—is intuitively

appealing.

3. Many organizations, however, operate in an environment of rapid and dynamic change and a

continuous improvement process may keep them behind the times.

a) A focus on continuous improvements may provide a false sense of security.

b) Incremental change may avoid facing up to the possibility that what the organization may

really need is radical or quantum change, referred to as work process engineering.

c) Continuous change may also make managers feel as if they are taking progressive action

while avoiding quantum changes that will threaten organizational members.

4. Aren’t these contradictory statements?

a) Continuous improvement can lead to organizational improvements, but it may not be the

right approach initially.

b) That's the case if you are producing a new improved version of an outdated product when

a complete overhaul might be required.

c) After the overhaul, then continuous improvement can have its rightful place.

5. Electronic organizer business example, continuous improvement approach.

a) Frame of reference, an electronic search capability for names and addresses, calendar of

tasks, an expanded keyboard function, and the like.

b) Your continuous improvement focus—more memory, larger storage capabilities, or

longer-lasting batteries.

6. A competitor reengineers the design process.

a) Your competitor asks, “How can we design an electronic organizer that is more useful,

expandable, and provides greater mobility?”

b) Starting from scratch, your competitor completes a redesign for a “wireless personal data

assistant.”

c) You are now competing against technology that may make your product obsolete.

7. In this theoretical example, both companies made progress.

a) But who made the most progress given the dynamic environment they face?

8. Our example demonstrates why companies such as Thermos, Ryder Trucks, and Casio

Computer are opting for work process engineering rather than incremental change.


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Teaching Notes _______________________________________________________________________

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IX. SOME CONCLUDING REMARKS

1. Both organizations and managers need to be more flexible and respond to change.

2. Frederick Taylor, the father of scientific management (See History Module), argued nearly a

century ago for the division of work and responsibility between management and workers.

3. Workers today are far better educated and trained than they were in Taylor’s day.

a) Today’s workers may be considerably more knowledgeable than those who manage them

about how best to do their jobs.

4. Managers are transforming themselves from bosses into team leaders.

a) Managers are finding that they become more effective when they focus on motivating,

coaching, and cheerleading.

b) Managers also recognize that they can often improve quality, productivity, and employee

commitment by redesigning jobs to increase the decision-making discretion of workers.

5. We call this process empowering employees.

6. The empowerment movement is being driven by two forces.

a) First is the need for quick decisions by those people who are most knowledgeable about

the issues.

b) Second is the reality that the large layoffs in the middle-management ranks that began in

the late 1980s have left many managers with considerably more people to supervise than

they had in the past.

7. Letting go and stretching can be likened to the role of a sports team coach.

a) Consider the job of head coach of a college football team.

b) This individual establishes the game plan and readies the players for the task.

c) The players execute the game plan.

d) During the game what the coach does depends on how well the plan is working.

e) Thus, the coach deals with the exceptions.

8. This coaching role is increasingly becoming an accurate description of today’s managers!


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Teaching Notes _______________________________________________________________________

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Review, Comprehension, Application Chapter Summary

1. The first wave was agriculture and individuals were their own bosses, responsible for performing a

variety of tasks. The second wave was industrialization when work left the fields and moved into

formal organizations with workers hired into tightly structured and formal workplaces dominated by

mass production, specialized jobs, and authority relationships. The third wave is information

technology and has significantly reduced low-skilled, blue-collar jobs in manufacturing. It has also

created abundant opportunities for educated and skilled technical specialists, professionals, and other

knowledge workers.

2. Competitors are no longer defined within national borders. Managers must think globally, be

prepared to deal with the changes globalization fosters, and be able to work with individuals from

diverse cultures.

3. Technology provides managers with immediate access to information that will help them in making

decisions. It also allows managers to supervise employees in remote locations with little face-to-face

interaction. Effectively communicating with individuals in remote locations as well as ensuring that

performance objectives are being met will become major challenges.

4. The term e-commerce encompasses presenting products on Web sites and filling orders. E-business

includes developing strategies for running Internet-based companies; improving communication

between employees, customers, and suppliers; and collaborating with partners to electronically

coordinate design and production. The term e-organization (e-orgs) refers to applications of e-

business concepts to all organizations.

5. Social responsibility refers to an obligation (beyond that required by law and economics) for a firm to

pursue long-term goals that are good for society. Ethics refers to rules or principles that define right

or wrong conduct.

