management 3e, definitions and summary - midterm

7/30/2019 Management 3e, Definitions and Summary - Midterm

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Skills managers need:Technical, specialized knowledge.Interpersonal: sensitivity, persuasiveness, empathyConceptual: Logical reasoning, judgment, analytical ability

entry level managers high on technical and interpersonal

top level managers high on conceptual and interpersonal

Management -the process of assembling andusing sets of resources in a goal-directed manner to accomplishtasks in an organizational setting

Organization -an interconnected set ofindividuals and groups whoattempt to accomplish commongoals through differentiatedfunctions and their coordination

4Primary Functions and their ContentsPlanningestimating future conditions andcircumstances and makingdecisions about appropriatecourses of action

Organizingsystematically integrating resourcesto accomplish task

Directingthe process of attempting toinfluence other people to attainan organizations objective

Controllingregulating the work of those forwhom a manager is responsibl

# Management is the process of assembling and using sets of resources in a goal-directedmanner to accomplish tasks in an organizational setting. It occurs in an organizationalcontext.

# Managers face a number of significant challenges. Managerial challenges include managing


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change, managing resources, managing strategically, and managing entrepreneurially.Increasing technology and globalization has caused much organizational change, and companies mustmanage it effectively. Efficient management of resources is only part of the equation. Organizationsmust develop their resource portfolios and integrate resources to createcapabilities that are then leveraged to achieve a competitive advantage. Managers select andimplement a strategy designed to provide greater value to customers than do competitors.

Finally, managers have to act entrepreneurially, even in large organizations, to identify andexploit opportunities.

# Management is an old concept dating back thousands of years; ancient Chinese rulers usedmanagement concepts of organization, specialization of labor, and strategy. The basis ofmodern management is traditionally thought to be scientific management proscribed byFrederick Taylor during the industrial revolution. However, a number of historical figurescontributed to our knowledge of modern management. Other people have contributed to ourknowledge of productivity (Frank and Lillian Gilbreth, for example), organization (AlfredSloan and Chester Barnard), leadership (Mary Parker Follett and Douglas McGregor) andmotivation (Abraham Maslow and Frederick Herzberg).

# What managers do can be understood through the functions that they perform. Among themare planning, organizing, directing, and controlling. Planning involves projecting the futureconditions and tasks required to be successful in these conditions. Organizing involves identifying theappropriate structure of relationships among positions, and the people occupyingthem, and linking that structure to the overall strategic direction of the organization.Directing is the process of attempting to influence other people to attain organizationalobjectives with managerial activities such as leading, motivating, and communicating.Control is a necessary and important managerial function designed to regulate the work ofthose for whom a manager is responsible.

# A complementary way of viewing managerial work is through the roles they fill.Managerial roles comprise three major categoriesinterpersonal, informational, anddecisionaleach of which has specific roles. Interpersonal roles include the figurehead,leader, and liaison. Informational roles include monitor, disseminator, and spokesperson.The four decisional roles are entrepreneurial, disturbance handler, resource allocator, andnegotiator.

# Managerial work can also be understood from the dimensions of managerial jobs. Thedimensions include the demands and constraints placed on managers and the discretionarychoices allowed by the job.

# To effectively perform the functions, fulfill the roles, and deal with the dimensions of thejob, managers need several skills. Among these are technical, interpersonal, and conceptual skills. Allof the skills are important, but the mix and levels of the skills required to beeffective vary by type of managerial job and level in the organization


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CHAPTER 2 MANAGING ETHICALLY AND GLOBALLY

Ethical dilemmahaving to make a choice betweentwo competing but arguably validoptions

Ethical lapsedecision that is contrary to anindividuals stated beliefs andpolicies of the company

Utilitarian approachfocuses on the consequences of anaction

Moral rights approachfocuses on examination of themoral standing of actionsindependent of theirconsequences

Universal approachchoosing a course of action thatyou believe can apply to all peopleunder all situations

Justice approachfocuses on how equitably the costsand benefits of actions aredistribute

