20091210091208chp 5 managerial ethics and organizational design

7/29/2019 20091210091208Chp 5 Managerial Ethics and Organizational Design

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CHAP 5

MANAGERIAL ETHICSAND

ORGANIZATIONALDESIGN


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LEARNING OUTCOMES

Structural causes of unethical conduct inorganizations

Two planning systems for managingbehaviour in organizations

Various means of solving unethical

behaviour problems in organizations andresponsibilities of senior management inorganizations


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WHAT ARE ETHICAL CODES?

Statements about norms an beliefs

of an organization.

They are proposed, discussed and

defined by the senior executives.


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ETHICAL CODES

Norms Standards ofbehaviour, the waythe seniormanagement wantstaff to behave in agiven situation.

Generally expressedas a series of negativestatements.


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ETHICAL CODES

Beliefs Standards of thought,ways of thinking inwhich the seniormanagement want

staff to adopt.

They are generallyexpressed in positive

forms.


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WHY ETHICAL DILEMMA IN

ORGANIZATIONS?

The code of ethics says, in one sectionthat we respect our employees and inanother section, that we expect fair

profits.

Ethical dilemmas are conflicts betweeneconomic and social performance.

(Give two examples of good beliefs inorganizations.)


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OMBUDSMAN POSITION

An older person, respected manager,close to retirement, who has been relievedof operating responsibilities and assigned

the task of counselling younger employeeson career problems, organizationaldifficulties and ethical issues.

(Can an ombudsman play his roleeffectively? Why?)


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STRUCTURAL CAUSES AND

UNETHICAL BEHAVIOUR

Most companies are diversified within numerousdivisions with its given product line, marketsegment and production process.

Divisional structures of this type aredecentralised, authority for product, market andprocess changes are allocated to the divisional

managers who will be responsible for economicperformance.


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PROBLEMS WITH

DIVISIONALIZATION

Interrelationships cannot be utilised as thebasis of economies.

Corporate management has little controlover the strategies of the divisions untilafter an outstanding success or anabsolute failure has occurred.

(As a manager who would you solve anethical problem in your organization?)


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QUESTIONS TO BE

DISCUSSED ONLINE

What are ethical codes and can theywork? Why?

What are the structural causes of

unethical behaviour?


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TWO PLANNING SYSTEMS

The General Electric PlanningSystem.

The Boston Consulting GroupPlanning System.


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General Electric Planning System

Its termed as aportfoliomodel.

It evaluated each product-market-process unit inthe company as an investment that could beincreased, maintained or decreased over time.

The product-market-process units were termedasstrategic business units(SBUs).

Each SBU differed on two basis: The attractiveness of the industry, and The strength of the company within that industry.


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Company strength within the industry

Above Average Average Below Average

Above Average

Average

Below Average

Invest Invest Retain

Invest Retain Divest

Retain Divest Divest


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Measurement factors weighted for strength of business unitwithin industry:

Measurement Factors

ProductQuality

MarketShare

BrandReputation

ShareGrowth


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BOSTON CONSULTING

PLANNING SYSTEM (BCG)

BCG believes that:

Growth rate can be shown in percentage forattractiveness of the industry.

High growth rates show high gross margins and lowcompetitive pressures.

Share of market can be shown in percentage to showthe competitive position on the company within theindustry.

High market share shows low production and distribution

costs.

The relationship between market share and marketgrowth is generally portrayed in the BCG model on afour-cell matrix, star,cash cow,problem child and

dogcategory.


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BOSTON CONSULTING

PLANNING SYSTEM (BCG)Relative Market Share

(Cash Generation)

High

Market GrowthRate(Cash Usage)

Low

High Low

(Market share and market growth relationship for the Boston Consulting GROUPPlanning Matrix)

STARPROBLEM

CHILD

CASH COW DOG


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BOSTON CONSULTING

PLANNING SYSTEM (BCG)

Star a business unit that has a large market in a fastgrowing industry. It generates large amount of cash andconsumes large cash investment to maintain its lead.

Cash Cowsa business unit with a large market share in

a mature, but slow growing industry. It requires slowinvestment but generates cash that can be used to invest inother BUs.

Problem Childa business unit with small market sharein a high growth market. It requires high large cash

consumption, since it requires large resources to grow.

Dog a business unit with small market share in a matureindustry. It has low market share and slow growth rate.Does not generate or consume large amount of cash.


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IMPACT OF PLANNING SYSTEMS

ON MANAGERIAL BEHAVIOUR

GE matrix:

Profitability has a direct influence on the measurement

of industry attractiveness through the input factors ofhistorical margins and competitive intensity, accountingfor 30%.

Profitability has an indirect influence on the

measurement of company strengths through inputfactors of product quality, brand reputation, promotionaleffectiveness and product efficiency, accounting for35%.


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IMPACT OF PLANNING SYSTEMS

ON MANAGERIAL BEHAVIOUR

BCG matrix:

High profits are assured to be the result of

high market share and high market growth.

The markets served by a given SBU will besegmented and redefined until profit, growth

and share figures are consistent.


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IMPACT OF CONTROL AND

MOTIVATION SYSTEMS ON

MANAGERIAL BEHAVIOUR

Strategic planning:

Looks at environmental assumptions, organizationalresources and managerial intentions.

Programme planning: Allocates the resources necessary to implement that

strategy.

Budgetary planning: Forecasts the revenues and expenses and establishes

numerical measures of the achievement of the strategy.

Operational accounting planning:

Record the actual results of the achievement innumerical terms, sees the variances between the

planned outcomes and actual results.


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QUESTIONS TO BE

DISCUSSED ONLINE

Compare and contrast the two newlydeveloped methods. What are they?

What can be done to solve the structuralcauses of unethical behaviour of the

organizations?

20091210091208chp 5 managerial ethics and organizational design

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