6. Entrepreneurship is a process where an individual or a group of individuals risk time and money in

pursuit of opportunities to create value and grow through innovation, regardless of the resources they

control. The components of entrepreneurial ventures are organizations that are pursuing

opportunities, that are characterized by innovative practices, and that have growth and profitability as

their primary goals.

7. The work force of 2010 will witness heterogeneity of gender, race, and ethnicity. It will also include

the physically disabled, gays and lesbians, the elderly, and those who are significantly overweight.

The most important requirement for managers is sensitivity to the differences among individuals.

8. Employees are increasingly focusing on the balance between work and personal time. Global

organizations, customer responsiveness, technology, and longer work hours have all contributed to

this debate. Employees are recognizing that work is squeezing our their personal lives and they want

“a life” as well as a job!


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9. Many corporations have downsized in an attempt to increase their flexibility. Continuous

improvements and work process engineering activities have created flatter structures and redesigned

work to increase efficiency.

10. Variables routinely evident in customer-responsive cultures include hiring service-oriented, outgoing,

and friendly employees; giving service employees the freedom to meet changing customer-service

requirements; empowering employees, giving them decision discretion to do what’s necessary to

please the customer; ensuring that employees have good listening skills; ensuring that employees are

conscientious in their desire to please the customer, and that they’re willing to take the initiative, even

when it’s outside their normal job requirements, to satisfy a customer’s needs.

11. Today’s educated consumer demands quality and continuous improvement. These are also strategic

initiatives in an organization designed to make the operation more efficient and effective.

Companion Website We invite you to visit the Robbins/DeCenzo Companion Website at www.prenhall.com/robbins for the

chapter quiz and student PowerPoints.

Diversity Perspectives: Communication and Interpersonal Skills, by Carol Harvey and June

Allard

1. What perceptions could the workers have of the new Division Manager?

On one hand the workers could see him as the “Savior” of the workplace and their jobs if they realize

the precariousness of the division’s position.

On the other hand, workers may resent this man who first of all is an “outgroup” person (i.e., not a

member of their ethnic group) and secondly, is replacing one of their own. Those who owe their jobs

to the departing manager could feel this way very strongly.

In addition, some of the perceptions of the new manager could be affected by the stereotypes and/or

prejudices that workers may hold about the manager’s ethnicity and/or religion. Further, not all

workers may feel that the division’s failure is due to the departing manager. They may blame company

policies, foreign competition, etc. and therefore could resent the old manager being “forced out” as well

as the arrival of the new manager.

In a good economy, younger workers may not be very concerned about their jobs as there are other

employers in their community and the ease of getting another job may color their perceptions. No

matter what the economy however, older workers are generally not as employable as those who are

younger and so may be more likely to accept most any leadership if there is a chance to save their jobs.

2. What perceptions could the new Division Manager have of the workers?

In part this will depend upon his stereotypes and prejudices about their ethnicity. If he has strong

prejudices against their ethnicity, then his perceptions will be negative. Because the division has

performed poorly he could perceive the workers as lazy and uncooperative. On the other hand, he

could feel that the division’s problems are totally due to the previous manager and if he sees this as an

opportunity to improve the division he could see the workers as part of a positive opportunity.

His past success in turning troubled operations around implies that he knows something about

managing diverse ethnic groups and he could be viewing the ethnicity of the workers in terms of

learning about their cultural values rather than making judgments about them.

3. What kinds of things might you say in a press release announcing the new manager’s arrival to the

division and to the community at large?

You could dwell upon the manager’s previous successes and stress how he has come to save the

division and their jobs; downplay his “otherness” and create the perception that he and they are all in

the effort together.

http://www.prenhall.com/robbins


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4. If you were the supervisor of the new Division Manager, what kinds of things could you say to him

to prepare him for supervising this division?

Hopefully the discussion will recognize that the more information the new manager has about the

values of the community, the strength of their ethnic identity and the strength of their solidarity, the

better prepared he will be to deal effectively with them. In addition, the more information he has about

the plant atmosphere and worker expectations of management, the better prepared he will be.

Note. The following web site is helpful for understanding Hofstede’s cultural work-related

dimensions of power distance, individualism-collectivism, understand avoidance and long-term—short-

term orientation. http://cyborlink.com/besite/hofstede.htm

Reading for Comprehension

1. Describe the shifts in the types of jobs in the work force during the past 100 years. What implications

have these shifts created for today’s managers?