Distributive justicethe equitable distribution ofrewards and punishment, basedon performance

Procedural justiceensuring that those affected bymanagerial decisions consent tothe decision-making process andthat the process is administeredimpartially

Compensatory justiceif distributive and proceduraljustice fail, those hurt by theinequitable distribution of rewardsare compensated


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---moral intensitythe degree to which people see anissue as an ethical one

magnitude of the

consequencesthe anticipated level of impact ofthe outcome of a given action

social consensusthe extent to which members of asociety agree that an act is eithergood or bad

probability of effectthe moral intensity of an issue risesand falls depending on how likelypeople think the consequences are

temporal immediacya function of the interval betweenthe time the action occurs and theonset of its consequences

proximitythe physical, psychological, andemotional closeness the decisionmaker feels to those affected bythe decision

concentration of effectthe extent to which consequencesare focused on a few individuals ordispersed across many---

Efficiency perspectivethe concept that a managersresponsibility is to maximize profitsfor the owners of the business

externalityan indirect or unintendedconsequence imposed on societythat may not be understood oranticipated


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stakeholderan individual or group who has aninterest in and is affected by theactions of an organization

strategic corporate social

responsibility perspectivea three-criteria model that canhelp managers focus on socialareas where there is the highestpossibility of creating shared valuefor the business and society

code of ethical conducta formal settlement that outlinestypes of behavior that are and arenot acceptable

whistle-bloweran employee who discloses illegalor unethical conduct on the part ofothers in the organization

Foreign Corrupt PracticesAct (FCPA)a law prohibiting employeesof U.S. firms from corruptingthe actions of foreign officials,politicians, or candidates for office

# The four basic approaches to ethical decision making include utilitarian, moral rights, universal, andjustice approaches. The utilitarian approach is based on the premise that the rightthing to do is that which brings about the greatest good. The moral rights approach assumesthat actions should be consistent with existing principles with moral standing. The universalapproach is based on the notion that actions should be guided by principles that you believeshould be universally applied, including to yourself. The justice approach is predicated onthe notion that costs and benefits should be equitably distributed, rules should be impartiallyapplied, and those damaged because of inequity or discrimination should be compensated.

# Moral intensity is the degree to which people see an issue as an ethical one. It is influencedby six factors: (1) the magnitude of the consequences, (2) social consensus, (3) the probability of effect,(4) temporal immediacy, (5) proximity, and (6) the concentration of effect.

# Poor judgments regarding social responsibility and lapses in ethical decision making caninflict irreparable damage to a firms value. As a consequence, as a manager, you need to beable to make sound, ethical decisions and encourage your subordinates to do likewise.

# The efficiency perspective argues that the business of business is business. Therefore, amanagers obligation is to maximize shareholders returns. The values of society should


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only be reflected in a managers decisions insofar as those values are codified by law.

# The social responsibility perspective argues that corporations owe their existence not just toshareholders, who provide risk capital, but to society at large. As a consequence, managersshould provide a reasonable return to shareholders while also meeting the legitimate concerns ofsociety.

# The strategic corporate social responsibility approach argues that the best social responsibilityis that which creates shared value for society and the business. Determining which issues havethe highest probability of fulfilling this objective comes from assessing the activities that arekey to the business, issues that the company affects, and issues that are of concern to society.

# When it comes to fostering ethical decisions and behavior throughout an organization, fewthings are more important than the example set by senior executives. Codes of conduct,communication, training, and rewards (and punishments) are all additional steps that canhave an effect on the decisions and behavior of employees.

CHAPTER 3 INTERNATIONAL MANAGEMENT AND GLOBALIZATION

Institutional environmentthe countrys rules, policies, andenforcement processes thatinfluence individuals andorganizations behaviors thatoperate within the countryboundaries

culturea learned set of assumptions,values, and beliefs that membersof a group have accepted and thataffect human behavior

power distancethe extent to which people acceptpower and authority differencesamong people

uncertainty avoidancewhen cultures differ in the extentto which they need things to beclear or ambiguous

individualismthe extent to which peoplesidentities are self-oriented andpeople are expected to take careof themselves and their immediate


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families

collectivismthe extent to which identity is afunction of the group(s) to whichan individual belongs (e.g.,

families, firm members, communitymembers, etc.) and the extent towhich group members areexpected to look after each other

gender focusthe extent to which people in acountry value masculine orfeminine traits

exportingmanufacturing products in a firmshome country and shipping themto a foreign market

licensingarrangements establishing howto allow a local firm in the newmarket to manufacture anddistribute its product

strategic alliancea cooperative arrangement betweentwo firms in which they agree toshare resources to accomplish amutually desirable goal

cross-border acquisitionacquisitions of local firms made byforeign firms to enter a newinternational market

wholly owned subsidiarya direct investment to establish abusiness in a foreign market inwhich the local firm owns andcontrols 100 percent of the business

globally focusedorganizationan organization that invests theprimary authority for majorstrategic decisions in the home


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office

regioncountry focusa situation in which primaryauthority for determiningcompetitive strategy rests with the

management of the internationalsubsidiary based in a region of theworld or a specific country

transnational organizationan organization that strives to besimultaneously centralized anddecentralized

cultural contextthe degree to which a situationinfluences behavior or perceptionof the appropriateness ofbehaviors

high-context culturea culture in which people pay closeattention to the situation and itsvarious elements

low-context culturea culture in which contextualvariables have much less impact onthe determination of appropriatebehavior

virtual teama team that relies on electronicallymediated communication

swift trustthe rapid development of trust inteams with positive and reciprocalcommunications about the teamstask activities

global mind-seta set of cognitive attributes thatallows an individual (e.g.,manager) to influence individuals,groups, and organizations fromdiverse sociocultural and


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institutional environments

# Globalization refers to the flow of goods and services, capital, and knowledge across countryborders. Globalization enhances the economic interdependence among countries and organizationsacross countries. In general, globalization has heightened the economic developmentand welfare of many countries but also created concerns about the homogenization of cultures.

# Two major elements of global environments are institutions and cultures. A nations institutionalenvironment consists of the countrys rules, policies, and enforcement processes thatinfluence the behavior of individuals and organizations that operate there. By contrast,national culture is a learned set of assumptions, values, and beliefs that members of a grouphave accepted and that affect human behavior.

# Each country has a distinct institutional environment composed of economic development,political-legal, and physical infrastructure dimensions. Countries vary in their level of economicdevelopment. Country economies can be classified into developed, emerging, anddeveloping economies. The political-legal dimension of the institutional environmentincludes the degree of regulation of economic factors, political behavior, political risk, andlaws and their enforcement. Institutional infrastructure is critical to the operation of businesses within acountry because they facilitate business communications and the movementof goods from their source to the ultimate consumer. Physical infrastructure includes suchelements as the amount and quality of roads and highways, the number of telephone linesper capita, and the number of airports.

# Culture is a learned set of assumptions, values, and beliefs that members of a group haveaccepted and that affect human behavior. Some refer to culture as a collective programmingof the mind with a profound effect on behavior. There are four prominent dimensions ofnational culture: power distance, uncertainty avoidance, individualism versus collectivism,and gender focus.

# Firms can enter new foreign markets in a variety of ways. Each has different risks and requiresdifferent levels and types of resources. Among the entry strategies are exports, licensing, strategicalliances, and acquiring or establishing new wholly owned subsidiaries abroad. Companiesmust choose how they manage their international subsidiaries, especially the degree of autonomygranted to the individual subsidiaries to develop and implement their own strategies.# One of three different approaches reflects the focus of the home office: a global focus, aregioncountry focus, or a transnational focus. A globally focused organization has internationalsubsidiaries that usually follow the same or a similar, strategy one which the firmdevelops centrally.

# In organizations with a regioncountry focus, authority is decentralized, and region orcountry managers can tailor their strategies to local market conditions and demands. Anorganization that follows a transnational approach strives to be simultaneously centralized anddecentralized in order to achieve both global efficiency and local marketresponsiveness.