Answer – Organizations that are stagnant and bound by tradition are increasingly fading from the

limelight. One of the biggest problems in managing an organization is failing to adapt to change. By

the start of the 1970s, a new age was gaining momentum. This is based on information. Technological

advancements were eliminating many low-skilled, blue-collar jobs. The information wave was

transforming society from manufacturing to service. Knowledge workers are at the cutting edge of the

third wave. Their jobs are designed around the acquisition and application of information. The

number of blue-collar workers shrank dramatically. See Exhibit 2-1.

2. Explain the managerial implications of a global village.

Answer – In the changing global environment, the spread of capitalism makes the world smaller. A

boundaryless world introduces new challenges for managers. U.S. managers in the past held a rather

parochial view of the world of business. They did not recognize that people from other countries had

different ways of doing things or that they lived differently from Americans. Traditional approaches

to international business sought to advance general principles. Viewing the global environment from

any single perspective may be too narrow and potentially problematic. A more appropriate approach

is to recognize the cultural dimensions of a country’s environment.

3. What are the managerial implications of Hofstede’s research on cultural environments? The GLOBE

study? In what countries do you believe U.S. managers would have to make the most adjustments?

Answer – Geert Hofstede surveyed over 116,000 employees in forty countries—all of whom worked

for IBM. Hofstede’s data indicated that, in general, national culture has a major impact on employees’

work-related values and attitudes. He classified those values and attitudes into five specific

dimensions of national culture: power distance, individualism versus collectivism, quantity of life

versus quality of life, uncertainty avoidance, and long-term versus short-term orientation.

U.S. managers would have to adjust to China and West Africa’s different preferences on Power

Distance (the United States scored low while China and West Africa scored high). U.S. managers

would also have to adjust to most Asian countries’ preference for collectivism (the United States

scored highest among all countries on individualism). U.S. managers would also have to adjust to

France and Russia’s strong preferences for uncertainty avoidance (the United States scored low).

Finally, U.S. managers would have to adjust to China and Hong Kong’s preference for a long-term

orientation (the United States scored low on this value).

To place U.S. managers where they fit best, identify those countries that are most and least like the

United States on the four dimensions. In terms of individualism, power distance, uncertainty

avoidance and quantity of life: Ireland, England, Canada, New Zealand, etc.


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4. Describe the managerial implications of growing organizational diversity.

Answer – More diversity leads to adapting human resource practices to reflect those changes. Many

organizations today, like BankAmerica, have work force diversity programs. Some, like Coca-Cola,

Motorola, and Mars actually conduct cultural audits to ensure that diversity is pervasive. Managers

may have to shift their philosophy from treating everyone alike to recognizing individual differences

and responding to those differences in ways that will ensure employee retention and greater

productivity. Managers must be in a position to:

Recognize and deal with the different values, needs, interests, and expectations of employees;

Avoid any practice or action that can be interpreted as being sexist, racist, or offensive to any

particular group;

Not illegally discriminate against any employees; and

Find ways to also assist employees in managing work/life issues.

5. How can managers help employees deal with work/life issues?

Answer – Managers can help employees deal with work/life issues by providing flexibility in their

work schedules so they can better manage work/life conflicts. Managers can be aware of the impact

of the global organization where their world never sleeps and how that may affect an employee’s

need to communicate with other employees around the world. Managers can also consider the

fairness of the demands they make on employees when technology makes it possible for them to work

out of the office. Organizations are typically asking employees to put in longer hours. Managers

need to help employees find the time to fulfill work commitments as well as commitments to home,

spouse, children, parents, and friends.

6. Identify the characteristics and behaviors of an ethical manager.

Answer – Ethics commonly refers to the rules or principles that define right and wrong conduct.

Exhibit 2-7 presents three views of ethical standards. Whether a manager acts ethically or unethically

will depend on several factors, including:

The individual’s morality.

Values.

Personality and experiences.

The organization’s culture.

The issue that is being called into question.

7. Explain how organizations can create a more customer-responsive environment.

Answer – Organizations can create a more customer-responsive environment by focusing on five

variables that shape customer-responsive cultures (See Exhibit 2-10):

Hire properly—successful, service-oriented organizations hire employees who are outgoing and

friendly.

Provide service employees with the freedom to meet changing customer-service requirements—

rigid rules, procedures, and regulations make this difficult.

Empower employees—be sure they have the decision discretion to do what’s necessary to please

the customer.