# Managing people operating in different cultures and institutional environments is often achallenging task. It requires managers to understand cultural differences and how thosedifferences affect employees attitudes and behaviors. For example, in geographically dispersed


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multicultural teams, rarely can managers schedule face-to-face meetings. Theyfrequently depend on technologically mediated communications, such as e-mail, Internetchat rooms, company intranets, teleconferencing, and videoconferencing. Such teams areoften called virtual teams because of their reliance on electronically mediated communication. Ininternational teams, significant responsibility rests with the team manager toensure effective functioning. These managers need to build trust early in the formation of

these teams.

# A global mind-set is a set of cognitive attributes that allows managers to influence individuals,groups, and organizations from diverse cultural and institutional environments.The globalization trend heightens the importance of managers building a global mind-setin order to effectively manage a multicultural workforce and serve multicultural consumer markets.

CHAPTER 4 PLANNING AND ORGANIZING

competitive advantagethe ability of a firm to winconsistently over the long termin a competitive situation

superior valueproducts and services that producevalue for customers that is superiorto the value provided bycompetitors

substitutionthe ability to fulfill a customersneed by alternative means

above-average returnsprofits that are above the averagefor a comparable set of firms

strategic visiona view of the firm over the longterm that describes what it shouldachieve in the future

mission statementa statement that articulates thefundamental purpose of theorganization; often containsseveral components

general environmentsociocultural, technological,economic, political-legal, and


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global forces that can influencethe effectiveness of anorganizations strategy

sociocultural forcesforces consisting primarily of the

demographics or culturalcharacteristics of the societies inwhich an organization operates

institutional forcesthe countrys rules, policies, andenforcement processes thatinfluence individuals andorganizations behaviors thatoperate within a countrys borders

physical forcesinvolve infrastructure that canaffect existing and potentialbusiness operations in a countrysuch as roads, telecommunications,air links, deepwater harbors, etc.

industry and competitorforcesfive environmental forces (PortersFive Forces) that can significantlyinfluence the performance oforganizations in an industry

entry barriersobstacles that makes it difficult forfirms to enter a particular type ofbusiness (industry).

value chainthe set of key activities that directlyproduce or support the productionof a firms products and serviceoffered to customers.

primary activitiesActivities that are directly involvedin the creation of a product orservice, and distributing it to thecustomer.


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support activitiesactivities that facilitate the creationof a product or service and itstransfer to the customer

core competence

an interrelated set of activities thatcan deliver competitive advantagein the short term and into thefuture

SWOT analysisan analysis of the firms strengths,weaknesses, opportunities, andthreats (SWOT) to its continuedoperation

strategic objectivesobjectives that turn the strategicintent and mission of a firm intoconcrete and measurable goals

cost leadership strategya strategy that involves being thelowest-cost producer of a productor provider of a service whilecharging only slightly less thanindustry average prices

differentiation strategya strategy to gain competitiveadvantage by making a product orservice different from those of itscompetitors

strategic scopethe scope of a firms strategyor breadth of focus

focus strategya strategy that targets a particularmarket segment. The strategy maybe a focused cost leadershipstrategy or a focuseddifferentiation strategy

customer segmenta group of customers who havesimilar preferences or place similar


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value on product features

integrated differentiationcost leadership strategya set of actions designed todifferentiate the firms productin the marketplace while

simultaneously maintaininga low-cost position relativeto its competitors

multipoint competitionstrategya strategy that involves competingwith firms across markets by usingstrengths in one market toovercome weaknesses in anothermarket.

# Fundamentally, the objective of strategic management is to determine, create, and maintaincompetitive advantage. A competitive advantage is the ability of a firm to provide value tocustomers that exceeds what competitors can provide. It is created by having and managingresources to provide goods and services that provide superior value, and that are rare, difficult toimitate, and nonsubstitutable.

# The strategic management process begins with the development of the strategic vision andmission for the organization. After establishing these, the organization should analyze itsexternal environment and internal resources. The results of these analyses help to identifythe organizations strengths and weaknesses and the opportunities and threats in the externalenvironment. The strategic objectives are developed and the strategy is formulated toachieve the objectives. Finally, the strategy is implemented.

# Analyzing the firms external environment includes examining the general environmentand the companys industry and competitor environment. The general environment consists ofsociocultural, technological, economic, political-legal, and global forces.Analyzing the industry and competitor environment focuses on the five forces identified byMichael Porter. Three of the five forces (the nature of rivalry, new entrants, and substitutes)involve competitors; the other two forces are customers and suppliers.

# A comprehensive internal analysis of the firms resources can be accomplished using thevalue chain. The value chain consists of a set of key activities that directly produce orsupport the production of a firms products and service offered to customers. Porter separates theinternal components of a firm into five primary activities and four support activities. The primaryactivities are those directly involved in the creation of a product or serviceand distributing it to the customer. By contrast, support activities facilitate the creation ofthe product or service and its transfer to the customer.

# A SWOT analysis (with SWOT standing for strengths, weaknesses, opportunities, andthreats) can be used to integrate and interpret the results of the internal and external analyses. TheSWOT analysis leads to the establishment of the firms strategic objectives and the


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formulation of its strategy.

# Setting strategic objectives is a critical step in the strategic management process because itfacilitates a firms ability to (1) allocate resources appropriately, (2) reach a sharedunderstanding of priorities, (3) delegate responsibilities, and (4) hold people accountablefor results.

# The business-level strategies, from which the firm can select include cost leadership, differentiation,focused cost leadership, focused differentiation, integrated differentiation-costleadership, and a multipoint competitive strategy. The choice of strategy depends on marketopportunities, competitors actions, and the firms resources and capabilities. The integratedstrategy has been facilitated by globalization and technology and simultaneously sometimesnecessitated by global competition. The multipoint strategy allows firms to compete withothers across product and geographic markets.

# After formulating a strategy, managers must effectively implement it for the desired resultsto materialize. Oftentimes, in addition to organic growth, firms use strategic alliances andacquisitions to enter new markets. After implementation, managers need to monitor the outcomes to seeif adjustments are necessary in the strategy or its implementation.

CHAPTER 5 PLANNING

objectivesthe end states or targets thata companys managers aim toachieve

plansthe means by which managershope to achieve the desired targets

planninga decision-making process thatfocuses on the future of anorganization and how it willachieve its goals

strategic plansplans that focus on the broadfuture of the organization andincorporate both externalenvironmental demands andinternal resources into managersactions

tactical plansplans that translate strategic plansinto specific goals for specific parts


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of the organization

operational plansplans that translate tactical plansinto specific goals and actions forsmall units of the organization and

focus on the near term

contingency plana plan that identifies key factorsthat could affect the desired resultsand specifies what actions will betaken if key events change

benchmarkingidentifying the best practicesby your competitors andnoncompetitors and the resultsthat they produced

budgeta tool used to quantify and allocateresources to specific activities

capital expenditure budgeta tool that specifies the amount ofmoney to spend on specific itemsthat have long-term use and requiresignificant amounts of money

expense budgeta budget that includes all primaryactivities on which a unit ororganization plans to spendmoney and the amount allocatedfor the upcoming year

proposed budgeta budget that outlines how muchmoney an organization needs;submitted to a superior or budgetreview committee

approved budgeta budget that specifies what themanager is actually authorized tospend money on and how much


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incremental budgetingapproacha budgeting approach wherebymanagers use the approvedbudget of the previous year andthen present arguments for why

the upcoming years budgetshould be more or less

zero-based budgetingapproacha budgeting approach thatassumes that all fundingallocations must be justified fromzero each year

# Few activities are more basic to management than deciding where the company is goingand how it will get there. Organizational objectives are the future end states targeted bymanagers, while plans are the means by which managers achieve the objectives. Planning,then, is essentially a process to determine and implement actions to achieve organizationalobjectives. This process includes an assessment of the organizations external environmentand internal resources.