Be sure employees have good listening skills—the ability to listen to and understand messages

sent by the customer.

Be sure employees exhibit organizational citizenship behavior—being conscientious in their

desire to please the customer and being willing to take the initiative, even when it’s outside their

normal job requirements, to satisfy a customer’s needs.


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8. Explain the increased popularity of continuous improvements and work process engineering in the

past 20 years.

Answer – An American who found few managers in the United States interested in his ideas, W.

Edwards Deming went to Japan in 1950 and began advising many top Japanese managers on ways to

improve their production effectiveness. His original program has been expanded into a philosophy of

management that is driven by customer needs and expectations. American companies learned from

the Japanese who had used Deming’s ideas that it was possible for the highest-quality manufacturers

to be among the lowest-cost producers.

Work process engineering involves radical or quantum change. If you are producing an outdated

product, a complete overhaul might be required. Work process engineering can lead to major gains in

cost, service, or time as well as assist an organization in preparing to meet the challenges technology

changes foster.

Linking Concepts to Practice

1. Small business owners are entrepreneurs. Do you agree or disagree with the statement? Explain.

Answer – Entrepreneurship is the process of initiating a business venture, organizing the necessary

resources, and assuming the risks and rewards. Because they usually start small, most fall within the

definition of a small business—one that is independently owned, operated, and financed and has

fewer than 500 employees. A small business isn’t necessarily entrepreneurial because it’s small. To

be entrepreneurial means being innovative and seeking out new opportunities. Even though

entrepreneurial ventures may start small, they pursue growth. Some new small firms may grow, but

many remain small businesses by choice or by default.

2. Continuous improvement programs include contributions from all historical management

contributors. Do you agree or disagree with this statement? Discuss.

Answer – Continuous improvement methods is a positive start; it focuses on incremental change.

Such action—a constant and permanent search to make things better—is intuitively appealing.

Students may agree or disagree. If they agree, they should note things like doing this the right way,

the use of empowerment, etc.

3. Customer-responsive cultures are only applicable in smaller organizations. Coordination of activities

in large organizations makes it nearly impossible to implement a customer responsive culture. Do

you agree or disagree with this statement? Defend your position.

Answer – Whether the organization is large or small, long-term success is primarily achieved by

satisfying the customer, for it’s the customer who ultimately pays the bills. 75 percent of all private

sector jobs in the United States and Canada are in service industries. Organizations in service

industries need to include attention to customer needs and requirements in assessing their

effectiveness because there is a clear chain of cause-and-effect running from employee attitudes and

behavior to customer attitudes and behavior to an organization’s revenues and profits. Sears,

definitely not a smaller organization, has carefully documented this chain. The company’s

management found that a 5 percent improvement in employee attitudes leads to a 1.3 point increase in

customer satisfaction, which in turn translated into a 0.5 percent improvement in revenue growth.

More specifically, Sears found that by training employees to improve the employee-customer

interaction, it was able to improve customer satisfaction by 4 percent over a 12-month period, which

generated an estimated $200 million in additional revenues.

4. Coaching and empowering employees will replace the traditional management functions of planning,

organizing, leading, and controlling. Do you agree or disagree with this statement? Explain.

Answer – Workers today are far better educated and trained than they were in Taylor’s day.

Managers are transforming themselves from bosses into team leaders. Managers also recognize that


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they can often improve quality, productivity, and employee commitment by redesigning jobs to

increase the decision-making discretion of workers. We call this process empowering employees. The

empowerment movement is being driven by two forces: first is the need for quick decisions by those

people who are most knowledgeable about the issues; second is the reality that the large layoffs in the

middle-management ranks that began in the late 1980s have left many managers with considerably

more people to supervise than they had in the past. Letting go and stretching can be likened to the role

of a sports team coach.

5. Discuss the implications of hiring contingent workers from both the organizational and contingent

worker perspective.

Answer – Thousands of organizations are converting many jobs into temporary or part-time

positions—giving rise to what is commonly referred to as the contingent work force. See Exhibit 2-9.

Organizations facing a rapidly changing environment must be in a position to adjust rapidly to those

changes. Organizations that rely heavily on contingent workers will have greater flexibility because

workers can be easily added or taken away as needed. Opportunities to capitalize on new markets,

obtaining someone who possesses a special skill for a particular project, point to a need to be able to

rapidly adjust staffing levels. Many employees have indicated a preference to their contingent status.

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