# Most companies of any size develop three different types of interrelated plans, strategic, tactical,and operational. Strategic plans focus on the broad future of the organization. Incorporatingexternal information gathered by analyzing the companys competitive environment and thefirms internal resources, managers determine the scope of the business (products and servicesthe firm will provide) to achieve the organizations long-term objectives. Tactical plans translatestrategic plans into specific goals for specific parts of the organization. Consequently, they oftenhave shorter time frames and are narrower in scope. Instead of focusing on the entire corporation,tactical plans typically affect a single business within an organization and its product lines(one or more related product lines). Operational plans translate tactical plans into specific goalsand actions for small units of the organization. They typically focus on the short term, usually12 months or less. These plans are the least complex of the three and rarely have a direct effecton other plans outside of the department or unit for which the plan was developed.

# In addition to plans that address strategic, tactical, and operational issues of the organization,managers at different levels of the company face different planning challenges. Managers ateach level attempt to address somewhat different questions. Strategic plans are typicallydeveloped at the corporate level. Strategic planning is arguably the key planning responsibilityof corporate managers. Business-level managers may be involved in developing strategicplans for their business units and are usually involved in developing tactical plans for theirbusiness. Functional-level managers largely focus on the development of operational plans.

# The planning process has six key elements: environmental analysis, resources, objectives,actions, implementation, and outcomes. Forecasts and benchmarking can be helpful in analyzing theorganizations external environment. However, the uncertainty in this environmentoften makes analyzing it a significant challenge. Firms must currently have the resources or


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the ability to acquire them to implement the plans developed. Thus, analysis of the internalresources is necessary to establish realistic objectives. Next, the organization designs andimplements the plans action steps.

# Budgets are used to quantify and allocate resources to specific activities. Most organizations proposeand set budgets on an annual basis. A capital expenditure budget specifies

the amount of money an organization plans to spend on specific items that have long-termuse and require significant financial investments. Another common budget is an expensebudget. An expense budget typically includes all primary activities on which the unit ororganization plans to spend money and the amount allocated to each during the year.

# Goal setting is a specific planning process for managing performance. The principles are applicableto setting goals not only for individual employees but for teams, units, and organizations.The research suggests that effective goals can have a significant and positive effect on performance,and five characteristics distinguish them: They are specific, measurable, realistic, timebound, and havethe commitment of those charged with the responsibility of achieving them.

CHAPTER 6 PLANNING AND ORGANIZING

organizational structurethe sum of the ways anorganization divides its laborinto distinct tasks and thencoordinates them

organizational designthe process of assessing anorganizations strategy andenvironmental demands and thendetermining the appropriateorganizational structures

organizational charta graphic illustration of therelationships among a firms unitsand the lines of authority amongsupervisors and subordinates

differentiationthe extent to which tasks aredivided into subtasks andperformed by individuals withspecialized skills

task differentiationdifferentiation by whatemployees do


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cognitive differentiationthe extent to which people indifferent units within anorganization think about differentthings or about similar things

differently

integrationthe extent to which various partsof an organization cooperate andinteract with each other

interdependencethe degree to which one unit orone person depends on another toaccomplish a task

pooled interdependencewhen several groups are largelyindependent in their functions butcollectively contribute to acommon output

sequential interdependencewhen the outputs of one groupbecome the inputs of anothergroup

reciprocal interdependencewhen two or more groups dependon one another for inputs

uncertaintythe extent to which organizationscannot accurately forecast futureinput, throughput, and outputfactors

valuesfundamentally importantbehaviors, activities, and outcomes

formalizationthe official and defined structuresand systems related to decisionmaking, communication, andcontrol in an organization


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line of authorityspecifies who reports to whom

unity of commandthe notion that an employeeshould have one and only one boss

span of controlthe number of employeesreporting to a given supervisor

tall organization structurea structure that has multiple layersor is high in terms of verticaldifferentiation

flat organization structurea structure that has fewer layers inits hierarchy than a tallorganization

informal organizationthe unofficial but influential meansof communication, decisionmaking, and control that are partof the habitual way things getdone in an organization

centralized organizationorganizations that restrict decisionmaking to fewer individuals,usually at the top of theorganization

decentralized organizationorganizations that tend to pushdecision-making authority down tothe lowest-possible level

profit centera unit or product line whoserelated expenses are deductedfrom the revenue it generates

network structurethe formal or informalrelationships among units ororganizations (for example, alongthe firms value chain)


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environmental complexitythe breadth and depth ofdifferences and similarities in anorganizations externalenvironment

global approachintegrating the firms activities on acoordinated, worldwide basis

local approachdifferentiating the firms activitiescountry by country

liaisonan individual designated to act asa bridge or connection betweentwo or more areas of a company

# A firms organization structure can be defined as the sum of the ways in which it divides itslabor into distinct tasks and then coordinates them. The structure provides the blueprint forreporting relationships, controls, authority, and decision making in the organization.Organizational design is the process of assessing the firms strategy and environmental demands anddetermining the appropriate organizational structure. Often, organizationalstructure is presented in the form of an organizational chart. Organizational charts illustraterelationships among units and lines of authority among supervisors and subordinatesthrough the use of labeled boxes and connecting lines.

# Important dimensions of the organizing process include differentiation and integration.Differentiation is the extent to which tasks in the organization are divided into subtasks andperformed by individuals with specialized skills. The main benefit of differentiation isgreater specialization of knowledge and skills. Integration is the extent to which variousparts of the organization interact, coordinate, and cooperate with each other. The primarybenefit of integration is the coordinated actions of different people and activities to achievea desired organizational objective.

# Formalization, informalization, centralization, and decentralization are structural dimensions thatbalance and help to manage differentiation and integration. Formalization isrepresented by the defined structures and systems in decision making, communication,and control in the organization. These mechanisms usually explicitly define where andhow people and activities are independent along with how they are integrated. The informalorganization consists of the unofficial but influential means of communication,decision making, and control that are part of the habitual way things get done in theorganization. Centralization and decentralization refer to the level at which decisions aremadeat the top of the organization or at lower levels. Centralized organizations largelyrestrict decision making to a few individuals, usually at the top of the organization. Incontrast, decentralized organizations tend to push decision-making authority down tolower levels in the organization.


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# Six common organization structures include functional, product, division, customer,geographic or region, and matrix. The functional structure is used to organize the firmaround traditional functional areas, such as accounting, finance, marketing, operations,and so on. In a product structure, the firm is organized around specific products orrelated sets of products. Divisions typically consist of multiple products within a generally related area,

though specific products may not necessarily be closely related.Customer structures are organized around categories of customers. Firms can develop astructure around various geographical areas or regions. A matrix structure consists oftwo organization structures superimposed on each other. As a consequence, there aredual reporting relationships.

# One of the most contemporary structures is the network structure. A common networkstructure results from outsourcing. Often, firms outsource noncore activities of their valuechain so that they can focus on core activities that give them a competitive advantage.

# Designing organizations must be done within the context of the organizations external environmentand its strategy. The environments complexity and dynamism are important indesigning organizations. Environmental complexity is fundamentally the breadth and depthof differences and similarities in an organizations external environment. Static environments may havefew or many factors, but these factors tend to remain stable over time.Dynamic environments change constantly. The structure should complement and leveragethe strategy. A division structure is commonly used to complement a multiproduct strategy.In dynamic environments a flexible strategy may be needed and thus the structure should facilitatechanging the strategy when it is necessary to do so.

# Firms usually begin with simple structures, such as an international department or aninternational division, as they venture into international markets. However, their international structuresgrow more complex over time as they enter more countries. The structures chosen usually depend onthe amount of the firms foreign sales and degree ofproduct diversification.


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CHAPTER 7 MANAGING DIVERSE HUMAN RESOURCES

job analysisdetermination of the scope anddepth of jobs and the requisiteskills, abilities, and knowledge that

people need to perform their jobssuccessfully

job postingan internal recruiting method inwhich a job, its pay, level,description, and qualifications areposted or announced to all currentemployees

valid selection techniquea screening process thatdifferentiates those who would besuccessful in a job from those whowould not

structured interviewone in which interviewers ask astandard set of questions of allcandidates about qualificationsand capabilities related to jobperformance

job designthe structuring or restructuringof key job components

job sharingsituation in which two peopleshare the same job by eachworking part-time

reengineeringfundamental rethinking and radicalredesign of business processes toachieve dramatic improvements incritical, contemporary measures ofperformance, such as cost, quality,service, or speed

behaviorally anchored


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rating scales (BARS)a performance appraisal systemin which the rater places detailedemployee characteristics on arating scale

360-degree feedbackperformance appraisal system inwhich information is gatheredfrom supervisors, co-workers,subordinates, and sometimessuppliers and customers

critical incidenta specific incident in whichthe employees behavior andperformance were above orbelow expectations

pay structurea range of pay for a particularposition or classification ofpositions

broadband systema pay structure in which the rangeof pay is large and covers a widevariety of jobs

at-risk compensationpay that varies depending onspecified conditions, including theprofitability of the company;hitting particular budget, revenue,or cost savings targets for a unit;or meeting specified individualperformance targets

incentive plana system that ties somecompensation to performance

career patha set and sequence of positionsand experiences


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cross-functional job rotationan arrangement in which anemployee has an opportunity towork in different functional areasand gain additional expertise

dual-career couplea couple in which both partnerswork full-time in professional,managerial, or administrative jobs

glass ceilingan invisible barrier that preventswomen from promotion to thehighest executive ranks

affirmative action programa hiring and training programintended to correct pastinequalities for certain categoriesof people based on gender, raceand ethnicity, age, or religion

bona fide occupationalqualification (BFOQ)a qualification that has a direct xand material impact on jobperformance and outcomes

# Getting the right people in the right jobs has four fundamental components. First, managersmust plan for their human resource needs. This consists of three related activities: (a) forecasting theirhuman resource demand, (b) estimating supply, and (c) determining fulfillment.Second, managers must perform a job analysis to determine the nature of the firms jobs andtheir requirements. Third, managers must attract the right people to the company and its jobopportunities (recruit them). Fourth, managers must select the right people for the jobs.

# Unstructured interviews are most commonly used to select employees, but they are lessvalid than structured interviews. Methods such as work sampling, whereby candidates perform tasksidentical or similar to the work they would be doing if hired, tend to be morevalid indicators of who would be a better employee.

# Effective socialization and orientation should be done very early in the employees tenurewith the company. Paperwork and information should be kept to only what is required toavoid overload. Employees should meet their supervisors early in the process. Pairing a newhire with a buddy (a more experienced employee) can also be helpful.

# Effective training can involve both formal (classroom or computer-based) training as well ason-the-job training. In both cases, effective training requires (1) a clear understanding of


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what is and is not correct or desired behavior and why that is the case, (2) sufficient opportunities topractice the behavior, and (3) feedback on the persons performance with furtheropportunity for them to practice and improve.

# Because it is simple and efficient, a graphic rating scale is a commonly used method ofassessing the performance of employees. Behaviorally anchored rating scales are also

common and provide richer descriptions of levels of performance. During a 360-degreefeedback appraisal, multiple people assess the employees performance.

# Most compensation systems consist of wages or salaries, at-risk pay, and benefits. At-riskcompensation is typically tied to performance results and, therefore, moves up or down withperformance. Benefits, such as health care, typically have a monetary value of 20 percent to40 percent of an employees wages or salary.

# A well-managed, diverse workforce can exceed, in many cases, the performance of a homogeneousworkforce. Managing a diverse workforce will become even more important in the futureas firms continue to globalize and search for tomorrows employees in developing countries.

management 3e, definitions and summary - midterm

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